# taz.de -- Rana Plaza collapse in Bangladesh: A Fine Margin | |
> Like many others the owners of the textile factories in the Rana Plaza | |
> had little money and lucrative, but risky business model. Everything went | |
> well for twenty years. Then it all came crashing down. | |
Bild: Buried beneath the Rana Plaza's rubble is a risky business model. | |
Two hours after his factories were reduced to rubble, Mahmudur Rahman | |
called a fellow garments factory owner. “I've lost everything, my life is | |
over”, he lamented. He was crying on the telephone, the friend remembers, | |
and saying that he would probably never recover his losses. | |
On April 24th the walls of the factory building named Rana Plaza, located | |
in a small town north of Bangladesh's capital Dhaka, came crashing down. | |
Mahmudur Rahman and his business partner Bazlus Samad owned textile | |
factories on three floors there. But since that day they no longer have | |
factories. Just three million Euros in liabilities. Both are now in jail | |
and will possibly face a charge of criminal negligence. | |
Two hours after the collapse 19-year-old textile worker Akhi also believed | |
that her life was over. The ceiling of the second floor hung so low, that | |
she could barely sit upright, she remembers. Dust settled in a thin layer | |
over her clothes, her hair, her skin. Around her lay the remains of | |
Mahmudur Rahman's factory: smashed sewing machines, squashed bales of | |
cloth. And the corpses of workers. | |
At the time of the collapse at least 3,500 people were inside the eight | |
stories of the Rana Plaza. Most were workers in the five textile factories | |
across six floors. During the following three weeks 1,129 of them were | |
recovered from the rubble dead, 2,438 were rescued alive. | |
The pictures of the destroyed factory building have made their way around | |
the world. The tragedy especially also touched people as far away as Europe | |
and North America: Many wear clothes that may have been produced in the | |
Rana Plaza. Cotton shirts by Benetton, trousers by Primark, polo shirts by | |
Mango and a special fashion collection by Kik. | |
To be able to sell the clothes cheap in developed countries, workers are | |
exploited in Bangladesh. Bargain deals on clothes in shops in Berlin and | |
Brussels are paid for in sweat by people thousands of kilometers away. | |
Sometimes they pay in blood. | |
The Rana Plaza collapse isn't the first disaster the textile industry in | |
Bangladesh has faced, but it is the largest single incident. And: it won't | |
be the last. The industry is one of the most profitable in the country, but | |
also extremely risky. With luck factory owners make fantastic margins and | |
so it has attracted many with little money and in search of a fortune. | |
Some were lucky and are now millionaires, but most face volatile business | |
conditions. Sometimes they do well, sometimes worse. Some survive, some go | |
bankrupt. And some, like Rahman and Samad, are unlucky and the risk | |
inherent to their business model becomes reality and causes it to collapse. | |
Much like the Rana Plaza did. | |
## A promising future | |
One day before the collapse Rahman and Samad faced a promising future. On | |
Tuesday, April 23rd, women like Akhi were sewing clothes for the two | |
businessmen in two factories the Rana Plaza. One, on the second floor, was | |
named New Wave Bottoms. The other, on the sixth and seventh floors, was | |
called New Wave Style. | |
Their customers were brands from the USA and Europe, two shipments were due | |
two days later, one a shipment for the irish brand Primark worth several | |
hundred thousand Euros. According to the registry of the Bangladesh | |
Garments Manufacturers and Exporters Association (BGMEA) around 1,600 | |
people worked for Rahman and Samad. And they wanted to expand: On the | |
eighth floor hundreds of sewing machines were waiting to be unpacked and | |
put to work. | |
There are few pictures of Rahman and Samad available publicly. Two are in | |
the BGMEA's internal voting list, while newer photographs show the two men | |
on the day of their arrest, around ten years later. Today both have graying | |
hair. Rahman has a precisely shaved beard, Samad is going bald. As he is | |
led away by the police Samad looks into one of the journalist's cameras, | |
his eyes defiant. | |
The story of the two men is hardly unique, it is the story of hundreds of | |
businessmen in Bangladesh's textile industry. Mahmudur Rahman completed his | |
studies at college in the early nineties. His father was a teacher, a well | |
paid job. His family owns a multi-storied residential building in Dhaka. | |
In the preceding years Bangladesh's textile industry had begun to take off, | |
in the nineties it began to boom. As wages in countries like South Korea | |
and Taiwan rose, European and US companies moved their businesses to keep | |
costs low. They moved to the Indian Subcontinent: Pakistan, Sri Lanka and | |
Bangladesh became their countries of choice. | |
## A booming industry | |
Together with Bazlus Samad, a friend from college, Rahman opened a first | |
textile factory on the upper floors of his family's house. Their entry into | |
the business was financed with a loan, probably from Samad's father, a | |
former bureaucrat, whose influence also probably smoothed the way for the | |
new company's registration. During the next ten years they produced | |
clothing mainly for the European market and in 2003 invested 110.000 Euros | |
in another factory. They named it New Wave Style. | |
In those years they moved to a multistorey building located between a slum, | |
government staff quarters and the army's cantonment in the industrial area | |
of Mirpur in northern Dhaka. Their company expanded as the textile industry | |
as a whole did: While Bangladesh exported garments worth 800 million | |
Dollars in the mid nineties, that value rose to 5 billion Dollars fifteen | |
years later. | |
But that was only the beginning. Thanks to continuing low wages for workers | |
the annual revenue tripled by the year 2012. And even after the disaster | |
the exports continued rising: during the fiscal year ending in June 2013 | |
the Bangladeshi textile industry exported 21.5 billion Dollars worth of | |
garments up from 18 billion the year before. | |
Then in 2008 the owner of the building in Mirpur wanted to open a hospital | |
and asked his tenants to move out. Moving a whole factory is an expensive | |
enterprise, because production comes to a halt for weeks. Businessmen with | |
enough money try to avoid the costs by buying buildings or constructing | |
them themselves. Only those who can't afford to buy, rent factories. People | |
like Rahman and Samad. | |
## The move to Rana Plaza | |
Not far from that building is the corporate office of the Rising Group. The | |
company's CEO, Mahmud Hasan Khan, owns a number of factories, employs 7,000 | |
people and is an influential member of the BGMEA. He has known Samad and | |
Rahman for years. His office on the eighth floor looks out over the flat | |
roofs of the Mirpur's factories. | |
A nervous assistant sits at his table, holding rolls of technical drawings. | |
“I've ordered all the building plans of my factories to be reviewed”, Khan | |
says. “We never expected such a tragedy.” This is surprising, since in 2005 | |
another factory, Spectrum Sweaters, had collapsed killing 64 workers. Since | |
the Rana Plaza collapse factory owners are digging through their documents: | |
Many buildings are converted residential or commercial buildings, many are | |
so old that their documents have been lost and often buildings are so old | |
that they were built before the building legislation in place today. | |
Inspections by a technical university and the BGMEA show that every tenth | |
textile factory in Bangladesh could be unsafe. | |
Khan waves away his assistant. He tells the story of Rahman and Samad's | |
factory move in 2008. “I told them to take the opportunity and buy a | |
building of their own”, he says. But Rahman and Samad decided to rent once | |
again. This time the building they chose was located 40 kilometers outside | |
Dhaka, in the small town of Savar. The building was new, constructed only | |
the year before. Its name: Rana Plaza. Building safety is something they | |
didn't even consider, after all the building was brand new. | |
The first two floors of the building contained shops, a mosque and a bank. | |
Then one factory was stacked above another. Rahman and Samad invested | |
100.000 Euros and founded another company named New Wave Bottoms, which | |
they moved into the second floor. New Wave Style moved into the sixth and | |
seventh floors. | |
## A regular workday | |
Tuesday, April 23rd, one day before the collapse, was a regular workday for | |
Akhi. She left the one room apartment she shares with her parents around | |
7:15 AM. Her father drives a rickshaw van, her mother, once a textile | |
worker herself, is now chronically ill. Their room is one of six opening | |
onto a common courtyard. Kitchen and Toilets are shared among all the | |
families. Thousands of textile workers, who work in the hundreds of | |
factories in Savar, live under similar conditions. Many live in tin sheds | |
and some, like Akhi and her family, in brick houses. | |
To get to the Rana Plaza Akhi walked along a narrow dirt lane. During the | |
monsoon rains the ground becomes soft and the rickshaws plying the small | |
roads leave deep tracks that dry into narrow channels. The walk to the | |
factory took Akhi about ten minutes. Shifts began at 8 AM, but many workers | |
arrived early. They entered the Rana Plaza through a back entrance, waved a | |
proximity card in front of a box at the entrance. When a light blinked | |
green and a screen displayed their card number they were been logged in for | |
the day. Hundreds of women and men squeezed their way up the narrow | |
staircase each morning. | |
At New Wave Bottoms, where Akhi worked as a machinist, the workers were | |
divided into four units. About seventy workers and machines sitting in a | |
row of tables make up one unit. The production process was broken down into | |
simple actions and all the workers of a unit contributed towards producing | |
a single item of clothing. They repeated the same simple actions hundreds | |
of times a day. | |
Akhi's unit sewed trousers. At one end of the column of workers the front | |
of the trousers were sewn, the back of the trousers started at the other | |
end. Every worker did their part of the process and passed the trousers on | |
towards the middle where they were joined to make the finished product. | |
Akhi sat at the far end of one column and was responsible for sewing on | |
pockets. | |
The hall had no fans and the workers were forbidden to speak. Two women who | |
talked while working were dragged to the middle of the room, other workers | |
remember, and made to stand on a table while a supervisor ridiculed them. | |
Working days ended in the evening after ten, twelve or fourteen hours. It | |
was dark when Akhi waved her card to log out for the day. When she reached | |
home she seldom had time to do more than eat and sleep. Only once a month | |
did she get a whole day off. | |
Rahman and Samad usually spent every day in their office at the factory, on | |
the same floor as New Wave Bottoms. Sometimes they walked through the rows | |
of working seamstresses, but seldom spoke with them. The workers describe | |
them as being “good bosses”, despite the working conditions. Wages were | |
paid on time and overtime calculations were fair, they say. Samad, some | |
remember, once told them to come to him if they ever had any problems. But | |
no one ever did. Rahman, they say, was a little aloof and strange, with a | |
stinging gaze. | |
On that Tuesday work ended unexpectedly early. At around 10 AM the plaster | |
started falling off a pillar beside Akhi's sewing machine. The workers | |
became agitated and even the supervisors had no idea what to do. After | |
calling the owners they sent the workers home: “come back after lunch”, | |
they said. But when the workers returned at 2:30 PM they found the gate | |
locked. They went home, wondering whether they would be paid in full for | |
the shortened workday and whether they would still have work the day after. | |
## Risky, yet lucrative | |
The office of the powerful industrial association BGMEA is in central | |
Dhaka, not far from a five star hotel. The building is 15 stories high with | |
a glass facade and built on a filled up pond. In March the Bangladeshi High | |
Court ordered the government to demolish it, since it was built on illegaly | |
occupied land, but so far that hasn't happened. | |
The tenth floor seems like a construction site, empty with unplastered | |
cement making up walls and floor. In one corner, behind a glass door, is | |
the air-conditioned office of the Creative Group. It's owner, Ferdous | |
Perves, too is an influential garments businessman and owns several | |
factories. He and Mahmudur Rahman go back a long way. They grew up in the | |
same neighbourhood and attended the same sports events as schoolboys. It's | |
a coincidence that they work in the same industry. Today, as Rahman and | |
Samad are in prison, Perves is handling their affairs, trying to minimize | |
their costs. He says, the two men owe about 3 million Euros. | |
“They had good customers”, Perves says. They regularly produced clothing | |
for the Irish brand Primark and for the US brand “The Children's Place”. | |
Documents recovered from the rubble of the Rana Plaza also show that the | |
factories handled orders from the Danish company Texman and for the Italian | |
label Benetton. In March Benetton received 40,000 shirts from New Wave | |
Style. | |
Financial documents that “taz.die tageszeitung” was able to review also | |
show that 2012 was a good year for Rahman and Samad. The turnover of both | |
companies added up to 6.7 million Euros and earned them a net profit of | |
250.000 Euros. They made more money in a single year than they had | |
initially invested into both companies. But this is also what made the | |
business model so risky: A large part of the production process is financed | |
via loans. The documents show: the companies have long term liabilities of | |
1.7 million Euros. A credit rating company gave them a medium rating saying | |
they had “major ongoing uncertainties and exposure to adverse business or | |
economic conditions. These companies have speculative elements, subject to | |
substantial credit risk.” | |
## "They invested every surplus Taka" | |
The business model is common, other factory owners say. Businessmen buy | |
machines and other factory equipment with their own money and then solicit | |
orders. The buyers give out payment guarantees for these orders, known as | |
Letters of Credit (LC), with which the businessmen then acquire LC's from | |
their banks to buy fabric, yarn and accessories. Essentially the money is a | |
bank loan. | |
The other running costs, too, are paid for through bank loans for which the | |
factory owners pay a whopping 18 percent in interest. Once the orders are | |
fulfilled the LC's are redeemed, the businessmen pay their loans back and a | |
fraction of the turnover, usually less than five percent, remains as net | |
profit. | |
Much can hamper the work of the textile industry in Bangladesh: corrupt | |
bureaucrats, late fabric shipments, frequent power failures. And general | |
strikes, known as hartals, usually called by opposition parties to pressure | |
the government. Since February the number of hartals has risen sharply. The | |
factories keep working, but shipments are hard to receive and to send off. | |
In these cases, factory owners often have to pay the more expensive air | |
cargo rates or offer rebates on the payment. The income from a textile | |
factory can be volatile: In 2010 New Wave Style only made 28,000 Euros, in | |
2011 New Wave Bottoms made only 1,000 Euros. This volatility puts pressure | |
on businessmen who have little money saved up. | |
Rahman and Samad, it seems, didn't lead luxurious lives. “I think they | |
invested every surplus Taka they had”, says Rahmans childhood friend | |
Ferdous Perves. Like into the new unopened factory on the eighth floor of | |
the Rana Plaza. While many other factory owners have villas in the more | |
expensive parts of town, with swimming pools and multiple luxury cars, | |
Rahman lives with his wife and two children in a largely middle class | |
neighbourhood in the north of Dhaka. When his chauffeur drove the children | |
to school in the car, he often took the bus to the office, says Perves, the | |
means of transport for the lower and middle classes in Bangladesh. | |
## It all comes crashing down | |
On the day of the tragedy many workers refused to enter the Rana Plaza. | |
Many had heard that the building was no longer be safe and were afraid that | |
something serious could happen. At 7:45 Akhi and dozens of women stood at | |
the back gate. When the supervisors failed to convince them to enter one | |
started hurling abuse. “Do your fathers pay the wages, you sisterfuckers?”, | |
he screamed. Akhi and some other women became scared and entered, others | |
remember being grabbed at the neck and pushed inside. Once inside they were | |
not allowed to leave. | |
In hindsight it seems that nobody really believed something would happen. | |
“Nothing could have forced me into that building, if I had known this would | |
happen”, one of the workers remembers. The supervisors were all present and | |
even the factory owners were on their way to office. The shift began at 8 | |
AM, but shortly afterward the electricity failed – nothing unusual in this | |
part of Bangladesh. The generators on each floor were started. As they | |
started to vibrate the pillar behind Akhi's machine began collapsing. And | |
then gave way. “It was as if the ground beneath my feet disappeared”, Akhi | |
remembers. | |
The rubble of the Rana Plaza buried Mahmudur Rahman's and Bazlus Samad's | |
business model beneath itself: fixed capital in the shape of machines and | |
equipment and running capital in the shape of unfulfilled orders. | |
At the same time liabilites stacked up: Loans and workers' wages that need | |
to be paid, compensation for the seriously injured and the families of | |
those who died. Millions of Euros. | |
Maybe this is what Mahmudur Rahman was thinking of, when he called his | |
business acquaintance that morning. Maybe he was also thinking of those | |
dead and injured in the rubble. | |
At midday Akhi, another seamstress and three men from the quality section | |
managed to leave the ruins. | |
Weeks after the collapse the corpse of the abusive surpervisor still hadn't | |
been found. | |
Two days after the disaster Mahmudur Rahman and Bazlus Samad surrendered to | |
the police. Now they are waiting to be charged. | |
13 Jul 2013 | |
## AUTOREN | |
Lalon Sander | |
## TAGS | |
Textilindustrie | |
Bangladesch | |
Fabrikeinsturz | |
Steve McQueen | |
Rana Plaza | |
Bangladesch | |
Bangladesch | |
Textilbranche | |
Bangladesch | |
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