'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.

When we started in 1997, Picard Bangladesh was the smallest of the Picard manufacturing units. Now I can proudly say that we are the biggest within the Picard family. And we are in the process of moving to a new factory, which will have 250,000 square feet and a workforce of around 4000 people. At the moment, 75% of our production is for Picard Germany; 25% for other customers. We will shift that mix to 65%–35%. More and more of the good brands are coming to Bangladesh.

Scholte: Why is that?

Islam: Bangladesh has leather. When you have your own raw material, you cut down the lead time. This is one of our big advantages. Another advantage is that our people learn very fast. We have a competitive work force. And the quality is good. Our customers tell us that the workmanship and the leather are much better than that of our neighbors.

Scholte: What makes the leather so good?

Islam: We do not have commercial farming. The grain in the leather is all natural grain. Our cows and goats are smaller and have a shorter life span. A commercially fed cow has a life span of 7-10 years; then the leather gets vein marks, growth marks and all. All those little black goats you see on the street – they give us the famous Black Bengal Leather.

Scholte: Bangladesh now exports about US$1 billion in leather goods each year. What do you see as the potential?

Islam: My projection is that it will be close to US$3 billion in the next five years. Many people say US$5 billion, but I do not see it that way.

Scholte: Tell me about the dynamics of a joint venture with Picard Germany. Were there some difficulties adjusting to two different cultures, two styles of working?

Islam: Working with Picard has been a really good experience. Picard did not want to be a brand that simply sourced the product and subcontracted. They have always been both manufacturer and retailer since their inception. You will not find this combination in any other leather goods brand in the world. So we immediately had a good understanding, not only on the commercial side, but also about the exchange of technology.

Initially when we started in 1997, it was a transfer of technology to Bangladesh. We got the technology from Picard without spending any money – a joint venture in the true sense. They sent their technicians, who taught our people how to make high quality leather bags, from start to finish. Picard didn’t go directly to the commercial aspects; they started by giving us the technical know-how.

Today I am happy to say that it has become a transfer of know-how in both directions. They send their apprentices to Bangladesh to learn. In the beginning, it was 100% from Germany to us, but now it is almost 50/50.

Also, from day one, Picard insisted that we had to take care of the people, we had to be concerned with the social and environmental aspects. In the 1990s, Bangladesh expanded into manufacturing in a big way. The entrepreneurs thought all they had to do was just produce. There was no question of social or environmental compliance. But we had a good understanding about compliance from the beginning. For the last 18 years we have not had a single case in the labor court.

Scholte: How is your overtime?

Islam: We do not have more than two hours of overtime a day. We are reducing it by increasing efficiency. And slowly, slowly they are getting away from the concept of overtime. Previously they were not happy when there was no overtime – they wanted the extra money. But now they have changed. They say, OK, I can go home early, I have some work to do at home, then I can play with the children. And Friday is the compulsory day off.

Workers in Bangladesh often leave the factory when they are 45. I want our workers to be able to work at Picard until they are 60. They can only do that if they have a good working environment here, if they work only eight hours a day, six days in a week and if they have good conditions where they live

We have a lot of loyalty; we have a number of people who have been here for the last 18 years! We offer social protection programs: life insurance, a health policy, a provident fund and the gratuity – after you work here for five years, you get a one-month bonus every year, in other words, 13 months of wages every year. That is a big deal.

I am also happy to see a lot of new mothers continuing to work for us. They have four months maternity leave, and after that they can use our child care facilities and kindergarten. This has helped us out.
Scholte: How did the recent increase in the minimum wage affect you?
Islam: It has affected us, but not in a big way. It was a huge raise for the readymade garment (RMG) sector, almost 67%. For us it was not so much, maybe 26% – we always paid above minimum wage anyway.

Scholte: But there is a terrible housing shortage in Savar, and the rents are very high. Even if you pay really good wages, the landlords just increase the rents. How can you even begin to address that problem?

Islam: Yes, I am really unhappy about the fact that 50% of their earnings go for rent and every year after our workers get a pay raise, the rent is increased. And I am really unhappy that there is no proposal coming from the side of the entrepreneurs. They are always demanding that the government provide the dormitories. But the government does not have much money. Why haven’t we formed a public-private partnership to address this problem in the industrial hub in Savar and Gazipur? Where is the plan? If there is no participation from the private sector, we are only taking and not giving anything back.

I tried to find a practical solution. We are talking to the landlords and looking at the houses, the dormitories, at how they are built, etc. Picard Bangladesh will sign a contract with the landlord, but we will insist on a certain living standard, make sure they have electricity and drinking water 24 hours a day, a good sanitation system, a good kitchen and other things.

Not that we are going to subsidize, except in the sense that we sign a contract with the landlord for five years. For 2.5 years there will be no increase in the rent. And after 2.5 years, the rent is increased by 10%. This is a pilot project that we will implement when we shift to the new factory.

Scholte: Let‘s talk a little about the political unrest last fall. There was one terrible incident when your factory was attacked and you and your daughter were caught here.

Islam: Yes, but this was an exception. It was after the collapse of Rana Plaza, where over 1000 people were killed. The newspapers and television were full of stories of how workers had been trapped, crying for their lives, and then died.

Put yourself in the shoes of a normal worker – they knew that they could have been in that building and they wanted to know why the owners, why the government bodies had not taken the necessary precautions to protect workers. This trauma was only a few miles away from our factory.

Most of the factories were closed for a week. A mob came and damaged some of our cars because we were open. We were not at fault, because we do not belong to the RMG sector. But angry mobs are dangerous.

I saw how dedicated our workers are! They were trying to save the factory. There are no locks, they put iron bars into the doors and were holding them closed with all their strength. They were risking their lives.

Scholte: Last question for you: How has it been to work with your daughter?

Islam: (laughs heartily) It is not always so easy to work with your own child! It is very complicated. I really enjoy working with Amrita. But I am still very much involved. I am always here. There are a lot of differences of opinion, and sometimes we have fights (laughs). In some cases, she wins. Or if I am right, I win. But I enjoy that – although sometimes it gives me a little headache to have to adjust my mentality to hers.

Scholte: Has she brought in a lot of new ideas?

Islam: Yes, a lot of new ideas. Her master’s thesis was on organizational management, and she has brought that in. She has also brought some new generation men and women into the company, and I see that they have a different concept. There have been a lot of changes... And she does not compromise with quality. I am a little old-fashioned. I say, give them a second chance. But she does not believe in that. So this is a good blending.

Scholte: Thank you so much for your time!

Islam: I hope I did not talk too much, but at the end of the day I have only one thing to say: This is our country. Bangladesh has many bad things, but good things too. So please, do not only point out what we are lacking; say something about the good things we have, too!