‘Our Situation is Apocalyptic’: Bangladesh Garment Workers Face Ruin

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The empty, echoing stores of Western cities certainly are a testament to the largest crisis borne by global clothing and retail industries in over a generation. But the impact of the coronavirus on retail is a two-part devastation, as the daily flow of a large number of orders put by Western retailers to supplier factories in South Asia has suddenly slammed to a halt.

Factory owners face financial ruin, while the livelihoods of thousands of garment staff hang in the balance.

“Our situation is apocalyptic,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), which represents Bangladeshi factory owners. “The cancellations and hold instructions to arrive from Western fashion retailers are pushing us to the point of insolvency, with massive open capacity and recycleables liabilities.”

Fast fashion retailers rarely own the factories that supply them with their wares. Instead, almost all garment and footwear orders are outsourced to suppliers in emerging markets like Bangladesh, where overhead is cheap and the price of human labor is cheaper.

Nearly all suppliers are in countries which can be the most vulnerable to large global monetary shocks, such as for example India, Myanmar, Cambodia and Bangladesh, which is the second major garment exporter nation after China.

Bangladesh, in particular, which has been the site of 1 of the very most effective campaigns of the globalized era to boost labor and safety conditions for garment workers, has seen more than $2.8 billion worth of orders canceled or postponed since the start of coronavirus crisis, according to Ms. Huq.

Ready-made garments comprised 84 percent of Bangladesh’s total exports, worth $40.5 billion, in its 2019 fiscal year, according to data posted on the site of the BGMEA. This loss compromises the ongoing employment of more than two million Bangladeshi garment workers.

“The situation is quite bad. The Bangladeshi supply chain is in complete disarray with many foreign brands acting irresponsibly,” said Sharif Zahir, the managing director of the Ananta Group, which owns seven factories with a complete of 26,000 workers. His company supplies brands that include H&M, Zara, Gap, Levi’s and Marks & Spencer.

According to Mr. Zahir, most Bangladeshi factories had already faced losses or thin margins since this past year because of government-implemented wage increases in December 2018. Now, many buyers were canceling orders that were produced, delaying payments and requesting discounts on already shipped goods.

“We've been left with around 20 percent of our orders for April. Beyond that, everything is uncertain,” Mr. Zahir said.

On March 26, the united states deployed soldiers and police to enforce the beginning of a nationwide 10-day shutdown to slow the spread of the coronavirus. The densely populated country of 160 million persons is regarded as to be at a high threat of increased infections because hundreds of thousands of overseas Bangladeshi staff had returned home in recent weeks, often traveling from virus-affected nations to cramped and closely confined living conditions with little sanitation.

Within an indication of the value of the garment sector, which gives 80 percent of the country’s export earnings, retail factories are an essential industry, although majority are currently closed.

“Factories will probably empty of orders from April onward and so are not in a position to pay salaries to workers. We understand this is a difficult time for buyers nonetheless they must understand that garment manufacturers are the weakest link,” said Mr. Zahir. “Workers are the responsibility of brands as well. They have better usage of liquidity and governments offering much bigger rescue packages.”

A survey of factory owners in Bangladesh by Pennsylvania State University’s Center for Global Workers’ Rights discovered that an incredible number of workers, mostly women from rural areas, had recently been sent home without owed wages or severance pay. In line with the survey, almost all Western buyers refused to donate to worker wages, and 70 percent of furloughed personnel have been sent home without pay.

Big-name retailers have already been at pains to stress that the cuts hit every area of their businesses. After weeks of pressure, H&M said, on March 30, that it could take and purchase the shipments of goods that had recently been manufactured for the company, in addition to those currently in production. It said it could not negotiate prices on orders that had already been placed.

But the Swedish retailer in addition has warned that it will have to cut jobs; the pandemic has closed a lot more than two-thirds of its 5,000 shops worldwide and has threatened landlords with the opportunity of leaving leases early if sales don’t start to recover.

“We are doing everything inside our power in the H&M group to control the situation linked to the coronavirus,” said H&M’s leader Helena Helmersson. “My hope is that people can get operations ready to go again as quickly as possible.”

Almost all brands are a good way from similar commitments. Inditex, which owns Zara among other retailers, announced on March 18 that it would temporarily close practically 4,000 of its stores. The company didn't state whether employees will be paid during the closures.

Primark, among the major purchasers of garments in Bangladesh, will not sell online. All 376 Primark stores in twelve countries are now closed until further notice, which represents a lack of some $807 million of net sales per month, the business said. It has frozen all future orders.

“The existing situation has been so fast moving. We could not need foreseen that during the period of 12 days, our stores atlanta divorce attorneys country where we operate experienced to close,” said Paul Marchant, the chief executive of Primark, last week.

“We have large levels of existing stock inside our stores, our depots and in transit, that is payed for and if we usually do not take this step now we are taking delivery of stock that people just can't sell,” Mr. Marchant continued. “We recognize and so are deeply saddened that this will clearly have an effect throughout our entire supply chain. That is unprecedented action for unprecedented and frankly unimaginable times.”

Although there are now signs from China that some fashion production lines are slowly beginning to resume manufacturing, few industry observers are expecting things to get any easier for retailers.

“Though retailers are striving to entice spending with discounting and promotions, or with loungewear at the forefront of marketing campaigns, we expect these to have little impact at the moment as consumers acclimatize to new daily routines,” said Kate Ormrod, the lead retail analyst at the marketplace research company GlobalData. “Significant fallout over the fashion sector is expected this season as fundamentally weaker players neglect to recover once demand finally accumulates.”

In a bid to offset some of the Western retail fallout, Bangladesh’s prime minister Sheikh Hasina announced a 5,000 crore Bangladeshi taka bailout worth $590 million on March 25. Many members of the Bangladeshi government are factory owners, however the funds, Prime Minister Hasina said, will be used solely as salaries and allowances for workers.

The task now facing the united states isn't only to make certain that the bailout reaches the right place, but that safety standards usually do not slip as factory owners find themselves in an increasingly desperate situation.

“It is necessary for the government to engage in social dialogue with employers’ organizations and trade unions to come up with practical solutions which keeps people safe and protect jobs,” said Tuomo Poutiainen, country director for Bangladesh at the International Labor Organization.

“Proven social protection measures like supporting job and income security, protecting against poverty and unemployment, and strengthening economical and social stability and peace is crucial,” he said.

Koen Oosterom, the manager for Bangladesh and Myanmar for Fair Wear, a membership organization payed for by brands to improve working conditions, said that the fashion business faced an “extremely grim and unprecedented” situation, far worse regarding potential ramifications than the financial meltdown of 2008.

“There were many tough conversations as of late about the sustainability of the industry. This situation is underscoring how unsustainable many of its practices really are,” he said. “Many in precarious work have lost their income and in a few areas, people haven't been more exposed to exploitation.”

As some fashion retailers fight to push away bankruptcy within the next few months, there is concern that recent ethical and environmental improvements in manufacturing will be maintained. “Events are playing out in countries where there is quite little with regards to social security and labor laws aren't always upheld,” Mr. Oosterom said.

And as for the overtures by Western brands and retailers in recent weeks to making masks and hospital gowns for front line medical workers, Ms. Huq said that the change would offer little reassurance or practical solutions for the army of garment personnel in lockdown.

“We would need substantial support to improve toward those types of product lines. The recycleables would need to be sourced and certified, it is stepping toward a completely new kind of supply chain,” Ms. Huq said.

“For them, it’s a question of the survival of the firms,” she said, of Western retailers. “For all of us, it’s the survival of our 4.1 million workers.”
Source: https://www.nytimes.com

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