Pakistan Factory Fire Highlights Risks

In a fiercely competitive global market, analysts warn factory owners face a difficult dilemma, as higher safety standards means higher production costs.

The death of 289 workers in a devastating factory fire has highlighted Pakistan's dismal approach to industrial safety and raised fears for the clothing sector vital to the nation's struggling economy.

Western companies buying Pakistani garments and textiles are likely to scrutinize their suppliers' working practices more closely after Tuesday's disaster and there have been promises of a clampdown from officials in Karachi.

But in a fiercely competitive global market, analysts warn factory owners face a difficult dilemma, as higher safety standards means higher production costs.

Karachi, Pakistan's largest city and commercial heart, has around 10,000 factories on seven industrial estates, according to the Karachi Chamber of Commerce and Industry (KCCI).

On top of that, there are at least 50,000 cottage and small industries in the informal sector based in residential areas.

Fahim Zaman Khan, Karachi's former top administrative official, said that Ali Enterprises, the factory destroyed in Tuesday's blaze, was typical of many units in the city.

"There is not a single factory in Karachi, which is different in shape and facilities as the one gutted by the fire. Everyone, including our rulers, could see similar factories nearby the gutted one but avoid to take action," he said.

Police records show Ali Enterprises exported ready-made garments to North America and Western Europe, though it is not clear which brands or chains were supplied.

Safety Measures Ignored

Nasir Mansoor of the National Trade Union Federation said safety measures were ignored at the factory.

"At Ali Enterprises there was only one exit point for more than 500 workers at the time of the emergency, all the windows had iron grills and doorways and stairs were stuffed with finished merchandise," he said.

Karachi is a vast, seething metropolis home to some 18 million people, but its emergency planning is woefully underprepared, according to Khan -- he said the city had only "a few dozen buildings" with proper emergency exits.

"We have a fire brigade which has just 35 fire tenders in working condition, but the city has hundreds of thousands of dangerous buildings. Our disaster management is totally inadequate," he said.

Mohammad Hussain Syed, the city's municipal head agreed that "very few establishments are in Karachi which have been built on proper building plans.

"Safety exits are duly mentioned in the plans approved by the authorities but the owners got away with it only to save money and extra land thus risking precious lives," he said.

A crafty two-step of corruption and political maneuvering allows factory owners to skip around the rules and focus on making money, said analyst Hasan Askari.

The garment trade is vital to Pakistan's shaky economy, particularly the export sector. According to central bank data, the textiles industry contributed 7.4% to Pakistan's GDP in 2011 and employed 38% of the manufacturing workforce. But it accounted for 55.6% of total exports -- around $11 billion.

Irfan Moton, chairman of the Sindh Industrial Trading Estate, said the Ali Enterprises tragedy would damage Pakistani exports.

"Anybody who is planning to import something from Pakistan will now think for a while about our safety standards.

"He will consider other options like India and Bangladesh and may book an order from such countries even if he is buying it a few cents higher than our price."

Aziz said it was vital that Pakistan responded to the disaster in the right way.

"There would be clarion calls from Western buyers for an immediate review of safety systems in units that supply goods to them," he said.

"A lot of damage control would be required immediately by the owners and more importantly from (the government)."

But introducing better safety measures -- fire hydrants, sprinkler systems, better escape routes -- means higher costs, giving the factory owners a dilemma.

"The choice is to make maximum foreign exchange at the risk of workers' lives or to earn less and make their life safe," prominent Pakistani economist Kaiser Bengali said.

Trade unionist Mansoor said most of the workers at Ali Enterprises were on third party contracts and none had appointment letters, so they were not entitled to social security benefits.

Workers at Ali Enterprises said they earned between 5,000 and 10,000 rupees (US$52 to $104) a month for their labor.

-  Hasan Mansoor,AFP

Copyright Agence France-Presse, 2012

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