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After Halting Production, Uniqlo Owner and M&S Say They’ll Pay for Nixed Orders

Uniqlo owner Fast Retailing and British department store Marks & Spencer have committed to pay their suppliers the money they’re owed.

Like many Western retailers, Marks & Spencer told suppliers to stop producing after nations started going on lockdown to stave off the worst of the coronavirus pandemic. But it had agreed to shell out for products that had been shipped before March 24, the day after U.K. Prime Minister Boris Johnson issued stay-at-home orders.

Marks & Spencer now says it will also pay for all made garments for the “vast majority” of orders—amounting to 95 percent of its product spend—with exceptions for niche lines or tertiary suppliers.

The department store adds that it will pay for “large volumes” of fabric already purchased by suppliers, and it will offer vendor finance (such as deferred loans) and letters of credit should suppliers need them.

“We have paid for all shipped products and for the vast majority of orders we will pre-pay for all garments and committed fabric—which is the most expensive cost for a supplier and across all our partners we will aim to ensure that no fabric goes to waste and is used at a later date,” a Marks & Spencer spokesperson said in a statement. “Most of our orders will be paid through the vendor finance facility we have available.”

The company said it “fully” supports the efforts of the Ethical Trading Initiative, a third-party monitoring group that helps businesses source responsibly, along with the International Labour Organization, which is facilitating the disbursement of emergency relief funds and coordinating an industry-wide response.

“Additionally, we’ll continue to support our community projects in the supply chain, including those focused on employability, health and digital wages,” the spokesperson said.

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Fast Retailing, the Japanese conglomerate that owns Uniqlo, J Brand, Theory and Helmut Lang, announced Tuesday that it has implemented a “series of measures” to mitigate the risks faced by its manufacturing partners and by workers across its supply chain, both of which have “contributed much to our business and industry.”

These include paying for completed and in-production orders, with no changes to payment schedules that were agreed upon prior to COVID-19 disruptions.

Uniqlo owner Fast Retailing and British department store Marks & Spencer have committed to paying their garment suppliers the money they’re owned.
Marks & Spencer now says it will also pay for all made garments for the “vast majority” of orders—amounting to 95 percent of its product spend—with exceptions for niche lines or tertiary suppliers. Dimitris Legakis/Shutterstock

Like Marks & Spencer, Fast Retailing says it will use fabrics or materials already purchased by suppliers to fulfill its orders or will provide compensation should they later prove unnecessary.

The conglomerate says it will begin consulting with each of its suppliers, in accordance with its responsible procurement, to “understand the current financial health of the partner, and to offer support if needed,” such as ascertaining financial risks, evaluating how current order status compared to production capacity and adjusting production schedules “where feasible.”

“Fast Retailing will continue to monitor the impact of the COVID-19 pandemic on our supply chain,” it said in a statement. “In cooperation with UN agencies, industry organizations, and the governments of our manufacturing locations, we will work to protect the security and safety of people who help to make our clothes and to help safeguard the financial stability of our production partners.”

Fast Retailing and Marks & Spencer source a portion of their garments from Bangladesh, which, as the world’s second-largest clothing exporter after China, has been dealt an especially bruising blow by the crisis.

Nixed orders worth billions of dollars have led factories in Bangladesh to lay off or furlough more than half of the country’s 4 million garment workers, according to the Bangladesh Garment Manufacturers and Exporters Association, a trade group. Industry bodies estimate the country is poised to lose roughly $10 billion in export revenue as a result of canceled business this financial year.

The Clean Clothes Campaign criticized Uniqlo the same day, however, for continuing to owe $5.5 million in outstanding severance payments to workers from the Jaba Garmindo factory group in Indonesia. Both Uniqlo and German brand S.Oliver are under investigation by the Fair Labor Association for allegedly violating its “principles of fair labor and responsible sourcing.”

“Since the sudden loss of their jobs, these workers have been forced into profoundly vulnerable situations, compounded by the current COVID-19 outbreak and restrictions,” the labor-rights group said. “A large number have been unable to find alternative factory work over the past five years. Many have relied on informal income from work such as street vending, childcare or laundering clothes and now face unprecedented hardship, with reports that a large number can only afford to eat plain rice.”

The workers are not covered under the Indonesian benefits system or COVID-19 related funds, which means they can only hang on by borrowing money, even though they have no way to pay their mounting debts.

“Uniqlo has manifestly failed and continues to fail in its clear moral responsibility towards these workers,” the Clean Clothes Campaign said. “International standards dictate that companies must address and remedy adverse human rights impacts of their business practices and, had Uniqlo acted responsibly, the 2,000 Jaba Garmindo workers would not be in such desperate positions now. “