Walmart Company: Factory Disaster in Bangladesh Case Study

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In the spring of 2013, the factory in Savar, Bangladesh is known as Rana Plaza suffered a major collapse killing at least a hundred people and leaving more than a thousand with various injuries (Bhasin, 2013; Engel, 2013). This disaster was one of the series of similar catastrophes that happened in Bangladesh since the beginning of the 2000s. Every several years one of the many clothes manufacturing factories would undergo a crisis of this type due to fire, poor construction, or some other breaches of workplace safety (Burke, 2014).

The primary cause of these accidents is the rapid growth of the manufacturing industry in Bangladesh. To be more precise, the country that used to occupy position 76 in the global list of the clothes exporters in the 1980s quickly moved up to the rank number seven in just under three decades, and by 2013 became the second in the list after China (Burke, 2014). This disaster, as well as all the similar ones that occurred within the last fifteen years, is associated with the effect of the globalisation that empowered the large corporations to expand their businesses and outsource the supply chains (Disaster at Rana Plaza, 2013).

The connection is quite simple – under the effect of the recession in the West, many large manufacturers started to seek out ways to reduce their costs. Attracting the labour markets of the countries with low income and loose employment rules is one of the cheapest ways to outsource a large portion of the manufacturing operations for the companies such as Walmart, H&M, and Gap (Burke, 2014). This is the reason why Bangladesh has become the world’s second country in terms of clothing manufacturing.

The series of factory disasters that occurred in Bangladesh throughout the beginning of the 2000s has attracted the public attention to the large multinational corporations who stood behind the mass production of garments. In turn, the companies such as Walmart, Gap, and H&M reacted to the events attempting to address the workplace safety problems of the manufacturers and improve the conditions in which the Bangladeshi employees had to operate (Chernikoff, 2013). Being at the centre of various labour-related issues in the third-world countries included in the supply chain, the large Western corporations have suffered brand reputation problems.

Responsible sourcing is the new strategy of the Western organisations that have established the “Alliance for Bangladesh Worker Safety” (Walmart, 2016). The agreement obliges the Western corporations to provide the funding necessary for the factories in Bangladesh to address all of their issues and proceed to work in safe conditions without endangering the lives of the employees (Chua, 2015). H&M was the first company to sign this contract as the biggest manufacturer in Bangladesh.

The approach sounds reasonable and effective because the companies such as Walmart, Gap, and H&M have saved a large portion of costs outsourcing their operations to Bangladesh, and if they spent a small part of these savings to improve the workplace conditions, it would make a massive positive impact on the manufacturers. However, there is a strong suspicion that the plan of the workplace improvement would not work as anticipated due to many obstacles.

For instance, as reported in 2015, the factories producing clothes for H&M are still extremely dangerous in terms of fire safety (H&M fails to make fire and building safety repairs in Bangladesh, 2015). The costs provided by the company might be either stolen or insufficient to arrange all the necessary safety measures. Besides, the suppliers can engage additional factories in the operations which are not funded by the Western companies. That way, the effectiveness of such measures is doubtful while the likelihood of new disasters is high.