Blog: Leonie BarrieFactory compensation talks stall

Leonie Barrie | 16 September 2013

Talks last week to try to agree compensation payments for the victims and survivors of two Bangladesh factory disasters failed to reach a decision, with brands and retailers set to meet again in a fortnight to consider their next steps.

Not surprisingly, frustrations are rising over the length of time it is taking to agree a framework for long-term compensation - with those companies who have not taken part in the discussions being singled out for particular criticism.

But there are signs that three separate initiatives underway to boost the safety of factory workers in Bangladesh are now beginning to look at ways of collaborating on common standards

And Bangladesh features prominently in the latest Social & Environmental Responsibility Report from Gap Inc - even though it did not have a business relationship with either of the premises caught in recent tragedies. The report also highlights the retailer's efforts to help communities at home and abroad, as well as its work to improve its environmental record.

The availability of raw materials is another issue at the forefront of the global garment industry. But a country's access to local fibre does not necessarily translate into a competitive advantage, suggests David Birnbaum.

Likewise, economists' "productivity" rankings don't necessarily translate to efficient garment makers, with Mike Flanagan pointing out that the most productive workers depend on the environment they're working in.

Payment terms for general merchandise suppliers to Marks & Spencer have been extended in an effort to boost cash flow. Freight on board (FOB) suppliers have seen their payment terms lengthened from 60 days to 75 days, while full-service vendors (FSV) will see their payment delayed to seven weeks from five.

In other news, upscale department store retailer Neiman Marcus is to be acquired by Ares Management and Canada Pension Plan Investment Board (CPPIB) in a deal worth US$6bn.

And Esprit is tweaking its existing turnaround plan to focus more on fast fashion, after the company swung to a full-year loss after its efforts so far failed to gain traction.

PVH Corp, meanwhile, says it is on track with the integration of the Warnaco business it bought earlier this year, despite the fact acquisition costs pushed the apparel giant to a second-quarter loss.

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