Blog: Bangladesh strikes cause apparel industry concerns

Petah Marian | 2 April 2013

Ongoing general strikes in Bangladesh are raising concerns among apparel manufacturers that foreign buyers will shift their orders to other countries as they face difficulties fulfilling orders on time.

General strikes have meant that many apparel exporters have failed to meet shipping deadlines, while others have had to resort to the more costly option of air freight, consequently pushing up the overall cost of production.

According to the Bangladesh Garment Manufacturers and Exporters Association, the overall cost of production in Bangladesh's apparel sector has increased by 20% to 25% due to political turmoil and the frequent general strikes.

The minimum wage for factory workers in Cambodia's garment and footwear sector is set to rise to US$75 a month from 1 May, rising from the current $61 a month.

Local unions in Cambodia who took part in the negotiations had called for a wage hike to between US$89 and US$150 a month.

PVH, which recently completed the US$2bn acquisition of Warnaco, now expects that the deal will require more investment than initially planned.

The company is forecasting that its full-year earnings before interest on a non-GAAP basis will be approximately 20% lower than original expectations, driven by additional investments in developing the brands acquired through the Warnaco buy.

Investments are set to include enhancing the existing systems and supply chain infrastructure; upgrading the Calvin Klein jeanswear product design and quality with an emphasis on geographic differentiation, and investing in in-store marketing and the in-store customer experience.

It will also fill key design, marketing and merchandising positions, rationalise global excess inventory levels, and reduce and restructure the off-price and club sales distribution in Europe and North America.

The warning came as the group reported a jump in fourth-quarter net income, reaching US$80.7m from $35.5m in the same period a year earlier.

Meanwhile, H&M has been working to improve its sustainability credentials, with the release of its fifth annual sustainability report highlighting the brand's ongoing efforts.

The company said that it is currently working on closing the loop on textile fibres, combating climate change and water scarcity as well as ensuring that workers in supplier factories earn enough to live on.

Yet, the Clean Clothes Campaign (CCC) has taken the launch of H&M's sustainable clothing range Conscious as an opportunity to criticise its efforts with a spoof campaign called "Unconsciousness Collapses".

The spoof ad aims to highlight working conditions in Asian garment factories. The CCC said, that in Cambodia alone, more than 2,900 workers have collapsed since 2010, several hundred of them at H&M suppliers.


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