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Wal-Mart fires supplier unauthorized to use Bangladesh factory

story by Arun Devnath, Ehren Goossens and Renee Dudley
Bloomberg News

Wal-Mart Stores Inc. fired a supplier that made garments at a Bangladesh factory where more than 100 people died in a blaze on Nov. 24.

“The Tazreen factory was no longer authorized to produce merchandise for Walmart,” Kevin Gardner, a Wal-Mart spokesman, said in an e-mailed statement. “A supplier subcontracted work to this factory without authorization and in direct violation of our policies. Today, we have terminated the relationship with that supplier.”
Gardner declined to name the supplier.

The factory, owned by Tazreen Fashion Ltd., had no emergency exits, and workers were burnt alive, Washington-based International Labor Rights Forum said, citing Mohammad Mahbub, a director at the fire department operations. Some workers jumped from the eight-story building to escape the flames, according to Mohammad Sharif, who runs a local grocery store and whose parents-in-law worked at the plant.

The manufacturers’ association estimates the death toll at 113, Mohiuddin said. The group announced a day-long shutdown to mourn the deaths, he said.

Bangladesh is the world’s second-largest apparel exporter after China. Textiles contribute more than 10% of Bangladesh’s gross domestic product and about 80% of the nation’s exports, mainly to the U.S. and the EU, according to the website of the Bangladesh Garment Manufacturers and Exporters Association.

About 700 garment workers have died since 2005 because of unsafe buildings in the Asian country, the International Labor Rights Forum said in a statement. As wages have risen in China, companies such as Li & Fung Ltd., the world’s largest supplier of clothes and toys to retailers, are tapping Bangladesh and other lower-cost Asian countries.

Tazreen Fashion, a unit of textile manufacturer Tuba Group, employs 1,200 workers and exports goods worth $36 million a year, mainly to the U.S. and Europe, according to the company’s website. The factory that burned down has produced apparel for Li & Fung, whose clients include Wal-Mart and Target Corp. Li & Fung, a Hong Kong-based outsourcer, has said it is in contact with the factory’s owner and that it will conduct its own investigation.

“We are very distressed and saddened by the deaths of workers and wish to express our deepest condolences to the families of the victims,” Li & Fung said in an e-mailed statement. It is matching the association’s financial assistance by pledging 100,000 takas ($1,234) to each family of every victim.

The fire won’t have any material impact on the company’s financial performance and the total value of orders placed by its U.S. subsidiary for the year amounted to $111,000, Li & Fung said in a statement to Hong Kong’s stock exchange. It hasn’t placed orders for other customers with Tazreen, it said.

Li & Fung U.S. representatives didn’t immediately return a phone message and e-mail seeking comment about Wal-Mart’s firing of the supplier.

Wal-Mart said on its website that it has visited supplier factories to identify those deemed “high risk for fire safety hazards” In 2011, the company stopped working with 49 factories in Bangladesh due to fire safety issues, it said.

C&A, the discount chain owned by Switzerland’s Cofra Holding AG, confirmed it has business ties to Tazreen Fashion, which was commissioned to supply C&A Brazil with 220,000 sweatshirts in the period from December until February 2013.

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“The victims and their families are in our thoughts and prayers,” Thorsten Rolfes, a spokesman for C&A Europe, said in the statement posted on its website.

Another fire at a 10-story building housing three garment manufacturing units broke out in capital Dhaka and injured eight workers, local TV channel Somoy reported yesterday.

In March 2012, PVH Corp., which markets Tommy Hilfiger and Calvin Klein, signed an agreement with Bangladeshi unions, international unions and other labor rights groups to develop a fire safety program to prevent future deaths in Bangladesh’s garment industry, ILRF said. The group is calling for urgent action to protect factory workers.

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