Foreign Affairs Committee on May 28th, 2013

[Paul Dewar, NDP, Ottawa Centre, ON]

Okay.

Mr. MacDonald.

[Prof. Chris MacDonald]

The ability of embassies to affect local goings-on is probably one of the oldest problems in the history of foreign affairs. It's a good example of how it's going to depend a lot on local circumstances. Some embassies are very well placed and have very good relationships and are going to have a lot of influence. In other situations, I suspect that's much less the case.

Again, this points to another obligation for companies, which is to get to know your local embassy in addition to the ways you already do to find out how they're going to be useful in these kinds of matters.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you very much.

[Bob Chant]

The department has been extremely helpful now because they are the people on the ground. That's one way they have made a very positive contribution.

[The Chair, Conservative, Dean Allison]

Thank you.

Thank you, Mr. Dewar, Mr. Chant, and Mr. MacDonald.

Now we're going to turn it over to Mr. Dechert for seven minutes, please.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for being here and sharing your thoughts with us.

Mr. Chant, you recently returned from Bangladesh. Can you tell us in some detail what you saw there generally in manufacturing facilities, and in particular where this terrible tragedy happened? Tell us what you think about the local working conditions, and elaborate on what kind of assistance the Government of Canada gave and could have given in that kind of situation. Tell me also, if you can, about what you think the Bangladeshi government's obligations are under both domestic law and the International Labour Organization standards, and whether or not you think those are being met.

[Bob Chant]

That's a multi-pronged question, so bear with me.

I've travelled in that part of the world to a certain extent, so I wasn't particularly surprised by what I saw. My immediate reaction was what I expected, which was very high-density populations. There are a lot of people in a very small area. That's true for the entire country. I heard, over and over again, that one of the biggest challenges is that property is either extremely expensive or difficult to acquire, and therefore you get expansion this way, not this way. People were expressing that to me in explaining why this particular facility had been built the way it was and why that seems, not to be a common thing but something that happens regularly.

I did not visit the site of the tragedy. My colleague did. By the time we were there, to be honest with you, most of the reclamation had occurred. But he did visit the Centre for the Rehabilitation of the Paralysed in Savar, which is the hospital I was speaking to. He was very moved by the work that was being done, by the visits he had with people who were severely injured. My immediate thoughts go there.

As I mentioned in my opening remarks, virtually every person I spoke to, whether it was in the Bangladeshi government or industry, NGOs, whoever I was talking to, all asked us not to leave, or congratulated and thanked us very much for not withdrawing because that would be the worst thing we could do. They also said, some of them on the side, that the Government of Bangladesh is not capable of solving this problem on their own. Industry has to step up. We have perhaps the best opportunity to exert influence on the factory owners and the industry on the ground there to ensure very quick action is taken.

If you look at the terms of the accord, the inspections would take place during a fairly lengthy time period. Our company has decided we're going to undertake inspections, including building integrity inspections, hopefully in 60 days, at maximum 90 days, so we will be able to provide that information to the accord, the group, and that information will be transparent. If the 40 members of the accord act that quickly, we should get most of the factories inspected, and at least identify the high-risk challenges.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

I'm glad you mentioned the accord because I did want to ask you about that. Is there anything else about the specific details of the accord that you want to tell us? Do you think those measures—I assume you do—would ensure that such an event as this wouldn't happen again?

Let me ask you one other question, and I want both of you to answer the question if you can. Do you think the Government of Canada can facilitate the building of capacity within the Bangladesh government and other similar kinds of governments in terms of enforcing the laws they already have on the books?

Mr. Chant, you mentioned they have pretty good laws if you read them. We have seen this in other countries where they pass the laws, but then they don't enforce them. Largely that is because they don't have the capacity or expertise to do so. That's perhaps something that Canada could provide. What do you think of that idea?

[Prof. Chris MacDonald]

I don't know the Bangladeshi government well. I do know it's a troubled place. I know they have serious corruption problems. When the corruption rankings come out, Bangladesh is not at the good end of the scale. So there's only so much you can do under that set of circumstances. But I think given our trade relationship with Bangladesh, it seems like something that's worth some pretty serious high-level conversations, if for nothing else but to illustrate what the economic and ethics literature says over and over again, which is that corruption is bad for your economy.

It's not like regrettable labour conditions that you may put up with because it helps to grow your economy. Corruption does not grow anyone's economy. Everyone should be on the same page about that.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

We have laws on that.

Mr. Chant, would you like to comment?

[Bob Chant]

I certainly wouldn't disagree with that. I would add though.... I will read the document that was given to me by the chief inspector when I walked into his office during our visit. “The Department of Inspection for Factories and Establishments is under the Ministry of Labour and Employment and it was established in 1970. The present sanctioned posts of the department is 314”, which I read as there are 314 positions. “However only 181 are acting in different offices in the country” so I think only 181 are filled. “Among the sanctioned posts only 103 are factory inspectors, but now 51 factory inspectors are functioning.”

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Can you provide a copy of that to the committee?

[Bob Chant]

Yes, I absolutely can. I have a bit of handwriting on it but I'd be happy to.

He said that and then he looked at me and said he had 51 inspectors. Two of them were there talking to him right then—they were sitting beside me—and none of them have a vehicle. He told me he had a vehicle but none of them had vehicles, and apparently his vehicle wasn't in great running condition.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Sorry, I'm running out of time and I want to quickly ask Mr. MacDonald a question.

Mr. MacDonald, you wrote an article on May 17 that addressed the Accord on Fire and Building Safety in Bangladesh, but you argued in that article that it might not be in the best interests of companies or their employees. Can you elaborate on that a bit?

[The Chair, Conservative, Dean Allison]

We're out of time so a quick response, Mr. MacDonald.

[Prof. Chris MacDonald]

I just wanted to open up the possibility that for some companies it might make sense. I wasn't arguing against the accord, but I was saying it might be reasonable for companies that feel like they have the right kind of command over their supply chains and the right kinds of local capacity to go their own way. That's all.

[The Chair, Conservative, Dean Allison]

Thank you.

Mr. Rae, you have seven minutes.

[Bob Rae, Liberal, Toronto Centre, ON]

Thank you, Mr. Chairman. I think this is a very important discussion. I hope both of you would agree with me that the internationalization of production is a fact of life.

Mr. Chant, you mentioned the number of people who told you they wanted you to stay. You are not a charitable institution, you are a business organization, and you said you're staying because people want you to stay. I would suggest you are also staying because that's how you are able to manufacture and market your products at a price that you feel Canadian consumers are ready to pay and that your competitors are also charging.

If Joe Fresh shifts its production somewhere else and it ends up costing consumers twice as much to buy a Joe Fresh product, you're going to have a hard time selling it. Isn't that right?

[Bob Chant]

Fair enough, but I wouldn't necessarily agree with your assumption or your proposition that it's the only choice we have. We source from a dozen countries. We don't source from hundreds, but we source from a dozen countries. It's a very competitive industry. There is no question that price is a significant component to that. I would say however that the quality of garment from Bangladesh is very good. So the combination of the two is where the magic is in this case. It's not just price or the cost of doing business in Bangladesh that's keeping us there.

There was a very healthy discussion within our organization before this tragedy occurred—I participated in one after—about whether or not we should in fact stay in Bangladesh.

[Bob Rae, Liberal, Toronto Centre, ON]

Well, I'm interested in this question, and I really do think it's important for Canadians to try to come to grips with it, because for a long time we've been in a state of denial collectively about where this suit is made, where this product is made, and what the conditions are under which they're made. For a long time everyone argued that we should try to get as much production in Canada as possible. In the last 50 to 60 years, clearly, almost our entire clothing and textile industry has left the country. We now have to say, “Well, we have no choice but to follow the supply chain.”

You made the decision to stay in Bangladesh even though you should have known that there were only 51 factory inspectors and that only one of them had a car. I mean, you make a decision as a company to say, “We're going to stay there anyway.” Presumably—I'm asking the question—has this event.... Obviously, it has forced you to take, or you have taken.... I commend you for the actions you've taken. I'm not being critical of that at all. I think they're essential.

I think you're to be commended for showing leadership, and I disagree with those critics. I think Mr. Corcoran in the National Post was taking a shot and saying that this isn't the way to do business.

[Bob Chant]

Mr. O'Leary, I think.

[Bob Rae, Liberal, Toronto Centre, ON]

Mr. O'Leary. Sorry, I take it back.

He said it, too, I think, but I don't want to cast aspersions on anyone.

But there is a philosophical view that says companies are not about exercising social responsibility, they're about making money in the most efficient way possible. If that means shifting production to other countries, so be it. This event presumably has changed.... As Paul has said, and I think quite rightly, this is an historic tragedy, because it forces everyone to look long and hard at what it means to be a global player today in terms of where we get our products and how we get our products.

Gildan has made one decision. They've said, “Wherever we go, we're going to make our own.” Your company seems to have made another decision, which is that you're going to continue to work with local suppliers, but that places an even higher burden on you to ensure that the production conditions and the conditions under which products are made are up to a standard that you can live with and that Canadians can accept.

That's for both of you.

[Bob Chant]

I'll try to be brief.

First of all, we are a grocer, primarily, and the apparel business is part of our business. It's not the main part of our business. Our approach to product procurement is that we source from vendors—not produce it ourselves—in almost all cases. That's our overall approach.

We were shaken to our core, I would say. We take this very seriously and I think are responding accordingly. As I said, and this isn't to share blame, the industry did not think to inspect for building integrity. We don't do it in developed parts of the world and even in developing parts of the world. So this is new, and unfortunately it required something of this magnitude to get us to collectively act, but it's on the radar now, and as quickly as we can get this fixed, it will be fixed.

But it is going to take some time and it is going to take the collective efforts of everyone: labour, government, business, NGOs, everybody. The Canadian government, the Bangladesh government, the U.S. government, the British government, everybody.... But I firmly believe, having chatted with I think everybody who we possibly could have talked to over there, that we can solve this and in fairly short order. The political situation in Bangladesh, the social conditions, and the culture there are an enormous challenge, but I think it can be addressed.

[Bob Rae, Liberal, Toronto Centre, ON]

Thank you.

Do you want to comment on that, Mr. MacDonald?