Safety overhaul puts strain on Bangladesh garment industry

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By Krista Mahr and Serajul Quadir

DHAKA (Reuters) - Undaunted by a run of horrific factory accidents that have hit Bangladesh's garments industry, two entrepreneurs bought Adorn Knitwear Ltd earlier this year.

    It is a small business not far from the rubble of Rana Plaza, a Dhaka suburb building that collapsed in April 2013 killing more than 1,100 people, most low-paid seamstresses, and prompting a costly safety overhaul at plants large and small.

Whether people like Rezaul Karim Chowdhury, one of Adorn's new owners, can afford those improvements will be critical for the future of a sector that accounts for over 80 percent of this South Asian nation's export earnings, industry leaders say.

Last month, Adorn's production lines were silent and its sewing machines gathering dust as the lengthy process of checking the building for structural weakness was underway.

"We're losing money every minute," said Chowdhury, 35, as he looked around his factory, which has a list of potentially expensive fixes to be completed before reopening.

    Many high-volume factories depend on smaller firms, contracting out work to meet orders from big Western retailers under tight deadlines.

Today, up to 20 percent of the 3,500 exporting garment factories subcontract, says the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

If that support system crumbles, some factory owners worry Bangladesh's $24 billion industry could lose the agility that took it to number two in the global league of garment exporters.

    Since Rana Plaza, nearly two-thirds of the country's exporting garment factories have been inspected.

    Many have been handed lists of structural, electrical and fire safety fixes and upgrades that could cost hundreds of millions of dollars.

    Larger factories can generally pay for those changes independently, or have access to a growing number of affordable financing arrangements backed by wealthy customers.

    Hundreds of smaller factories do not, leaving them exposed at a time when owners say they are grappling with a slide in orders and an increase in minimum wages for the industry's workforce of more than 4 million.

Already about 450 factories have gone to the wall since last year's disaster, the BGMEA says.

    "If all the factories are becoming big, who will do the smaller things?" said Anwar-ul Alam Chowdhury, chairman of Evince Group and a former BGMEA president. "Then who will come to Bangladesh?

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