Wal-Mart, Gap Continue to Notch Up Death Tolls in Factory Accidents

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Another blaze at a Bangladesh garment factory took the lives of nine workers and injured nearly 50 others. During the evening shift on Tuesday, October 8, a faulty heating machine at the Aswad Composite Mills, near Dhaka, caught fire as employees produced clothing for major brands including Wal-Mart ( WMT ) and Gap ( GPS ).

The deadly Aswad factory fire marks the fourth such tragedy to strike Bangladesh garment workers in the past year, starting with last November's blaze at the Tazreen Fashion factory that killed 112 people who were making clothing for global brands like Sears ( SHLD ), Disney ( DIS ), and usual suspect Wal-Mart.

While the Tazreen incident shone a spotlight on unsafe working conditions -- which included padlocked exits and employees forced to remain at their sewing machines after the fire alarm sounded -- it wasn't until 1,133 people were crushed in the Rana Plaza factory collapse last April that companies began to feel public pressure to make reforms.

In an effort initiated by H&M (STO:HM-B), a group of 90 apparel retailers across the world -- including Benetton (OTCMKTS:BNGPY), Primark (OTCMKTS:ASBFY), Loblaw ( L ), Next (LON:NXT), and Esprit (OTCMKTS:ESPGY) -- signed the Fire and Building Safety Accord in May.

Covering more than 1,000 Bangladesh garment factories, the accord established a set of enforceable safety standards based on independent inspections, with necessary repairs underwritten by the corporations doing business in those factories. In addition, as part of the accord, workers are allowed to unionize, lead health and safety committees, and refuse dangerous working conditions without repercussions.

Abercrombie & Fitch (ANF), PVH (PVH) (the parent company of Tommy Hilfiger and Calvin Klein), and Sean John are the accord's sole US-based signatories.

Meanwhile, the largest players in the retail landscape -- Target (TGT), Kohl's (KSS), Macy's (M), Nordstrom (JWN), and others -- instead joined an alliance that is neither legally binding nor independently enforced and is designed to allow the industry to perform its own inspections and audits. Critics and activists call the alliance a sham , likening it to little more than a corporate PR stunt.

Also absent from the accord but part of the industry-controlled alliance are Wal-Mart, Sears, Gap, and Husdon's Bay Company (HBC) -- all four of which have had either direct or indirect business relationships with the Aswad garment factory.

Still, the lives lost in this particular fire couldn't have been saved by the global accord. In fact, accord signatories Primark, Next, and H&M had sourced cloth from Aswad.

Workers at the Aswad garment factory dyed, knitted, and finished fabric and supplied it to companies, but they didn't assemble finished textiles. Like other mills or dye works at the bottom of the supply chain, Aswad was left out of the accord and fell through the safety net reserved for factories higher up in the production process. Aswad's sister factory, owned by the same company, is one such so-called "frontline" factory that is on the list.

But self-checks, like those in the alliance, of top-tier factories are not preventing disaster either. The Atlantic reported that a Pakistani factory where there had been a fire that killed 289 workers in September "had received a clean bill of health from industry inspectors just three weeks prior, while a 2010 blaze in Bangladesh that left 29 workers [dead] had been previously inspected by Gap and other customers. Tazreen itself had received audits by Wal-Mart and other buyers, yet no investments were made to address obvious fire hazards."

What it would take to impose Western factory standards on Bangladesh, the second biggest worldwide exporter of apparel (second only to China), is $3 billion over the next five years. In a country where American firms reap the spoils of a $19 billion garment industry, that amounts to less than $0.10 per garment.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: DIS , GPS , L , SHLD , WMT

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