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News | 21st April 2020
 

EWM cancels orders with Asian suppliers

 
 
 

Millions of pounds worth of lost business has been catastrophic

EDINBURGH Woollen Mill is among a number of British retailers to have collectively cancelled £1.4bn and suspended another £1bn of orders from Bangladesh.
More than a million Bangaldeshi garment workers have been sent home without pay or have lost their jobs after EWM, Primark and Matalan cancelled or suspended £2.4bn of existing orders in the wake of the COVID-19 epidemic, according to data from the Bangladeshi and Garment Exporters Association (BGMEA).
EWM, which includes Peacocks and Bonmarché, has cancelled or suspended £27.1m worth of orders, A company spokesperson said it had cancelled all existing orders, saying: “Our relationships with suppliers are absolutely fundamental to our business.
“This is not what we would ever normally wish to do but the current circumstances are such that this is a necessity.”
The BGMEA said the impact of the cancellations had already been “catastrophic” for Bangladesh.
More than one-quarter of the country’s four million garment workers have lost their jobs or been furloughed without pay because of order cancellations or the refusal of brands to pay for cancelled shipments.
A survey of nearly 300 Bangladeshi garment suppliers by the Workers Rights Consortium (WRC) and Penn State University, found western retailers had used force majeure (unforeseeable circumstances which prevent someone from fulfilling a contract) clauses in their contracts to cancel or suspend orders.

Factory owners in Bangladesh said brands and retailers were postponing the delivery of orders, which had already been produced by garment factories, so invoices couldn’t be raised.
They were also cancelling all upcoming orders and refusing to pay the cost of raw materials already bought by suppliers.
“We have had to temporarily close our factory for the health and safety of our workers but we face ruin because brands and retailers are cancelling orders which we have already produced and, if they don’t pay, I can’t pay the workers,” said Mostafiz Uddin, chief executive of the Bangladesh Apparel Exchange and managing director of Denim Expert, which supplies international brands, including Peacocks, in the UK.
“We have to pay upfront for all our materials and banks are blocking my accounts. I can’t even pay the utility bills.
“We can’t do anything because, after this is over, we’ll need to work with these brands again so are powerless to fight them.”
More than 97 per cent of the suppliers surveyed by the WRC and Penn State University said brands had offered no financial help in covering the cost of furloughing workers or helping to pay severance costs.
“What we’re seeing is a wholesale abandoning of workers and suppliers,” said Scott Nova, executive director of the WRC.
“The way the garment supply chain is set up means the suppliers take all the risk. They buy the cloth, hire the workers and make the clothes but can’t raise an invoice until the order is shipped.
“If brands cancel existing orders and refuse shipment, invoices can’t be sent and nobody in Bangladesh gets paid.”

 
 
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