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April 23, 2020

Industry groups urge action on supply chain liquidity squeeze

Textile, apparel, footwear and travel goods associations from around the globe are adding to calls for governments to address the liquidity squeeze caused by Covid-19 across the supply chain.

Textile, apparel, footwear and travel goods associations from around the globe are adding to calls for governments to address the liquidity squeeze caused by Covid-19 across the supply chain.

66 industry groups are urging governments and international financial institutions to enact coordinated efforts to fight the economic crisis created by the pandemic.

As businesses have closed, revenues and cash flow have dried up, adversely hitting many companies, their workers, and multiple layers of suppliers all around the world. 

“Contracts are being cancelled, workers are being furloughed, and factories and businesses are being closed. With each passing day, this damage is compounding and harming more and more stakeholders,” they say. “We need to coordinate and accelerate our efforts to limit and mitigate this damage, and make sure it is not irrevocable.”

The plea comes from industry associations around the world, including the US, China, the UK, India, Philippines, Sri Lanka, Bangladesh, Indonesia, Egypt, Cambodia and Pakistan.

They are appealing to governments to:

  • Enact temporary stimulus measures to ensure liquidity;
  • Undertake temporary duty deferral and tariff relief to support liquidity and cash flow, and keep workers employed; and
  • Refrain from imposing new trade restrictions and not impede production or delivery of PPE, its intermediate products, or raw materials.

The organisations say they recognise many of these items were addressed in a G-20 statement released in March, but add that, “words mean a lot, but the actions will determine how fast and how well we can emerge from this crisis.”

They also urge supply chain partners “to do their part too. Individual companies should take action that minimise disruptions, facilitate payment for work that has been undertaken, and ensure workers continue to be treated with full respect while ensuring their health and safety.

“These actions in the next 90 days will not only help dictate how fast we can recover, but also will say a lot about who we are as an industry and as a people.”

“Companies are desperate for cash to pay their workers and suppliers, while at the same time access to revenue is down due to closed stores,” says Steve Lamar, president and CEO of the American Apparel & Footwear Association (AAFA). 

“This is why we need governments – both the US and globally – to work together with international financial institutions to make sure financial resources are available to keep supply chains solvent and workers employed. 

“If this is not done quickly and thoughtfully, we risk burning a hole in the global supply chain. It is essential that leaders act now to support these networks that employ millions around the world.”

The statement can be viewed in its entirety here.

A coalition of labour rights groups representing around 2,000 garment brands and retailers has separately set out its priorities to protect garment workers during the Covid-19 crisis – including safeguarding worker income and health, and future-proofing supply chains.

And apparel brands and retailers – including Adidas, C&A, H&M Group, Inditex, M&S and Primark – have joined employer organisations, unions and the International Labour Organization (ILO) to try to secure emergency funds to support garment factories and workers through the Covid-19 pandemic.

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