The new coronavirus is potentially disastrous for low-wage workers who power the global clothing trade.
By Elizabeth Paton
The empty, echoing shopping malls of Western cities are a testament to the biggest crisis borne by global clothing and retail industries in over a generation. But the impact of the coronavirus on retail is a two-part devastation, as the daily flow of thousands of orders placed by Western retailers to supplier factories in South Asia have suddenly slammed to a halt.
Factory owners face financial ruin, while the livelihoods of hundreds of thousands of garment workers hang in the balance.
“Our situation is apocalyptic,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), which represents Bangladeshi factory owners. “The cancellations and hold instructions coming in from Western fashion retailers are pushing us to the point of insolvency, with massive open capacity and raw materials liabilities.”
Fast fashion retailers rarely own the factories that supply them with their wares. Instead, the vast majority of garment and footwear orders are outsourced to suppliers in emerging markets like Bangladesh, where overhead is cheap and the cost of human labor is cheaper.
The majority of suppliers are in countries that can be the most vulnerable to large global economic shocks, such as India, Myanmar, Cambodia and Bangladesh, which is the second largest garment exporter nation after China.
Bangladesh, in particular, which has been the site of one of the most effective campaigns of the globalized era to improve labor and safety conditions for garment workers, has seen more than $2.8 billion worth of orders canceled or postponed since the start of the coronavirus crisis, according to Ms. Huq.
Ready-made garments comprised 84 percent of Bangladesh’s total exports, worth $40.5 billion, in its 2019 fiscal year, according to data posted on the website of the BGMEA. This loss compromises the ongoing employment of more than two million Bangladeshi garment workers.
“The situation is very bad. The Bangladeshi supply chain is in complete disarray with many foreign brands acting irresponsibly,” said Sharif Zahir, the managing director of the Ananta Group, which owns seven factories with a total of 26,000 workers. His company supplies brands that include H&M, Zara, Gap, Levi’s and Marks & Spencer.
According to Mr. Zahir, most Bangladeshi factories had already faced losses or thin margins since last year because of government-implemented wage increases in December 2018. Now, many buyers were canceling orders that had been produced, delaying payments and asking for discounts on already shipped goods.
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