Has Manufacturing Overseas Gotten Any Safer?
Has Manufacturing Overseas Gotten Any Safer?
November 17, 2015
With the demand for cheaper products, many American manufacturers assemble or purchase manufactured goods overseas. But this comes at a price because worker safety in manufacturing overseas, especially in the Far East, has always lagged behind North American safety standards. The consequences of poor worker safety is more than just the risk of injury, because negative publicity surrounding incidents can tarnish the reputation of the U.S. company that has placed the order for goods. This is especially so because society is starting to hold American companies responsible for ensuring their overseas suppliers operate safely.
Why Manufacture Overseas?
The primary reason for overseas manufacture is that ex-factory prices are much lower, and provided volumes are high enough, it generally makes economic sense to purchase offshore. There is an assumption that despite lower wages, overseas companies look after their workforce.
What’s Actually Happening?
In reality, the situation is not as simple as this, especially as labor costs, even in the U.S., comprise only a relatively low percentage of total product costs. Frequently, the real reason why it’s cheaper to purchase from overseas is that manufacturers cut corners and pay little more than lip service to working conditions and worker safety.
For example, in April 2013, a poorly built factory collapsed in Bangladesh, killing over a thousand workers. Major companies, including retailers, shoe and computer manufacturers have discovered that safety audits performed on their behalf were not properly done and that in many cases factory management deliberately mislead inspectors. As wages rise in the Far East, the safety of manufacturing overseas seems to be getting worse due to inadequate supervision by local authorities. The only real solution seems to be the implementation of more intensive interventions to ensure that suppliers of manufactured goods to American companies comply with local regulations and, at the same time, adopt safe working practices. However, the changes required are expensive and difficult to implement in countries where safe working practices are virtually nonexistent.
Buyer Beware
Although not every overseas supplier flaunts the law and customer requirements, it seems it will take many years before factories in these countries are able move from what is essentially the Dark Age and improve safety of manufacturing overseas.
Meanwhile, buyers need to take great care to ensure their products are ethically manufactured or face the risk of embarrassing and costly revelations of worker abuse in the factories they source from. As well as keep in mind the possibility that factories overseas can be destroyed or shut down due to safety issues. If this were to happen then the supply chain is severed and can lead to countless other problems. Low prices won’t do you any good if you can’t get your products.
