Business & Economic Research Center | Jones College of Business | Middle Tennessee State University

by Steven Sibley (November 11, 2008)

 

Where Food Comes From

Another of Babor's interns, Stephen, from France, wanted to visit Grameen Knitwear, located in the Export Processing Zone (EPZ) on the outskirts of Dhaka. Babor asked Kathryn and me if we would like to visit there with him. While neither of us had been especially interested in that sister company, we were certainly willing to spend 300 taka to go. Babor had made the visit sound especially enticing by offering us "two piece of garments." We were to meet Babor at the head office at 9:30 a.m.

Kathryn and I meet in the hotel restaurant for breakfast at 8:30. As soon as breakfast is served, Stephen calls me to ask what time we are meeting at the head office to embark on our trip. I tell him 9:30. As I sit back down, Babor calls, and the call is dropped. I go out into the hallway where reception is better and return his call. He had called to tell me that Nana wants to join us, but her language classes dismiss at 9:30, so we will meet at the head office at 10:00. I sit back down and take one bite of my curried vegetables when Nana calls me. The call is dropped before I can answer, so I go back out in the hall to return her call. She is calling to tell me that she will not be able to go after all, because Stephen called her to inform her that there is a terrible traffic jam on the way to the head office. After hanging up the phone, I sit back down and finally enjoy my breakfast. The organization (or lack thereof) has finally started to wear on me after six weeks.

Kathryn and I walk outside to hail a rickshaw in the rain. While the monsoon season is officially over, Cyclone Reshmi is in the Bay of Bengal. As a result, the temperature is delightfully cool, but it has rained relentlessly for two days. We arrive at the head office, wet from the waist down. We get out of the rickshaw and take the elevator upstairs. Arriving in the internship office, we find Babor gluing the names of participants in Grameen's International Dialogue Program to name tags. I haven't seen a glue stick since elementary school. Adding to this, Babor seems especially lighthearted and playful this morning.

"Stephen messaged me and say he is running late because of the jam. He does not have his phone with him, so we cannot call him," Babor informs us. "Most probably he give it to Yasmina (his girlfriend)."

In a similarly playful mood, I ask, "Is that because she wears the pants?"

Babor replies, "Yes, she wears pants. Very small pants. Stephen wears small pants also. They are not long like you and Kathryn." In Banglish, "long" means "tall."

Kathryn and I giggle uncontrollably. Obviously Babor is not familiar with the idiom. Babor, too, is laughing and takes our laughter as his cue to be a comedian for the day.

Continuing to wait for Stephen, I try to make conversation, "So Babor, I read that there is a cyclone in the Bay of Bengal."

"It is no problem. We will be safe," says Babor.

Sham, another internship coordinator, chimes in, "No. It is a problem."

Babor defends his position, "Winds are only 30 to 40 kilo."

Sham retorts, "Winds might reach 100 kilo. If it rains much more, then winter seedlings will be destroyed."

Babor has been silenced, so he returns to his gluing. Soon, Stephen arrives.

Babor welcomes him and says, "Let's move. We go outside and get into our taxi. Babor asks if anyone wants the front seat. Four inches taller than anyone else in the group, I do not hesitate. Babor gets stuck sitting in the middle of the backseat. He offers, "You are my interns. I will sit in the middle. I will do anything for my interns. I like to be close to my interns."

Kathryn says, "That's very nice of you, Babor."

The driver begins to drive. Babor asks, "Steve, what is that?"

"What is what, Babor?"

"That, in the driver's window," he says, pointing to the large piece of wood resting on the dashboard. "If we do not pay, he can beat us with his stick." Kathryn, having been sick for several weeks, laughs so hard that she begins to cough. I am rolling in the front seat. Encouraged, Babor continues, "No. He cannot beat us; we are more," referring to our strength in numbers.

I add, "And I am very long."

Babor adds, "And me, too," as he strikes a flexing pose. Except for the driver who understands nothing of what has transpired, the entire taxi is laughing as we begin our trek to Grameen Knitwear.

On the way to the factory, I notice that there is an eight-story bank under construction. There are no cranes or cement trucks or other heavy machinery that one might expect to see at a construction site. There is only scaffolding--not metal scaffolding, but scaffolding made of single bamboo stalks tied together. A worker would have to balance eight stories in the air on a single stalk of bamboo. In addition, the top of the building has exposed rebar sticking out the top of the building. This is apparently so that the bank can add onto the building after it has been constructed.

Further along on our journey, the taxi comes to a screeching halt. A gigantic pothole—probably two feet deep, 8 feet wide, and 10 feet long—blocks the left lane of the two-lane road on which we are traveling. The driver tries to creep around it on the right-hand side, but there is traffic in the oncoming lane. I am jostled in my seat as the front left tire slips into the pothole. The oncoming lane of traffic clears, and the driver pulls out of the pothole, the underside of the taxi grinding on the edge of the asphalt.

As I glance in the back seat to see Stephen and Kathryn sleeping through the commotion caused by the pothole, Babor says, "They sleep silently." He continues, "Like the sign, 'Sleep silently. Nobody will repeat it.' at Hiroshima and Nagasaki." I fail to comprehend how that came to his mind.

The taxi driver makes a right turn into the area designated EPZ. There are numerous factories on both sides of the road. There is a sign advertising the FedEx office of the EPZ. Before we arrive at Grameen Knitwear, a gigantic puddle blocks our path. The water of the puddle is pitch black, like something out of a bad horror movie. I ask, "Babor, why is the water black?"

"It is the dyes from the factories. Most probably, the rain makes them flood the street."

"That is not very good for the environment," I reply.

"No. It is very bad," says Babor.

After getting clearance from the guard that the puddle is not too deep to drive through, the taxi driver pulls into the Grameen Knitwear driveway. We exit the taxi and enter the front door of the factory. We are greeted by several Grameen Knitwear executives and are escorted into the manager's office. Mr. Choudhury introduces himself and calls for an assistant to bring us food and water.

Mr. Choudhury begins to detail the operations of Grameen Knitwear, while the assistant serves us grapes and crackers. As with all factories in the EPZ, 100% of the products produced here are exported. No pieces are sold in the country. 60% of the factory's products are exported to Germany, 30% to the rest of Europe, and 10% to the United States. Mr Choudhury tells us, "We just started to export to the U.S.A. Hopefully, this number will increase day by day." The lack of diversification in the countries to which Grameen Knitwear exports its products could present problems for the company.

Producing t-shirts, polo shirts, sportswear, and sweatshirts, Grameen Knitwear employs 2,850 people, 150 as executives and supervisors and 2,700 as line workers. Unskilled laborers earn a monthly base salary of 3,000 taka ($44.11), while skilled laborers earn 5,000 taka ($73.52). With overtime hours paid for days longer than eight hours, wages can reach 4,500 taka ($66.18) and 6,800 taka ($100), respectively. While this sounds like an inhumane wage, the minimum required base salary for factories in the EPZ is only $30 per month, or 2,040 taka. Grameen pays wages substantially higher than the minimum. Outside the EPZ, garment factories often pay wages as low as 1,500 taka per month.

In addition to higher wages, Grameen Knitwear offers its employees other benefits. Knitwear hires 26 buses to transport workers to and from the factory. Additionally, Grameen provides education and childcare for the workers' children and operates free health clinics for the workers. If a worker is injured on the job, Grameen pays 100% of the worker's treatment. Furthermore, injured workers unable to perform a job are not fired. For example, if a loader injures his leg on the job and finds it difficult to lift upon returning, he is shifted to a different department, like storage, where he might be responsible for taking inventory.

The Grameen Knitwear factory has the capacity to produce from 25,000 polo shirts to 35,000 t-shirts per day, depending upon the complexity of the product to be produced. A polo shirt sells for approximately $6 US, a t-shirt for $3 US. At capacity, Grameen Knitwear could generate $105,000 daily revenue if producing t-shirts and $150,000 daily revenue if producing polo shirts. Assuming that the factory is operational at 100% capacity for 252 days per year and produces only t-shirts (the lower total revenue), Grameen Knitwear would earn $26.5 million gross revenue. In reality, Grameen Knitwear generated $19 million in annual revenue for the last fiscal year and operated with a 7-8% profit margin. Because Grameen Knitwear generates only $19 million out of a potential $26.5 million revenue, the factory is at best utilizing only 71.7% of its capacity. Grameen Knitwear could potentially generate much higher revenue and operate at a higher profit margin were it able to expand its export markets and operate at a higher capacity.

Grameen Knitwear is Grameen's only for-profit business but is jointly owned by two social businesses, Grameen Kalyan (well-being programs for Grameen members) and Grameen Fund (venture capital for small enterprises that benefit the poor). In this way, Knitwear provides funding for Grameen sister companies that directly serve the poor and is basically a profit-generating business activity of two nonprofit organizations. Grameen Knitwear also provides, relatively speaking, high wages with strong employee benefits.

After Mr. Choudhury provides the details of Grameen Knitwear's operations, we take a tour of the factory. The ground floor houses the heavy capital equipment and has little human activity. Each person monitors approximately three gigantic machines that knit, dye, and wash the all of the fabric used in the production of Grameen Knitwear garments. The effluent from the fabric dyeing and washing is pumped outside the building to a waste treatment facility also housed on the ground floor. Walking through this maze of pipes, pumps, and tanks, I see that there are no leaks and no overflow. Hopefully, Grameen Knitwear is not responsible for any of the black water in the large pond that obstructed our entrance to the factory. I am surprised to see that, amidst the massive metal fixtures, there are several planters in which flowers are growing.

We move back inside the building and ascend the first flight of stairs to the second floor. Huge shelves store large quantities of fabric rolls and bundles representing every color of the rainbow. On the other side of the room, there are 60-foot-long tables upon which the fabric has been unrolled and stretched. Standing beside and kneeling on top of these tables, approximately 100 employees measure and cut all of the fabric for Grameen Knitwear. With each cut, an employee saws through 60 to 100 pieces of fabric. The cut fabric is then moved upstairs for sewing, while the scrap fabric is collected and sold to a factory that reconstitutes it into yarn.

Upstairs, we see the sewing room. Thousands of employees in over 60 production lines are seated barefoot at sewing machines. The size of this sewing operation is massive. Images of sweatshops producing garments for Kathy Lee Gifford's fashion line spring to mind. As we walk through the aisles between production lines, Kathryn leans over to me and says, "So this is where my clothes come from. I'm not sure I will be able to buy clothes ever again."

The employees engaged in the sewing of fabrics do not look tortured or agonized, but they certainly don't look happy. There is a drone-like look upon their faces. While they are not machines, perhaps it is easier for them to make it through the day if they sew without thinking. I think back to our visit to the slum schools and am saddened that many of the children who dream of being doctors, teachers, and army men will likely end up in a factory like this one, suffering less humane conditions, lower wages, and few (if any) benefits. As we reach the end of the production line, I see the finished product, a black shirt that reads, "I'm just not sweet." The irony was not lost upon me.

We walk past six more production lines before we come to the next product, a shirt that reads, "It's all good in the hood." Babor reads this shirt to us. His Bengali-accented English reading such a phrase is wildly comical and, for which I am thankful, lifts me from my reminiscence of the slum school. Walking down production line number 25, we stop briefly to speak with a beautiful young woman named Nasina. Twenty years old, Nasina was married at 14. Her husband works six rows over on production line 19. They earn 3,800 and 5,000 taka per month, respectively, for a monthly household income of 8,800 taka (~$129.41). Hearing this, I feel guilty for earning $250 per day for engineering live concert sound (a job that I truly love), while half a world away these poor people toil away at a job with little satisfaction to earn little more than a penny to my dollar.

We ascend the flight of stairs to see the ironing, folding, and packing room. Here, one table of women is ironing the clothes, while another table is folding them, while another table is packing them. More mindless, monotonous labor. There are boxes of packed clothes on one side of the room. On the boxes are pictures of gorgeous white models smiling shiny white smiles while they wear the shirts made by the poor people in this factory. The German words on the box mean nothing to me, but the 10.99 € price tag means much. Well over half of the revenue generated by the retail sale of these garments is being earned by the companies that import the products made here. If 30,000 of these shirts are made in a day, then each of the 2,700 line-level employees daily makes a little more than 11 shirts, representing over 120 € worth of retail value, while they earn approximately 2 € for their daily work.

I remember that Grameen Knitwear pays its employees more than the minimum amount required and offers benefits. As the garment industry represents 75% of Bangladesh's gross domestic product, there are certainly other factories that offer their workers worse conditions, pay, and benefits while generating more revenue off the exploitation of cheap Bengali labor. I also realize that without the garment factories, many Bengalis would be unemployed or working more hours for less pay under more grueling and dangerous conditions as a rickshaw driver or a construction worker. While the employees of Grameen Knitwear seem to have it bad, many in Bangladesh have it much worse.

We exit the manufacturing part of the plant and go back to Mr. Choudhury's office. He asks if we have any questions. Stephen, interested in importing several thousand units of Grameen Knitwear to France, asks about the minimum order size, the amount of shipping those 10,000 units, and the duties and export taxes he would have to pay. After answering these questions, Mr. Choudhury gives two garments each to Kathryn, Stephen, and but only one to Babor.

Leaving the factory, the rain has abated, though the black puddle remains. The taxi ride back to the Grameen head office is as humorous as the ride there. Babor makes jokes about receiving only one garment while Mr. Choudhury gave us two. "I am poor Bangladeshi beggar. Give me only one piece. Give the foreigners two." We all laugh—myself, to keep from crying at the injustice of the Bangladeshi garment industry and the world at large. Could we afford our abundance in America were it not for the poverty of other parts of the world?