May 15, 2013

BANGLADESH: US And European Retailers Split Over Bangladesh Safety Deal. Europe Accounts For About 60% Of Bangladesh’s Clothing Exports. Must Read Entire Article. Great Piece!

France24 news
written by Reuters staff
Tuesday May 14, 2013

Major U.S. retailers including Gap Inc declined to endorse an accord on Bangladesh building and fire safety backed by Europe’s two biggest fashion chains, a trans-Atlantic divide that may dilute garment industry reform efforts.

Three weeks after the collapse of a building housing garment factories, which killed more than 1,100 people, Western brands that rely on Bangladesh to cheaply produce clothing disagreed over how best to ensure worker safety.

Sweden’s H & M Hennes & Mauritz AB and Spain’s Inditex SA, the world’s two largest apparel brands, topped a list of predominantly European companies signing an agreement led by the International Labour Organisation, trade unions and other lobby groups.

Major brands and retailers set a May 15 deadline to join the agreement after talks in Germany last month. As of late Monday U.S. time, the only well-known U.S. company to announce it had signed on was PVH, which owns brands including Calvin Klein.

Gap said it was ready to join “today” but first wanted a change in the way disputes are resolved in the courts.

“With this single change, this global, historic agreement can move forward with a group of all retailers, not just those based in Europe,” Eva Sage-Gavin, an executive in Gap’s global human resources and corporate affairs department, said in a statement.

Europe accounts for about 60 percent of Bangladesh’s clothing exports, so even without participation from the big U.S. retailers, the agreement may bring some change in a country that has seen at least three deadly garment factory disasters in the span of six months.

Mohammad Atiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association, said the deal was a bit of good news in the “worst time for us.”

“We believe this decision will motivate other big buyers across the West and the USA to join their hands with us,” he told Reuters in an interview.

Wal-Mart flags safety concerns

Wal-Mart Stores Inc, the world’s biggest retailer, did not say whether it plans to sign the accord. But on Monday it called on the Bangladesh government to stop production at one factory and inspect another where it spotted safety concerns during its own checks.

In an unusually blunt and detailed public statement, Walmart asked the government to halt production at Stitch Tone Apparels in Chittagong, Bangladesh, and to inspect Nassa Group’s Liz Apparels Ltd factory complex in Dhaka.

The garment companies could not immediately be reached for comment outside normal business hours.

Walmart said it found “structural concerns” at a factory adjacent to Stitch Tone, Dresswell Ltd, which was not part of the retailer’s own supply chain. It said the Dresswell factory “appeared unstable and could cause a hazard” for workers at Stitch Tone, which was making clothes for Walmart.

Walmart said it removed its business from Stitch Tone and advised the owner not to continue production.

The inspections also found visible cracks in the wall at Liz Apparels. Walmart said it notified factory owners, the garment association and the government about the safety concern at Liz Apparels and Stitch Tone.

“The government of Bangladesh did the responsible thing last week by closing factories believed to be dangerous,” Rajan Kamalanathan, vice president of ethical sourcing for Walmart, said in a statement. “We call on them to show the same leadership in the Stitch Tone Apparels and Liz Apparels cases, and take any actions necessary to ensure safe conditions.”

Retailers routinely inspect suppliers, but several companies said after the Rana Plaza collapsed in April that they were not able to check for structural soundness.

Walmart said it hired Bureau Veritas to inspect for structural fire and electrical safety, including checking building designs and permits as part of an expanded inspection process it launched last month.

Rana Plaza was extended to add three more floors, in violation of city building codes, according to the chief engineer of Dhaka’s development authority. The day before the building collapsed, cracks were seen in the walls.

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