17 US Clothing Retailers Sign Bangladesh Factory Safety Pact

Michael Teague |

bangladeshi factory collapse1

After a horrific factory collapse last April that killed over 1,100 Bangladeshi workers, 17 North American retailers who depend on the country’s cheap labor force to produce many of their products finally agreed to a five-year pact that would improve safety at production facilities and extend accountability for accidents to the country’s government, as well as factory owners.

Among the 17 companies are household names such as the Gap (GAP), Target (TGT), and Wal-Mart (WMT), as well as Sears Holdings (SHLD), Nordstrom (JWN), Kohl’s (KSS), and Macy’s (M). The firms have agreed to a one-year deadline for inspecting all Bangladeshi facilities that make their products, and a three-month deadline for coming up with new safety guidelines.

The pressure on American companies working in Bangladesh to act on concerns about worker safety came from several directions. First, April’s incident followed an earlier catastrophe last November during which 112 workers died after being trapped in the basement of a garment factory that had caught fire.

Second, the April incident elicited a rather quick response from 72 European companies using Bangladeshi labor, who in May signed their own safety pact that was hashed out with local rights groups and trade unions. The objections on the part of US companies to this global pact hinged ostensibly on fears of unlimited liability, and, of course, the claim that unions were given too much leverage.

Thus, the companies who did not sign on with their European counterparts were under tremendous pressure to make a credible and public show of concern that could result in substantial corrective action. The new pact involves some 500 Bangladeshi factories, while the previous European version covers up to 1,000 of the country’s estimated 5,000 garment-making facilities.

In an interview with the Associated Press, Wal-Mart’s senior Vice President of global compliance, Jay Jorgensen, stressed how similar the North American and European pacts were, and signaled the willingness of US retailers to “work together with” the European accord. However, workers’ rights groups were immediately skeptical of this claim and accused North American companies of being more concerned about costs and expenses.

The European pact that includes companies such as Benetton and H&M requires that each signatory pay as much as $500,000 a year to fund the program, in addition to committing to investment in renovation and safety to the tune of an estimated $600,000 per factory. Furthermore, the Europeans have sought to make their pact not only global but legally binding by creating a board of labor and business representatives who will preside over the resolution of grievances in a manner that is enforceable in the countries in which they do business.

Only a small number of US companies signed on to the global accord, and they include Abercrombie & Fitch (ANF), Sean John, and PVH Holdings (PVH), the company that owns Tommy Hilfiger and Calvin Klein.

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Companies

Symbol Name Price Change % Volume
ANF Abercrombie & Fitch Company 15.91 0.37 2.38 2,014,515
GPGPY Coats Group PLC ADR n/a n/a n/a 0
JWN Nordstrom Inc. 51.91 0.43 0.84 2,098,322
KSS Kohl\'s Corporation 43.79 0.99 2.30 2,542,246
M Macys Inc. 37.09 1.04 2.88 4,531,228
PVH PVH Corp. 110.53 3.87 3.63 1,450,076
SHLD Sears Holdings Corporation 11.44 0.44 4.00 1,144,782
TGT Target Corporation 68.75 1.03 1.51 3,797,235
WMT Wal-Mart Stores Inc. 72.12 1.39 1.97 7,717,866

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