Disney halts production in Bangladesh
Too many industrial disasters spurred the move, but the impoverished country's factory owners fear other companies will follow.
According to CNNMoney, the Burbank, Calif.-based company sent a letter to its vendors and licensees in March ordering them to quit producing Disney-branded merchandise in the "highest-risk countries" to improve safety standards in its supply chain. The company will also quit production in Ecuador, Venezuela, Belarus and Pakistan by April 2014.
Disney's decision was spurred by a factory fire in November in Dhaka that left 112 dead and a fire in Pakistan that killed 262 workers, according to CNNMoney. Then last week, more than 500 people were killed after a factory collapsed in a Dhaka suburb in what is Bangladesh's worst industrial accident (pictured).
"After much thought and discussion we felt this was the most responsible way to manage the challenges associated with our supply chain," said Bob Chapek, president of Disney Consumer Products, in an interview with the site.
Disney is the first Western company to take such a move, and business owners in Bangladesh fear it won't be the last. Factory owner Mohammad Fazlul Azim, told the The New York Times that the entire industry shouldn't be penalized for the actions of a few lawbreakers.
"This industry is very important to us," Azim, a factory owner, told the paper. "Fourteen million families depend on this. It is a huge number of people who are dependent on this industry."
As the paper noted, Wal-Mart (WMT), Gap (GPS) and other retailers have balked at backing a plan that would require them to pay for upgrades at Bangladeshi factories because they are concerned "about the plan’s binding legal commitment." Wal-Mart, the world's largest retailer, agreed to train 2,000 factory owners in Bangladesh about fire safety, an investment of $1.5 million. And Gap has developed a $22 million "fire and safety plan."
Consumers are starting to realize that there's a pretty high price to be paid for cheap fashion.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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