Loblaw, other retailers grappling with fallout from Bangladesh building collapse

Ottawa and Toronto — The Globe and Mail

Workers and fire fighters are shrouded in smoke as they prepare to dislodge the debris and fallen ceiling of the garment factory building which collapsed in Savar, near Dhaka, Bangladesh on Monday, April 29, 2013.

(Wong Maye-E/AP)

Loblaw Cos. Ltd. and other major Canadian retailers are holding an emergency meeting Monday to grapple with the aftermath of the deadly collapse of an illegally built clothing factory in Bangladesh.

The meeting comes a day after Bangladeshi authorities arrested the fugitive owner of the building that housed several factories as he tried to flee to India. At least 377 workers have died after last week’s disaster at the facility, which produced clothes for Loblaw’s Joe Fresh line and products for other major retailers around the world.

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Loblaw is facing consumer calls for a boycott of the brand.

The meeting is aimed at ensuring “those tragic incidents do not occur again,” said Diane Brisebois, president and chief executive of the Retail Council of Canada, the voice of Canada’s major retailers.

The council said it would work with member companies, the federal government and human rights groups to “identify best practices and key principles around worker and building safety,” she added, declining to name other retailers taking part in the meeting.

Loblaw is the only Canadian company that has publicly acknowledged buying clothes from the now-destroyed Rana Plaza in Savar, Bangladesh. But Ether Tex Ltd., a Bangladeshi company that produces clothes at the site, also identifies Wal-Mart Canada, Fairweather Ltd. and Atlantic Sportswear among its clients, according to its website.

Galen G. Weston, Loblaw’s executive chairman, may face some tough questions about the tragedy on Thursday when the company holds its annual meeting in Toronto.

After details of the incident surfaced last week, Loblaw expressed its condolences and vowed to bolster safety audits of factories working for it in Bangladesh, to get answers from local authorities on what caused the tragedy, and to support affected families. But neither Mr. Weston, who is the face of Loblaw in its advertising, nor Joe Mimran, the high-profile designer after whom Joe Fresh is named, have spoken publicly about the tragedy.

At least one labour rights group has challenged Loblaw’s contention that the company supplied a “small” amount clothing from Rana Plaza.

Washington-based Workers Rights Consortium said on Sunday that import data suggest Loblaw sourced a “substantial” volume of Joe Fresh garments in the collapsed building in Bangladesh. The group supplied data that shows Loblaw imported nearly 18,000 kilograms of clothing from the factory in seven separate shipments this year alone, or roughly the weight of 28,000 T-shirts or 22,000 pairs of jeans.

But Loblaw spokeswoman Julija Hunter disputed the suggestion that the company sourced more than a small amount of goods from the Bangladeshi factory. “In the context of Joe Fresh manufacturing, the amount of production from the building was small,” she said in an e-mail. “But I want to be clear that my confirmation of this does not in any way diminish that we feel that this is tragedy.”

Toronto-based anti-sweatshop activist Maquila Solidarity Network is calling on Joe Fresh and other brands that sourced from garment factories in the collapsed building “to come clean on what they knew about the health and safety record of the factories, compensate the victims and take steps now to prevent future disasters.”

Maquila’s policy analyst Bob Jeffcott said “just committing to more audits and certifications of factories haven’t solved the problems to date.”

Loblaw’s handling of the file is critical because it is betting heavily on Joe Fresh, which generates close to $1-billion of Loblaw’s $31.6-billion of annual sales. It is one of the bright spots in the grocer’s bumpy 6-1/2-year turnaround efforts under Mr. Weston. Last month, Loblaw launched Joe Fresh in shops in about 680 J.C. Penney stores in the United States, thus doubling the sales volume of Joe Fresh’s overall women’s-wear offerings.

In a report earlier this month, the World Bank warned that Bangladesh’s garment industry is facing a “severe image crisis” because of its poor labour safety record, prompting the United States and the European Union to rethink their preferential tariff rates.

Canada also offers duty-free access on most Bangladeshi goods. But government officials were not immediately available to comment on whether it too is contemplating action.

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