North American retailers set five-year Bangladesh factory plan

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Published July 10, 2013

| Reuters

Nearly 20 North American retailers including Wal-Mart Stores Inc and Gap Inc unveiled a 5-year safety plan for Bangladesh garment factories on Wednesday that would include inspecting every factory within a year.

The announcement in Washington by the Alliance for Bangladesh Worker Safety on Wednesday comes after 1,129 workers were killed in the collapse of a Bangladesh garment plant in April and another 112 people perished in November fire at a Bangladesh factory.

A separate safety plan including coordinated inspections was announced by a group of mainly European brands on Monday.

A few student protesters were outside the building in Washington, where the plan was announced. The group United Students Against Sweatshops handed out fliers, saying "Gap and Walmart: Bangladeshi Workers Reject Your Fake Safety Plan."

Funding for the North American plan is based on how much production each retailer has in Bangladesh; those at higher levels will pay $1 million a year for five years.

So far, $42 million has been raised for the project. Ten percent of the funds will be set aside to assist workers temporarily displaced by factory improvements or if a factory closes for safety reasons. The money will also support a non-governmental organization chosen to implement it. A decision on the NGO should come within 30 days.

The 17 current members of the alliance include: Canadian Tire Corp Ltd ; Carter's Inc ; The Children's Place Retail Stores Inc ; Gap; Hudson's Bay Co ; IFG Corp; J.C. Penney Co Inc ; Jones Group Inc ; Kohl's Corp ; L. L. Bean Inc; Macy's Inc ; Nordstrom Inc ; Public Clothing Co; Sears Holdings Corp ; Target Corp ; VF Corp ; and Wal-Mart.

Hong Kong sourcing company Li & Fung Ltd <0494.HK>, which does business with many of the companies involved, is serving as an adviser. Additional members are expected to join in the future.

"The safety record of Bangladeshi factories is unacceptable and requires our collective effort," member chief executives said in a joint statement. "We can prevent future tragedies by consolidating and amplifying our individual efforts to bring about real and sustained progress."

Goals include developing common safety standards within three months, sharing inspection results, and getting factories to support the democratic election and operation of worker participation committees.

An independent board chairman, set to be named in the next few weeks, will oversee the plan. Four retailers and four others will also be on the board.

The plan, Bangladesh Worker Safety Initiative, was developed with assistance from former U.S. Senators George Mitchell and Olympia Snowe, who acted as independent facilitators at the Bipartisan Policy Center. The group has asked Mitchell and Snowe to verify the effectiveness of the program over at least the first two years.

Some companies are also set to offer a combined total of over $100 million in loans and access to capital to help factory owners improve safety.

The North American group's plan is being backed by the American Apparel & Footwear Association, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association, and the United States Association of Importers of Textiles & Apparel.

A larger number of mostly European retailers and brands backed a safety accord put together with the help of labor unions. The group behind that plan includes the world's two biggest fashion retailers, Inditex SA , owner of the Zara chain, and H&M . A small number of North American companies such as PVH Corp signed onto that accord.

(Reporting by Jessica Wohl in Chicago and Doug Palmer in Washington; Editing by Jeffrey Benkoe)

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http://www.foxbusiness.com/news/2013/07/10/north-american-retailers-set-five-year-bangladesh-factory-plan/