May 15, 2013 / 2:43 PM / 4 years ago

Wal-Mart checks Bangladesh factories; retailer accord elusive

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A man stands on a skateboard outside a Wal-Mart store in Williston, North Dakota March 13, 2013.Shannon Stapleton

(Reuters) - Wal-Mart Stores Inc (WMT.N) stepped up Bangladesh factory inspections while U.S. and European retailers pursued separate accords to try to prevent another disaster in a garment industry where more than 1,200 workers have died in the past six months.

Wal-Mart, the world's biggest retailer, said it does not plan to sign a fire-and-building safety agreement backed by some of Europe's biggest apparel brands because it believes its own safety inspection plans will get faster results.

Wednesday is the deadline for retailers to decide whether to join the consortium, led by labor groups such as Europe's IndustriALL, which said at least 24 garment and retail brands sourcing from Bangladesh had signed up so far.

Other U.S. retailers including Gap Inc (GPS.N) said they would not join the European pact without changes to the way conflicts are resolved in the courts. U.S. companies have been reluctant to join any industry accord that creates legally binding objectives.

"Walmart believes its safety plan meets or exceeds the IndustriALL proposal, and will get results more quickly," the U.S. retailer said in a statement on Tuesday.

Walmart has begun checking the 279 factories that supply its stores, and plans to inspect them all within six months. Its checks have already turned up two locations with safety problems and it asked the Bangladesh government to suspend production at those factories.

In Chittagong, about 250 kilometers (155 miles) from Bangladesh's capital Dhaka, workers at one factory that Walmart wants closed said they were unaware of any safety concerns and business was proceeding as usual. Company officials at Stitch Tone Garments Ltd said they were no longer making clothes for Walmart, but did not reveal who they were currently supplying.

"We don't know about the problems of our owners. We don't know about the risk of building. We are working for our livelihood. If we stop the work, we cannot survive," one of the workers, Parvin Akter, said.

The minimum wage for Bangladesh's garment workers is about $38 a month, although many factories pay more than that to attract workers in a tight labor market. Bangladesh ranked last in minimum wages for factory workers in 2010, according to World Bank data.

The April 24 collapse of Rana Plaza in Savar, near Dhaka, has focused attention on safety standards at Bangladesh factories that make clothing for the world's major apparel brands and retailers. The death toll stood at 1,127 as rescue operations ended this week.

But the companies that rely on Bangladesh for inexpensive apparel have yet to agree on how best to ensure safe working conditions. Walmart's approach may be faster, but touches only a fraction of Bangladesh's estimated 6,500 garment factories. The European-led accord will take months to implement, but covers a wider spectrum.

IndustriALL spokesman Tom Grinter said the agreement, signed mostly by European companies so far, including the world's two biggest fashion retailers Inditex (ITX.MC) and H&M (HMb.ST), could not be amended to address concerns of U.S. companies.

"The clear message is that the legally binding nature of the accord is what makes it a historic game changer and watering that down is absolutely out of the question."

"H&M are really getting some good publicity for being first out of the blocks. Consumers on the High Street are going to know which shops have signed on and which haven't."

Trans-Atlantic Split

North American retailers discussed forging their own Bangladesh safety agreement as an alternative to Europe's plan, although details were sparse.

The National Retail Federation, one of the largest U.S. retail trade associations, spoke on Tuesday with other trade groups and with its member companies about a possible accord among North American retailers. Details from those calls were not yet available.

Despite the differences between U.S. and European companies, the fact that the world's biggest retailers were ready to act indicates that the latest tragedy has begun to bring about change.

In Dhaka, the government has inspected and closed more than a dozen garment factories because of structural problems.

Workers have also begun to demand greater safety and labor rights protections. Earlier this week, worker unrest prompted authorities to shut more 300 garment factories for indefinite periods in the Ashulia industrial belt, on the outskirts of Dhaka, which accounts for nearly 20 percent of total exports.

Garments make up about 80 percent of Bangladesh's exports, so the government wants to ensure business continues as usual. With wages less than half of what workers make in China, Western retailers are just as eager to keep sourcing from Bangladesh.

But some workers doubt that change will come any time soon. Mominur Rahman, who damaged his spine jumping from the third floor to escape the deadly fire that ripped through the Tazreen factory in November, said working conditions remain tough.

"We need to work collectively: workers, factory owners and the government, to see improvement," he said through an interpreter at a workplace safety conference in Thailand last week. "The factory inspection system in Bangladesh needs to be increased and improved. I never saw a factory inspection at the Tazreen factory, not once. Same with the Savar tragedy, nothing will change immediately."

Additional reporting by Nazimuddin Shyamol in Chittagong, Nivedita Bhattacharjee in Chicago, Phil Wahba and Jennifer Saba in New York, Susan Taylor in Toronto, Emma Thomasson in Zurich and Amy Sawitta Lefevre in Bangkok; Writing by Emily Kaiser; Editing by Michael Perry and Maureen Bavdek

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