'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.

Scholte: How did this joint venture in Bangladesh come about?

Picard: Already at the end of the 1980s, I thought that Bangladesh was a country where we could work for a relatively long time. The leather is there. The people are there. I started looking for a partner. I knew Franz Bauer, who was responsible for leather goods here at the Offenbach University of Art and Design, but who was then working in Bangladesh for GTZ. I asked him, and he recommended Saiful Islam. So, after a leather trade fair in Hong Kong, I went to Bangladesh, met Saiful Islam and explained our model to him. We came to an agreement after only 20 minutes or so. He trusted me – ultimately we trusted each other.

Over the years, a friendship has developed between our families. Then Saiful Islam’s daughter Amrita joined. I think she will be a good partner for my nephew Georg, who will be my successor. So there is generational change at both ends. 

Picard Germany

Scholte: But this blending of two different cultures, two different mentalities surely required some adjustment. That was perhaps not always easy?

Picard: It was relatively easy. The good thing was that our partner, Saiful Islam, had an international orientation and was a realist. He did his part. We did our part. We supplied him and his people with knowhow and he covered the Bangladesh side. That would have been unimaginable for us – all the confusion in the country, the corruption etc. The company gradually gained a very good reputation and has won various awards from the government. There were actually no frictional losses.

Scholte: And there was also agreement from the beginning on the treatment of workers?

Picard: For me is it was a given that workers would be paid in line with the laws of the land, and we also went beyond that. For example, women were leaving the company after they had children, so I said to Saiful Islam, ‘They leave because there is no child care. Just set up a kindergarten. Where is the problem?’ So we set up a kindergarten in the factory.

Scholte: What did the recent increase of the minimum wage mean for Picard?

Picard: Wages at Picard were always above minimum wage, but they had to be increased further to the new level. Naturally this becomes noticeable in the calculation, but it is not only a question of the minimum wage. In a country like Bangladesh, there is the problem that when a firm grows, the productive and non-productive sides of the operation get out of balance. A lot of people come to Saiful Islam and ask for employment. So when a wage increase comes, it is across the board, also for the non-production side.

Scholte: Are you concerned about the political unrest in Bangladesh?

Picard: Saiful Islam manages all that very well. It appears to be helpful that the factory is outside the city. We are somewhat independent of what is going on around us and can work. Most of the workers live in the same area. And they want to work, they want to earn money. I follow it of course. I read the headlines of the Daily Star every day. But the shipments were always on time. He has an enormous reputation and can move things.

We had one situation where protesters entered our premises. It was not our workers. They, in fact, defended the factory. But it is a chaotic country. It is a developing country and – one has to say this honestly – this is why production prices are low.

3% of Picard's production is in Germany.

Scholte: And how do you view the medium-term prognosis? Will the prices in Bangladesh rise like they did in China and destroy business there?

Picard: I don’t think that I will see that in my lifetime. Of course there will be development. The country is dynamic, despite the catastrophic government situation. The people are getting more education. Employment opportunities are increasing. The country will continue to develop. But there are so many people waiting in line, people in the rural areas who do not have the chance to get an education, but who want to work.

Scholte: So it won’t be like China?

Picard: No, no. I don’t see this at the moment. I believe we will be producing there for the next 15 or 20 years – unless there is severe political upheaval or the Islamists gain the upper hand. But even they need employment for their people. They cannot destroy everything and let people starve on the streets. I believe it will be a stable production site in the long term. The country is so chaotic, but that is also what makes it viable. The country is developing positively despite its government. The Chinese are now focused on high tech, and buyers are leaving China. Bangladesh will benefit from this.

Scholte: But how would you respond if someone says to you: you moved jobs abroad to produce under exploitative conditions?

Picard: There are two aspects: one is the shift of production overseas and the loss of jobs in Germany. In that case, there is a very simple answer: If we had not done this, we would no longer exist. The 200 people in Germany working for us now would not have jobs with us. Moving abroad was a life saver for the company.

The second aspect is that of ‘exploitation’ abroad. We pay wages that are appropriate in the country. So no one can say that we exploit the country. In fact, we are actually taking the country forward. We gave them our knowhow for free. We weren’t paid anything for that. The people who are trained in our factory can open a business or work in another factory. We have good technicians who are wooed away by other firms offering more money – three times as much. This is the normal development and will surely increase. University professors come to us and are trained. Students come to us.

Scholte: You are also supporting a school in Bangladesh. How did that come about?

Picard: After a number of years in Bangladesh, we earned some money and I was looking for ways to use those profits for the country. Coincidentally, one Sunday morning a woman spoke to us in the morning church service about Lichtbrücke. She was trying to collect funds for a project in Bangladesh. I was interested and looked at their projects. There was one project in Tangail that I found very good – a boarding school for young men and women between 16 and 18 who are not able to continue their education but want to learn a trade. Most are from very poor families from the north and would otherwise have no opportunities in life.

We went to look at this BGS School in Tangail and thought it looked good, so we took over the complete financing of the school. This was around the year 2000. My brother and I bought all new machines – the kind of machines that they will be working on in the outside world. Machines for mechanics, electricians, carpenters, for sanitary installations, to repair plows, three wheelers, mopeds, computers, TVs.

The development of this school over the years has been super. Even the Education Minister was there and called it exemplary. 98% of the graduates immediately find a job where they earn US$80-90 a month. Some set up their own business. And so that became our project.

Scholte: Thank you so much for your time.