May 7, 2013

Response to collapse poses risks for retailers

By KAY JOHNSON/The Associated Press

MUMBAI, India - Global clothing brands involved in Bangladesh's troubled garment industry responded in starkly different ways to the building collapse that killed more than 600 people. Some quickly acknowledged their links to the tragedy and promised compensation. Others denied they authorized work at factories in the building even when their labels were found in the rubble.

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Firefighters try to douse a garment factory fire in Dhaka, Bangladesh, last year. After a series of fatal incidents in the industry there, experts say businesses that sell clothing need to help eliminate work hazards to protect their images.

The Associated Press

click image to enlarge

The first approach seems to deserve plaudits for honesty and compassion. The second seems calculated to minimize damage to a brand by maximizing distance from the disaster. Communications professionals say both are public relations strategies and neither may be enough to protect companies from the stain of doing business in Bangladesh.

Such experts say that with several deadly disasters and fires in Bangladesh's $20 billion garment industry in the past six months, possibly the only way retailers and clothing brands can protect their reputations is to visibly and genuinely work to overhaul safety in Bangladesh's garment factories. A factory fire killed 112 workers in November and a January blaze killed seven.

"Just public relations is not going to do it," said Caroline Sapriel, managing director of CS&A, a firm that specializes in reputation management in crisis situations.

Over the past decade, major players in the fashion industry have flocked to Bangladesh, where a minimum wage of about $38 a month has helped boost profits in a global business worth $1 trillion a year. Clothing and textiles now make up 80 percent of Bangladesh's exports and employ several million people.

Yet the country's worker safety record has become so notorious that the reputational risks of doing business there may have become too great even for retailers and brands that didn't work with factories in the collapsed Rana Plaza building or the Tazreen Fashions factory that burned late last year.

"I don't think it's enough anymore to say 'We're not involved in these particular factories,"' Sapriel said.

Many clothing brands were quick to distance themselves from the five factories that were housed in Rana Plaza. The building, which was not designed for industrial use and had three illegally added levels, collapsed April 24.

Benetton said none of the factories were its authorized suppliers, although Benetton labels were found in the rubble. Spain's Mango said it hadn't bought clothing from Rana Plaza factories but acknowledged it had been in talks with one factory to produce a test batch of clothing.

German clothing company KiK said it was "surprised, shocked and appalled" to learn its T-shirts and tops were found in the rubble. The company said it stopped doing business with the Rana Plaza factories in 2008. It promised an investigation.

Wal-Mart said there was no authorized production of its clothing lines at Rana Plaza but it was investigating whether there was unapproved subcontracting. Swedish retailer H&M, the single largest customer of Bangladeshi garment factories, said none of its clothes were produced there.

The Walt Disney Co. in March responded to publicity from last year's fire at the Tazreen factory, where its branded clothing was found, by pulling out of Bangladesh production altogether.

Only a few companies, including Britain's Primark and Canada's Loblaw Inc., which owns the Joe Fresh clothing line, have acknowledged production at Rana Plaza and promised compensation. Loblaw's CEO said there were 28 other brands and retailers using the five factories and urged them to end their "deafening silence."

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