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Asos, New Look Nixed Plans to Expand UK Manufacturing After Leicester Trip

Fashion retailers Asos and New Look had harbored ambitions expanding U.K. production but quietly shelved plans to employ more Leicester, England, factories after a fact-finding mission uncovered unsafe and possibly illegal conditions, according to reports that have reemerged in the wake of alleged worker exploitation by ultra-fast-fashion brand Boohoo.

In 2017, Asos CEO Nick Beighton and then-New Look chief Anders Kristiansen visited Leicester to meet manufacturers, Mayor Peter Soulsby, HM Revenue & Customs and the Home Office’s Gangmasters and Labour Abuse Authority with an eye on restoring significantly more manufacturing to British shores. Instead, they turned to the Parliamentary Joint Committee on Human Rights to voice concerns about “illegal wages, right to work, poor health and safety standards, subcontracting and vulnerable workers” that they warned could “fatally derail” any hopes of a made-in-Britain resurgence.

“’Despite our considerable efforts to play our part in improving the industry, we are still concerned over the presence of a number of key issues across the U.K. supply base and in Leicester in particular,” Beighton and Kristiansen wrote to the committee, calling for increased government oversight. “Those factories operating outside of legal standards are undermining our efforts to improve standards in U.K. manufacture and increase our sourcing in the Leicester area. The private sector cannot solve these issues alone.”

Asos abandoned plans to triple its U.K. production, after previously announcing a goal to “bring customers the best fashion as quickly as possible, and there’s nothing faster than manufacturing in the U.K.” It axed at least one Leicester factory in the aftermath, though it continues to maintain relationships with two dozen British suppliers, including many from Leicester, which boasts Britain’s second-highest concentration of textile manufacturers after Manchester.

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New Look also trimmed back its use of British factories. Kristiansen had anticipated doubling the brand’s 35-million-pound ($44.1 million) orders from Leicester factories, but was now “afraid of using these units because what is going on is just so plainly wrong,” he told the Telegraph in 2017. He described the city as a “ticking time bomb.”

“Many of these factories have unsafe conditions with fire escapes blocked up, workers exploited and paid far ­below minimum wage,” he said. “What happens if there is another massive fire; what will it take for people to wake up?”

Warning bells have long sounded about what the Financial Times dubbed in 2018 Leicester’s ”dark factories,” which it described as being so divorced from U.K. employment law that they operate as “a country within a country.”

In 2015, the University of Leicester published a report indicating that the majority of Leicester’s garment workers were paid below the minimum wage, lacked employment contracts and were subject to “intense and arbitrary work practices.” The Environmental Audit Committee of the House of Commons has also cast a gimlet eye on factories in the city over the course of an eight-month inquiry into the social and environmental impacts of fast fashion in the United Kingdom.

Fast-forward several years and little about Leicester’s factory situation appears to have changed. If anything, it has gotten worse, with Boohoo fending off accusations that it goaded its suppliers to stay open—and at full capacity—despite the nationwide lockdown amid the coronavirus pandemic, endangering workers paid as little as 3.50-pounds ($4.40) per hour in contravention of the 8.72-pound ($10.99) minimum wage for those aged 25 and older.

Boohoo sources some 40 percent of its inexpensive Instagram-popular outfits, designed to mimic pricier looks by celebrities such as Kim Kardashian West and Cardi B, in Leicester. In turn, Boohoo items account for 75 percent of Leicester’s garment output.

Leicester has also experienced a surge in coronavirus cases relative to the rest of the country—which some have blamed on injudicious factory practices, such as unenforced social distancing and the lack of personal protective equipment—prompting a localized lockdown even as COVID-19-induced restrictions started easing elsewhere.

Asos, in response to the headlines, has suspended sales of Boohoo and its subsidiary brands, which include Oasis, Nasty Gal, PrettyLittleThing, Karen Millen and Warehouse, from its website pending Boohoo’s independent review of its U.K. supply chain.

It’s also considering action against an unnamed Leicester supplier after finding the factory in breach of its ethical trading standards. Beighton told the Guardian Wednesday that the factory had been flagged as “red critical,” its most serious category, in the past few months under Asos’s ethical audit process, signaling the need for urgent action because of potential risks to workers or problems with management. None of the Leicester factories it uses also supply Boohoo, Asos claimed.

Beighton said executives visited the factory last week and he would be visiting again on Friday before “making a decision accordingly” about retaining its services.

The company also shared Wednesday that it expects annual profits to hit the top end of its projections as it reported a 10 percent sales uptick for the four months leading up to June 30, which it credited to a heightened demand for quarantine-friendly categories, such as casualwear, activewear and beauty products, and a strong online presence that gave it a leg up over shuttered physical stores during the lockdown. Its U.K. sales slid 1.5 percent, however, compared with Boohoo, whose domestic share leaped 30 percent in the three months up to May 31.

Still, Asos noted that it will not partake in a British-government scheme that pays employers for reinstating furloughed workers.