Major apparel brands delay & cancel orders in response to pandemic, risking livelihoods of millions of garment workers in their supply chains

Major apparel brands and retailers are cancelling or postponing orders as the COVID-19 pandemic forces store closures in Europe and the United States, risking the livelihoods of millions of garment workers in their supply chains. As it is standard practice for brands not to pay for products until after they are shipped, when an order is put on hold or cancelled, payments are also held or cancelled. Non-payment for orders that have not yet left factories risks leaving suppliers unable to pay for their workers’ salaries and, because they buy their materials outright, for what they owe their own suppliers. This has forced many suppliers to lay off or suspend workers in garment factories, without any social protection, or paid leave, pushing an already precarious group of workers to greater economic vulnerabilities. 

Exporters are appealing to their buyers not to cancel orders due to lockdowns enforced by governments in response to the pandemic. H&M, Inditex, Marks & Spencer, Kiabi, PVH and Target have confirmed they will receive and pay for placed orders from their suppliers in Bangladesh.

Labour groups and unions are calling on apparel brands and governments to urgently mitigate impacts on the 60 million garment workers bearing the brunt of the COVID-19 crisis. Their full set of demands can be found here.

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Article
29 March 2020

Arcadia Group cancels orders and extends supplier payments in response to COVID-19

Author: Isabella Fish, Drapers

"Exclusive: Arcadia cancels orders and extends supplier payments", 29 March 2020

Sir Philip Green’s Arcadia Group has written to suppliers to inform them that it will be cancelling all orders and extending payment terms, in a bid to protect the business during the coronavirus outbreak.

The letters, sent to suppliers on 27 March and seen by Drapers, state that all orders will be cancelled until further notice, and payment terms will be extended by 30 days, with immediate effect. The standard terms will therefore be 90 days...

Article
25 March 2020

Asos halts supplier deliveries in response to COVID-19

Author: Isabella Fish, Drapers

"Exclusive: Asos pauses supplier deliveries", 25 March 2020

Asos has paused some incoming deliveries from suppliers and third-party brands as it makes adjustments to manage its stock throughout the coronavirus uncertainty...the etailer is understood to be refusing shipments for spring 20 orders from several third-party brands and suppliers...

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Article
25 March 2020

Cambodia: Garment owners association calls for buyers, factories, unions and workers to collectively mitigate impacts of the Covid-19

Author: Khmer Times

"GMAC appeals to stakeholders to join hands to tackle manufacturing woes caused by Coronavirus", 25 March 2020

The Garment Manufacturers Association in Cambodia (GMAC) has called for collaboration from all stakeholders in facing the critical situation caused by Covid-19 pandemic.

“The current global pandemic Covid-19 has brought chaos to all our lives and businesses. To overcome this critical situation, GMAC would like to appeal to all stakeholders to join hands so that we can all survive together”

To all Buyers: PLEASE DON’T GIVE UP ON CAMBODIA! We urge you to fulfill your existing contractual obligations by taking delivery of goods already produced and goods currently in production and pay under the normal term. This will allow us to be able to pay our workers and continue the work for them.

To all factories: WORKERS SAFETY FIRST! Please continue to stay vigilant and maintain high levels of hygiene as a preventive measure at the workplace to protect our workers and help prevent the spread of the virus. Please ensure that our workers understand and strictly follow guidelines and regulations issued by our Cambodian government.

To all Workers and Unions: Have confidence in the scientific preventive measures being implemented at the workplace. Be part of the solution by following instructions, specifically on keeping social distance and minimising social gatherings. Wash hands often and do not touch your faces!...

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Article
25 March 2020

New Look halts all production in supply chain, while asking direct employees to voluntarily take unpaid leave to ease impact of COVID-19

Author: Isabella Fish, Drapers

"Exclusive: New Look halts all production", 23 March 2020

New Look has put a halt on all current and future production... until it is able to review the ongoing situation...

Meanwhile, New Look has offered its 13,000-strong workforce the option of unpaid voluntary leave, voluntary reduced hours or the chance to use their holiday allowance for the foreseeable future.  

A spokesman said: “To help ease the impact of coronavirus on the business, we have asked if colleagues would consider voluntarily taking unpaid leave for up to four weeks or to work reduced hours temporarily.”...

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Article
24 March 2020

India: Garment exporters appeal to global buyers not to cancel orders due to COVID-19 pandemic lockdowns

Author: Economic Times Retail

"Covid-19: Exporters urge global buyers not to cancel orders", 24 March 2020

Indian exporters have appealed to their buyers across the globe not to cancel orders due to lockdowns enforced by governments the world over to check Covid-19 pandemic.

There is panic among the exporting community that temporary suspension of business due to coronavirus spread may result in cancellation of orders by some of the buyers leading to serious financial implicatios for Indian export units and resultant shutdowns.

Considering the seriousness of the emerging issue, Apparel Export Promotion Council (AEPC) in a letter has appealed to most of the EU and US stores, global brands, buying houses for their continued support in this critical time by not cancelling orders as it would severely impact the livelihood of thousands of workers...

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Article
24 March 2020

Primark cancels all supplier orders after triggering force majeure clause in contracts

Author: James Warrington, City A.M

"Coronavirus: Primark to close all UK stores as pandemic hits high street", 22 March 2020

... Primark has cancelled all new orders in anticipation of plummeting demand... after the force majeure clause in contracts was triggered... [It] will come as a huge blow to suppliers.

“It is an absolute bomb — if they do as they say, they will bring down most of my industry,” one supplier told the Sunday Times...

It is understood that Primark will pay for any orders that have already been shipped. However, suppliers face non-payment for any orders that have not yet left factories.

... [C]hief executive Paul Marchant [said:] “We have... been left with no option but to take this action. We have large quantities of existing stock in our stores, our depots and in transit, that is paid for and if we do not take this action now we will be taking delivery of stock that we simply can’t sell. This is unprecedented action for unprecedented and frankly unimaginable times.”...

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Article
23 March 2020

Bangladesh: European & US fashion brands cancel $1.5billion worth of orders

Author: Arun Devnath, Bloomberg

"European Retailers Scrap $1.5 Billion of Bangladesh Orders", 23 March 2020

European and U.S. buyers including Primark, the budget fashion chain owned by Associated British Foods Plc, have canceled about $1.5 billion of Bangladesh garment orders as the coronavirus outbreak roils demand.

As many as 1,089 Bangladesh garment factories have seen orders getting scrapped, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association said...

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Article
20 March 2020

Monsoon Accessorize & Debenhams extend payment terms for suppliers in response to COVID-19

Author: Grace Whelen, Drapers

"Retailers extend supplier terms over coronavirus", 20 March 2020

Monsoon Accessorize has extended its supplier payment terms from 90 days to 120 days for goods received into its warehouse “with immediate effect on all due invoices”... 

Monsoon Accessorize declined to comment.

Debenhams has extended its supplier payment terms by 30 days to mitigate the ongoing impact of coronavirus on cash flow.

The department store has told suppliers of the immediate changes in an email from chief executive Stefaan Vansteenkiste, seen by Drapers. It will apply to all suppliers except those which were already on extended terms...

Debenhams declined to comment...

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Article
19 March 2020

Garment workers face layoffs as brands cancel or postpone orders indefinitely, including those scheduled to be shipped

Author: Rachel Cernansky, Vogue Business

"As coronavirus spreads, supply chain workers face layoffs", 19 March 2020

... [D]enim factory owner [Mostafiz Uddin] in Bangladesh... learned that a handful of brands were putting their orders on hold..[A]fter a number of governments in the US and Europe ordered businesses to close their doors — things got worse. Emails from more brands flooded in... “Don’t ship the goods. That’s the thing we are hearing from everybody,”...

It’s standard practice for brands not to pay for products until after they’re shipped. When an order is put on hold or cancelled, payments are also held or cancelled. That leaves suppliers on the hook for both their workers’ salaries and, because they buy their materials outright, for what they owe their own suppliers. Without revenue coming in or much cushion in their budgets, factory owners... may be forced to cut jobs. The pandemic has already prompted tens of thousands of layoffs and job suspensions, but millions more could be at risk... with little access to healthcare and no social safety net...

To assuage effects on manufacturing partners, brands could uphold contracts and buy the products they already committed to buying, and pay on time for them...

[P]resident of the Bangladesh Garment Manufacturers and Exporters Association, says that over three hours on Tuesday, $10 million in orders were cancelled across 20 factories. “Most brands are putting the orders indefinitely on hold and cancelling. They are also cancelling orders that are scheduled to be shipped now. For them it’s a question of the survival of the businesses, for us it’s the survival of our 4.1 million workers"...

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