Bangladesh export industries for apparel and textiles have completed its four decade. During this time there were different phases of challenges and prosperity. In the 1st decade the challenge was the technical know-how. Some of the big enterprises of that time played a leading role e.g. Reaz garments, Desh Garments, Paris Garments, etc. Of them Desh garments together with Korean company Hyundai trained many of its staffs in Korea for technical training. From those trained staffs our industry got many new entrepreneurs who later become leading industrialist of this time.
At the middle of its 2nd phase the government took various steps in order to set up backward and forward linkages for the industry. This brought many new spinning mills, weaving mills, and most importantly knitted composite factories were grew up in the country like mushrooms. During the end of 2nd decade and start of the 3rd decade Bangladesh garment industry faced the first global challenge. That is child labour prevention act. With the strong support from Government, ILO, and local factory owners it was possible to eradicate child labour, at least, formally from the export factories.
As soon as this was over comes the banning of azo dyes from export goods. Lots of factories had to count big cancellation and discounts due to this because the chemical factories and Chinese mills supplying our export fabrics were not ready for it. The list of banned substances grew day by day. The new directives and legislation in EU and US till today kept our factories onto their toes to source raw materials from certified sources like Oekotex, REACH, and Detox so that the risk of such contamination can be avoided. End of 3rd decade also endured the MFA quota phase out in 2005 which played favourable role to grow our export industry.
Everybody expected the 4th decade to be the golden one with more than 10 percent export growth each year. But the ‘Tazreen Fire’ and ‘Rana Plaza Collapse’ incidents have brought a big question mark in Bangladesh’s fairy tale. It is not only the sweat shops, some believed, but also the workplaces, many started to believe are poorly constructed for industrial production.
Accord and Alliance started auditing the factories for fire, construction, and electrical safety. The factory owners soon recognize the room for improvement. Some started making state-of-the art facility and look for building certification that would erase any question mark about construction quality, safety issues, and ergonomics.
Why GREEN factory?
Buyers are always playing with some negative cards, for example, child labour, chemical issues, labour rights, occupational health & safety, etc. as being the problem of placing orders in Bangladesh compared with China, Vietnam, or even India. On the other hand factory owners are always complaining that buyers use those negative cards from time to time to pay less. A GREEN factory can reduce owner’s risk against such issues and once they are building a new factory they will at least stay relaxed for some years before a new regulation would ask for even more stringent safety requirement in the factory.
What is a GREEN factory?
USGBC (United States Green Building Council) certifies the building structure as being GREEN based on its level of environmentally friendly features. These are lower energy consumption, use of renewable energy, safety issues, water efficiency, convenient working environment, and use of technology, ability to fight fire and other accidents, and most importantly the strength of the construction as being used for industrial purpose. There are several levels of such certification- Platinum, Gold and Silver. There are points for each green features. If the factory building attains points 80 or above on the merit of its green features then it will be awarded as Platinum. The same way with 70 or more but less than 80 qualifies for Gold and with 60 or more but less than 70 qualifies for Silver.
Will GREEN factory earn a better price from buyer?
No, a Green factory may not necessarily get a better price from buyer for their product. All the global buyers are fighting for each cent they buy. Although there is a demand for Green factories but buyer will say owners that this is the buying price from a good conventional factory and they are not going to increase it for Green. Then Green factories would reduce the price to take the order at the same price as others. The good conventional factory once they lose the order they would ask for an answer why they lost it though there was no increase in price. Buyer would tell them that the prevailing price they pay to the Green factory and to get the same the conventional good factory need to quote a better price. This continues and buyers will try to take the advantage of the competition between GREEN and good conventional factories. Therefore, a Green factory may not get a better price from buyer but always enjoy a better bargaining power for their product against good conventional factories.
Then Why to go for Green factory?
There are about 250 new factories applied for Green certificate and the pace is expected to be much faster in the coming years. There is almost 10 to 20% increase of cost for the construction of Green building plus incremental operating cost due to the increase of maintenance cost. If industry owners do not get an incremental price for Green then why are they running after Green? It will not be a good idea for the industry owners to go for Green without doing a good feasibility for the industry. It is true that the conventional fuel cost will keep rising. On the other hand the present cost of renewable energy though a bit higher but in the coming years this would be reduced for sure with the advancement of technology. For example, the present cost of one kilowatt-hour of electricity is BDT 8.50 and buying price from the Govt. authority is BDT 12. There is no chance of reducing this cost in the coming years. On the other hand, a kilowatt-hour of solar energy costs BDT 20 today, the chance of this cost to reduce is likely in future due to Govt. subsidy in renewable sources, chance of reducing the battery prices, etc. Again the initial cost for such solar power are high but once these costs are taken away for pricing after a few years this energy is free.
Another example is that use of heat efficient glasses in the factory. The initial cost of such glass will be high but they will pay back with reduced energy cost from the saving of lights and prevention of heat transmission that will help the air conditioners to run at a lower power. Investors must do proper feasibility for each feature and calculate it as ROI (Return on Investment) before taking decisions. It is likely that the next challenge we have ahead of us is cost reduction and for this we need to increase productivity. This can only be maintained in good factories under proper industrial management and material control system by MIS.
In the next month’s editorial more will be discussed on Green Building, LEED, Sustainable Sites, Water Efficiency, Optimizing Energy Performance, Waste Management, Recyclables, Material Reuse, Indoor Environment and Outdoor Quality, etc.