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Bangladesh Factory Owners Threaten Legal Action

(5/30/2014)

Garment factory owners in Bangladesh are threatening to pursue legal action over the cost of closures due to alleged safety violations. The apparel factory owners say they alone cannot cover the costs of both repair work and paying employees while the factories are closed for months. Two different agreements backed by retailers – the Accord on Fire & Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety – have mandated independent inspections for a number of safety issues. A dozen factories so far have been deemed to need significant work under the Accord, while another five under the Alliance have been identified as needing to suspend production.

The owner of Softex Cotton, a Dhaka-based factory, has threatened legal action against the Accord and demanded $100 million in compensation after his factory was closed because of alleged structural problems. While the Accord requires brands to maintain orders with suppliers for two years – even during closure – factory owners fear their facilities will lose orders from having to shutter.

It is still undetermined under the Accord who will pay workers during factory repairs. Jenny Holdcroft, policy director for international union IndustriALL, says the issue was left open to make sure factory owners could make a contribution. “This was always going to be a topic of negotiation,” Holdcroft told The Guardian. “Brands don’t want to commit to paying so that rich factory owners who have just pocketed the profits and not been spending on their factories for years continue to do so.”

The Alliance, which is backed by Walmart and Gap among other U.S. retailers, has set aside $5 million to help pay factory workers at buildings where improvements are needed. The inspections and safety agreements stem from last year’s Rana Plaza building collapse, which killed 1,138 people.

“The Alliance is sharing the worker’s salary along with entrepreneurs, so now there is a big confusion. We had a big meeting with the Accord to make them understand they have to come forward or how will we help our workers?” said Shaidullah Azim, a director of the Bangladeshi garment manufacturers association.



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