Skip to comments.What does that $14 shirt really cost?
Posted on 05/04/2013 4:32:40 PM PDT by rickmichaels
Before last week, Loblaws Joe Fresh was known mostly as a hot spot for cheap, stylish clothing. Few customers likely cared how the clothes were made. That all changed with the deadly collapse of an eight-storey factory complex used by the retailer in Bangladesh. Nearly 400 people are dead, and the owners of the complexand the factories within itthat was reportedly built without proper permits, have been arrested on charges of negligence. Bangladeshs government has vowed to inspect every manufacturer in the country.
The worst industrial accident in Bangladeshs history offers an uncomfortable glimpse into the fast-growing garment industry there, and the treatment of its workers. According to a 2011 report by the consulting firm ORourke Group Partners, a generic $14 polo shirt sold in Canada and made in Bangladesh actually costs a retailer only $5.67. To get prices that low, workers see just 12 cents a shirt, or two per cent of the wholesale cost. Thats one of the lowest rates in the worldabout half of what a worker in a Chinese factory might makeand a major reason for the explosion of Bangladeshs garment industry, worth $19 billion last year, up from $380 million in 1985. The countrys 5,400 factories employ four million people, mostly women, who cut and stitch shirts and pants that make up 80 per cent of the countrys total exports.
For that $14 shirt, the factory owners can expect to earn 58 cents, almost five times a workers wage. Agents who help retailers find factories to make their wares also get a cut, and it costs about $1 per shirt to cover shipping and duties. Fabric and trimmings make up the largest costs65 per cent of the wholesale price. Toronto-based labor rights activist Kevin Thomas says wages ultimately get squeezed most because businesses can easily control them, unlike the price of cotton or shipping.
A cost breakdown only partly explains the maze of relationships in the garment-supply chain. The retailer H&M, which had no connection to the collapsed building, works with 166 different factories in Bangladesh. It has published its supply chain, listing every factory around the world that makes H&M clothing in an effort to prove what most major stores claim: that it knows where its clothes come from. But according to observers, many dont. Though most brands have a regular stable of factories, they may contract hundreds more for short stints. It would be a very high risk to have a limited number of suppliers, says Adriana Villaseñor, a senior adviser with the global retail consulting firm, J.C. Williams Group. Smaller factories often take on more than they can produce, Thomas says, and then subcontract later onwithout the retailers knowledge. This week, Wal-Mart said it had no authorized production in [the collapsed] facility, but added that if unauthorized production were discovered, it would take appropriate action.
Amid mounting protests, both in Bangladesh and abroad, and calls for boycotts, retailers have pledged to improve working conditions. Primark, a U.K. chain that made goods in the ruined factory, and Loblaw Companies Ltd., have said they will compensate victims families. But Bangladesh is just one country in a vast supply chain. H&M, for instance, uses hundreds of other factories, including 262 in China. In Vietnam, workers make only slightly more than in Bangladesh: 14 cents per shirt. Real reform will mean paying a lot more than $14 for a shirt.
Ironically, it's automation that's driving this, not labor costs. When a business of any kind becomes dominated by automation, then access to cheap/reliable power becomes far more important than access to cheap labor. In North America, a lot of this "near-shoring" has been driven by the plummeting price of natural gas in recent years.
Interestingly, the Chinese government saw the folly of their ways when being linked to the U.S. dollar became a BAD thing as the dollar declined against other world currencies. When the global price of oil (priced in U.S. dollars) escalated dramatically after 2005, the Chinese found themselves paying exorbitant prices for oil simply because the dollar lost a lot of its value.
Our operations involve animal management, botany, geology, microbiology, forestry, hydrology, construction, engineering... It is a type of work for which robots are spectacularly unsuited: too dirty, difficult terrain, distances from energy stocks too large... I don't care how much GIS information they have, it will never be enough and cannot be processed by any algorithm with certainty (although there is a huge need for better locational information aps). The critical needs for proximity and site familiarity defeat the very idea of central command and control. It is a new industry, with a huge demand for tool and process development including sensor and information processing, automated contract management, manufactured equipment ranging from weed bags to autonomous walking houses, portable food production, and composting units, etc.
Soil is everything to the continuity of civilization. It is time to rebuild a planet full of life. And what do you know but I own the first patented business method for free-market environmental management! (like I'll ever see a dime from it, but at least they can't do it now).
Anyway, that's the gist of it, with the side benefit that a large, distributed, and independent population is immune to tyranny and a bulwark of civil defense for the settled population. All of that's Biblical btw, a new book that is still in rewrite.
The way I see it, the yuan-dollar link became much more tenuous once the governments of China and Australia announced a few weeks ago that they would conduct their trade directly rather than use the U.S. dollar as a medium of exchange. This basically means that for those transactions between China and Australia, there is no bearing on the value of the U.S. dollar anymore.
Look this is the next big battle.
China is now the world’s predominant exporter. America is number two.
China is growing at 7%.
We are doing nothing.
We must stop this, and find a way to turn this around. Or we are finished.
Bring back AMERICAN jobs. Now.
Don't use facts about WalMart. Some guy will say everything he saw in the store was made in China, like he looked at all 140,000 (more?) SKUs.
He has a personal interest? Please explain further.
I still buy Egyptian cotton sheets and pillow cases in high thread count. Why? Because we do not need that many sets of sheets and pillow cases plus we like them. I would pay more for made in USA “if the quality was like up to 1960-70 or so. Unfortunately, I have had my fill of the American workers work ethics and total lack of pride in their work with the exception of a plumber or an HVAC type or so. Anyone who owns a house knows how damn lazy most of these white boys are today. I am ashamed of them as I worked construction every summer when in high school. These 20-30 years olds will not leave the damn bar to paint, mow a lawn, or do anything to make money. They’d rather steal and/or draw Gov bennies.
And most likely machines would do the work. Yes, they would need some workers.
Obamacare is the end to any hope of more jobs.
You paint with a very broad brush, take a dim view of your countrymen and even introduce race into it.
There are far more Americans who work their @sses off and take pride in their work than there are dysfunctional substance abusers willing to work temporarily in construction for the artificially depressed wages paid to modern-day Coolies to build shoddy houses formerly sold at inflated prices, then go back on unemployment.
Shoddy construction is not limited to lazy white boys, I can tell you that much with certainty. Shoddy construction is, however, accepted by lazy and even corrupt contractors who are mostly white boys, because it’s more profitable to use idiots and green foreigners to slap it up than it is to use skilled labor.
Bring back US jobs now.
We have been exporting our very means of national support now for 2 (or 3 even) decades.
We have now made China a bigger manufacturer, than America. China, with over a billion population, and a communist government, now has an unemployment rate which is what ours USED to be.
China is now growing at 7%.
China is taking over. While we complain.
QUIT COMPLAINING. We need jobs.
I don't think there's any logical connection between our trade policies and rapid Chinese growth. Half the countries in the world have lower salaries than China. Why aren't they all growing at 7%? India's and Egypt's per capita GDP have been growing in the low single digits for decades, and they've had the same access to US markets for the past 30 years.
Ultimately, the Chinese economy is growing because the regime has abandoned the command economy in favor of private producers using the profit motive as the primary criterion for deciding what to produce and how much of it to produce. They are privatizing formerly wholly-state owned companies just about as quickly as they can. Government regulation of private business is almost wholly non-existent, sometimes to the detriment of an unlucky few until some major outrage hits the headlines.
We can't prevent China, or any country that wants to, from modernizing because they can buy the expertise by hiring current, laid off or retired employees from every corner of the earth. Because Japan is close by, they are putting up ads in Japan and hiring plenty of retired contractors and employees from the keiretsus who are either bored or looking for extra income. Sophisticated American or European machine tools are available for purchase complete with training personnel to familiarize the buyer with the full capabilities of the equipment.
Show me any white boy 20-35 doing any real roofing. Yes,I see fellow caucasian’s types working their asses off in convenience stores, and; in fact, some have three jobs.
You are talking about the exception-not the norm. Join a union. I would not hire you based on attitude.
Thanks for your detailed response.
I think it is time to be tougher with China.
We need an equal system. Right now we have one-way everything.
One-way American jobs sent to China. One-way Chinese exports flooding American stores.
That won’t work. We are running out of options.
Just my .02.
(The GOP is just as involved in this as the Democrats BTW)
We need someone who will look out for America.
Exactly. China has taken our capitalism market without all the left wing Regs and taxes plus Obamacare. Those who think this country is going to bring back jobs are delusional. Obamacare is going to cost many more jobs or hours lost. Many business owners will cut work to 28 hours and pay the $2000 fine.
Sort of. The Chinese gov't has tried to keep a more or less stable exchange rate with mixed results:
--but if we really want call that 'pegged' then we need to decide which peg.
In contrast here's a list of 17 countries whose currencies have been pretty close to a dollar or a multiple for much longer time periods, and here's ten more countries that just use dollars period. No matter what you might hear on this thread from the hyperactive set, I had nothing to do with it...
Do you write comedy for a living. LOL.
Let me guess: you’re an itinerant roofer picking up “day labor” out of the Home Depot parking lot and paying them cash under the table?
Good luck to any company that has you in an actual hiring capacity, they’re going to need it.