Ethical Sourcing Forum: Subcontracting More Prevalent Than Brands Believe
I had the opportunity to attend the ESF (an Intertek shindig) in NY. So much of my last two years have been tied up with worker safety efforts in Bangladesh, that I took note of the presentation given by Sarah Labowitz of NYU Stern. The Sourcing Journal has a piece on her presentation that may be of interest:
Labowitz describes Bangladesh’s RMG sector as a hub and spoke model of production, where the hub factories are the ones that have direct relationships with foreign brands, are often in good condition, with their own power plants, and are well lit and ventilated. And those hub factories have a lot of relationships with spoke factories.
“The spoke factories are the invisible factories,” Labowitz said. They are often in mixed-use buildings, above auto repair shops, for example, and some don’t appear on any registry of factories in Bangladesh. Labowitz and her partner Dorothée Baumann-Pauly, co-authors of the report, “Business as Usual is Not an Option,” are currently conducting research on how many unregistered facilities there are in Bangladesh. “The riskiest facilities are those in the spoke universe,” she said.
But because audits and inspections are directed at the hubs, no one pays attention, Labowitz said. “What brands are doing is pushing subcontracting further under the ground.”
It is well known that despite the work being done by the Alliance and Accord in Bangladesh, the surface is only being scratched. It's hard not to feel overwhelmed at the size of the problem, and the lack of support from the government of the country -- and that's despite pressure from the ILO and governments from Europe and NA. Most brands only have visibility their direct suppliers -- but there exists a huge, unregulated, unseen supply chain below the direct suppliers. These factories do everything and add significant capacity to the sector. After the Alliance and Accord work is completed with direct suppliers, it will be interesting to see if any focus moves to the hidden supply chain.
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