The world is reeling from the aftershocks of the outbreak of the COVID-19 pandemic and the effects are being felt across all strata of society. As stock markets tumble, countries go into effective lockdown and the death toll continues to rise, the pandemic has changed the lives of everyone globally. As the impact of the pandemic spreads, every industry worldwide has been affected by the ramifications of the disease wreaking havoc within the global apparel industry.
As retailers and brands face dwindling customer numbers, stores have closed while inventory mounts. The immediate reaction from these companies has been the cancellation, delay or scaling back of current production orders. This has been further compounded by many companies withholding payment for goods that have been shipped or insisting upon longer payment terms with their manufacturers than were originally agreed when orders were placed.
This has created a perfect storm for apparel manufacturers around the globe. Unable to rely on supplementary business from existing or new customers—as the business has, put simply, evaporated—their cashflow is seriously affected and they are struggling to raise the necessary funds to pay their workers and to cover the purchase of the materials necessary to generate new orders, or diversify into other product areas.
What this perilous state of affairs brings to light is the ethics of companies when dealing with their apparel manufacturing partners. It would appear that, in some cases, the moral compass of many fashion companies is askew, as they seem to forsake the relationships that have been built with their partners and are prepared to cut them adrift during these unprecedented times.
I, like many of my peers in the apparel manufacturing sector, appreciate the gravity of the situation caused by the COVID-19 pandemic. We are not naïve enough to assume that it will be ‘business as usual’ as our customers are themselves facing challenges from all sides, not least of which is how to protect their own employees. Across the globe, clothing retail stores are being forcibly shut down and customers advised to stay at home for fear of spreading the virus. Brands and retailers are seeing their sales fall through the floor and, of course, all of us involved in the apparel manufacturing process appreciate that our customers cannot trade as normal.
What concerns me is that the approach that appears to have been most commonly adopted by our customers is to minimize their financial burden, instead shifting the onus onto the apparel manufacturers themselves. Often the small print of an order is used as the pretext for the cancellation of orders or the delay in payment but these actions are being taken without open dialogue with business partners and with no consideration for the far-reaching consequences that they bring to bear.
This seems to me to be a short-term strategy. The COVID-19 pandemic will be defeated and when the dust has settled, companies will need the support of their apparel manufacturing partners to support the post-virus demand for product.
From an ethical standpoint would it now not be better for companies to engage with their manufacturing partners, negotiate terms that allow both parties to remain functioning and, in effect, be prepared to lose today in order to reap the benefits of an understanding, established business relationship when the situation improves?
We are in unchartered territory and entering into a period that threatens the well-being of the whole apparel manufacturing industry and the livelihood of the millions of workers around the world, that rely on our industry to support them. When the COVID-19 crisis is finally averted, the industry must ensure that the events of recent weeks are not allowed to take place again.
Surely, from an ethical point of view, an order between a brand or retailer with an apparel manufacturer should be seen as a binding contract. As recent events have proven that does not currently appear to be the case. This is a situation that must be addressed at an international level going forward.
There is no safety net in place for the apparel industry, in particular manufacturers that have to cover fixed costs and are largely operating on limited profit margins. Given these circumstances, the ethical approach would be to safeguard the interest of the apparel manufacturers and, more important, the well-being of their employees. Contracts between manufacturers and their customers should be respected and when faced with unprecedented circumstances, such as we now face, be allowed to be renegotiated to the satisfaction of both parties.
Whatever the outcome of the COVID-19 catastrophe, it is the industry’s moral duty to do whatever is possible to mitigate the damaging effects that a calamity of this scale causes to ensure that the industry is fit for purpose going forward and to safeguard the long-term security of the workers that depend on the industry for their survival.
During these troubling times the global apparel industry must work together to mitigate the effects of the COVID-19 virus. There has been much talk across the sector among manufacturers and their customers about responsibility, partnership, cooperation and collaboration.
Now, more than ever, is a time when the industry should stand up and start practicing what it has been preaching over the past few years and find a way to overcome the financial dilemma facing manufacturers around the globe.
Mostafiz Uddin is the managing director of Denim Expert Limited. He is also the founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE). He can be reached at firstname.lastname@example.org.