Hundreds Of Bangladesh Factories Shut Down, Threatening Apparel Supply Chain

U.S. and European apparel retailers may face supply-chain problems as hundreds of clothing factories in Bangladesh have closed because of street protests, some of which have turned violent.

About 500 factories in several industrial areas near the capital city, Dhaka, were reportedly closed on Monday (Sept. 23) due to the violence, the Wall Street Journal reported. That represents a small percentage of the whole Bangladeshi apparel industry, which employs more than 4 million people, mostly in relatively small factories. However, for retailers and apparel companies whose merchandise is being made in the closed factories, it's not clear how long manufacturing will be disrupted.

The street protests are over higher pay. Labor leaders are calling for a minimum wage of about $100 a month, more than double the current minimum wage. The per-capita monthly income in Bangladesh is $70. A government committee to decide on a new minimum wage after consulting with factory owners and workers is scheduled to make a recommendation by December, but the protesting workers want action sooner.

The workers have been protesting for several days. On Saturday (Sept. 21), shipping minister Shahjahan Khan reportedly told workers at a rally that the minimum wage would be raised. Some factory owners blamed Khan's comments for the increasingly violent protests on Monday. But Bloomberg quoted Khan as saying Monday that "If the workers don't return to work tomorrow, we will conclude that workers are part of the conspiracy and we will be bound to take action against them" after a meeting with garment owners in Dhaka.

Both U.S. and European retailers could be affected if the protests expand and more factories are shut down, but European chains are more likely to be hit by shortages if the situation isn't resolved quickly. Europe imports roughly 60 percent of Bangladesh's output, while the U.S. only imports about 25 percent of it.

For more:

- See this Wall Street Journal story
- See this Bloomberg story

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