Wal-Mart nixed paying suppliers to fight fire

At a meeting convened in 2011 to boost safety at Bangladesh garment factories, Wal-Mart Stores Inc. made a call: paying suppliers more to help them upgrade their manufacturing facilities was too costly.
The comments from a Wal-Mart sourcing director appear in minutes of the meeting, which was attended by more than a dozen retailers including Gap Inc., Target Corp. and JC Penney Co.
Details of the meeting have emerged after a fire at an Ashulia factory that made clothes for Wal-Mart and Sears Holdings Corp. killed more than 100 people last month. The blaze has renewed pressure on companies to improve working conditions in Bangladesh, where more than 700 garment workers have died since 2005, according to the International Labor Rights Forum, a Washington-based advocacy group.
At the meeting in Dhaka in April last year, retailers discussed a contractually enforceable memorandum that would require them to pay Bangladesh factories prices high enough to cover costs of safety improvements.
Sridevi Kalavakolanu, a Wal-Mart director of ethical sourcing, told attendees the company wouldn't share the cost, according to Ineke Zeldenrust, international coordinator for the Clean Clothes Campaign, who attended the gathering.
Kalavakolanu and her counterpart at Gap reiterated their position in a report folded into the meeting minutes, obtained by Bloomberg News.
“Specifically to the issue of any corrections on electrical and fire safety, we are talking about 4,500 factories, and in most cases very extensive and costly modifications would need to be undertaken to some factories,” they said in the document. “It is not financially feasible for the brands to make such investments.”
PVH Signature PVH Corp. (PVH), which owns the Tommy Hilfiger brand, and German retailer Tchibo signed the memorandum earlier this year. Gap, which has pledged funding for safety improvements and hired a chief fire safety inspector, had been in negotiations to sign the agreement.
The retailer eventually declined, objecting to higher prices, publicly disclosing Bangladesh factories and to making the memorandum contractually enforceable, said Scott Nova, executive director of the Washington-based Worker Rights Consortium, who attended the meeting.
Gap decided against signing the document in October, Bill Chandler, a spokesman, said in a telephone interview. He declined to discuss the negotiations.
“We made a good-faith effort to participate, and for any agreement to be successful, it has to be acceptable to many parties,” Chandler said. “Our investment of time shows how committed we are.”
CONTINUED ENGAGEMENT
Kevin Gardner, a Wal-Mart spokesman, declined to discuss the Dhaka meeting or what was said there.
“We know that continued engagement is critical to ensure that reliable, proactive measures are in place to reduce the chance of factory fires,” he said.
WAL-MART'S POSITION “SHOCKING”
“You know it is extremely important, and they say: 'There's no way we're going to pay for that,'” said Zeldenrust, whose Amsterdam-based organization pushes for improved working conditions in the global garment industry.
UNDER PRESSURE
Fifty percent of the Bangladesh's garment factories don't meet legally required work safety standards and those that have improved working conditions have done so under pressure from Western apparel makers, said Kalpona Akter, executive director of the Bangladesh Center for Worker Solidarity, a non- governmental organisation founded by two former garment child workers to promote safer factories.
On November 26, two days after the fatal fire at the Tazreen factory, Akter witnessed the aftermath of a blaze at a Dhaka garment warehouse. Workers were forced to climb down a bamboo pole because they couldn't exit through the stairs, she said. Graffiti on a restroom wall at the warehouse read: “Work here and your life is a living hell.”