In April, there were deadly fires in several Bangladesh factories as well as one factory collapse that killed more than 1,000 people.  After these disasters, Walmart publicly berated the Bangladesh factories and accused over 250 Bangladeshi suppliers of having safety problems.  Walt Disney Co. told licensees that they could no longer produce Disney-branded merchandise in Bangladesh.  This directive came after boxes of Disney sweatshirts (to be distributed to Walmart) were found at the site of a factory fire.  Walmart claims it didn’t know the items were being produced at that particular plant.

H&M is the biggest buyer of clothing from Bangladesh, and has taken an opposite route of Walmart, vowing to work with factories to improve the factories’ safety standards.  H&M has adopted a fix-it approach.  However, retailers can’t monitor everything that goes on in factories or with all of their suppliers.   For example, H&M faces challenges with factories in other countries like Cambodia where there were recently injuries at a factory that was unauthorized to manufacture H&M clothing.

Several years ago, H&M auditors surprised Garib & Garib, a factory in the Dhaka-area.  They identified several safety hazards that were repaired, but that did not prevent a fire in 2010 that killed over 20 people.  The factory closed for six months.  H&M contributed to the compensation of the victims, but the owner of the factory claims he had to pay over $2 million in damages.  H&M continued to work with the factory after the fire, although other retailers pulled their orders from Garib & Garib.  Since it reopened, H&M has begun making two or more unannounced visits per month.

Some Bangladesh leaders suggest that buyers should put more pressure on owners in order to facilitate meaningful change in the industry.  Walmart holds true to its zero-tolerance policy to cut suppliers that violate safety standards.

Discussion Questions:

1. What alternatives are retailers pursuing when they find out their merchandise is being made in unsafe conditions?

2. Which alternative do you believe is best?

 

SOURCE: Jens Hansegard, Tripti Lahiri, and Christina Passariello, Wall Street Journal, May 30, 2013