How fashion companies abandoned RMG employees in Bangladesh
It is time the big buyers were held accountable
In Bangladesh, 50 takas is not bad for overtime.
So Kulsum always works as much as possible. She is a textile worker at Sams Attire, a factory in Dhaka where the company C&A produces shirts, pants, dresses and T-shirts.
Kulsum’s wages are just enough for a room in a barrack near the factory and for the two children’s school fees. “My husband drives a rickshaw,” says the 28-year-old. “We can only buy our groceries with his wages.”
Cofra Holding has its headquarters in Zug, Switzerland, 7,000 kilometers from Dhaka. She manages the assets of the Brenninkmeijer family, who founded C&A almost 200 years ago and controls the international textile group. With an estimated fortune of CHF 15 billion, the Brenninkmeijers are the eighth richest family in Switzerland, according to the Swiss magazine “Bilanz”. C&A does not publish figures, family businesses do not have to.
But the industry knows that C & A’s sales have been shrinking for years. Discounters like Aldi, KiK, Primark and Lidl sell fashion even cheaper, chains like Zara and H&M are attracting more and more customers. In 2018 the Brenninkmeijers were looking for a buyer for their group – unsuccessfully.
Then came the pandemic
Then came the coronavirus: C&A had to close all 1,400 branches in Europe for weeks.
On March 23, shortly after the outbreak of the pandemic, Martijn van der Zee, number two at C&A, wrote to suppliers in Bangladesh: “These are extraordinary times that call for the extraordinary […] Measures that put the strength of our partnerships to the test. ”In other words: C&A cancels all orders up to the end of June“ with immediate effect ”, regardless of the production status. Even garments that have already been sewn remain in the warehouses.
C&A is not the only apparel company that is abruptly withdrawing large orders in Bangladesh and other countries. A data set collected by the BGMEA shows for the first time how various fashion chains have behaved. It lists 7,854 canceled or postponed orders from the fashion industry, including those from Switzerland. The table is a snapshot of a disaster in late March.
C&A alone is said to have canceled orders worth $ 166 million. Swedish company H&M reportedly canceled orders worth $ 178 million. The Swiss fashion chain Tally Weijl is said to have initially suspended orders worth $ 7 million and canceled orders worth around $ 3 million. At the end of June, Tally Weijl himself speaks of cancellations amounting to $ 2.17 million. “In the meantime, all of these suspended orders are in production, on the way or have already arrived.”
In total, orders worth $ 3.2 billion have been canceled or suspended – one tenth of Bangladesh’s annual textile exports. The country ships around $ 35 billion worth of clothing every year, with 84% of its exports being T-shirts, dresses and men’s suits, the top export.
When we reached Kulsum on her cell phone at the beginning of April, she was sitting at home with her husband and children. At the end of March, the government issued a “national holiday”. Kulsum lost her job and her husband no longer deserves a single taka. The landlord demands money every day. Kulsum is afraid that he might throw her family out of the room. “If this continues, it will be very, very difficult,” she says. “If you are poor you have to die.”
Thousands of women textile workers take to the streets in mid-April. Some are demanding their wages, others reopening their factories, and others demanding that their factory remain closed for fear of coronavirus infection. Dozens of demonstrators are injured and two women are said to have been killed. Although Prime Minister Sheikh Hasina pledged Tk 500 billion to support the textile industry at the end of March, the government had not yet kept her promise and payments were slow.
The fashion chains’ stopping orders is responsible for the chaos. “Almost all governments have paralyzed public life”, argues C&A – so nothing can be sold in stores for “weeks, if not months”.
The calculation is simple: no sales, no sales, no money for the suppliers. They could not expect the group to “keep and / or fulfill the contracts” – writes C&A to the suppliers in Bangladesh, referring to German law. It allows the suspension or cancellation of orders in cases of force majeure.
Lawyers like Alan Behr, a New Yorker specializing in the fashion industry, are critical of this. The reference to force majeure could be unjustified, “since most force majeure clauses do not cite pandemics as a reason for non-payment,” he says. Ultimately, a court must decide on this.
The power rests with the customers
It is questionable whether this will ever happen. Because the orders are vital for the suppliers: “Many will not defend themselves against the fashion companies,” says Christie Miedema of the Clean Clothes Campaign, the non-governmental organization that campaigns for the rights of textile workers.
When providers annoy major customers like C&A, they simply move like a caravan to the next country to look for even cheaper accommodation.
The power is in the west. Companies like C&A draft the contracts and terminate them. An example of this are the general terms and conditions of C&A. The group allows itself to reduce supplier invoices by up to 12%. C&A grants itself a “4.5% discount” if the company pays the invoice within 10 days. “It reads like this for me: We take a 4.5% discount on everything,” says an industry expert.
A further 7.5% can be deducted if “a different product is delivered or fewer goods than ordered”. According to industry experts, the fact that a manufacturer has to deliver an exact amount is “a tough nut to crack, a hard contract”. Buyers typically accept between 2-3% more or fewer items of clothing.
Manufacturers in Bangladesh pay raw materials and wages in advance, try to meet tight delivery times and in the end only a small profit remains. But better a bad order than none at all. This is why seamstresses earn so badly – and they have to meet ever more stringent requirements. Fashion companies push suppliers financially until they “have great incentives to cut costs through exploitation,” according to NGO Human Rights Watch.
In Bangladesh, the manufacturers opted for an unusual path in their plight: They publicly denounced the methods of their customers and asked them to pay off their outstanding debts. “Our situation is apocalyptic,” said Rubana Huq in March. As president of the textile industry in Bangladesh, she claims to represent over 4 million women textile workers.
“The canceled and suspended orders from western fashion houses bring us to the brink of ruin.”
When the media reported on the grievances in Bangladesh in April, C&A Purchasing Manager Martijn van der Zee asked the suppliers for understanding: “We know that you were shocked by our first letter […]. We too were hit hard and at that time we had no choice but to take drastic measures immediately. ”
C&A would pay for the goods that have already been shipped and take over most of the clothes ordered. On April 23, the company announced through Cofra Holding that 93% of the canceled orders had been resumed. C&A does not want to say to which production countries and to which period the number referred.
A supplier in Bangladesh said at the beginning of May: “C&A is still placing orders today.” And his factory hardly receives any new orders. At the beginning of May, after questioning its members, the Bangladesh Textile Industry Association came to the conclusion that C&A definitely wants to cancel 40% of its orders, 20% in December and the remaining 40% next year.
Open for a fee
After weeks of only eating lentils with rice crackers, Kulsum found out on May 1 that she could go back to work the next day. “Finally,” she says, “I was so excited about the reopening of the factory that I cooked my husband’s favorite dish – lentil soup, aubergine puree, spinach and rice.”
The Sam’s Attire factory has up to 6,000 textile workers, 600 to 700 per floor. The factory was almost fully occupied from the start, although only 30% of the workers are admitted. “It’s difficult to keep your distance,” says Kulsum.
In mid-May she will receive almost 60% of her April salary. It was financed with state money and the factories have to repay the loan at 2% interest. C&A urges governments and banks to “speed up access to credit and income support for businesses and workers”.
The factories are running again, but a lot of money is still lacking in Bangladesh. Scott Nova of the US NGO Worker Rights Consortium is someone who talks about this more openly than the suppliers. He assumes that C&A has reactivated around 90% of the orders.
This means that the company is better positioned than others. But the problem is not solved. “Conservatively, there is a gap of $ 20 to 30 million,” says Nova. C&A funds were missing $ 2-3 million in wages today, the equivalent of 20,000 to 30,000 textile workers a month.
The fact that textile companies want to postpone orders by up to a year is tantamount to a rejection. “How can the company guarantee that it will take off and pay for the clothes a year later?” Asks Nova, an employment lawyer.
In addition, fabrics and clothing have to be stored, otherwise they would go moldy in the high humidity in Bangladesh. His conclusion: “When millions of dollars are missing, the industry needs time to recover from the financial hangover. Suppliers have to close their factories and lay off workers. The wages are falling, the families have no money for food and rent. ”
A spokesman for C&A said: “Complete production of all old orders is not possible and unreasonable, as production in many supplier countries was completely interrupted for several weeks and can currently only be restarted to a limited extent to protect factory workers.”
At the beginning of June, Rubana Huq spoke publicly for the first time about the extent of the crisis: “Only 1,926 factories have started working again.” The association has 4,500 factories as members. The capacity utilization is only 55%. In addition, orders had been canceled and $ 430 million was missing to pay the garment workers’ wages. Around every second job in the textile industry is at risk.
Huq warns: “We are blacklisting companies that do not pay and do not react to their suppliers.” And for the first time, individual providers are threatening to bring lawsuits against buyers.
Dil Afrose Jahan is a freelance investigative journalist and media trainer. Benedict Wermter is a reporter from Germany, Sylke Gruhnwald and Christian Zeier are reporters from Switzerland. The investigation was published and written for the first time in cooperation with the Swiss investigation platform “Reflekt”. The investigation is partially funded by the European Journalism Covid 19 Support Fund. Further information and background material at www.reflekt.ch/bangladesh.