Loblaw to include structural integrity audits of supplier companies

TORONTO – Loblaws says it will continue manufacturing Joe Fresh clothing in Bangladesh and also take new steps to ensure the structural integrity of the factories in the wake of the collapse of a building that housed one of its suppliers.

“We must do a better job to enforce the safety of workers producing our products in Bangladesh and around the world,” Joe Mimran, who founded the clothing brand Joe Fresh, said Thursday.

More than 400 people died when the illegally constructed, eight-storey building collapsed last week. One of the factories in the building produced items for Loblaw’s Joe Fresh clothing line, but numerous other clothing makers were also in the complex.

“I’m very troubled,” said Galen Weston, executive chairman of Loblaw.

“I’m troubled by the deafening silence from other apparel retailers on this.”

Loblaw said its standards were designed to ensure that products are manufactured in a socially responsible way, but they did not address the issue of building construction or integrity.

Still, the company didn’t wash its hands of the problems.

In the past, Loblaws executives visited Bangladesh every six months to keep tabs on worker safety at the 47 local factories that produce Joe Fresh clothes. An international auditing firm would visit each year, Mimran explained.

“It’s a very robust system, but it needs to be even more robust,” he said.

Loblaw plans to station an employee in Bangladesh to oversee sourcing on a daily basis, Mimran added.

Next week, Loblaw will send four senior executives to Bangladesh to meet with the government, labour officials and the Canadian high commission. There was no mention of the company meeting with trade unions.

Loblaw said owners of other factories that manufacture Joe Fresh clothing have begun to provide the company with architectural plans and building permits, but Mimran emphasized the factory collapse is more than just a concern for Loblaws and other clothing makers.

“This is not just the brands and the labels who have a responsibility … it is a responsibility for the whole industry and for government,” he said.

“If we feel that government cannot give us the kind of information we can rely on when we do our audits, then we may have to rethink which countries we go into.”

The Bangladesh government has distanced itself from blame. In an interview with CNN, the country’s prime minister, Sheikh Hasina, said actions are being taken to fix the troubled garment industry.

“Anywhere in the world, any accident can take place,” she said. “You cannot predict anything.”

Bangladesh has a history of safety problems at its factories that stretches back for years.

In 2005, the Spectrum factory collapse killed 64 workers in the middle of the night, while numerous fires have ravaged other facilities, including one last November in Dhaka that killed at least 117 people.

Loblaw should have known that safety issues were a major concern in countries like Bangladesh, said Kevin Thomas, director of advocacy at the Maquila Solidarity Network, a labour rights group in Toronto.

“It’s as if there’s been no model out there on how to fix these problems, that (Loblaw is) just sort of flailing out there in the dark trying to come up with a new idea to address their responsibility,” he said.

“The reality is there’s a lot of work being done on this.”

Earlier this week, retailers including Walmart and the Gap met in Germany to iron out a national fire safety plan for Bangladesh that has been in the works since last year. The agreement to be ironed out before a May 15 deadline and would make specific commitments on improving infrastructure and policies within the country’s factories

So far, Loblaw isn’t involved, but a spokeswoman for the company said it is “reviewing all options.”

The factory collapse has shaken the clothing industry which has brushed aside many concerns about worker safety in the past.

On Wednesday, Disney announced that it will no longer produce licensed merchandise Bangladesh, as well as Pakistan, Belarus, Ecuador and Venezuela, according to the New York Times.

“That is their choice, we have to make what we believe is the right choice for us as a company and Bangladesh,” said Mimran.

“To pull out might start to create even more hardship for the country, and so we would want to consider that very, very carefully before we made that decision.”

Weston also called for other clothing retailers who had garments made in the factory to come forward.

“There are many other retailers involved here and the way that we’re going to make lasting change in countries like Bangladesh — and the industry as a whole — is to act as an industry,” he said.

So far, only Joe Fresh and British retailer Primark, which has ties to the Weston family which controls Loblaw, have come forward to address the building collapse.

Together with the Garfield Weston Foundation, members of the Weston family co-own Wittington Investments Ltd., which owns a controlling stake in Associated British Foods, the company which owns Primark.

Loblaw has also set up a relief fund to help victims and families of those killed in the disaster now and in the future, but questions still remain over how much money will be made available and how it will be allocated.

When asked for more details, Weston provided little clarity.

“This is a situation that is changing every day,” he said.

“New facts are coming to the table almost every hour, and our priority is to do what’s right for those affected by the tragedy. It’s going to take some time to determine exactly how to do that.”

Weston said that he expects other apparel manufacturers will extend their help, but that it was “impossible to share details” at this point.

Disaster funds in countries with well-known political corruption often go missing, or the victim’s families never receive the money that was supposed to be delivered to them.

One shareholder asked Weston whether the company would establish a website to keep the public updated with the efforts being made in Bangladesh. He said while those plans haven’t been made, it’s being considered.

“We will look at options for opportunities to keep the public, consumer and shareholder up to date on what it is we are doing.”

On Wednesday, Loblaw reported a 40 per cent increase in first-quarter profits and raised its dividend just over nine per cent.

Canada’s largest supermarket operator said it earned $171 million or 61 cents per share, up from $122 million or 43 cents in the year-earlier period. Revenue rose to $7.2 billion from $6.94 billion.

The company also said it expects to file a preliminary prospectus for its real estate investment trust in late May and complete an initial public offering in early to mid-July.

Loblaw operates 22 different banners, including Independent, Zehrs, Superstore, Wholesale Club, Value-mart, No Frills, Maxi, Loblaws and Provigo.