The Cost of Cheap

Some may have heard the news that a recent building collapse in Bangladesh killed over 1,100 people. Most have not. Disasters happen all over the world, all the time. What makes this different? It was a garment factory for some of the worlds biggest (cheap) brands with deplorable conditions. Ann Zimmerman and Neil Shah wrote a great piece in the Wall Street Journal this weekend entitled American Taste for Cheap Clothes Fed Bangladesh Boom. It is a must read.

Building Collapse

Photo Credit: Andrew Biraj, Reuters

My wife and I walked through the mall this weekend past an H&M store where they advertised a bikini for $4.95 (modeled by Beyonce). $4.95. Let that sink in. If you’ve ever dug into the economics of products like clothing, it means the cost of goods on that bikini is somewhere between $0.50 and $1.50, depending on a number of factors, that include the fabric and the labor itself. That does not include paying Beyonce. People have quickly become familiar with China making just about everything (and typically of rather poor quality), but what people are less familiar with is that even China is becoming “too expensive” in terms of labor. Companies are shifting their manufacturing from China to even lower cost manufacturing countries like Bangladesh, with devastating consequences. There aren’t even basic safeguards for people working in these countries. Over 1,100 people died in this building collapse. In buildings like this and others that have experienced deadly accidents in Bangladesh, clothes are made for H&M, Zara, J.C. Penney, United Colors of Benetton, Wal-Mart, and other major companies. H&M and Zara have made a name for themselves with “fast fashion”, taking inspiration from couture fashion, cutting down the production to shelf time, using dirt cheap labor, and bargain basement pricing. The consequences of these business practices are great profits for these companies along with significant human suffering.  It is absolutely true that offshore production can give people in developing countries a chance at a brighter future with jobs, if done responsibly. This is anything but responsible.

The only way things will change is if people in America and Europe (primarily) start to vote with their dollars and demand change. United Colors of Benetton champions itself as a company of social responsibility. It denied having any connection to the factory that collapsed, until pictures emerged of its clothing amidst the rubble.

Things have to change. I believe we’re doing our part at Mizzen+Main with our commitment to American manufacturing. While people don’t typically make the choice between item A and item B based on where it is made, seeing American made products, or responsibly made products from overseas, helps encourage people to keep in mind the consequences of their purchases.

John Mackey, the CEO of Whole Foods, is probably the best example of what he champions: conscious capitalism. At Inc’s 2013 GrowCo conference, he said America is in “disintegration mode,” and unless businesses, government, and the media behave more ethically and more cooperatively, high unemployment levels and economic decline will continue. Perhaps most importantly, he said “the virtues that made us a great nation are beginning to disappear. Capitalism needs to renew itself, and we need new ethcial foundation for business.”

There is a cost to cheap. A very, very high cost. I encourage you to vote with your dollars and effect positive change. Pay attention to who you buy from and do business with. You’ll be surprised.