Primark and Matalan among retailers allegedly cancelling £2.4bn orders in ‘catastrophic’ move for Bangladesh

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More than a million Bangaldeshi garment personnel have been sent home without pay or have lost their jobs after western clothing brands cancelled or suspended £2.4bn of existing orders in the wake of the Covid-19 epidemic, according to data from the Bangladeshi and Garment Exporters Association (BGMEA).

Primark, Matalan and the Edinburgh Woollen Mill are among retailers which may have collectively cancelled £1.4bn and suspended an additional £1bn of orders as they scramble to minimise losses, according to BGMEA. This consists of practically £1.3bn of orders that were already in production or had been completed.

Other brands included in the data, including Next, Marks & Spencer and Tesco have since said they will honour existing orders which have been placed with Bangladeshi suppliers.

The BGMEA said the impact of the cancellations was already “catastrophic” for Bangladesh. A lot more than one-quarter of the country’s 4 million garment personnel have previously lost their jobs or have already been furloughed without pay due to order cancellations or the refusal of brands to cover cancelled shipments.

A survey of practically 300 Bangladeshi garment suppliers by the Workers Rights Consortium (WRC) and Penn State University, discovered that western retailers have already been using force majeure clauses in their contracts to cancel or suspend orders in the wake of the coronavirus crisis.

Factory owners in Bangladesh told the Guardian that brands and retailers are postponing the delivery of orders that contain already been made by garment factories so invoices can’t be raised. Also, they are cancelling all upcoming orders and refusing to pay the cost of recycleables already purchased by suppliers.

“We've had to temporarily close our factory for the health and safety of our workers but we are facing ruin because brands and retailers are cancelling orders that we have previously produced and if indeed they don’t pay, I can’t pay the workers,”said Mostafiz Uddin, the chief executive of the Bangladesh Apparel Exchange and managing director of Denim Expert, a clothing company that supplies international brands including Peacocks in the UK.

“We must pay upfront for all of our materials and banks are blocking my accounts. I can’t even pay the bills. We can’t do anything because following this is over we will have to use these brands again so we are powerless to fight them,” he said.

“I can’t sleep during the night. I've 2,000 workers nonetheless they are supporting another 10,000 members of the family. What will I tell them about their jobs and their pay?”

More than 97% of the suppliers surveyed by the WRC and Penn State University said brands had offered no financial assistance in covering the price of furloughing workers or helping to pay severance costs.

“What we’re seeing is a wholesale abandoning of personnel and suppliers,” said Scott Nova, executive director of the WRC.

“Just how that the garment supply chain is set up, the suppliers take all of the risk. They buy the cloth, hire the staff and make the clothes but can’t raise an invoice until the order is shipped. If brands cancel existing orders and refuse shipment then invoices can’t be sent and nobody in Bangladesh gets paid.”

In a statement, Primark said that, while it recognised and was “deeply saddened” by the result this would have further down its supply chain, it had had “no option” but to cancel orders that were located with their Bangladeshi suppliers.

“If we had not taken this step, we'd be taking delivery of stock that we simply cannot sell,” Primark said in a statement. “It has been unprecedented action for unprecedented and frankly unimaginable times”

Edinburgh Woollen Mill also confirmed it has cancelled all existing orders saying, “Our relationships with suppliers are absolutely fundamental to your business, and this isn't what we'd ever normally wish to do however the current circumstances are in a way that this is essential.”

Matalan wouldn't normally confirm whether they had cancelled orders. By email, they said the business was “looking at multiple means of repurposing or postponing, instead of cancelling whenever we can.”

After the BGMEA data was published, Tesco and Marks & Spencer said these were now dealing with Bangladeshi suppliers to honour existing orders. Tesco is also refuting the figure published in the BGMEA data that it cancelled £50m of orders.

In a statement, Next said that as all its shops are closed it is cancelling some orders, but will honour existing agreements that are set up up to 10 April.

Other brands including H&M, Next and Zara said they might also honour existing financial arrangements with their Bangladeshi suppliers and pay invoices in full for orders already placed.

Aruna Kashyap, senior researcher at Human Rights Watch said that the problem in Bangladesh exposed having less any kind of protection for employees who make huge profits for international fashion brands.

Workers who have been furloughed or lost their jobs would battle to find any way to support their families within a Covid-19 lockdown and it could take years for the garment industry to recuperate, Kashyap said.

“The brands are trying to minimise their losses however the impact on the ground in Bangladesh has already been catastrophic and can spell disaster for millions of families,” she said.

“Retailers are calling on the governments of garment-producing countries to provide support for workers, but if you’re likely to base your hugely successful supply chain in countries where you know no such social back-up is available, you should take responsibility when things go wrong.”
Source: https://www.theguardian.com

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