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Sourcing at risk in Bangladesh

Ongoing protests by clothing factory workers in the Bangladeshi capital Dhaka are likely to become a long-term threat to retailers who source from the country, according to leading industry experts.

After four days of angry protests over pay and conditions during which several factories were forced to close, the Bangladesh government had reached an agreement with unions over increased pay and better working conditions as Drapers went to press.

However, supply chain and sourcing experts said further riots in the area were inevitable as demand for garment manufacturing in Dhaka rises. Dhaka is one of the cheapest sourcing bases for high street retailers, partly because of low wage costs. However, if riots gain momentum, manufacturing could be threatened and the supply chain of UK retailers disrupted. Chains such as Primark and New Look source out of Bangladesh.

Continued riots are also likely to slow the influx of investment in raw materials plants in Dhaka.

Michael Flanagan, chief executive of clothing sourcing consultancy Clothesource, said: “These protests are about workers wanting more money, which frequently causes protests in Dhaka. This time it appeared to have been fuelled further by police overreaction.”

He added that protests seldom lasted more than a few days and rarely affected more than a handful of Dhaka’s 4,000-plus textile factories, but warned that more riots were likely as increasing numbers of European retailers shift sourcing to Bangladesh, which he described as “the only option for low-cost manufacture now”.

Grant Liddell, retail development director at logistics firm Uniserve, agreed. “The business of manufacturing has migrated to Bangladesh,” he said. “Factories are working to full capacity and owners are reaping the benefits but often not passing that on to workers.”

A report by the government’s Factory Inspection Department, released on Monday, revealed that 122 of the 825 factories in the region surveyed did not pay staff on time between January and May.

Dan Rees, director of the Ethical Trading Initiative, said: “The riots, and the Bangladeshi government’s report, are yet another damning indictment of the state of workers’ conditions in the garment industry. UK retailers are a vital part of this equation.

“Those that source from Bangladesh must ensure they are trading in a way that supports a living wage and decent terms and conditions for workers.”

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