Some U.S. retailers, including Gap Inc, had said
they would not join the European pact without changes to the way
conflicts are resolved in the courts. The rhetoric sharpened
considerably when a U.S. trade group, the National Retail
Federation, after calls with member companies and other groups,
issued a stinging rebuke of the European-led safety accord.

The U.S. solidarity did show one high-profile crack late
Wednesday when Abercrombie & Fitch Co announced it had
verbally agreed to join the accord.

“We are committed to Bangladesh and support industry-wide
efforts to improve safety standards,” Abercrombie’s director of
sustainability, Kim Harr, said in a statement. “We believe this
is the right thing to do to bring about sustainable, effective
change.”

The accord came together last week in the aftermath of the
April 24 collapse of Rana Plaza in Savar, near Dhaka, the second
high-profile disaster at a Bangladeshi textile center in recent
months. The death toll at Rana Plaza stood at 1,127 this week,
making it the deadliest industrial accident since the 1984
Bhopal disaster in India.

Earlier this week, apparel company PVH Corp,
marketer of the Calvin Klein and Tommy Hilfiger brands, became
the first U.S. company to join the accord.

Even so, the U.S. retail and apparel industry remained
nearly unanimous in criticizing the compact. Matthew Shay, chief
executive of the National Retail Federation, in a statement
Wednesday said the accord, hammered out in recent weeks under
leadership of IndustriALL, a union organization based in Europe,
“veers away from commonsense solutions and seeks to advance a
narrow agenda driven by special interests.”

He said it “exposes American companies to a legally
questionable binding arbitration provision, a process that
serves only the unions, not the workers they represent.”

Wal-Mart Stores Inc, the world’s largest retailer,
on Tuesday had preempted the U.S. industry rejection of the
European initiative by stating that it intended to work on its
own. Wal-Mart said it will implement a stepped-up plan to
improve working conditions in Bangladesh factories it employs.

Gap this week became the first of several U.S. retailers to
say they would not join the European pact without changes to the
way conflicts are resolved in the courts. The accord drew sharp
criticism from a major U.S. retail trade group for not calling
for equal responsibility from the Bangladeshi government and
factory workers.

IndustriALL said the accord could not be amended to address
concerns of U.S. companies.

“The clear message is that the legally binding nature of the
accord is what makes it a historic game changer and watering
that down is absolutely out of the question,” IndustriALL
spokesman Tom Grinter said.

Signatories to the accord included the world’s two biggest
fashion retailers, Inditex, owner of the Zara chain,
and H&M, as well as British department store operator
John Lewis and Arcadia Group, whose chains include Topshop.

The accord calls for binding arbitration that would be
enforceable in the courts of the country where a company is
domiciled, according to the text of the agreement that was
released on Wednesday. Binding arbitration typically restricts
the ability of the parties involved to appeal any decision in
court.

In addition, companies must fund activities of a steering
committee, safety inspector and training coordinator,
contributing up to $500,000 per year for each of the five years
of the agreement.

The National Retail Federation, the U.S. trade group,
criticized the funding component for not providing for
accountability for how funds are spent.

IndustriALL had set Wednesday as the deadline for retailers
to sign on to the fire-and-building safety agreement framed out
initially by union and non-governmental groups. proposed by the
European groups. Almost 30 garment and retail brands sourcing
from Bangladesh had signed ahead of the deadline.

A group of five North American retail trade associations and
companies had sought to draft their own proposals in recent
days. The NRF said a proposal has circulated, but no retailer
had signed it yet.

Jonathan Gold, an official with the NRF, said the North
American proposal takes into account other stakeholders like the
Bangladeshi government and factory owners, as well as the brands
and retailers.

Retailers “are afraid what will happen if there was some
kind of arbitration ruling and how it’s going to come back to
them,” he said.

The chief executive of the trade group American Apparel &
Footwear Association, Kevin Burke, on Wednesday said he met with
several Bangladesh government officials, including the foreign
minister and the Bangladesh ambassador to the United States as
they “begin high-level discussions with all apparel industry
stakeholders.”

WAL-MART’S APPROACH

The North American and European companies that rely on
Bangladesh for inexpensive apparel are still split on how best
to ensure safe working conditions. Wal-Mart’s approach, while
potentially faster, touches only a fraction of Bangladesh’s
estimated 6,500 garment factories. The European-led approach
covers a wider spectrum.

Wal-Mart said it has begun checking the 279 factories that
supply its stores, and plans to inspect them all within six
months.

A union official who helped draft the European accord,
Philip Jennings, head of Swiss-based UNI Global Union, on
Wednesday said in a statement that Wal-Mart was “acting as the
pirates of the supply chain” and called its alternative solution
“meaningless.”

In Chittagong, about 250 kilometers (155 miles) from Dhaka,
workers at one factory that Wal-Mart wants closed said they were
unaware of any safety concerns.

“We don’t know about the problems of our owners. We don’t
know about the risk of building. We are working for our
livelihood. If we stop the work, we cannot survive,” one of the
workers, Parvin Akter, said.

Even so, there were signs of change. In Dhaka, the
government has inspected and closed more than a dozen garment
factories in recent weeks because of structural problems.

Some workers remain skeptical. Mominur Rahman, who damaged
his spine jumping from the third floor to escape the deadly
Tazreen fire last year, said working conditions remain tough.

“The factory inspection system in Bangladesh needs to be
increased and improved,” he said through an interpreter at a
workplace safety conference in Thailand last week. “I never saw
a factory inspection at the Tazreen factory, not once. Same with
the Savar tragedy, nothing will change immediately.”

(Reuters) – The factory collapse in Bangladesh that killed over 300 people this week is a stark reminder of the risks in the global retail industry’s search for cheap production.

But there have been few signs that safety issues and other questionable labor conditions are sending shockwaves through the major Western retailers, their shareholders or the people who buy the clothes in the United States, Europe and elsewhere.

Despite a series of accidents that have killed hundreds of people in recent months, dozens of major retailers and apparel makers continue to operate in Bangladesh.

The country ships about $15.6 billion of ready-made garments each year – about 80 percent of its total exports. Sixty percent of Bangladesh’s garment exports go to Europe; the United States takes 23 percent, and Canada takes 5 percent, according to data from Bangladesh’s commerce ministry and industry sources.

About 18 months before the previous big tragedy in Bangladesh – a fire in November in a textile factory that killed 112 people – shareholders at Wal-Mart Stores Inc had the opportunity to weigh in on the safety question. By a nearly 50-to-1 margin, they rejected a proposal to require suppliers to report annually on safety issues at their factories.

In arguing against the proposal, Wal-Mart’s management made its reasoning clear: Having suppliers compile such reports “could ultimately lead to higher costs for Walmart and higher prices for our customers. This would not be in the best interests of Walmart’s shareholders and customers and would place Walmart at a competitive disadvantage,” the company said in proxy materials.

Soon after the fire, Wal-Mart and Sears Holdings Corp admitted their goods were being made at the Tazreen Fashions workshop even though they had denied that factory authorization as a supplier.

FAR FROM ALONE

Bangladesh is hardly the only source of inexpensive clothes and cheap labor that has sparked concern about labor conditions. From Vietnam, to the American protectorate of Saipan, to the massive workshops in China, Western companies have found themselves entangled with places where worker health and safety conditions are often questioned.

Disasters such as the April 24 collapse of an eight-story factory building in Bangladesh have not changed the calculation for apparel makers and retailers. Cheaper products appeal to shoppers. And the taint, if any, appears to be manageable.

The courthouse, marketplace and stock market seem to be telling them they are right.

Shoppers such as Mohini Raichura are making decisions that justify the retailers’ strategies. Raichura, a 30-year-old London charity worker, was shopping Friday at Primark, a discount retailer owned by Associated British Foods, even though she knew that some of its products were made at the factory that collapsed earlier in the week.

“I go there because it’s cheap. That’s awful. It really makes me a bad person,” Raichura said. “But you know, I work for a charity, I’m on a limited income, and I pay rent in London —that’s how I justify it.”

Consumers continue to purchase products from brands like Wal-Mart’s Faded Glory, found in the Tazreen rubble, and Loblaw’s Joe Fresh, found in the ruins of the factory building this week.

Loblaw Cos Ltd’s stock has edged up since the tragedy this week, while Wal-Mart and Sears’ shares have moved higher since the Tazreen fire last November. That disaster, in which locked doors prevented workers from fleeing to safety, did not appear to have any measurable impact on sales at Wal-Mart and Sears after both acknowledged their products were made there.

The world’s court systems have not provided a disincentive, either. For example, in 2005, a lawsuit was filed in California state court on behalf of factory workers in Bangladesh, China, Indonesia and other countries accusing Wal-Mart of failing to address substandard working conditions in suppliers’ factories.

But the case was ultimately dismissed, and according to a search of available filings on the Thomson Reuters legal database Westlaw, there have been no U.S. lawsuits filed against Wal-Mart or Sears on similar matters since the Tazreen fire.

Michael Silverstein, senior partner and managing director at Boston Consulting Group, said the attractions of places like Bangladesh outweigh the risks, and most retailers believe the risks can be managed.

“Bangladesh is a very viable source for apparel retailers. It has very low labor cost, good operational efficiency and because it produces in such large quantities, supply-chain costs are also low,” Silverstein said. “Obviously safety and health conditions need to be tightly policed. Suppliers need to be rated and visited frequently.”

Wal-Mart and other companies have vowed to step up their safety audits, training, and conversations with government officials. Earlier this month, Wal-Mart said it would donate $1.6 million to help start a new Bangladesh training academy.

NOT JUST A PROBLEM FOR LOW-PRICE RETAILERS

Foreign companies have long grappled with working conditions in manufacturing hubs, including China – places that have become the world’s workshops because of low wages and improving transport infrastructure.

Global protests against Apple Inc swelled after reports spread in 2010 about suicides at plants operated by Foxconn, Apple’s chief supplier in China. The world’s most valuable technology company was forced to tackle the issue head-on. Apple publicized an internal audit that for the first time spotlighted all its manufacturing partners. It set up a workplace-improvement program, invited auditors like the Fair Labor Association to review it, and began monitoring its several hundred contract manufacturers more closely. Foxconn also significantly boosted wages at plants making Apple products.

In the apparel industry, Nike Inc began making changes to its sourcing and worker policies after there were charges of minimum wage violation and child labor practices in the mid-1990s. In 2005, the company disclosed its factory list, and then broadened that to cover 800 factories worldwide that manufacture all Nike brands.

But Nike and Apple make higher-priced brand name products than many apparel retailers. And protests such as the ones they have faced have mostly failed to materialize when it comes to retailers who sell cheaper apparel products.

For companies such as Wal-Mart, who use thousands of suppliers, keeping an eye on the supply pipeline is proving difficult. After the Rana Plaza building collapsed Wednesday, it took Wal-Mart more than a day to confirm that its goods were not being made at the building that collapsed. And in the Tazreen Fashions fire, Wal-Mart learned after the fact that a supplier was having garments made there without Wal-Mart’s approval.

COMPANIES URGED NOT TO PULL OUT

Western activists criticize retailers and apparel companies for not doing more to force improvements in a country where working conditions are poor and government oversight is lax.

“The bottom line is that worker safety laws are hardly enforced,” said Iftekhar Zaman, the executive director of global anti-corruption group Transparency International in Bangladesh. The retailers and apparel makers cannot be “perceived helpless” when such incidences occur.

The Western companies should not pull out of Bangladesh and other low-cost countries because impoverished workers would pay the price, Zaman noted. Instead, they need to push for changes from within.

“Better ways must be found such as the importing companies to be more closely involved in preventive measures, like ensuring strict compliance with safety standards as part of their business deal,” Zaman said.

Canadian discount retailer Loblaw, whose Joe Fresh clothing was being made at the building that collapsed on Wednesday, said that the latest disaster led it to realize that audits and other workplace actions can overlook shoddy building construction and other environmental problems. In a statement, the company said it will work with other retailers and government bodies to address factory standards in Bangladesh.

Two years ago, 29 people were killed and 100 injured in a fire at a Bangladesh factory making clothes for Gap Inc, which owns Gap, Banana Republic and Old Navy. In response, the company last year implemented new safety standards in Bangladesh, including hiring a fire safety inspector, and loaning vendors up to $20 million for safety improvements.

Despite such measures, the pressure for low prices will persist.

“The fundamental value tension, we all know, is that consumers want quality at a low price and businesses cater to that,” said Harlan Loeb, who runs a crisis management team at the public relations firm Edelman, which as of Thursday was not advising anyone about the building’s collapse.

Companies often resist efforts to force a deeper discussion about the tradeoffs.

Before Wal-Mart invited shareholders to this year’s annual meeting, to take place June 7, the board of directors rebuffed another effort to force a shareholder vote on workplace safety issues.

According to documents filed with the U.S. Securities and Exchange Commission, a shareholder presented a proposal to require the company to report on its progress for assessing risks to human rights in its operations and supply chain. But Wal-Mart said the proposal was so similar to the one that failed in 2011, and that it already addresses the request through its standards for suppliers, that it did not merit reconsideration. The SEC approved its decision to reject the request for a shareholder vote.

Bargain-hunting shoppers continue to have mixed feelings.

“I was thinking about it when I was queuing up to pay,” said Philomina Wood, 70, as she left the Primark store in London. “It wouldn’t have hurt if there had been something inside to say people had died. It’s sad that life goes on and there’s no recognition at all.”

(Reporting by Nivedita Bhattacharjee and Jessica Wohl in Chicago; Additional reporting by Sam Forgione, Jessica Dye and Dhanya Skariachan in New York, Dasha Afanasieva in London and Solarina Ho in Toronto; Editing by David Greising, Edward Tobin and Lisa Shumaker)

(Reuters) – The factory collapse in Bangladesh that killed over 300 people this week is a stark reminder of the risks in the global retail industry’s search for cheap production.

But there have been few signs that safety issues and other questionable labour conditions are sending shockwaves through the major Western retailers, their shareholders or the people who buy the clothes in the United States, Europe and elsewhere.

Despite a series of accidents that have killed hundreds of people in recent months, dozens of major retailers and apparel makers continue to operate in Bangladesh.

The country ships about $15.6 billion of ready-made garments each year – about 80 percent of its total exports. Sixty percent of Bangladesh’s garment exports go to Europe; the United States takes 23 percent, and Canada takes 5 percent, according to data from Bangladesh’s commerce ministry and industry sources.

About 18 months before the previous big tragedy in Bangladesh – a fire in November in a textile factory that killed 112 people – shareholders at Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) had the opportunity to weigh in on the safety question. By a nearly 50-to-1 margin, they rejected a proposal to require suppliers to report annually on safety issues at their factories.

In arguing against the proposal, Wal-Mart’s management made its reasoning clear: Having suppliers compile such reports “could ultimately lead to higher costs for Walmart and higher prices for our customers. This would not be in the best interests of Walmart’s shareholders and customers and would place Walmart at a competitive disadvantage,” the company said in proxy materials.

Soon after the fire, Wal-Mart and Sears Holdings Corp (SHLD.O: Quote, Profile, Research) admitted their goods were being made at the Tazreen Fashions workshop even though they had denied that factory authorization as a supplier.

FAR FROM ALONE

Bangladesh is hardly the only source of inexpensive clothes and cheap labour that has sparked concern about labour conditions. From Vietnam, to the American protectorate of Saipan, to the massive workshops in China, Western companies have found themselves entangled with places where worker health and safety conditions are often questioned.

Disasters such as the April 24 collapse of an eight-story factory building in Bangladesh have not changed the calculation for apparel makers and retailers. Cheaper products appeal to shoppers. And the taint, if any, appears to be manageable.

The courthouse, marketplace and stock market seem to be telling them they are right.

Shoppers such as Mohini Raichura are making decisions that justify the retailers’ strategies. Raichura, a 30-year-old London charity worker, was shopping Friday at Primark, a discount retailer owned by Associated British Foods (ABF.L: Quote, Profile, Research), even though she knew that some of its products were made at the factory that collapsed earlier in the week.

“I go there because it’s cheap. That’s awful. It really makes me a bad person,” Raichura said. “But you know, I work for a charity, I’m on a limited income, and I pay rent in London —that’s how I justify it.”

Consumers continue to purchase products from brands like Wal-Mart’s Faded Glory, found in the Tazreen rubble, and Loblaw’s Joe Fresh, found in the ruins of the factory building this week.

Loblaw Cos Ltd’s (L.TO: Quote, Profile, Research) stock has edged up since the tragedy this week, while Wal-Mart and Sears’ shares have moved higher since the Tazreen fire last November. That disaster, in which locked doors prevented workers from fleeing to safety, did not appear to have any measurable impact on sales at Wal-Mart and Sears after both acknowledged their products were made there.

The world’s court systems have not provided a disincentive, either. For example, in 2005, a lawsuit was filed in California state court on behalf of factory workers in Bangladesh, China, Indonesia and other countries accusing Wal-Mart of failing to address substandard working conditions in suppliers’ factories.

But the case was ultimately dismissed, and according to a search of available filings on the Thomson Reuters legal database Westlaw, there have been no U.S. lawsuits filed against Wal-Mart or Sears on similar matters since the Tazreen fire.

Michael Silverstein, senior partner and managing director at Boston Consulting Group, said the attractions of places like Bangladesh outweigh the risks, and most retailers believe the risks can be managed.

“Bangladesh is a very viable source for apparel retailers. It has very low labour cost, good operational efficiency and because it produces in such large quantities, supply-chain costs are also low,” Silverstein said. “Obviously safety and health conditions need to be tightly policed. Suppliers need to be rated and visited frequently.”

Wal-Mart and other companies have vowed to step up their safety audits, training, and conversations with government officials. Earlier this month, Wal-Mart said it would donate $1.6 million to help start a new Bangladesh training academy.

NOT JUST A PROBLEM FOR LOW-PRICE RETAILERS

Foreign companies have long grappled with working conditions in manufacturing hubs, including China – places that have become the world’s workshops because of low wages and improving transport infrastructure.

Global protests against Apple Inc APPL.O swelled after reports spread in 2010 about suicides at plants operated by Foxconn, Apple’s chief supplier in China. The world’s most valuable technology company was forced to tackle the issue head-on. Apple publicized an internal audit that for the first time spotlighted all its manufacturing partners. It set up a workplace-improvement program, invited auditors like the Fair Labour Association to review it, and began monitoring its several hundred contract manufacturers more closely. Foxconn also significantly boosted wages at plants making Apple products.

In the apparel industry, Nike Inc (NKE.N: Quote, Profile, Research) began making changes to its sourcing and worker policies after there were charges of minimum wage violation and child labour practices in the mid-1990s. In 2005, the company disclosed its factory list, and then broadened that to cover 800 factories worldwide that manufacture all Nike brands.

But Nike and Apple make higher-priced brand name products than many apparel retailers. And protests such as the ones they have faced have mostly failed to materialize when it comes to retailers who sell cheaper apparel products.

For companies such as Wal-Mart, who use thousands of suppliers, keeping an eye on the supply pipeline is proving difficult. After the Rana Plaza building collapsed Wednesday, it took Wal-Mart more than a day to confirm that its goods were not being made at the building that collapsed. And in the Tazreen Fashions fire, Wal-Mart learned after the fact that a supplier was having garments made there without Wal-Mart’s approval.

COMPANIES URGED NOT TO PULL OUT

Western activists criticize retailers and apparel companies for not doing more to force improvements in a country where working conditions are poor and government oversight is lax.

“The bottom line is that worker safety laws are hardly enforced,” said Iftekhar Zaman, the executive director of global anti-corruption group Transparency International in Bangladesh. The retailers and apparel makers cannot be “perceived helpless” when such incidences occur.

The Western companies should not pull out of Bangladesh and other low-cost countries because impoverished workers would pay the price, Zaman noted. Instead, they need to push for changes from within.

“Better ways must be found such as the importing companies to be more closely involved in preventive measures, like ensuring strict compliance with safety standards as part of their business deal,” Zaman said.

Canadian discount retailer Loblaw, whose Joe Fresh clothing was being made at the building that collapsed on Wednesday, said that the latest disaster led it to realize that audits and other workplace actions can overlook shoddy building construction and other environmental problems. In a statement, the company said it will work with other retailers and government bodies to address factory standards in Bangladesh.

Two years ago, 29 people were killed and 100 injured in a fire at a Bangladesh factory making clothes for Gap Inc (GPS.N: Quote, Profile, Research), which owns Gap, Banana Republic and Old Navy. In response, the company last year implemented new safety standards in Bangladesh, including hiring a fire safety inspector, and loaning vendors up to $20 million for safety improvements.

Despite such measures, the pressure for low prices will persist.

“The fundamental value tension, we all know, is that consumers want quality at a low price and businesses cater to that,” said Harlan Loeb, who runs a crisis management team at the public relations firm Edelman, which as of Thursday was not advising anyone about the building’s collapse.

Companies often resist efforts to force a deeper discussion about the tradeoffs.

Before Wal-Mart invited shareholders to this year’s annual meeting, to take place June 7, the board of directors rebuffed another effort to force a shareholder vote on workplace safety issues.

According to documents filed with the U.S. Securities and Exchange Commission, a shareholder presented a proposal to require the company to report on its progress for assessing risks to human rights in its operations and supply chain. But Wal-Mart said the proposal was so similar to the one that failed in 2011, and that it already addresses the request through its standards for suppliers, that it did not merit reconsideration. The SEC approved its decision to reject the request for a shareholder vote.

Bargain-hunting shoppers continue to have mixed feelings.

“I was thinking about it when I was queuing up to pay,” said Philomina Wood, 70, as she left the Primark store in London. “It wouldn’t have hurt if there had been something inside to say people had died. It’s sad that life goes on and there’s no recognition at all.”

(Reporting by Nivedita Bhattacharjee and Jessica Wohl in Chicago; Additional reporting by Sam Forgione, Jessica Dye and Dhanya Skariachan in New York, Dasha Afanasieva in London and Solarina Ho in Toronto; Editing by David Greising, Edward Tobin and Lisa Shumaker)

But there have been few signs that safety issues and other
questionable labor conditions are sending shockwaves through the
major Western retailers, their shareholders or the people who
buy the clothes in the United States, Europe and elsewhere.

Despite a series of accidents that have killed hundreds of
people in recent months, dozens of major retailers and apparel
makers continue to operate in Bangladesh.

The country ships about $15.6 billion of ready-made garments
each year – about 80 percent of its total exports. Sixty percent
of Bangladesh’s garment exports go to Europe; the United States
takes 23 percent, and Canada takes 5 percent, according to data
from Bangladesh’s commerce ministry and industry sources.

About 18 months before the previous big tragedy in
Bangladesh – a fire in November in a textile factory that killed
112 people – shareholders at Wal-Mart Stores Inc had the
opportunity to weigh in on the safety question. By a nearly
50-to-1 margin, they rejected a proposal to require suppliers to
report annually on safety issues at their factories.

In arguing against the proposal, Wal-Mart’s management made
its reasoning clear: Having suppliers compile such reports
“could ultimately lead to higher costs for Walmart and higher
prices for our customers. This would not be in the best
interests of Walmart’s shareholders and customers and would
place Walmart at a competitive disadvantage,” the company said
in proxy materials.

Soon after the fire, Wal-Mart and Sears Holdings Corp
admitted their goods were being made at the Tazreen
Fashions workshop even though they had denied that factory
authorization as a supplier.

FAR FROM ALONE

Bangladesh is hardly the only source of inexpensive clothes
and cheap labor that has sparked concern about labor conditions.
From Vietnam, to the American protectorate of Saipan, to the
massive workshops in China, Western companies have found
themselves entangled with places where worker health and safety
conditions are often questioned.

Disasters such as the April 24 collapse of an eight-story
factory building in Bangladesh have not changed the calculation
for apparel makers and retailers. Cheaper products appeal to
shoppers. And the taint, if any, appears to be manageable.

The courthouse, marketplace and stock market seem to be
telling them they are right.

Shoppers such as Mohini Raichura are making decisions that
justify the retailers’ strategies. Raichura, a 30-year-old
London charity worker, was shopping Friday at Primark, a
discount retailer owned by Associated British Foods,
even though she knew that some of its products were made at the
factory that collapsed earlier in the week.

“I go there because it’s cheap. That’s awful. It really
makes me a bad person,” Raichura said. “But you know, I work for
a charity, I’m on a limited income, and I pay rent in London
-that’s how I justify it.”

Consumers continue to purchase products from brands
like Wal-Mart’s Faded Glory, found in the Tazreen rubble, and
Loblaw’s Joe Fresh, found in the ruins of the factory building
this week.

Loblaw Cos Ltd’s stock has edged up since the tragedy
this week, while Wal-Mart and Sears’ shares have moved higher
since the Tazreen fire last November. That disaster, in which
locked doors prevented workers from fleeing to safety, did not
appear to have any measurable impact on sales at Wal-Mart and
Sears after both acknowledged their products were made there.

The world’s court systems have not provided a disincentive,
either. For example, in 2005, a lawsuit was filed in California
state court on behalf of factory workers in Bangladesh, China,
Indonesia and other countries accusing Wal-Mart of failing to
address substandard working conditions in suppliers’ factories.

But the case was ultimately dismissed, and according to a
search of available filings on the Thomson Reuters legal
database Westlaw, there have been no U.S. lawsuits filed against
Wal-Mart or Sears on similar matters since the Tazreen fire.

Michael Silverstein, senior partner and managing director at
Boston Consulting Group, said the attractions of places like
Bangladesh outweigh the risks, and most retailers believe the
risks can be managed.

“Bangladesh is a very viable source for apparel retailers.
It has very low labor cost, good operational efficiency and
because it produces in such large quantities, supply-chain costs
are also low,” Silverstein said. “Obviously safety and health
conditions need to be tightly policed. Suppliers need to be
rated and visited frequently.”

Wal-Mart and other companies have vowed to step up their
safety audits, training, and conversations with government
officials. Earlier this month, Wal-Mart said it would donate
$1.6 million to help start a new Bangladesh training academy.

NOT JUST A PROBLEM FOR LOW-PRICE RETAILERS

Foreign companies have long grappled with working conditions
in manufacturing hubs, including China – places that have become
the world’s workshops because of low wages and improving
transport infrastructure.

Global protests against Apple Inc swelled after
reports spread in 2010 about suicides at plants operated by
Foxconn, Apple’s chief supplier in China. The world’s most
valuable technology company was forced to tackle the issue
head-on. Apple publicized an internal audit that for the first
time spotlighted all its manufacturing partners. It set up a
workplace-improvement program, invited auditors like the Fair
Labor Association to review it, and began monitoring its several
hundred contract manufacturers more closely. Foxconn also
significantly boosted wages at plants making Apple products.

In the apparel industry, Nike Inc began making
changes to its sourcing and worker policies after there were
charges of minimum wage violation and child labor practices in
the mid-1990s. In 2005, the company disclosed its factory list,
and then broadened that to cover 800 factories worldwide that
manufacture all Nike brands.

But Nike and Apple make higher-priced brand name products
than many apparel retailers. And protests such as the ones they
have faced have mostly failed to materialize when it comes to
retailers who sell cheaper apparel products.

For companies such as Wal-Mart, who use thousands of
suppliers, keeping an eye on the supply pipeline is
proving difficult. After the Rana Plaza building collapsed
Wednesday, it took Wal-Mart more than a day to confirm that its
goods were not being made at the building that collapsed. And in
the Tazreen Fashions fire, Wal-Mart learned after the fact that
a supplier was having garments made there without Wal-Mart’s
approval.

COMPANIES URGED NOT TO PULL OUT

Western activists criticize retailers and apparel companies
for not doing more to force improvements in a country where
working conditions are poor and government oversight is lax.

“The bottom line is that worker safety laws are hardly
enforced,” said Iftekhar Zaman, the executive director of global
anti-corruption group Transparency International in Bangladesh.
The retailers and apparel makers cannot be “perceived helpless”
when such incidences occur.

The Western companies should not pull out of Bangladesh and
other low-cost countries because impoverished workers would pay
the price, Zaman noted. Instead, they need to push for changes
from within.

“Better ways must be found such as the importing companies
to be more closely involved in preventive measures, like
ensuring strict compliance with safety standards as part of
their business deal,” Zaman said.

Canadian discount retailer Loblaw, whose Joe Fresh clothing
was being made at the building that collapsed on Wednesday, said
that the latest disaster led it to realize that audits and other
workplace actions can overlook shoddy building construction and
other environmental problems. In a statement, the company said
it will work with other retailers and government bodies to
address factory standards in Bangladesh.

Two years ago, 29 people were killed and 100 injured in a
fire at a Bangladesh factory making clothes for Gap Inc,
which owns Gap, Banana Republic and Old Navy. In response, the
company last year implemented new safety standards in
Bangladesh, including hiring a fire safety inspector, and
loaning vendors up to $20 million for safety improvements.

Despite such measures, the pressure for low prices will
persist.

“The fundamental value tension, we all know, is that
consumers want quality at a low price and businesses cater to
that,” said Harlan Loeb, who runs a crisis management team at
the public relations firm Edelman, which as of Thursday was not
advising anyone about the building’s collapse.

Companies often resist efforts to force a deeper discussion
about the tradeoffs.

Before Wal-Mart invited shareholders to this year’s annual
meeting, to take place June 7, the board of directors rebuffed
another effort to force a shareholder vote on workplace safety
issues.

According to documents filed with the U.S. Securities and
Exchange Commission, a shareholder presented a proposal to
require the company to report on its progress for assessing
risks to human rights in its operations and supply chain. But
Wal-Mart said the proposal was so similar to the one that failed
in 2011, and that it already addresses the request through its
standards for suppliers, that it did not merit reconsideration.
The SEC approved its decision to reject the request for a
shareholder vote.

Bargain-hunting shoppers continue to have mixed feelings.

“I was thinking about it when I was queuing up to pay,” said
Philomina Wood, 70, as she left the Primark store in London. “It
wouldn’t have hurt if there had been something inside to say
people had died. It’s sad that life goes on and there’s no
recognition at all.”

(Reporting by Nivedita Bhattacharjee and Jessica Wohl in
Chicago; Additional reporting by Sam Forgione, Jessica Dye and
Dhanya Skariachan in New York, Dasha Afanasieva in London and
Solarina Ho in Toronto; Editing by David Greising, Edward Tobin
and Lisa Shumaker)

Donald Seale, chief marketing officer, said domestic demand
for coal, a key part of Norfolk’s business, is expected to stay
weak in the near future as electric utilities replace coal with
cleaner, low-cost natural gas.

Norfolk competes with CSX Corp regionally, and both
railroads traditionally get a lot of business from transporting
coal in the Appalachian region of the eastern United States.

“Coal is diminishing in volume, but the rails would gladly
take more coal as the market demands. It remains over 20 percent
of sales (for most railroads) and it is higher margin than most
other commodities,” said Keith Schoonmaker, an analyst with
Morningstar.

Coal revenue was down 17 percent in the quarter for Norfolk,
due to lower prices and demand. Intermodal revenue climbed 9
percent.

Intermodal is the shipping of containers that can be moved
from one form of transport to another, such as from train to
ship.

Last week, CSX, the No. 2 U.S. railroad, posted a higher
quarterly profit as strong business in merchandise and
intermodal helped offset its struggles with the coal business.

For the first quarter, Norfolk, the country’s third-largest
railroad, earned $450 million, or $1.41 a share. A year ago, the
Norfolk, Virginia-based company earned $1.23 a share.

Excluding a gain from a land sale, the company earned $1.22
a share, while Wall Street was expecting $1.17, as per Thomson
Reuters I/B/E/S.

Railway operating revenue fell 2 percent to $2.74 billion.
However, shipment volume increased 3 percent.

Shares of the company traded at $75.50 after the bell on
Tuesday. They closed at $75.84 on the New York Stock Exchange.

Residential shoppers, who are a growing part of the
company’s business thanks to the rise of online purchases, can
receive notification of FedEx Express and FedEx Ground packages,
and track and manage deliveries without a tracking number or
FedEx account.

UPS launched its service in September 2011 to help enhance
first-time delivery with consumers getting alerts and details on
the specific timeframe for a shipment.

Raj Subramaniam, president of marketing and communications
at FedEx Services, told Reuters the growth in ecommerce made it
the right time for the company to launch FedEx Delivery Manager
through its FedEx Services subsidiary.

“In the second quarter, overall online sales (in the US)
grew 15 percent while GDP was somewhat between 1-2 percent,” he
said, adding that it would put FedEx at a competitive advantage
over rivals.

But at least two analysts said FedEx was late in offering
the service and that it would not change FedEx’s game by much.

“I think offering services at parity is normal for both
companies,” said Morningstar analyst Keith Schoonmaker, who
added that his valuations on FedEx would not change.

The analysts said FedEx was most likely late in offering the
new service because it was testing it to work out any possible
glitches.

FedEx Delivery Manager is available through multiple digital
platforms including a free mobile app, letting customers request
alerts via email, SMS text or phone – providing advance
notifications about packages being shipped to their homes.

The service also lets customers request options without
being locked into a premium-priced membership.

Speaking at the launch of Qatar’s service to Chicago, Al
Baker also said he thinks Boeing’s fix for the battery system
that overheated on two planes in January will work. He said if
it were not the right solution, the Federal Aviation
Administration would not have approved the testing plan for it.
Boeing completed testing on April 5.

“The 787 has such a huge technological leap compared to
other airplanes that it was obvious that some kind of teething
problem will occur,” Al Baker said in an interview.

“Boeing is very busy getting the certification process
finished and I’m sure they’ll give you something very soon.”

On Tuesday, United Continental Holdings Inc’s United
Airlines said it planned to begin flying Boeing Co’s 787
Dreamliner on May 31, five days sooner than expected.

Al Baker, who has said he will seek compensation from Boeing
over the 787 problems, declined to discuss the terms he is
seeking

The fast-growing airline, which is enjoying a civil aviation
boom in the Gulf region, has an order for up to 60 Dreamliners,
30 firm orders plus an option to buy 30 more.

The company also plans to use Boeing’s next-generation 777X
aircraft, which is still in development.

“I don’t think the 777X would be around until the end of
this decade or early part of the next decade,” he said, adding
that the 787′s problems had not affected plans for other
airplanes that Qatar gets from Boeing.

Qatar Airways, 50 percent owned by the state of Qatar,
currently serves New York, Washington, D.C., Houston and Chicago
in the United States. The company will be able to fully join the
Oneworld alliance by October, Al Baker said, after which it will
have code sharing arrangements with other Oneworld members,
including British Airways.

Baker also said the new Hamad International airport, which
was supposed to be open for a soft launch on April 1, will be
fully operational by the end of 2013.

(Reuters) – Nike Inc’s (NKE.N: Quote, Profile, Research, Stock Buzz) quarterly profit beat Wall Street’s expectations, as margins increased and world-wide future demand for its apparel and shoes rose, sending its shares up 8 percent.

Global orders for Nike-branded shoes and clothing scheduled for delivery from March through July 2013, known as futures orders, rose 6 percent compared to orders reported for the same period last year. In North America, the company’s biggest market, orders increased 11 percent.

The company also saw a turnaround in future demand in Greater China, with orders rising 4 percent, after falling in the previous two quarters.

“They turned China much faster than we thought,” said Brian Yarbrough, consumer discretionary analyst for Edward Jones.

Yarbrough said this turnaround was important as China is among Nike’s highest margin markets. Lower shipping costs and high price tags help the company make more money on their products in that region, he said.

“In China, we are seeing progress against our strategy to reset the marketplace but we still have more to do before we can capture its long-term growth potential,” Nike Chief Executive Mark Parker said on a conference call with analysts.

Nike had been stuck with excess inventory in China and was finding it difficult to tackle intense competition and frequent promotional sales by local brands. Distributors and retailers were also wary of an uncertain global economy.

Shares of the Beaverton, Oregon-based company rose to $57.93 Thursday in extended trade. They closed at $53.60 on the New York Stock Exchange.

Paul Swinand, an analyst with Morningstar, said one of the biggest challenges for Nike is to grow in its more mature markets. He said strong demand in North America shows it is able to do that.

Nike also posted its first growth in gross margins in around two years, with margins rising 30 basis points in the quarter. High costs of raw material and labor pressured the company’s margins over the past couple of years and Nike had been fighting it by raising prices on merchandise.

“Gross margin benefited from the combination of pricing actions and easing material costs, which more than offset higher labor costs,” the company said.

For the third quarter ended February 28, the company earned $662 million, or 73 cents a share, compared with $569 million, or 61 cents a share last year. Analysts, on average, expected earnings of 67 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 9 percent to $6.2 billion.

(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Bernard Orr)

(Reuters) – Leading clothing retailers like Gap Inc (GPS.N: Quote, Profile, Research, Stock Buzz) , American Eagle Outfitters (AEO.N: Quote, Profile, Research, Stock Buzz) are forecast to report larger fourth-quarter profits in the coming weeks, the latest evidence that smart inventory management and lower costs helped overcome sluggish holiday sales for most in the industry.

For calendar 2013, clothes retailers are expected to see margins improve due to better control of when their products arrive in stores, lower manufacturing costs and smarter use of technology for online sales and price comparisons.

Ken Perkins, president of data-monitoring firm Retail Metrics, expects fourth quarter net earnings at 18 U.S. apparel companies he follows to increase by 18 percent on average. Ten other retailers that sell clothes to teenagers are expected to see a 37 percent average increase in net profit, while the broader group of 120 retailers should see earnings rise 9.5 percent.

Lower product costs, investments in a smarter supply chain that helps manage inventories better, and controlled discounts are what analysts are banking their estimates on.

“Apparel retailers have lower product costs year over year, and most companies came into this quarter clinging on inventory. So even though top-line trends may not have been strong, margins should grow,” said Betty Chen, retail analyst with Wedbush Securities.

According to Thomson Reuters estimates, Gap’s profit is expected to rise about 34 percent over last year, while margins expand about 3 percentage points. Nike’s profits are expected to be up about 8 percent. Abercrombie & Fitch Co (ANF.N: Quote, Profile, Research, Stock Buzz) , American Eagle and Lululemon Athletica Inc (LLL.TO: Quote, Profile, Research, Stock Buzz) are all expected to post better profits and margins as well. Many others raised profit expectations on Thursday.

“The fact that input prices were significantly lower than last year because of the dramatic drop in cotton prices, and the post Christmas enthusiasm helped on markdowns,” said retail analyst Jan Kniffen. “So, despite the only OK Christmas selling season, margins are better than otherwise.”

Kniffen said costs of manufacturing were down by about 8 percent this year, while Michael Niemira of the International Council of Shopping Centers pegs the decline at 10 percent to 12 percent.

SMARTER RETAIL

Analysts also said apparel retailers are getting “smarter”, and more technology savvy by the day, helping them better manage inventory and invest in suitable fashions and markets. That, coupled with fledgling signs of an economic recovery seem to have raised Wall Street’s expectations from the group.

“The companies are working to become more efficient and one contributing factor (for gross margin expansion) is online sales,” said Helena Song, credit ratings analyst with S&P.

“Every single clothes retailer is investing in and working hard to improve online sales… which contributes to margins. It is a profitable way of selling things and contributing a greater and greater percentage of the total sales,” she said.

Retailers have also raised prices on products over last year, another reason margins are looking up. While retailers push up price tags when manufacturing costs go up, they seldom bring prices down when costs go down. When cotton, which is the clothing sector’s most used raw material, rose sharply in the past few years, almost all of the retailers and manufacturers had to push up prices. Cotton futures CTC.1 have fallen off their peak and are trading down 15 percent from this time last year.

Most analysts stuck to their top picks like American Eagle and Gap, and Jefferies’ Randal Konik said he also expects Ugg maker Deckers Outdoor Corp (DECK.O: Quote, Profile, Research, Stock Buzz) to do well.

“UGG brand remains a cold weather staple and our checks indicate that sales have picked up after the recent drop in temperatures across much of country. After fourth quarter results, we expect the business to stabilize … due to lower sheepskin costs and cleaner inventory levels,” he said.

Gap, the standard favorite among analysts is trading at about 14 times forward multiples, according to Thomson Reuters data, while the broader S&P Apparel Retail Index .SPLRCRETA is trading at 15.5 times.

The S&P 500 has risen about 8.49 percent over the past quarter. In contrast, the S&P Apparel Retail Index has risen 9.73 over the same time.

Jaime Katz, retail analyst with Morningstar, said though the stocks are “fairly overvalued”, they could still rise in the next few months.

“People are really hesitant to put their funds in the fixed income markets and they would prefer to put them in equities. There could be some support to domestic apparel retailers in the near term,” she said, adding that while international markets are not doing as well as expected, domestic clothes retailers could still have the advantage of a somewhat improving consumer confidence levels.

(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Bob Burgdorfer)

(Any opinions expressed here are those of the author, and not necessarily those of Thomson Reuters Corp.)

The mother and father of the 23-year-old Delhi gang-rape victim were cremating their daughter’s body around the same time I discovered Honey Singh, now lately known for his notorious song, “Ch**t,” or “Cu*t.” The song revolves around the singer’s vision of satisfying a woman’s lust, followed by beating her with a shoe and then moving on to other things.

While India convulses over its people’s shameful treatment of women, its inadequate rape laws and questions about how to change an entire society, Singh’s star has been rising in Bollywood. The industry apparently likes what it hears.

Whether the trouble he has encountered over his songs will stall that career remains to be seen, but it is safe to say that Bollywood has a record of promoting a dim, if adulatory view of women. But it is time the industry takes responsibility for what it perpetrates under the garb of “entertainment.”

India’s influence over what we see, the tunes we hum and the weaving of the tapestry of our pop culture is huge. Teenagers and adults  often dress like the hottest actors and actresses of the season, talk like them and woo each other with songs and dialogue from hit films and almost inevitably have, at some points of their life, imitated their onscreen role models. Bollywood’s bounty is as boundless as the seas, but much of the time, we’re the fish.

When popular actors and producers such Akshay Kumar and Saif Ali Khan become patrons of the likes of Honey Singh, there is little doubt that his popularity will grow. That means that what he thinks and says is OK, or as we might say in Hindi, “OK chalta hain.”

But it’s not OK, telling a woman how you’re going to assault her and then hit her with a shoe. While we would love to live in a world in which adults knew what is right and wrong, we don’t, and that is why we make rules.

Artistic freedom is a fine concept, and liberal as one would want to be, I don’t know what loss the world will suffer when “Pallu ke neeche dabaa ke rakha hai / utha doon toh hangama ho” (“Pressed down underneath my ‘pallu,’ they’ll cause a ruckus if they come out”) is not played on buses and in the nation’s living rooms. Which music lover will miss a song called “Aja teri ch**t maroon”? (“Come let me f**k you”)

Bollywood should and must portray reality, including the dismal treatment of women. But surely  portraying reality or realistic situations is different from inviting your audience to leer and demean with you? When Shahrukh Khan gropes his heroine on screen and makes borderline racist jokes (I’m talking about “Ra 1“), I wonder how it champions any cause, let alone that of artistic freedom. No woman I know appreciates being groped or pinched by strangers.

There is a difference between crass and comical. No matter how much we talk about “to each his own”, when SRK does that on screen, my 12-year-old cousin and my parents’ 20-year-old driver think it is acceptable.

Censorship is not bad; neither are rules. It is a matter of how and where we use them. It is a matter of questioning why a movie that shows a mother of two kids being raped by village goons while the father stands helpless is not rated “A” (adults only), and why nobody minds seeing that broadcast on prime time national television.

Bollywood has come a long way from the days of “Pati parmeshwar hain” (“Husband is God”), but its influence has not. Note the poster for the movie “Maine pyar kiya” (“I Fell in Love”) from 1989, and then this one from five years later, for Hum Aapke Hain Koun! (“Who Am I to You!”). The depiction of the heroine’s “place” as times change comes across clearly here, and from a production house that is the poster child of all things mushy Bollywood.

So, the industry is a part of the debate. What side it chooses to argue for is another matter.

(Priyanka Chopra performs during the International Indian Film Academy awards show in Toronto, June 25, 2011. Reuters photo: Mark Blinch)

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