The Picard Company: in Bangladesh to Stay, by Marianne Scholte

The increasing shift of manufacturing jobs from Europe and North America to developing countries since the 1970s has been an extremely painful transition and has been roundly condemned. Well-paying jobs were destroyed in the West, and production was moved to factories in developing countries, often with low wages and poor social compliance. However, the Picard Company has shown that hardheaded price calculations can go hand in hand with socially responsible business practices.

Saiful Islam inspects the kindergarten at Picard Bangladesh.

Saiful Islam, the Managing Director of Picard Bangladesh Ltd., likes to tell the story of the day that ‘child labour’ was discovered at his leather goods factory in Savar, outside the capital city of Dhaka. It was one day early in 2012, just as he was returning from lunch. He spotted a photographer outside the perimeter taking pictures of children playing in the yard and immediately understood what was up.

He approached the photographer and said, ‘You are looking for child labour? Let me take you inside and show you.’ The alarmed photographer tried to back away, anticipating that he might be roughed up, but Islam reassured the frightened man that he was in no danger and escorted him to the factory’s kindergarten. The photographer dutifully filmed the after-school care for 40-50 children and all-day childcare for 32 children, but of course the pictures were never shown on television. Evidence of a Bangladeshi entrepreneur doing something right doesn’t fit the story line we have come to expect. 

Picard Bangladesh, however, has been defying convention wisdom about the exploitative nature of overseas production since it was established in 1997. Picard Bangladesh is a joint venture between Saiful Islam, who before then had been working in his family’s readymade garment business in Bangladesh, and the Picard Company in Obertshausen, Germany, which sells its high quality leather bags across Europe and Asia.

Unlike most leather goods firms, the Picard Company was not interested in simply sourcing bags overseas; the company had been both manufacturer and retailer since Martin Picard started the family business with his sons, Edmund and Alois in 1928. By the end of the 1960s, the company had four factories in Germany with over 1000 workers.

Thomas Picard;'If we had not done this, we would no long exist.'

But, as Thomas Picard, the Director of Picard Germany, explains, ‘Then the big buyers – Neckermann, Karstadt, Kaufhof, Horton and Hertie – went to South America, Korea, Taiwan, Hong Kong, and began to buy there. Our production had no chance against this competition. We tried, but it was hopeless. In 1976 we opened our first overseas production facility in Tunisia. We simply moved what we had in our Spessart factory to Tunisia – with a German manager and everything. And we worked there just like we had always worked here.’

The next expansion was to China, in 1982. And then in 1995, Thomas Picard started looking for a partner in Bangladesh. Picard: ‘It was clear to me already in 1995 that China would close down at some point. It got too expensive and too complicated – too many requirements, too many demands.’ A mutual acquaintance, Franz Bauer from the Offenbach University of Art and Design, who conducted leather bag design and production training in Bangladesh, brought the two men together.

'There are also good things happening in a developing country like Bangladesh. A lot of good factories are being set up.'

Interview with Md. Saiful Islam, Managing Director of Picard Bangladesh Ltd. by Marianne Scholte, 12 April 2014, at the Picard factory outside Dhaka 
 
Scholte: Mr. Islam, there have been a lot of media reports on poor conditions and industrial accidents in Bangladeshi factories. Picard Bangladesh is part of a joint venture with Picard Germany, a brand name that is well known in Germany and beyond. It occurred to me that the German public might be interested in knowing more about the conditions under which you produce leather bags, wallets, and briefcases – and about this German-Bangladeshi cooperation project.

Islam: There have been a lot of negative stories about Bangladesh. Yes, we had a very big industrial disaster last year. We could have prevented the loss of life by following the building code. But there are also good things happening in a developing country like Bangladesh. A lot of good factories are being set up.

I see occupational health and safety as part of our core business – a factory should be run as a factory, and there are hundreds of checkpoints we have to follow. If we all do this, the country will have a great future in manufacturing – there are predictions that Bangladesh can become a middle income country by 2021. But we have to change our mindset for the safety of the work place.

Scholte: How did you get started in leather goods?

Islam: I started my career in the Bangladesh Merchant Navy in 1979, when I was 19. I joined the family textile business in 1987. Then, in 1997, I met Mr. Thomas Picard through Mr. Franz Bauer, who ran training programs for leather bag design and production in Bangladesh.

My first meeting with Mr. Picard lasted only half an hour, but we immediately understood each other. Within three months we started a factory with 60 people in Malibagh. In 2001 we bought this building in Savar and moved here with 300 people. Today we have 1500 workers on 70,000 square feet of manufacturing facilities.

'In fact, we are actually taking the country forward. We gave them our knowhow for free. We weren’t paid anything for that.'

Interview with Thomas Picard, CEO, Picard Germany

by Marianne Scholte, 29 July 2014, Obersthausen

Scholte: There has been a lot of international criticism of the working conditions in Bangladesh factories, particularly in the garment sector. Have you been criticized for producing in Bangladesh?

Picard: No. On the contrary, people who know us trust that we have a production facility there that respects human rights, complies with the ILO standards, and even goes beyond that to do things to benefit the people. It is also apparently not well known that we produce in Bangladesh.

Scholte: But you do not hide the fact…

Picard: It is on our website. Transparency is important.

Scholte: Let’s go back to the history: At the beginning of the 1970s, Picard had to move production abroad because of price competition, right?

Picard: Until the end of the 1960s, the company had four factories in Germany with over 1000 workers. But then the big buyers – Neckermann, Karstadt, Kaufhof, Horton and Hertie – went to South America, Korea, Taiwan, Hong Kong, and began to buy there. Our production had no chance against this competition. We tried, but it was hopeless. I joined the company in 1974, and in 1976 we opened our first overseas production facility in Tunisia. We simply moved what we had in our Spessart factory to Tunisia – with a German manager and everything. And we worked there just like we had always worked here.

In 1982, we started in China – we just closed that factory this year. In 1995 we started in Bangladesh. It was clear to me already in 1995 that China would close down at some point. It got too expensive and too complicated – too many requirements, too many demands. That is one of the reasons we went into Bangladesh, so that we would not remain dependent on China.

Scholte: Bangladesh is by far your biggest production site, right?

Picard: 50% of our goods are produced in Bangladesh, 3% in Germany. The rest is divided between Tunisia and Ukraine.

Picard Bangladesh: Continuity and Change

Interview with Amrita Islam, Deputy Managing Director, Picard Bangladesh by Marianne Scholte, 21 September 2014, Dhaka

Scholte: You grew up in this entrepreneurial family. The Picard factory was part of your life from day one. And I imagine there was always the hope that you would want to work in the business. Was there ever a time in your life when you said, ‘I am going to do something else; I am not joining the business’?

Islam: No, strangely enough, I always wanted to go into business. So I studied business subjects throughout. I did my undergraduate degree in business and accounting in Sydney, and then I came back to Bangladesh and worked in the factory for three years. For the first two years I was on the production floor full time learning how each step worked, how the whole thing happens. You have to know that or you cannot run the factory – especially a leather goods factory. You have to know the leather. You have to know how things are made. You have to know what you are talking about. Otherwise people are going to bullshit you.

Then I went back to Sydney and did a master’s degree in organizational management.

Scholte: Specifically chosen for the needs of Picard?

'At a time when everyone is talking about Bangladesh and compliance, I can proudly say that we have a tannery that is compliant and respects the environment.'

Interview with Ibnul Wara, Managing Director, Austan Ltd.

by Marianne Scholte, 19 September 2015, Dhaka 

Scholte: When did you become Managing Director of Austan?

Wara: Four years ago. We suddenly and unexpectedly had the opportunity to buy Austan. It was a Korean tannery that supplied leather to Picard, and it went bankrupt. So we had to make a decision. They were not one of our key suppliers, but they were supplying a few important leathers, plus it was a compliant tannery. If it had shut down, it would have impacted our sourcing.

Scholte: You had to jump in and learn by doing.

Wara:  Absolutely, we took a chance and jumped into a business that was a bit risky. I remember the first day I walked into the tannery. All the workers were sitting outside on the lawn, and there was absolutely no work. I knew almost nothing about tanning. I had some idea about leather goods and leather, because I was already doing marketing for Picard. But basically everything I learned about tanning was on the job.

Scholte: So what is the capacity of Austan?

Wara: We manufacture about 300,000 square feet a month.

Scholte: What about chemical disposal?

Wara: We have a central effluent treatment plant (ETP). The Export Processing Zone (EPZ) built it and we supported it. We were involved throughout the whole process – along with the other factories in the EPZ. They built the ETP based on the waste water samples supplied by all the factories.