• Monday, Jul 06, 2020
  • Last Update : 11:23 pm

Apparel retailer Global Brands Group cancels $4.61m work order

  • Published at 12:09 pm June 26th, 2020
Garment workers
File photo: Garment workers return from a workplace as factories reopened after the government has eased the restrictions amid concerns over the coronavirus disease (Covid-19) outbreak in Dhaka Reuters

Unethical buying practices worst nightmare for apparel workers

The livelihood of hundreds of Bangladeshi apparel workers working for western retailer Global Brands Group (GBG) has fallen into uncertainty. GBG has cancelled work orders worth $4.61 million due to the Covid-19 pandemic.  

These cancellations or work orders on hold, and delayed payment or nonpayment, have forced suppliers to cut jobs at their factories.

GBG is a fashion accessories and apparel company which designs, develops, and sells products under a diverse array of brand names like Calvin Klein, Juicy Couture, Frye, Kenneth Cole, Reiss, Sean John, Jones New York, and many more.

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, GBG and its importer Li-Fung have cancelled orders worth $4.61 million from 11 suppliers.

One such supplier, Mostafiz Uddin, managing director of Denim Expert Ltd, is fighting against unethical buying practices and trying to establish workers’ rights. With work order cancellations worth $247,136, Mostafiz Uddin is facing a cash crunch to pay his 2,000 workers.

Denim Expert Ltd in Chittagong made 24,462 pieces of jeans for Sean John and Jones New York, which was cancelled by GBG.

“In my factory, hundreds of boxes of jeans are crammed against walls and packed to the ceiling. These were supposed to be shipped off by now, but the buyer cancelled the orders,” Mostafiz told Dhaka Tribune.

He said that due to the Covid-19 pandemic, global buyers, including GBG, Arcadia, Asda, Burton jeans, Peacocks, owned by Edinburgh Woollen Mill, Dorothy Perkins and Topshop, have either cancelled or put a hold on work orders and payments worth $10 million.

Like Mostafiz, some 1,150 BGMEA apparel makers and suppliers have seen work order cancellations of $3.17 billion from global retailers and brands, as have many other Asian countries.    

 Workers worst victims of unethical practices

 “Unfortunately, we all saw that after the Covid-19 pandemic surfaced some cruel unethical practices and decisions were taken by some fashion brands and retailers. The decision to cancel work orders has made the workers' jobs vulnerable and they are on the verge of losing their jobs,” Mostafiz said.

According to Industrial Policy data, over 20,000 apparel workers in Bangladesh have already lost their jobs as of June 22, 2020. People in the apparel industry say the figure will rise as owners downsize due to a lack of work orders.   

“Clothing brands and retailers have cancelled orders ignoring their financial responsibility towards workers. This decision increases worker’s job losses through dismissals and temporary layoffs from factories,” said China Rahman, general secretary of IndustriALL Bangladesh Council.

“They [clothing brands] have a responsibility to stand beside workers in this crisis period. Keeping in mind the workers’ lives and livelihoods, they should clear payments and reinstate work orders,” she added.

Businesses fall due to cash crunch

“The effects of the order cancellation from GBG have left my factory in grave trouble in more ways than one. First, GBG gave the factory a sales contract but with the condition that we had to buy fabrics and accessories from their nominated suppliers under letter of credit (LCs). When they cancelled the orders, I still had to pay the suppliers for the raw materials.

“Second, due to their cancellation of orders, I could not settle the payment with my bank and as a result my factory is cash strapped,” the Denim Expert owner added.

Suppliers are also facing problems in opening LCs to import raw materials for new or existing work orders due to a shortage of cash.

“The brands in  European and other western markets have started to open slowly, but there is no commitment from brands and retailers to reinstate work orders or pay for goods already shipped to retailers,” said a supplier wishing to remain anonymous. He has also faced order cancellations of $1.88 million from GBG.

Suppliers are also unable to open Letters of Credit (LCs) for new orders as they do not have funds in hand to procure raw materials, said the apparel maker.  

Discounts add salt to wounds  

Now in this difficult time, buyers have added yet another unethical practice, namely discounts.

“Buyers are demanding a 10% to 50% discount on work orders already produced and kept on hold. We are making at best a 3% profit. How is it possible to agree to the demand for discounts, and who will bear the bank liabilities?” said another manufacturer, who is having to deal with cancelled and work orders put on hold, worth over $2 million.  

Giving a discount  on such slim margins is much harder to deal with than a  cancelled order, he added.

 Fashion supply chain shaky

“Suppliers work for retailers and brands. Protecting the supply chain of suppliers and workers in a crisis is in the best interest of brands,” said a top official of a renowned apparel brand, wishing not to be named..

“If suppliers cannot sustain themselves, the whole fashion industry will be in trouble. Building ethical buying practices and maintaining a relation of trust is going to be very critical in a post-Covid world,” he added.

“Whatever happens, we should think about our workers. Leaving them in uncertainty will ultimately hurt moral standards and end consumers will not be on the side of the industry as a whole, he said.

How to absorb the shock

“It is a global problem, which comes from both sides—demand and supply. Buyers think about their survival as we think of ours,” said Arshad Jamal Dipuvice president of BGMEA.

“Buyers will come back to us as we have a well-established capacity to supply, while a good number of work orders will fly from China and it will create new opportunities for us as well,” Arshad added.

The government has to play an important role with cash support as well as policy for us to remain afloat, the BGMEA VP said.  

“Buyers should think about our workers and continue placing orders and reinstate cancelled orders, when the Covid-19 situation is brought under control,” the business leader said.

He expressed hope that buyers will come back with more orders.

 Consumers protest unethical practices

While apparel retailers who face order cancellations or have work orders on hold, are on the verge of collapse due to non-payment or delayed payments by global buyers, social media campaigners and consumers have taken a stand against these unethical practices.  

US reality TV star Kylie Jenner and Rapper Cardi B, who create garments for their Kendall+ Kylie fashion, have faced a lot of criticism on social media for reportedly refusing to pay workers in Bangladesh. 

GBG owns Kendall+ Kylie, which is refusing to pay Bangladeshi factory workers who make garments for their fashion line.

Consumers have already taken a stand on social media platforms against bad practices of giant brands like GBG. Maybe soon they will hit the streets, said brand representatives.   

“Kylie Jenner is the perfect example of performative activism, posting about Black Lives Matter (BLM) on her social media account just to appease her fans. But behind the scenes, her companies are unwilling to pay poor (mostly female) garment workers in Bangladesh. Make it make sense,” a fan tweeted. 

Kylie is being criticized, especially for not dipping into her own funds, to pay those factory workers who are struggling financially.

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