Bangladeshi garment makers say $3bn in orders lost to virus – The Diplomat

In this April 19, 2018 file photo, garment factory trainees work at the Snowtex garment factory in Dhamrai, near Dhaka, Bangladesh.

Credit: AP Photo/AM Ahad

Clothing makers in Bangladesh say fashion retailers have canceled or suspended more than $3 billion in orders due to the coronavirus outbreak, although a handful have agreed to pay anyway.

Data from the Bangladesh Garment Manufacturers and Exporters Association released on Monday reflects both orders already placed or in progress and expected orders from the country, which is the world’s second-largest garment exporter after China.

Canceled orders, according to manufacturers’ reports to the BGMEA, included tens of millions of purchases from many large buyers, including European buyers C&A and Inditex, Ireland’s Primark and Britain’s Marks & Spencer.

Manufacturers and unions in Bangladesh have called on major retailers to honor their commitments to suppliers.

Bangladesh is just starting to feel the direct impact of the pandemic and its government has ordered most businesses to close to help contain it. But shocks to the country’s export markets have been rippling through its economy for weeks.

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A survey of factory owners in Bangladesh released on Friday showed millions of Bangladeshi workers were being sent home without the wages or severance pay they were owed.

The BGMEA said $1.8 billion in orders had been suspended and a further $1.4 billion had been cancelled. Planned order cancellations for April-December amounted to nearly $1.7 billion, he said. The numbers are conservative as they exclude orders that would go to multiple buyers.

The new data was incorporated into a report by the Center for Global Workers’ Rights at Pennsylvania State University and the Worker Rights Consortium, a Washington, DC-based labor rights organization.

Sweden’s H&M said it was suspending new orders and reassessing plans, but would pay suppliers and take delivery of orders already in production or already made, under terms already agreed.

“This is in line with our responsible sourcing practices, and not just in Bangladesh, but in all countries of production,” the company said in a statement.

PVH, owner of the Calvin Klein, Tommy Hilfiger and Heritage brands, has told its suppliers it is releasing invoices that have been on hold since March 18. Subsequent invoices will be processed gradually.

Commitment for orders already in production or finished goods not yet shipped would allow factory owners to get funding to help them out, says a letter to suppliers seen by The Associated Press.

“PVH and H&M are doing the right thing, unlike the long list of brands that refuse to pay for the goods workers have already made for them,” said Scott Nova, executive director of the Worker Rights Consortium.

British retailer Tesco, one of the retailers mentioned in the latest data, said in a statement that it buys from most of its suppliers and is working with them to understand how the outbreak is affecting them.

Marks & Spencer said it was trying to defer orders and carry over inventory. “During these unprecedented times, as a responsible retailer, we will continue to do everything we can to support our partners and suppliers,” he said in an emailed statement.

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Major Western brands have come under heavy pressure to improve conditions in factories after huge fires and other disasters killed hundreds of workers.

Store closures and other disruptions due to the virus outbreak are straining a fragile supply chain in which big buyers have been squeezing their suppliers for years.

More than one million of the more than 4 million garment workers in Bangladesh have already lost their jobs or been made redundant due to order cancellations and non-payment of canceled shipments by buyers.

By Julhas Alam for The Associated Press.

AP Asia Business editor Kurtenbach reported from Bangkok.

Michael O. Stutler