VZCZCXRO7994
PP RUEHBI RUEHCI RUEHHM RUEHJO
DE RUEHKA #1365/01 0731059
ZNR UUUUU ZZH
P 141059Z MAR 06 ZDK
FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC PRIORITY 6078
INFO RUCNCLC/CHILD LABOR COLLECTIVE
RUEHIL/AMEMBASSY ISLAMABAD 1020
RUEHNE/AMEMBASSY NEW DELHI 8950
RUEHLM/AMEMBASSY COLOMBO 7348
RUEHKT/AMEMBASSY KATHMANDU 8433
RUEHLO/AMEMBASSY LONDON 1399
RUEHKO/AMEMBASSY TOKYO 1023
RUEHUL/AMEMBASSY SEOUL 0233
RUEHMD/AMEMBASSY MADRID 0018
RUEHCI/AMCONSUL CALCUTTA
RUEHIN/AIT TAIPEI 0059

UNCLAS SECTION 01 OF 03 DHAKA 001365 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB ETRD PGOV BG
SUBJECT: MANAGEMENT ACCEPTS UNION; BUYERS PLEDGE INCREASED 
ORDERS 
 
DHAKA 00001365  001.4 OF 003 
 
 
¶1. (SBU) Summary: After management fired a newly formed 
union's members, corporate social responsibility compliance 
agents, trade groups and labor organizers successfully 
negotiated the reinstatement of fired workers and union 
officers.  Shortly after the settlement, buyers tripled the 
garment orders for the factory.  The American Center for 
Labor Solidarity (ACILS) and their local NGO labor partner, 
BIGUF, played a vital supporting role in the bargaining 
process. End summary. 
 
A UNION FORMS 
============= 
 
¶2. (SBU) In autumn 2004, the workers at the Bangladeshi-owned 
Intersoff Clothing factory established a new local level 
union: the Interstoff Clothing Limited Workers Union (ISCL), 
representing 400 workers at a factory in Gazipur, located 45 
kilometers outside of Dhaka. In the Bangladesh garment 
industry, where labor is considered plentiful, the 
establishment of a labor union outside of the Economic 
Processing Zones (EPZ) was newsworthy.  However, soon after 
the establishment, according to labor organizers, Intersoff 
management began to harass workers, and dismiss union 
officers and workers who supported the union. Local 
Bangladeshi labor organizations, including the American 
Center for International Labor Solidarity (ACILS) a.k.a 
Solidarity Center, and one of its local partners, the 
Bangladeshi Independent Garment Union Federation (BIGUF), 
supported the members of ISCL from the beginning. 
 
¶3. (SBU) By October 2005, as negotiations came to a halt, the 
ISCL membership contacted the brands, buyers and the Ethical 
Trade Initiative (ETI), a corporate responsibility 
association to which the brands, Zara, Mothercare, and Tesco, 
belong.  Zara is part of the Spanish Inditex group marketing 
internationally several brands of fashion clothing; 
Mothercare, a UK based company specializing in maternity 
clothes selling primarily in the UK, and TESCO a retail chain 
based in the UK.  According to ACILS, other buyers from 
Interstoff owner Shahriar Alam other factories include Marks 
and Spencer, and Sears. 
 
¶4. (SBU) On March 6, after several rounds of negotiations, 
management, buyers, and labor came to an agreement which 
reinstated the ISCL as the union representing the factory 
workers and reinstated the dismissed union officers. Factory 
owner Alam told laboff he enjoyed a positive experience, and, 
according to those present, in a tearful statement welcomed 
back the workers. Solidarity Center Country Representative 
Rob Wayss told laboff, that while the threat of buyers 
canceling orders was always present, the atmosphere was a 
positive one, the buyers concentrated on the prospect of 
increased orders. 
 
¶5. (SBU) Shortly after the settlement, buyers announced they 
would increase orders with Intersoff Clothing from $500,000 
to $1.5 million, as well as increase orders at the owner's 
sister factory Interstoff Apparel, which employs 1500 
workers.  Buyers eagerly supported the termination of the 
dispute, and according to Bhatia, plan to make Interstoff a 
key supplier. 
 
DID IT HAVE TO HAPPEN? 
====================== 
 
¶6. (SBU) Laboff spoke to one of the mediators Lakshmi Menon 
Bhatia, who wears several labor hats: Corporate Social 
Responsibility (CSR) Compliance Officer for the GAP, Board 
Member of the Multi-Fiber Arrangement Forum, a trade group 
aiming to ameliorate potential country job losses due to the 
end of MFA quotas, and Executive Committee member of the 
Ethical Trade Initiative, a trade group who responded to 
ISCL's plea for assistance. 
 
¶7. (SBU) Initially, Bhatia said the owner/manager of the 
factory welcomed the union.  Factory owner Alam told laboff 
that while he thought the union was not needed, "at the end 
of the day, it's the workers' call." Despite this positive 
outlook, soon the relationship deteriorated.  "There was a 
huge divide based in part by the Bangladesh susceptibility to 
 
DHAKA 00001365  002.2 OF 003 
 
 
conspiracy theories," she said.  Deep down inside. many 
factory owners believe that the post-MFA changes and union 
organizing efforts are part of a foreign conspiracy to 
destroy Bangladesh textile industry.  In this context, she 
said, labor relations and the initial goodwill swiftly "went 
downhill." 
 
¶8. (SBU) The owner, Shahriar Alam, started his garment 
business 12 years ago, and opened this factory six years ago. 
 Alam, a dynamic 35 year-old man, is involved in his 
community as President of the Bangladeshi Hockey Association 
and other sports associations.  He told laboff that he always 
tried to do the most for his workers, including establishing 
a private retirement, and holding periodic labor-management 
meetings.  However, when the union first started, a lot of 
the demands were "over the top." Bhatia commented that 
perhaps the union changed the relationship causing Alam to 
feel "betrayed at an emotional level." Alam told laboff that, 
"you don't get a lot of experience in the export community on 
how to deal with unions." 
 
¶9. (SBU) Other textile business pressures in the post-MFA era 
increased the owner's fears.  Bhatia cited demands by buyers 
for lower prices, increased quality standards, and more 
audits.  She said that many owners she speaks to constantly 
raise the question, "but what about China?" when buyers ask 
for lower prices, increased quality and more CSR audits. 
 
¶10. (SBU) In that context, management fears increased, she 
said, when factory owner Alam heard that buyers and the 
brands were concerned about the labor problems, and suspected 
a Solidarity Center local labor union, the Bangladesh 
Independent Garment Union Federation (BIGUF).  The owner 
thought that BIGUF helped contact the brands as the "letter 
was in almost perfect English."  The brands TESCO, INDITEX 
and Mothercare sent mediation/representatives from Spain, 
Peru, and Scotland, as well as International Textile, Garment 
and Leather Workers Federation General Secretary Neil Kearney 
to lead the negotiations for an agreement. 
 
THE NEGOTIATIONS 
================ 
 
¶11. (SBU) The first round of negotiations started in 
mid-February, according to Bhatia, and ended on a sour note. 
After the first day of emotional outpourings, when labor and 
management accused each other of "rudeness" with a lot of "he 
said, she said" exchanges, the second day ended with hardened 
and hurt feelings. Bhatia said that discussions started and 
broke down several times, and ended when laborers realized 
that management was attempting to divide the workers amongst 
themselves.  Asked if the workers had become emboldened by 
their ability to call in international support and therefore 
less able to compromise, Bhatia said that the buyers and 
Kearney took great pains to instruct the workers that the 
negotiations were really a chance for a "new beginning" with 
management. 
 
¶12. (SBU) The second round of negotiations, aimed at 
restoring trust between the groups, was conducted using 
"separate room diplomacy" with the international team 
shuttling between labor and management.  After a total of 27 
hours of actual contact time, a mutually acceptable proposal 
was developed.  Among the conditions, accepted by the owner, 
was a month-long training program in industrial relations for 
workers and managers.  According to Bhatia, Alam wanted an 
"attitudinal shift" for both labor and managers in their 
relationship.  He especially wanted "to strengthen 
management's ability to conduct industrial relations," she 
said. 
 
LESSONS LEARNED 
=============== 
 
¶13. (SBU) Asked about the whole experience, Alam said that, 
"The negotiations were difficult, but I hope my patience 
won't run out next time."  I like solving problems, he said, 
adding that when the negotiations broke down, "I listened 
when ETI offered up the idea of a month-long industrial 
relations training that might solve future problems before 
 
DHAKA 00001365  003.2 OF 003 
 
 
they start." 
 
¶14. (SBU) "But really, this did not have to happen," Alam 
told laboff, "there was really no problem."  However, other 
labor activists told laboff they disagreed, saying that 
labor-management relationships in Bangladesh still need time 
to mature.  Nonetheless, Bhatia said, the seeds for the 
amicable outcome were sown in the 1990's when brands and 
buyers developed corporate social responsibility codes of 
conducts, hired compliance agents, and instituted  social 
audits for factories.  "When the CSR units were first 
started, we would not have been able to talk to the factory 
management, but we routinely work together," she said. "It's 
all about dealing with change." 
 
¶15. (SBU) Comment: As labor and management relations become 
more important that ever in the post-MFA world, a lack of 
industrial relations training capacity in Bangladesh may 
become a bottleneck to development.  The Bangladesh Export 
Processing Zone Authority (BEPZA) Executive Director wanted 
to hire 60 trained or experienced industrial relations 
specialists this past year. He hired his 60 staff, but 
despite offering very competitive salaries, he was forced to 
hire people with little or no experience or training in 
industrial relations. 
CHAMMAS