BGMEA deadline for blacklisting EWM extended

The Bangladesh Garment Manufacturing and Exporters Association (BGMEA) have extended the deadline for blacklisting British clothing retailer Edinburgh Woollen Mill (EWM).

The time to blacklist the company, for not paying Bangladeshi suppliers, has been stretched for a week.

The apparel exporters' trade body communicated the decision in a letter sent to EWM Chairman John Herring on May 31.

"We extended the deadline to June 5 from May 29 for paying Bangladeshi suppliers as a response to the retailer's letter," said RMG Sustainability Council Chairman Nafis Ud Doula.

"However, unfortunately, from the first week of May, they began looking for new suppliers, sending random emails to the manufacturers, which means they want to dump the existing suppliers.

"They never responded to any suppliers' communications over email or phone," Nafis said. 

Meantime, replying to the BGMEA's first letter on May 27, John Herring said the threats to blacklist the retailer "over unpaid invoices had been unfairly targeted."

Herring said he was "extremely disappointed" that the BGMEA not only drafted "such a letter in the first place without corroborating the facts or opportunity to comment but also provided the letter to the media before providing a copy to the recipient."

On May 21, the BGMEA threatened to halt production and any further orders with EWM over nonpayment of dues and demands for "unreasonable" discounts, despite concluded contracts.

The BGMEA President Rubana Huq Told the Business Standard "Their (EWM) vendors reported to us that they had moved on and started sending queries to new suppliers instead of settling their outstanding bills with the previous vendors."

In a letter sent to EWM owner Philip Day, the BGMEA president said the association's step came after receiving dozens of complaints from suppliers that "EWM was avoiding contacts with the suppliers that it owes money to for previous orders."

"EWM was taking 'undue advantage' of the Covid-19 situation and that the discounts requested are not only impossible to grant by our members but also in violation of local laws, and acceptable international standards," Rubana said.

EWM Group, owned by the British billionaire Philip Day, has quite an impressive array of brands under its fold – Peacock, Jaeger, Austin Reed, Jacque Vert, Country Casuals, Windsmoor, Baumler of Germany, and Bonmarche & Ponden Home.

Herring said, "The EWM Group has operated in Bangladesh for over two decades. We have enjoyed an enviable reputation."

"During its tenure, we have not received any contact from the BGMEA on any issues, nor have we been contacted for comment.

 "It is unconstructive to try and exert political pressure on UK companies that themselves are desperately trying to protect their workforces and the future of their companies. 

"Now is the time to be constructive and find solutions that are both economically and commercially viable to ensure the long-term survival of retail supply from Bangladesh to the UK.

"We are critical of your approach, and lack of attention to the veracity and accuracy of the data contained within your letter.

"The pandemic has been affecting the globe for the last three months. And only now three months later, do you deem fit to send a letter without any verification of the facts or comment from its intended recipient," said Herring.

He also said the retailer reached an agreement with 22 out of 29 of the BGMEA's members on its standard terms of business, some of which requested alternate terms, for which discounts had been discussed.

"We have offered the same terms to all our suppliers in Bangladesh. Your letter is not representative of the majority of your members."

"Throughout this process, we have worked collaboratively and constructively with our suppliers to reach conclusions that ensure that they are paid for orders, and at no point have we said otherwise."

Herring said, "Our group is continually looking to forge relationships with new and innovative suppliers." 

"Our China office, as it does each year, was undertaking a simple price comparison exercise. At no point has there ever been a single suggestion that this would affect any current supplier with open orders. A fact that could have been instantly clarified if requested by your organisation.

"We feel that you have unfairly targeted our group, a loyal supporter of the Bangladeshi garment industry for over two decades when there are numerous other retailers who have significantly higher values of unconcluded orders. We can only surmise that your letter is driven by personal and political agendas."

However, Nafis said that EWM cancelled all the orders in the first week of April. 

"In mid-April, they asked for a 70 percent discount to all suppliers. At the end of April, they again asked for a 30 percent discount. Whenever any suppliers asked for a formal mail, they would never provide it."

The BGMEA sources said EWM and its subsidiary brands owe about $30 million to about 50 Bangladeshi apparel exporting companies.

BGMEA's response

In another letter to EWM chairman on May 31, Rubana said the BGMEA stands by the "veracity and accuracy" of the information provided in its initial communication.

"We are aware of your contribution to the industry and Bangladesh and we were also clear that we communicated with you in the belief that during this global pandemic it was a time for all of us to unite and support each of our interests, which would help preserve and strengthen our relationship and the industry. 

"We were also of the opinion such co-operation would avoid the criticism and allegations of big brands abandoning their partners and workers during this critical time of need and support in poor and developed countries.

"We would like to make it clear that we are by no means trying to exert any 'political pressure' but merely trying to preserve the interest and survival of our members, its stakeholders, the international image of the industry during this critical period and most importantly compliance with local laws and foreign exchange restrictions of Bangladesh. 

"We also believe that our proposal is not only constructive within the framework of local laws but also economically and commercially viable to ensure the long-term survival of retail supply from Bangladesh to the UK.

"A number of international brands, which I am sure that you are aware of, have come forward to support their suppliers and confirm existing orders despite the Covid-19 pandemic.

"And we expect the same from a group such as yours, with popular and well-known brands, whose founder, Mr Philip Day, was recently named the 132nd richest person in The Sunday Times Magazine 'Rich List 2020' published on May 17 2020."

"We note with interest your comment that your group was merely looking to forge relationships with new and innovative suppliers, which is done annually; because according to our industry survey no such annual scouting of suppliers has been done in the past.

"What does concern and surprise us is that such survey was done in the midst of what you yourself have referred to as a devastating time for the fashion industry, where the priority according to your own statement is of preservation," said the BGMEA president.

"Such action by you not only defies all logic and your motive but also the sense of priority and also your lack of empathy, compassion and support for your existing suppliers, who are now not only facing the disproportionate brunt of your unilateral decisions but a potential breach of regulatory and legal consequences of your action and devastating job losses to millions," said Rubana.

Bangladesh, like many other clothing export nations, suffered as brands and retailers cancelled and postponed orders due to lockdowns resulting in stores closing globally.

The BGMEA has been keeping a tally, and its current estimate suggests: 1,150 factories with over 1 million workers saw export orders of $2.97 billion cancelled or suspended by global retailers and brands.