For the apparel industry, there are two huge mistakes responsible traders have to avoid. One is the nationalistic nonsense about “clothes miles”: the fatuous propaganda from rich-country protectionists that making a garment in a poor country is bad for the planet, because of all the travelling a garment has to do. Repeated analyses constantly demonstrate the claim’s absurd: washing and drying a t-shirt a few times uses more energy than freighting its cotton from the US to China, then freighting the t-shirt from China to Germany. And neither caring for the garment nor freighting it use anything like as much energy as screenprinting “Save the Planet: Buy Local” on the shirt.

And then there’s the opposite mistake: the claim that worrying about sustainability just drives up costs. Which might happen – but not if you find a way of cutting the amount of energy used in whole life-cycle of a garment.

Which is where WalMart’s holistic approach comes in. Announcing a plan to cut 20 million tons off its products’ greenhouse emissions (GHGs) by 2015, it’s singled out apparel. Pointing out that garment care is where the energy is really used, it’s sensibly decided that’s a challenge for its garment suppliers – but also for the companies selling WalMart laundry detergent, washing machines and driers.

And if you’re not just the world’s biggest garment buyer, but have an even bigger share of the world’s laundry detergents – and a pretty impressive share of the world’s washing machines – you’re ideally placed to see your suppliers rise to the challenge.

I’m writing this as I’m drying a pair of trousers. The detergent we use didn’t do a very good job of cleaning them when washed, as the eco-conscious retailer I bought them from recommended, at 30 degrees C. So I washed them again. Our new low-energy washing machine did its job – but they were so wet after spinning, they’ve been in the dryer now for two hours. And don’t tell me I can dry them in the fresh air during a dull, wet, Oxfordshire winter. I’ve probably used more energy on this wash than went into an entire pallet full of them in their journey from American cotton field to Sri Lankan factory to Clothesource Towers.

Now, with WalMart’s famously kind, sympathetic approach to motivating its suppliers (as in “do it our way and you don’t get fired”), the likelihood is suddenly a lot greater that by 2015 those trousers will dry quicker anyway, detergents will work a lot better at 20 or 30, and washing machines will spin well enough the trousers will dry outdoors even here. WalMart’s influence won’t quite extend to our just as famously uncertain weather – but a bit of WalMart brutality with manufacturers will almost certainly do a great deal more to reduce energy usage than any amount of high-minded talk from governments or activists.

So – and here’s the clincher – washing those trousers will cost me less.

Is WalMart doing this because it wants to save the planet or because it wants to make more money? Probably a bit of both. But does it matter?

Because you’ll find the other bit of WalMart’s philosophy on the Highgate, London, grave of Karl Marx. The old fraud would probably be turning in it if he realised who was agreeing with him on this, if on little else. But whereas philosophers interpret the world, he’d said before meeting his all too delayed death, “the point is to change it”.

A holistic WalMart taking their cue from Marx? Strange times indeed

Most sensible observers have probably rated H&M’s attempts to run their business ethically very highly indeed. They’re conscientious, they’re honest in what they publish, they go to great lengths to ensure responsible trading. They don’t preach, they’re perfectly happy about being in business to make a profit – but most trade unions and the like probably rate them as highly for their standards of behaviour as most stock analysts rate them for consistently good financial results.

But they’ve had practically as horrible a set of things happen on the ethical front in the past two months as I can remember anyone ever having in a year.

The year started off with claims in New York that H&M were throwing away unsold garments, rather than discounting them or giving them to charity. By the end of January, they were being accused by the Germany’s
Federal Consumer Affairs Agency of “not being vigilant enough” after a Bremerhaven inspection agency was reported to have found 30% of alleged organic cotton garments in H&M stores contained GM cotton.

On February 22, the Economic Justice Forum (EJF) added another non-vigilance allegation: H&M had claimed to have been at the forefront of boycotting Uzbek garments over the country’s use of slave labour in its cotton fields, but appears to do nothing about checking the source of cotton used in its garments, and uses suppliers known to be buying Uzbek cotton. H&M seem to have claimed origin auditing’s not possible – but, says the EJF, Tesco audits where the cotton in its garments comes from, so what’s the problem?

Then on February 25, 21 people were reported to have been killed at Garib & Garib – a Gazipur sweater factory which puts H&M at the top of its client list, thus implying H&M had inspected its safety standards.

Now we don’t know whether Garib & Garib really are an accredited H&M supplier, or what caused the disaster. We do know that the Bremerhaven inspection agency strongly rejects media claims it found non-organic cotton in 30% of H&M samples (H&M claim they can’t find any at all) , and few of us are really technically competent to judge between H&M’s and the EJF’s claims about how accurate cotton origin testing can be.

But no other apparel retailer has ever been hit with so many examples, so quickly, of what look like a superficial approach to responsible trading.

Personally, I don’t suspect they’re being particularly irresponsible, and there seems little doubt they’re getting the raw end of some of the problems. Google H&M and organic, for example, and you get at least 20 references saying things liked “fraud” for every one reference to the inspection agency’s denial. Their current quandary really illustrates just how whiter than white you need to be if you’re trying to establish yourself as responsible.

Or do you? H&M are certainly getting a lot of unfortunate PR at present. But is it really translating into poorer results?

Or are staff and consumers just increasingly of the belief that bad things happen, however vigilant you try to be. In our view, H&M’s current difficulties will help the whole industry understand better how important responsible trading really is – and how businesses need to handle the inevitable things that go wrong.

The US withdrew its AGOA concessions in December over Andry Rajoelina’s seizure of power with help from the Madagascar army last year. AGOA exists simply to offer trade concessions, and the US President is required to review regularly whether beneficiaries conform to certain principles of government. By law, he has no authority to continue those concessions to a country that fails to observe those principles.

For the EU, the legal position is different. Madagascar gets duty-free access because of the Cotonou agreement, a much wider-ranging programme offering aid, investment and a number of other benefits. The Cotonou agreement sets standards of governance – but contains no mandatory prescription of what should be done if a country fails to follow them. And the EU has a much wider range of sanctions available to it under Cotonou should it want to start wielding a big stick

The EU, officially, was as outraged at Rajoelina’s coup as the US, calling it a “flagrant violation” of the Cotonou principles. But it is under no obligation to withdraw duty-free access: in theory Zimbabwe, possibly the most flagrantly misgoverned country in Africa, retains the concession; though the EU bans its officials from travel to Europe.

The most likely EU reaction will be some suspension of aid, or personal restrictions on the individuals concerned in the coup. It’s simply untrue that “moves on the agenda …include the loss of access“. They include the loss of duty free access – but goods will be able to be sold, and there are options for the EU that hit Madagascar’s politicians rather than its workers.

It should be remembered, of course, that losing duty free access to the EU wouldn’t matter as much as a similar loss on sales to the US. Madagascar last year sold twice as many garments to the US as to the EU – and the EU’s maximum duty is 12%, compared to America’s 27%. Claims about “teetering on the edge” are making a wholly unnecessary drama out of a serious issue the EU is likely to handle with reasonable sensitivity to the need for preserving jobs

Speaking to Turkish business daily Referans on February 5, the newly appointed Turkish Clothing Manufacturers Association (TGSD) chairman Cem Negrin said his association aimed to have a Egyptian-style system of duty-free Qualified Industrial Zones (QIZ) “within two years”, and added that his association was “about to agree with a U.S.-based lobbying firm” that a programme to get one would start.

In chasing duty-free status, TGSD joins a pretty long – but pretty forlorn – club. Bangladesh and Cambodia have been telling the world for years they were going to get it – and, in fairness to them, the US DID agree some years ago to offer it to the world’s 49 poorest countries and these two, with Laos, are the only ones in that group to have a serious garment industry and need to pay US import duty. Legislation proposing this goes on and off US legislative agendas – but it looks no more likely to be taken seriously now than at any point in recent history. Opposition is fierce, not just from the US textile lobby, but from far richer countries, like South Africa, who dislike the idea of losing their competitive edge in the US

Pakistan endorses the US government’s enthusiasm towards duty free access for garments made in its most remote tribal districts – but few Pakistani manufacturers do, and apparently even fewer US legislators.

The Philippines, after getting nowhere spending hundreds of thousands on lobbyists for duty free access a few years back, now keeps on telling everyone it’s going to be excused duty on garments it makes from US fabric. But its SAVE bill seems to be getting slow progress. As does the Bill to prolong AGOA.

Is there any real reason Turkey’s attempts will fare better? It’s actually hard to think of a less attractive candidate from America’s point of view.

Unlike Africa and Israel, which get duty-free access, Turkey has no strong US pressure group. Unlike America’s neighbours, or the Philippines, its garment factories aren’t going to use US fabric: Turkey’s real strength is in the quality of its fabric mills – and US textile lobbyists will just laugh out loud at the thought Turkish competitors might delude themselves they’ll be allowed duty-free access. Unlike Pakistan, Turkey isn’t a country undermined by terrorism – but even for Pakistan, the US is prepared only to allow duty free status for factories so inaccessible no-one would ever use them: there’s not even the hint of a scintilla of a suggestion the US might look favourably at duty-free treatment for factories in Lahore or Karachi.

Turks might think they could claim their Southeast Anatolia development area (known in Turkey as GAP) needs support: but if they seriously believe the poverty and instability round Diyabarkir is in the same universe as the problems Pakistan has round the Khyber Pass, they’re just delusional. The idea that they can claim the kind of poverty Egypt does to justify the case for its QIZ programme when Turkey’s heaviest concentration of garment factories is in Istanbul, one of Europe’s biggest cities and just a couple of hours by freeway from the EU, is doolally.

And Turkey’s an official EU applicant. Indeed, as far as the apparel trade is concerned it’s virtually in the EU already. Its garments have duty free access and Turkish trucks carrying them have unlimited rights to ride, and ply for hire, throughout Europe (unlike the restrictions the US places on Mexican trucks).

Arguing to let Turkish garments, made from Turkish textiles, into the US without restrictions might not be quite as tough as making the same case for China. But it really is in pretty much the same league. This really is an idea whose time is unlikely to come in the lifetime of anyone reading this blog

30%? Well, the value of apparel imported into the US fro Cambodia fell 21% in 2009, US textile agency OTEXA announced on February 10. The value of imports fell 27% in one or two months – but the fall was way, way, below the reported 30%. Where does the 30% come from? No-one has the faintest. There’s a culture in Cambodia of announcing any old number if it makes the right point, there might have been different customs scams going on in 2009 from those in 2008, or the country’s official data systems might not work. Whatever the explanation: numbers reported as coming from official Cambodian sources are rarely worth the paper they were never printed on.

But sales still fell 21%. Actually, their value did: the volume of garments the US imported from Cambodia fell slightly less: just 15.5%, since the average prices paid for Cambodian garments fell 6.8%.

Fine, but both the 15.5% fall in imports and the 6.8% fall in prices were due to the recession, weren’t they?

No. Cambodia’s share of US garment imports fell too, as its exports failed to compete with clothes from China and Vietnam. If Cambodia’s share of US imports had stayed the same as in 2008, its sales would have been 11.2% higher. Of the 15.5% fall, 9.4% was the result of Cambodia’s falling competitiveness, and just 6.1% was down to the recession. The main reason prices fell was that once US and EU restrictions on Chinese and Vietnamese imports were withdrawn, price competition worldwide got tougher.

So, of the claimed 30% sales loss in Cambodia, just 6.1% – or one-fifth – is down to the recession. The rest is hokum, or the result of falling competitiveness.

Hokum in our view is pretty much the same thing as falling competitiveness. Alleging bad data, corrupt officials or a tendency to believe any old rumour aren’t things that would surprise anyone familiar with Cambodia. The fact is: the country’s increasingly unable to compete, in spite of its relatively low wages.

It’s going to be just as unable to compete if Western markets start growing again, or if Asian beliefs prove correct that the world garment market is going to shift somewhere else. Our analysis shows that four-fifths of Cambodia’s alleged sales loss is down to problems in Cambodia, and the political and logistical infrastructure that supports its garment business.

Hopes that sales in Gap or H&M might pick up are concentrating on the smallest aspect of the problem. The answers lie in Phnom Penh: not in Poughkeepsie or Portsmouth

It’s a problem more and more people are recognising, and the Fast Fashion boom isn’t making things any easier. Retailers and brands are expecting fewer buyers to manage more products, faster and more efficiently, than ever before.

So I’m pleased we’ve been able at Clothesource to work with our friends at Industry Forum Services to develop a fast, affordable seminar to help buyers catch up quickly with the latest sourcing trends,

Our March 3 Essential Sourcing Skills seminar is compressed into just four hours. So UK-based buyers will need to invest less than half a day honing up on the latest garment sourcing developments. And many buyers on the European mainland can get to London, catch up on all the latest trends, and get home for dinner without needing a night in a hotel.

The full brochure is downloadable . The March 3 half-day Essential Sourcing Skills seminar is designed to give help apparel buyers and sellers understand how their business can deal with the constant changes in international clothing supply chains.

This half-day seminar will provide Clothesource’s latest information about supplier countries’ changing competitiveness, helps participants review their sourcing and marketing patterns against their competitors’ and demonstrate how to identify potential new sources, how to evaluate them, and how to make informed and profitable decisions.

Obviously, we’re biased. But it’s probably the best £125 most of our readers will ever have spent

The concession will be removed partly because Sri Lanka faces serious charges of abusing human rights, and the EU invented the GSP+ programme specifically to reward Sri Lanka after it was hit by the tsunami for its apparent superior human rights record. But since then it’s faced serious terrorism problems, and it’s claimed some rough treatment was necessary. There might well be some sympathy in the EU for that point of view. Former colonial power Britain has been hit by terrorism as well – but Sri Lanka’s real offence in the eyes of many EU officials has been its refusal to assist the EU’s investigations and to show any serious attempts at improvement.

And there’s a great deal more to Sri Lanka’s stance than the issue of duty-free access for the country’s bras to Europe. The Economist has an excellent explanation for this.

Sri Lanka’s president, like his counterparts in a growing number of poorer countries, resents having Western countries impose conditions – and it would rather not have benefits like GSP+, however useful, if that means doing what other countries tell him to do. Probably, that’s long been the view of many developing-country politicians: what’s the point of going through the bother of winning power if you’ve still got to do what people thousands of miles tell you? But if your economy depends on selling things, your markets are going to be in Europe or America, and for a long time responsible politics meant putting up with Europeans’ and Americans’ whims.

The recession and changing geopolitics have changed all that. Contrary to the self-delusion of many Asian politicians, they haven’t changed the blunt truth that practically all the money the world spends on importing clothes from the Indian subcontinent is spent by Europeans, North Americans or their near-clones in Australasia. Other clothes markets are dominated by the Chinese and imports are worth so little they’re dwarfed by sales to the North Atlantic. That doesn’t stop Indian politicians constantly telling Indian clothes manufacturers to sell more to the Arabian Gulf, or to Russia: but it does stop any meaningful sales being made. But politicians don’t understand markets: they understand power. Because they think power’s shifted, they assume sales opportunities have as well.

And, as far as politicians are concerned, power really has shifted. In Sri Lanka’s case, as Europe made its assistance depend on good behaviour, Iran provided $450m for a power station, and half a year’s oil on easy terms. Pakistan and China provided the Sri Lankan government with weapons to fight its Tamil rebels, while the West wouldn’t. China passed Japan in 2008 as the country’s biggest single country provider of aid. Though the EU in total provides more, China has lent it over $1 billion for an airport and a Chinese-built port that might well be handy as a Chinese naval base. That worries India, which is now lending the county $700mn for railway improvement – and trade with India is growing.

Now little of that might help Sri Lankans if jobs making things to sell to Europe and America disappear. But Sri Lanka’s president thinks he’s now got a choice. He might not need to accept European rules if he can borrow nigh on $1 bn from India just by exploiting India’s fear of growing Chinese influence. And if blowing a raspberry at Westerners destroys jobs – well, he can always blame Western arrogance. And are jobs dominated by women workers real jobs anyway?

So, just as in Madagascar, there’s a non-argument going on here. Sri Lankan businesses want to keep GSP+ because they want the economy to function. Many Sri Lankan politicians don’t care about that: they simply dislike neo-colonialism.

This of course raises questions about the whole direction of Western trade policy. But they’re above my paygrade. What’s easier to cope with is that, with China looking as if it’s offering no-strings help to developing-country governments, threatening to make underwear exports dearer isn’t going to strike terror into the hearts of developing-world politicians.

Sri Lanka, under its current ruler, is very, very unlikely to do anything to keep GSP+ eligibility. Or to get it back. Its ruler thinks the world has turned upside down already: he’s very unlikely to believe it’ll turn back the other way in his lifetime

But the surprise two-day visit of Mike Duke, WalMart CEO, to Bangladesh, his demand for a meeting with the country’s prime minister and his signature on a letter demanding “swift action” over scandalously low wages reflects the growing frustration – and sometimes downright fury – among garment buyers over the Bangladesh garment industry’s persistent refusal to deal with the greatest running sore in our business.

Bangladesh set its minimum wage at Tk 1662 ($23) a month in 2006 (it had been unchanged since 1994), and for the past four years, we’ve been carrying stories about the number of factories not even paying that. The country’s government has pressed for its minimum wage board to set a higher level – probably $72 – but business owners have undermined the process by just not turning up to its last meeting, so nothing got decided. And with 10% of Bangladesh MPs garment or textile business owners, there’s more than a whiff of a government not trying to enforce its own rules as hard as it might.

Hence a letter to the Bangladesh Prime Minister from 11 key buyers published on Feb 5, demanding swift action for a minimum wage workers can actually live on. The 11 – including WalMart as well as the world’s other two biggest retailers, Tesco and Carrefour, in addition to Gap, H&M, Ikea and Levi Strauss – claim to account for 40% of Bangladeshi garment exports, which means about a third of ALL the country’s exports. They are frustrated at constant violence in Bangladeshi factories over the most trivial dispute and they are sick of customer complaints about their alleged complicity in low wages. H&M even went on public record to claim they’d offered to pay more if wages went up, but factories had rejected their offer

Will it work? Well, buyer pressure over big government issues hasn’t had a great record lately. Letters from US apparel buyers to their government over Honduras have achieved nothing. Threats by the US to Madagascar’s government to withdraw its apparel industry’s duty free access have been ignored – as, almost certainly have similar threats by the EU to Sri Lanka’s. And Bangladesh’s dependence on garment exports is roughly the same as Madagascar’s.

Bangladesh garment businesses have an influence over their government unmatched anywhere else: the government publicly complains about low wages but has done nothing to force them to the Minimum Wages Board table, and has recently announced plans to reduce penalties for factories breaching the country’s labour code. It consistently joins in the downright silly witch-hunt for “foreign rabble-rousers” every time a riot breaks out – thus feeding the state of denial factory owners have been in since violence broke out.

The businesses will, understandably, point out that buyers never stop demanding lower prices. They DO face violence from their workers to as level unseen anywhere else and there can be little doubt that there is some kind of organisation behind the riots and arson. But they make an awful case for themselves.

Explaining why 30% monthly labour turnover is quite commonplace, Bangladesh Garment Manufacturers & Exporters Association (BGMEA) President Abdus Salam Murshedy cheerfully admitted in an interview published yesterday that workers sometimes move jobs for an extra Tk 100 ($1.40) a month. His vice-president, Siddiqur Rahman, thought that was wrong of workers “These workers always want to raise their wages making the factory owners hostage”. Rahman’s answer to high labour turnover? The taxpayer should solve the problem “The only way to solve the labour crisis is establishing training centres by the government.”

But, however aggrieved Bangladeshi businesses might feel, ultimately you can’t argue with your biggest customer. The question is, though: what will Wal-Mart and Tesco do if the Bangladeshis keep wriggling? It might be odd for a retailer famous for his tough negotiations to drop everything to try to put prices up – but the Bangladeshis have already behaved even more oddly by refusing higher prices. For all the frustrations of working there, Bangladesh does now have an important niche in European and US buying as the place for finding low-cost clothes. If its businesses postpone living wages again, are the world’s most cost conscious buyers rally going to switch to – well, to where?

Of course they’re not. But they are short of two KINDS of workers:

• Workers with the necessary skills to be productive in the garment industry
• Workers near garment factories prepared to work for what are often extraordinarily low wages.

And the way the world has changed in the past few years has made it increasingly tough to find people like that. Here’s our take

Garment factories have always, since the Industrial Revolution, been a good way for people to get almost-decent wages instead of the awful standard of living they had to cope with in the countryside. Typically, though, what seemed in the village amazing wages aren’t quite so amazing for a worker who’s got to pay city rents and city prices for food she almost regarded as free back in the village. For many, of course, the wages are still good enough they can send cash home to the village, so their family can invest in land, tools or a new house.

We think that’s changed recently. High worldwide food prices have meant living near Saigon or Mumbai or Guangdong has got more expensive, while the wave of factory closures in 2008/9 have made job prospects in garment factories look a lot less rosy. Many (according to some activists, millions of) garment workers have lost their jobs. Going home, they’ve often discovered that rising food prices have also made working back in the village is a lot better paid than it was five years ago. Near India’s Tirupur, they can make as much in two hours’ farm work as they’d make in a day in a city far from home.

So, though there are still hundreds of millions of desperately poor people, many have discovered that a migrant’s life in a distant city just isn’t worth it. To which, for many garment makers, there really is only one solution: the only way to get enough staff is to pay them enough to make the discomforts of a shared room, hundreds of miles from family, worthwhile.

Now factory owners don’t pay rotten wages for the fun of it. Wages are the only cost garment makers can control – and I wouldn’t like to lecture those business people on how to pay proper wages without going broke.

But, ultimately, it comes down to productivity. The last edition of The Source carried mixed messages on that. Western retailers were claiming evidence higher wages led to higher productivity: emerging-market factory owners were claiming they didn’t

But there really is no alternative for garment factories. Even in the poorest countries, food-price inflation is making city life pricier for workers and rural life more remunerative. Garment makers simply have to learn how to depend on fewer workers: and if they can’t leverage higher wages into better productivity, they’re going to have to learn how to.

There really is no shortage of workers in poor countries. But the growing shortage of people both able to sew garments AND prepared to work in a garment factory is a real threat throughout Asia. Businesses who can’t deal with it won’t be dealing with anything soon

11 Jan 2010, online:- According to the International Trade Administration Office, Peru was the
leading provider of textiles and clothing to the US in 2009, exporting a total of USD 523mn (EUR 361.47mn). Colombia’s textiles exports to the US fell 36% in 2009 to total USD 205mn. Colombia has lost two thirds of the US market in the last five years, exporting USD 600mn of textiles and clothing products in 2005. Textiles exports from the Andean region as a whole to the US fell 29% in 2009 to 750mn. © Esmerk 08 Jan 2010, online:- Peru’s clothing exports fell 20% in value and 5.23% in volume in 2009, with January, May and September being the worst performing months. A total of USD 29.60mn (EUR 20.67mn) was exported in 2009, compared to USD 37mn in 2008. In terms of volume, exports fell from 5mn units to 4.7mn units between 2008 and 2009.