On April 24, 2013 an eight-story building called Rana Plaza collapsed and killed an estimated 1,129 people, most of whom were low-wage garment factory workers manufacturing goods for foreign corporations such as fast-fashion giant, Hennes and Mauritz (H&M). In the period following the tragedy, companies that outsourced their garment production were facing public pressure to eliminate sweatshops and were also encouraged to promote workers rights. By focusing on giants like H&M, negotiators hoped that by bringing the larger corporations onboard that the other smaller firms would follow suit. Negotiators for each side worked towards a mutually beneficial solution, however, ultimately the United States and European companies made separate negotiated agreements rather than a unified agreement. This case study offers an opportunity for negotiators to understand the pros and cons of all-inclusive, diffuse agreements versus targeted, specific agreements
Bangladesh Factory-Safety Agreements
On April 24, an eight-story building in Bangladesh known as Rana Plaza collapsed, killing an estimated 1,129 people, many of them low-wage garment workers who made goods for foreign companies.
In the weeks after the disaster, apparel outsourcers faced mounting public pressure to address hazardous conditions in the factories where their goods are manufactured. Labor unions focused their efforts on persuading Swedish “cheap chic” giant H&M to take the lead on safety improvements. “Get H&M on board, the thinking went, and others would follow,” wrote Liz Alderman in the Times.
Negative publicity marked a tipping point for H&M. The company signed on to an agreement that would require Western retailers to invest in improving the safety of foreign workers. Once H&M was on board, other European retailers began to follow suit.
On July 8, a European consortium of 70 brands unveiled its legally binding agreement. The group committed to inspections of the garment factories of members’ Bangladeshi suppliers and developing a plan to correct any safety problems.
Just two days later, a group of 17 North American retailers (including Walmart, Gap, and Target) announced its own plan for factory safety in Bangladesh, centered on raising funds for safety improvements. The signatories’ promises are not legally binding, and the burden falls on factory owners to improve safety. Labor groups immediately panned the North American agreement, saying it lacks the accountability of the European version.
The lead negotiators of the European agreement could have decided to water down their agreement to keep the Americans in the fold. Instead, they chose to stand by their core principles, and the Americans splintered off. In your own talks, weigh the pros of an all-inclusive, more diffuse agreement against the benefits of a smaller, more targeted one.
1. If you were a Bangladesh garment factory worker who survived but was hurt, how would you negotiate with the company to pay for your medical expenses? Explain in your own words.
2. If you were a negotiator for Hennes and Mauritz (H&M), after reading this scenario, how would you negotiate with the owners of the Plaza? Explain in your own words what you would say and how would you approach them?
3. If you were a negotiator for the owner of the Rana Plaza, how would you negotiate with the companies? Explain in your own words.