NYT article “Retailers Are Pressed on Safety at Factories”

By Steven Greenhouse

Originally published in The New York Times Business Section

A protest at a Gap store on Thursday in Chicago, in response to the disaster in Bangladesh.A wide spectrum of government officials, investors and religious groups are warning major retailers like Walmart, Benetton and Gap that they could face financial repercussions from consumers, damage to their stock value or sustained public protests if they do not adopt stricter garment manufacturing standards.

With the death toll rising above 1,000 two weeks after an eight-story factory building collapsed in Bangladesh, organizations and officials say they have been growing impatient with American and European retailers and apparel brands because only two companies — PVH, the parent company of Calvin Klein and Tommy Hilfiger; and Tchibo, a German retailer — have signed onto a binding agreement on safety standards for factories. That agreement would commit companies to allow independent inspections of the apparel factories they use, to terminate business at factories that do not quickly correct violations and to underwrite needed safety improvements. For example, many garment factories in Bangladesh lack basic means for workers to flee in case of fire — specifically fire escapes and smokeproof enclosed staircases.

Avaaz, a human rights group, has collected 875,000 signatures on a petition urging Gap and H&M to sign on to the plan to commit to fire safety improvements at Bangladesh factories. New York City’s comptroller, John C. Liu, who oversees city pension funds owning more than five million Walmart shares, is warning the company that it risks damage to its public image unless it does more on factory safety in Bangladesh.

And the Rev. Seamus P. Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate, has been circulating a letter among religious organizations — groups that control more than $100 billion in assets — to express displeasure with the nation’s retailers. He says the retailers have not done nearly enough to improve workplace safety for the more than three million garment workers in Bangladesh.

“What happened in Bangladesh is a game-changer because of the gravity of the situation and the tremendous loss of life,” Father Finn said. “People are really coming to life about this and saying, ‘We need to do something.’ ”

Not just Western retailers are encountering more pressure after the April 24 collapse of the Rana Plaza building outside Dhaka, the Bangladeshi capital. The nation’s government — known for lax building code enforcement — has suddenly grown tougher, closing 18 factories for safety violations. Three of those factories were run by the Nassa Group, the country’s largest clothing exporter, which counts Walmart and Sears among its customers. Last weekend, the government also announced it would hire hundreds of additional factory inspectors.


The United States government has also been pressing Bangladesh and the apparel manufacturers there over safety. In January — two months after the Tazreen factory fire in Bangladesh killed 112 workers — the United States trade representative notified Bangladesh that Washington might withdraw, suspend or limit that country’s trading privileges. The trade representative was responding in part to a complaint that the A.F.L.-C.I.O. filed, asserting that the Bangladesh government had worked in concert with its apparel manufacturers to suppress labor unions.

“There are serious concerns in Bangladesh related to freedom of association, worker safety and other issues,” a senior official in the trade representative’s office said on Friday. The trade representative’s office says it will decide in June whether to take action against Bangladesh, although under esoteric trade rules, any penalties could not be directed against that country’s apparel industry.

The most visible pressures that retailers have faced are street protests, including one in Barcelona, where demonstrators wore shirts with fake blood stains to protest Mango, Benetton and other retailers. In the United States, university chapters of United Students Against Sweatshops have helped organize a series of demonstrations this week against Gap in Boston, Los Angeles, New York and Washington to press it on factory safety.

Alex Wilks, campaign director of Avaaz, which has 21 million members worldwide, said its online petition was aimed at the chief executives of Gap and H&M. The petition says, “Your companies and other multinationals profit from cheap labor, and can do much more to reduce the dangers of the places where your products are made.” Bangladesh, the world’s second-largest apparel exporter after China, has the lowest minimum wage in the world — $37 a month — which has helped it attract billions of dollars in orders from the West.

“We feel that H&M and Gap are well placed to turn what have become death traps into safe factories,” Mr. Wilks said. “We’re targeting these two companies because they’ve made commitments to ethics, and we feel that this leadership makes them well placed to not only lead their own companies but also to lead the rest of the industry to sign up to these strong and enforceable agreements.”

Two weeks ago, the German government sponsored a conference of retailers, apparel brands and antisweatshop groups that sought to push the companies to agree to take strong safety measures in Bangladesh. The antisweatshop groups have set Wednesday, May 15, as a deadline to persuade retailers to join the PVH-Tchibo plan, and they say that any retailers that do not sign will be the target of new protests.

Saying that his company has a strong reputation on social responsibility, Bill Chandler, a Gap spokesman, insisted that the attacks against his company were misplaced. “It’s perplexing that they’re targeting us when we’re a leader in taking action on the ground while many others are passively sitting on the sidelines,” he said.

Gap has hired a respected fire safety expert to inspect the dozens of factories it uses in Bangladesh. Gap has also said it will spend $22 million for fire safety improvement there.

H&M, in a statement, said that improving fire and building safety in Bangladesh was one of its priorities. “We are working at full speed to reach the best solution with other stakeholders,” the company said.

Mr. Liu has been singling out Walmart in particular. “The tragedy in Bangladesh may finally bring home the lesson to Walmart and others that they are responsible for their suppliers,” he said. Walmart, Gap and H&M did not use any of the five factories in the building that collapsed, but customs records show that two American companies — the Children’s Place and Cato Fashions — bought significant amounts of apparel from factories there over the last year.

Jane Singer, a Children’s Place spokeswoman, said the company was evaluating the PVH-Tchibo proposal. “We have not reached any decisions at this point, but are committed to supporting changes to improve safety and working conditions,” she said.

Kevin Gardner, a Walmart spokesman, said the retailer was working to develop strong standards from its suppliers to create “a truly innovative, ethical and sustainable supply chain.”

The union-owned Amalgamated Bank and the Interfaith Center on Corporate Responsibility are circulating letters among shareholders to exert pressure on numerous retailers.

Father Finn noted that Gap and other companies had adopted their own programs for Bangladesh. “Every company wants its own code of conduct and enforcement mechanism,” he said. “They’re sure their way of doing things is better than their competitors’. But we believe we need a comprehensive plan that includes many companies.”

Kellie A. McElhaney, an expert on corporate social responsibility at the Haas School of Business at the University of California, Berkeley, predicted that these pressures would hardly sway the companies. “They are feeling a lot of pressure, but it’s not coming from consumers. It’s coming from N.G.O.’s,” she said, referring to nongovernment organizations. “They’re not feeling it in the marketplace. I believe they’re going to do the bare minimum. The N.G.O.’s need to make more consumers aware of this.”


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