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A torturous situation for factories and their staff

 

Bangladesh is the second biggest producer of garments in the world with 87% of export revenue coming from the garment industry. Therefore when European and American fashion retailers cancelled billions of pounds worth of clothing stock orders, Bangladeshi factories were impacted to devastating effect.  

Millions of jobs were instantly lost or put at risk, and the long term existence of many factories was in jeopardy. 

Budgets slashed

This has been catastrophic in terms of keeping these businesses going. In the retail industry, the factory bears all the upfront costs for producing goods. This includes the fabric costs, labour and factory costs to make items. A huge power balance exists, and retailers often pay nothing until they take delivery of the stock into the warehouse in their country. 

When the Coronavirus pandemic hit, well known high street retailers were able to cancel goods with no payment. In some cases, they just refused to pay or demanded massive discounts because they knew they could just move to other suppliers after the pandemic passed, even moving production to different countries. 

For many factories, creating new stock is funded by lines of credit from their banks. With stores closed and retailers refusing to accept goods, this meant they would default on these lines of credit and in turn potentially not be able to borrow more funds to make any new orders that came in. It put them in an impossible situation. 

Mountains of unwanted stock 

With retailers cancelling stock, the result was hundreds of thousands of items of unwanted stock and no means of getting paid for it. As a result, many factory owners around the country were forced to close up, and the human impact this has had is devastating. 

Zahida Fizza Kabir, CEO of SAJIDA Foundation, said: 'In this challenging business environment, garment factories are continuing to be forced to operate at partial capacity which has resulted in at least half a million job cuts. The majority of garment workers solely depend on wages to run their households and do not have any savings to fall back on."  

Factory closures or reduced working leaves garment workers unpaid and with no employment on the horizon. The majority of these workers are female, and their wages support not only their children but often their parents too. Without savings and living from paycheck to paycheck when they lose their jobs, the impact is immediate and wide-reaching.

Whilst Lost Stock is primarily focused on supporting workers right here, and right now, we know that it's essential to also ensure we can support the long term viability of factories as much as possible. 

A lifeline for workers

When you buy a Lost Stock box, there's a two-fold impact for the textiles industry in developing nations like Bangladesh. 

The first impact is supporting a garment worker and her family through SAJIDA Foundation, but there is also support provided to factories as well. 

Around 30% of the value of each box goes to factories to pay for the goods you find in your Lost Stock order. 

To protect their long term relationships with retailers, which many will need going forward, we're not able to name the factories or identify the brand's products from Lost Stock. However, we did want to pass on their thanks and what it has meant for them to be supported by Lost Stock shoppers at this time. 

For a long time, the relationship between retailers/brands and factories have been heavily weighted in favour of the retailers and brands. This needs to be rebalanced and we hope that Lost Stock can help. 

'We would like to thank Lost Stock for supporting our workers and our factory by buying ready-made garments from us which were made but cancelled due to COVID-19 by various retail brands who left those goods unpaid.

'This is truly a great initiative taken to help the workers financially in this difficult pandemic period.'

Factory owner in Bangladesh where over 34,000 products have been bought 

‘We have successfully settled 2 consignments now with no issue. We appreciate your generous initiative of providing financial assistance to our workers, and on behalf of our management, we salute all the customers involved..’ 

Factory owner in Bangladesh where over 8,000 products have been bought

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