Can Wal-Mart Clean Up Its Foreign Factories?
Following a directive for a new round of garment factory inspections, the Bangladesh government was called on by Wal-Mart (NYSE:WMT) to suspend activity at one apparel factory and investigate conditions at a neighboring one, Reuters reports.
The rare suspension illustrated the Bangladesh government’s renewed commitment to safety, following the collapse of one of its factories that killed more than 1,100 people.
The factory closure also comes on the heels of another major wave of factory closures in Bangladesh. Last week, FoxBusiness reported that the country’s government was forced to shut down three factories owned by the country’s garment manufacturer, Nassa Group, for safety violations. Nassa Group, which not only is a supplier for Wal-Mart, but also for major corporations such as Sears Holdings Corp. (NASDAQ:SHLD) and others, was forced to close down factories until safety improvements were made.
These safety issues illustrate the difficulty western retailers are facing in ensuring their factory partners are meeting safety regulations. Wal-Mart especially has come under fire for its conditions in foreign production factories and food-safety management. Wall St. Cheat Sheet reported just last week that the company was forced to invest $16.3 million in its China-based stores for an investigation into its food-safety practices, after complaints that workers were using expired eggs, mislabeled meat, and tainted “milk.”
Nevertheless, Wal-Mart’s call for closures demonstrates the company’s commitment to take any actions necessary to ensure safety conditions. It hopes that with the cooperation of the Bangladesh government, it can help clean up the country’s most important industry.