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As Firms Line Up on Factories, Walmart Plans Solo Effort As Firms Line Up on Factories, Walmart Plans Solo Effort
(about 3 hours later)
Six major retailers, including Carrefour, Marks & Spencer and El Corte Inglés, announced on Tuesday that they would participate in a landmark plan to improve fire and building safety in Bangladesh, joining five European companies that signed onto the plan on Monday. As American retailers face mounting pressure to join a landmark plan to improve factory safety in Bangladesh, newly found documents indicate that apparel had been produced for Wal-Mart at one of the operations in the factory building that collapsed last month, killing more than 1,100 workers.
With only one American company joining — PVH, the parent company of Calvin Klein and Tommy Hilfiger — consumers, investors and labor groups are pressing Gap, Walmart and other American retailers and apparel companies to sign onto the effort. The plan will require participating companies to agree to rigorous inspection of the factories they use in Bangladesh and to help underwrite needed safety improvements at factories with violations. The Bangladesh Center for Worker Solidarity has provided The New York Times with photos of several documents not disputed by Wal-Mart, that were recovered in the building’s rubble showing that a Wal-Mart contractor from Canada had produced jeans last year at the Ether Tex factory, which had been situated on the fifth floor of the collapsed Rana Plaza building.
Late Tuesday afternoon in response to growing criticisms that it was not doing enough to improve factory safety, Walmart announced that its factory monitors would “conduct in-depth safety inspections at 100 percent of the” 279 factories it uses in Bangladesh. While both the contractor and Wal-Mart denied any knowledge of the production orders there, Wal-Mart on Tuesday announced that it would put in place new safety measures at the factories it was using in Bangladesh.
Walmart said it would immediately stop production at factories where urgent safety problems were found and would notify factory owners and government authorities of the need to take action. Walmart stopped short of committing to help underwrite the needed improvements — one of the key aspects of the landmark Bangladesh safety plan that more than a dozen European retailers and apparel brands have embraced since Monday. Saying it was unwilling to sign on to the broad safety plan embraced by more than a dozen European companies this week, Wal-Mart said its factory monitors would “conduct in-depth safety inspections at 100 percent” of the 279 factories it uses in Bangladesh and publicize the results on its Web site.
Walmart said it would complete reviews of every factory within six months and would post results of these inspections, although it did not say how much information it would post. “Transparency is vital to make progress in improving factory conditions,” said Rajan Kamalanathan, vice president of Ethical Sourcing for Walmart. Wal-Mart promised to stop production immediately at factories if urgent safety problems were uncovered and to notify factory owners and government authorities of improvements. But the company, the world’s largest retailer, stopped short of committing to help underwrite the improvements — one of the crucial aspects of the Bangladesh safety agreement adopted by European companies.
Once numerous European companies began joining the plan on Monday — led by H&M, the Swedish company that is the largest purchaser of apparel from Bangladesh — a division has appeared between European and American companies about what needs to be done to respond to the April 24 factory building collapse in Bangladesh in which more than 1,100 workers died. On Tuesday, Carrefour, the world’s second largest retailer, Benetton, Marks & Spencer and El Corte Inglés, the Spanish department store chain, joined major retailers like H&M and Inditex, the parent of Zara, in signing on to the safety agreement. The plan requires companies to have rigorous independent inspections and to help pay for fire safety upgrades, like adding fire escapes, which many factories still lack.
Walmart has maintained a distance from the collapse, even though Ether Tex, one of the factories in the collapsed Rana Plaza building, had listed Walmart as a customer on its Web site. Both Walmart and Ether Tex’s chairman have said that Walmart was not a customer at the time of the building collapse. But Wal-Mart and numerous other American retailers and apparel companies have sought to maintain a distance from the April 24 building collapse, and have balked at the worker safety agreement urged by consumer and labor groups.
The Bangladesh Center for Worker Solidarity has provided The New York Times with photos of what it says are documents recovered in the Rana Plaza rubble that show that a Walmart contactor from Canada, Fame Jeans, was having jeans produced for Walmart at Ether Tex. One document, a purchase order dated May 12, 2012, calls for “dark blue wash,” “skinny fit” jeans to be delivered in the fall of 2012. Wal-Mart maintained on Tuesday that it had no involvement at the Rana Plaza building, playing down the newly discovered documents.
Another document, dated April 27, 2012, discusses pricing for five different jeans styles, with the F.O.B. prices ranging from $3.41 to $4.50 a pair. One document, dated May 12, 2012, that was found in the rubble detailed a purchase order by a Canadian company, Fame Jeans, for “dark blue wash,” “skinny fit” jeans to be delivered to Wal-Mart in the fall of 2012. Another document, dated April 27, 2012, discussed pricing for five styles of jeans, with the F.O.B. prices ranging from $3.41 to $4.50 a pair
Kevin Gardner, a Walmart spokesman, noted that the documents were from a year ago. “Our investigation of the Rana Plaza building site after the collapse revealed no evidence of authorized or unauthorized production at the time of the tragedy,” Mr. Gardner said. “If we learn of any unauthorized production, we will take appropriate action based upon our zero-tolerance policy on unauthorized subcontracting. We remain committed to promoting stronger safety measures in factories, and that work continues.” But Wal-Mart emphasized that the documents dated back a year. “Our investigation of the Rana Plaza building site after the collapse revealed no evidence of authorized or unauthorized production at the time of the tragedy,” said Kevin Gardner, a Wal-Mart spokesman. He declined to say on Tuesday whether the Ether Tex factory, as well as the Fame Jeans order there, were authorized.
Judy Gearhart, executive director of the International Labor Rights Forum, an advocacy group in Washington, said Walmart was improperly trying to distance itself from the building collapse. After The Times questioned Wal-Mart about the documents on Tuesday, Alen Brandman, chief executive of Fame Jeans, said in an interview, “It’s very clear that Wal-Mart did not authorize me in any capacity to work within this factory.” He blamed a “rogue employee” for the order, who had decided to use the factory without Mr. Brandman’s knowledge.
“It’s another example of Walmart’s lack of ability to track the specifics of its supply chain,” she said. She called on Walmart to join a compensation fund for the victims of the Rana Plaza building collapse. He said after that order “no other product came out” of that factory “for us or for Wal-Mart.”
So far no American company has agreed to contribute to such a fund, while Loblaws of Canada, Primark of Britain, El Corte Inglés of Spain and three other European companies have agreed to participate. After a fire last November at another Bangladesh garment factory that killed 112 workers, numerous documents showed that six suppliers had clothes made there for Wal-Mart in previous months. Wal-Mart said it had deauthorized the factory because of violations and had terminated its relationship with the suppliers that continued using the factory after it was deauthorized.
Consumer and labor groups have focused more on persuading Gap rather than Walmart to join the Bangladesh factory safety plan. Gap has been the most vocal company in criticizing the plan, expressing concerns that overly litigious American lawyers could seize on the agreement to sue American companies on behalf of aggrieved factory workers in Bangladesh. Gap’s proposed changes would greatly limit any legal liability for any company that violated the plans. Judy Gearhart, executive director of the International Labor Rights Forum, an advocacy group in Washington, faulted Wal-Mart for again trying to distance itself from the building collapse just as it had sought to do after the November fire. “It’s another example of Wal-Mart’s lack of ability to track the specifics of its supply chain,” she said.
In a statement, Gap said: “We’re pleased that an accord is within reach, and Gap Inc. is ready to sign on today with a modification to a single area — how disputes are resolved in the courts. This proposal is on the table right now with the parties involved. With this single change, this global, historic agreement can move forward with a group of all retailers, not just those based in Europe.” At the time of the building collapse, Wal-Mart was listed as a customer on Ether Tex’s Web site, another link that advocacy groups were using to try to pressure the retailer, the Gap, Target and other American companies to sign onto the safety plan. The only non-European companies to sign are PVH, the parent company of Calvin Klein and Tommy Hilfiger, and Loblaw of Canada.
Under Gap’s proposal, if a retailer is found to have violated the agreement, the only remedy would be public expulsion from the factory safety plan. By far, Gap has been the most vocal company opposed to the plan, expressing concerns that overzealous American lawyers could seize on the agreement to sue American companies on behalf of aggrieved factory workers in Bangladesh — perhaps in the event of a factory fire. Gap said it supported much of the plan, but it proposed changes that would greatly limit any legal liability for a company that violated the plan.
Under Gap’s proposal, if a retailer were found to have violated the agreement, the only remedy would generally be public expulsion from the factory safety plan.
“The U.S. is quite litigious,” said Bill Chandler, a Gap spokesman. “We put forward specific proposals that we thought would bring other American retailers into the fold. We thought it would be a step forward and would turn it into a much more global agreement.”“The U.S. is quite litigious,” said Bill Chandler, a Gap spokesman. “We put forward specific proposals that we thought would bring other American retailers into the fold. We thought it would be a step forward and would turn it into a much more global agreement.”
The labor unions and advocacy groups that have negotiated with H&M; Inditex, the Spanish company that owns the Zara chain; and other companies that have signed the plan criticized Gap’s proposal to change the agreement. These groups say Gap’s vigorous push against the version of the plan has helped sway some other American companies not to sign. Consumer and labor groups said Gap’s concerns about litigation were overblown. They complained that Gap’s stance against the agreement had helped to dissuade other American companies from signing.
“Gap Inc. is ready to sign on today with a modification to a single area — how disputes are resolved,” said Scott Nova, executive director of the Worker Rights Consortium, a group sponsored by 175 colleges and universities. “Gap’s demand is that the agreement be made unenforceable — and therefore meaningless. What Gap wants is the right to renege on its commitments when it wishes.” “Gap’s demand is that the agreement be made unenforceable — and therefore meaningless,” said Scott Nova, executive director of the Worker Rights Consortium, a group sponsored by 175 colleges and universities. “What Gap wants is the right to renege on its commitments when it wishes.”
Gap says that it has already taken substantial steps to improve safety at the 78 factories it says it uses in Bangladesh. It has hired a respected fire inspector to examine those factories and has pledged $22 million in loans to help finance safety upgrades when problems are found. Some advocates say the European retailers signed the joint accord more readily than the Americans because Europe accounts for 60 percent of Bangladesh apparel exports and the United States one-fourth.
Among the other companies that joined the Bangladesh safety plan on Tuesday were Kik, a German low-cost apparel retailer; Aldi, the German retail chain; and G-Star Raw, a Dutch designer clothing company. Wal-Mart also expressed concerns about the joint Bangladesh safety plan, saying it “introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals.”
Wal-Mart added that its plan either meets or “exceeds” the group safety plan, and would get quicker results.
The retailer said its factory inspectors would examine electrical systems for any flaws — a major cause of factory fires in Bangladesh — and would review building design and permits to help avoid future collapses Those inspections would include thermal circuit imaging of factories’ electrical systems to analyze for problems.
“Wal-Mart is committed to a global supply chain that first and foremost provides safe conditions for workers,” said Rajan Kamalanathan, vice president of ethical sourcing for Wal-Mart. “Wal-Mart is focusing directly on the most urgent issue, and that’s worker safety. We invite others to join us in this effort.”
Wal-Mart praised the Bangladeshi government for closing 18 factories that had safety violations. The company said that based on its information none of those factories were making authorized apparel for Wal-Mart, although three of those factories were owned by the Nassa Group, which claims Wal-Mart and Sears as customers and is Bangladesh’s largest exporter.
Mr. Nova voiced skepticism that Wal-Mart’s initiative would significantly improve worker safety. “It is a unilateral initiative that’s nonbinding and unenforceable, and it’s unclear how much transparency there will be,” he said. “If all of this stuff happens, there’s substance, but there’s no basis to believe it will all happen.”