Walmart rejected safety upgrades at Asia factory where 100 die in fire

It seems a little too easy for Walmart to brush off safety upgrades at their supplier factories. Their reasoning is that the cost is too high. The dead factory workers in Bangladesh, and their families, might have viewed the safety issues differently.

Whether it’s the appalling work conditions at Apple supplier factories in China where workers are available 24×7 and given a cup of tea and a biscuit, the Chinese factories that previously produced lead-tainted children’s toys for the US market or the garment factories throughout Asia, there’s a distinct lack of accountability by too many Western companies. Walmart is only the latest.

Bloomberg:

bangladesh walmart

Bangladesh via Shutterstock

At a meeting convened in 2011 to boost safety at Bangladesh garment factories, WalMart Stores Inc. (WMT) made a call: paying suppliers more to help them upgrade their manufacturing facilities was too costly.The comments from a Wal-Mart sourcing director appear in minutes of the meeting, which was attended by more than a dozen retailers including Gap Inc. (GPS), Target Corp. and JC Penney Co.

Details of the meeting have emerged after a fire at a Bangladesh factory that made clothes for WalMart and Sears Holdings Corp. killed more than 100 people last month. The blaze has renewed pressure on companies to improve working conditions in Bangladesh, where more than 700 garment workers have died since 2005, according to the International Labor Rights Forum, a Washington-based advocacy group.

Walmart is claiming that it cut ties with that factory months before the fire, and blamed any connection to the plant to a supposed rogue supplier.  CNN:

Wal-Mart Stores Inc. said Monday that the Tazreen Fashion factory in Ashulia, near the Bangladeshi capital, Dhaka, was no longer authorized to produce merchandise for its stores.

But one of its suppliers “subcontracted work to this factory without authorization and in direct violation of our policies,” Wal-Mart said in a statement. “Today, we have terminated the relationship with that supplier,” it said, without identifying the company in question.

But documents from the factory, as reported by the Nation, appear to shoot possible holes in Walmart’s defense:

[T]here were multiple Walmart suppliers using the Tazreen Factory as recently as April of this year, and at least one when the fire broke out. … [T]here are “strong indications in the documents, but short of certain, that it was still multiple suppliers at the time of the fire,” rather than the single rogue supplier implied by Walmart’s statement. … (Some of the Tazreen documents are posted below; they were provided to The Nation by the Corporate Action Network, which also posted them on its own website.)

For Western consumers, this callous bargaining can often mean cheaper prices (unless you’re buying an Apple product, where everyone but Apple gets screwed in all directions – but smile, ’cause it’s trendy to own something that cost two to four times the competition , with next to no warranty) but there’s a cost. Just as there’s a cost at home in the US when Walmart wants to deny workers bargaining rights, cut wages and benefits, there’s a price to pay for cutting costs with suppliers and it can even have deadly consequences.

What’s also disturbing about companies like Walmart cutting corners for workers at home, and suppliers abroad, is that the benefits are all focused on the top of the food chain. Whereas companies used to have a more level playing field where everyone prospered, now the benefits all go to the top. Workers are supposed to be impressed when they receive a few crumbs from three day old, stale bread tossed their way.  Look at Hostess.  In bankruptcy, and the workers are asked to take a pay cut while the management gets millions in bonuses.

Everyone can accept that times and business models change, but do we really want to be reinforcing bad behavior with businesses that show such little concern for their direct or indirect workers? Giving them your money might save you in the near term, but it’s clear that you could be next in line to get hit with cuts.

At some point, consumers need to stop rewarding bad behavior. We see that the anti-Obamacare extremists of Papa John’s, Denny’s and Applebees are feeling the pinch for their bad behavior, so we know it’s possible to have an impact when we choose to spend our money elsewhere.

As I’ve said before, the free market can work. Giving tax breaks and bailouts to those least in need is not the free market, but choosing to spend your own hard-earned cash with businesses that do the right thing is absolutely the free market. As consumers, we have a lot more power than people realize, and it’s time to start using it.


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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  • Ted in Dallas

    And?

  • 1jetpackangel

    Oh, and if you need another reason to hate Wal-Mart, they’re doing the same thing Papa John’s and Applebee’s are: http://www.examiner.com/article/walmart-takes-advantage-of-obamacare-to-reduce-health-insurance-costs

  • http://adgitadiaries.com/ karmanot

    That’s exactly how the Caryle Group operated when it bought up a majority of nursing homes a while back. They lowered standards, drastically cut costs and when the homes went bankrupt or sued by the states for violations, they changed the names, opened for business again in a matter of months and obfuscated the whole package by filtered, multilayered dummy corporations.

  • http://www.facebook.com/bill.perdue.98 Bill Perdue

    Walmart and the Clinton’s – copy and file for the 2016 campaign, already underway.

    “Clinton served on Wal-Mart’s board of directors for six years when her husband was governor of Arkansas. And the Rose Law Firm, where she was a partner, handled many of the Arkansas-based company’s legal affairs.” Common Dreams
    http://www.commondreams.org/headlines06/0312-01.htm

    David Nassar of the AFL-CIO’s Wal-Mart Watch said “We respectfully disagree with former President Clinton’s characterization of Wal-Mart as a benign, benevolent corporation striving for self-improvement either during Sen. Clinton’s tenure on the board or at present…” and “while we don’t have any insight into what Sen. Clinton advocated for while on the board of Wal-Mart, we do know that Wal-Mart has made no meaningful progress regarding the company’s poor business practices, including gender discrimination, low wages, inadequate health care, overseas sourcing or environmental degradation…”

    http://abcnews.go.com/Politics/Vote2008/story?id=4183757&page=1

    The Clintons are subsidized by Wal-Mart and other one percenters through their ‘contributions’ to the Clinton Foundation. It’s their way of saying thank you for NAFTA, DOMA, DADT and deregulation.

  • HereinDC

    “the benefits are all focused on the top of the food chain”
    When the doors close at Wal-Mart everynight…..the $$$ goes to Arkansas…and does not STAY in the community.

  • Naja pallida

    Wal-Mart blames a subcontractor… which is exactly why they use subcontractors for these kind of things. Plausible deniability. Next week, that same subcontractor will reorganize with a new business name, and be contracted by Wal-Mart all over again, and nothing will change.

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