How Western retailers put a Bangladesh garment supplier on the brink

It's in the days leading to Eid-ul-Fitr that Mostafiz Uddin is most cheerful. It’s that time of the year when the owner of Denim Expert pays his workers, hands them gifts, and takes them to a restaurant for Iftar.

That’s then, before he suffered a stroke of fate that tore a hole in his business in the past couple of months.

The pandemic has thrown off track plans the Bangladesh garment entrepreneur had sewn together. His Western buyers have either cancelled orders or declined to pay with the shops closed in locked-down Europe and North America.     

Mostafiz did everything he could for 10 days before the banks were closed. On Wednesday, the last business day, he went to the bank at 10 am and implored his buyers to send the money they owe so that he could pay the workers before Eid. No one did.

“It was like the sky fell on me. I went sleepless the entire night. I dreaded the very thought of letting my workers return empty-handed because Wednesday was all I had before the Eid holidays.

"And then I couldn't take it anymore. I broke into sobs because of my sense of responsibility, love and concerns for my workers,” he told bdnews24.com

“I spent days in fear of losing self-respect, vandalism, failure to pay, and so many other trepidation,” Mostafiz said.

Retailers generally place orders at least three months ahead of delivery and pay for the finished product when it is delivered. Initially, most retailers cancelled all outstanding orders, but many adjusted their position in March and April after a public outcry, agreeing to pay for goods that had already been manufactured or were mid-production.

Fast fashion retailers and buyers began to cancel orders at the height of the pandemic in the US and Europe in February. And in some instances, they never paid the manufacturers despite receiving the products, according to apparel sector entrepreneurs of Bangladesh.

The Bangladesh Garment Manufacturers and Exporters Association says 1,150 factories had lost orders worth $3.18 billion to the pandemic while around 3,000 others have also been suffering from the financial crisis since February.

The Western buyers did not place new orders in the past two months, which has put jobs of around 2.8 million workers on the line and many of them have been protesting over unpaid salary.

Mostafiz is one of those owners whose factory ensures workplace safety and hygiene, pays regularly, grants six-month maternity leave and uses environment-friendly technologies.

Launched in Chattogram’s Karnaphuli EPZ in 2010, Denim Expert employs 2,000 workers and is one of the smaller companies struggling to ride out the crisis.

The Apparel Insider released a photo of Mostafiz in tears with a story on the plights of the Bangladeshi exporters, making him the face of what the RMG industry magazine called “broken”.

Mostafiz told bdnews24.com that he tried to reach the international media about the “unethical decisions on order cancellations and nonpayment by the brands and retailers”. “The buyers haven’t paid me even after the media published and broadcast the stories,” he said.

He said his firm made a shipment worth of Tk 60 million to the Global Brand Group in the US and another shipment of Tk 250 million to Arcadia in February. Garments worth similar sums for Peacocks remained as inventory in his factory. In total, the foreign buyers owe Denim Expert Tk 540 million, according to him.

“A handful of factories may survive such a blow, but how will a small factory like mine with a turnover of less than $18 million?” he asked.

Denim Expert pays workers Tk 16 million in wages every month. It spends another Tk 50 million on the salaries of officials and rent. It requires Tk 10 million to pay the workers festival allowances before Eid.

It paid the workers their April salary from the government’s bailout funds but was struggling to pay them Eid allowance as the buyers have not paid for three months.

Every year he gives an Eid gift to each of his workers and hosts an Iftar get-together at a good restaurant, said Mostafiz.

“This year I couldn’t do any of those things, but I never thought that they’ll be deprived of their Eid bonus. In the end, I borrowed from my friends and relatives to give their bonus (festival allowance),” he said.

Mostafiz declined to specify the amount he paid to each worker in festival allowance. Some of them said they got what they had expected. Denim Expert has also declared a 10-day holiday marking the Eid.

Mostafiz shared his frustration over the foreign buyers cancelling or deferring orders and shipments all of a sudden after the COVID-19 pandemic broke out.

“They started cancelling and postponing the orders, halting shipments without consultation. They placed an order and we made the clothes. Now all of a sudden they have deferred the order; this is not the proper way to do business,” he said.

“My American buyers stopped payments in February. But I have to pay my workers and meet other costs. All they say is that they’ll pay when it’s time. When will the time come? Will my workers starve until then? What if they erupt in protest?”  he asked.

“And the ball is in their [buyers] court now. Because we couldn’t make any law to hold them to account for such actions,” he remarked.

The Bangladesh government has rolled out economic packages to bail out the garment workers but global organisations have remained tight-lipped on the issue, he lamented.

“What role did the ILO, UN or EU play amid this crisis? The IMF distributes huge funds elsewhere. Why don’t they do anything for these workers whom they have cared about for long?” Mostafiz asked.

He said he joined 33 conventions in Europe and America last year and tried to raise the issues related to dues.

“If the stakeholders put pressure on the buyers, then they would never leave us unpaid.”

Mostafiz said he also spoke with people who hold sway over the buyers to ask them not to tar all factories with the same brush. “The bigger companies can afford to store their products for years but small companies like mine cannot,” he said.

Mostafiz believes factory owners are afraid of taking up the matters as the bilateral contracts with the buyers have "weak points". It enables buyers to do as they please, according to him.

“They are the people who put pressure on us to protect the rights of the workers and then make them suffer by not paying the dues,” complained Mostafiz.