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Major Retailers Join Bangladesh Safety Plan

May 13, 2013 by Leave a Comment

Consumer and labor groups hailed the move by Sweden-based HM – which is the largest purchaser of garments from Bangladesh – as an important step toward improving factory safety in Bangladesh, saying it would increase pressure on other Western retailers and apparel brands to do likewise.

Within hours of HM’s Monday statement, CA of the Netherlands and two British retailers, Primark and Tesco, also joined in.

The factory safety agreement calls for independent, rigorous factory safety inspections with public reports and mandatory repairs and renovations underwritten by Western retailers. A legally enforceable contract, it also calls for retailers to stop doing business with any factory that refuses to make necessary safety improvements, and for workers and their unions to have a substantial voice in factory safety.

PVH, the parent company of Calvin Klein, Tommy Hilfiger and Izod, also said it would sign on, an expanded version of an earlier proposal that PVH was one of two companies to sign. The new plan lasts five years, the previous one two years.

Ever since the collapse of the Rana Plaza building on April 24 on the outskirts of Dhaka, Bangladesh’s capital, HM, Wal-Mart, Gap and other companies have faced intense pressure to sign the agreement. Until Monday, only PVH and Tchibo, a German retailer, had.

In announcing its move, HM said that “in order to make an impact and be sustainable,” the agreement “would need a broad coalition of brands.” A company statement said the agreement committed a company to the goal of a safe and sustainable garment industry in Bangladesh “in which no worker needs to fear fires, building collapses or other accidents that could be prevented with reasonable health and safety measures.”

“Fire and building safety are extremely important issues for us and we put a lot of effort and resources within this area,” said Helena Helmersson, head of sustainability at the retailer. “With this commitment we can now influence even more in this issue. We hope for a broad coalition of signatures in order for the agreement to work effectively on ground.”

HM and Gap were the target of an online petition that obtained more than 900,000 signatures and was sponsored by Avaaz, a human rights group. The petition said, “Your companies and other multinationals profit from cheap labor, and can do much more to reduce the dangers of the places where your products are made.”

“HM’s decision to sign the accord is crucial,” said Scott Nova, executive director of the Worker Rights Consortium, a Washington-based factory monitoring group backed by 175 American colleges and universities. “They are the single largest producer of apparel in Bangladesh, ahead even of Wal-Mart. This accord now has tremendous momentum.”

PVH also said on Monday that it would contribute $2.5 million to underwrite factory safety improvements as part of the new plan.

Gap has resisted signing on, objecting to its legally binding nature and saying it was already doing a lot on its own, having hired a fire inspector and promised $22 million in loans for factory improvements.

Bangladeshi labor groups that have sifted through the Rana Plaza rubble have not found any evidence that HM or Gap had garments made at any of the five factories in the building.

But numerous investor, religious, consumer and labor groups are pressing other companies known to have obtained apparel from the factories there – Benetton, Cato Fashions, the Children’s Place, el Corte Ingles, Loblaws and Primark – to sign on to the safety plan. Primark, which had acknowledged that one of its suppliers had occupied the second floor of the eight-story building, had already pledged to compensate victims who worked for its supplier and their families.

Bangladesh is the world’s second-largest apparel exporter, after China, and also has the lowest minimum wage in the world — $37 a month. Its low wages and lack of regulation have helped it attract billions of dollars in orders from Western retailers and apparel brands.

On Sunday, the Bangladeshi textiles minister, Abdul Latif Siddiky, said the government planned to raise the minimum wage for the nation’s more than three million garment workers.

Over the last week, HM was in intense negotiations on the plan with officials from IndustriALL Global Union, a federation of 50 million workers from 140 countries and from UNI Global Union, a federation of 20 million service sector workers.

In a meeting sponsored by the German government that HM, Wal-Mart and other retailers held with IndustriALL and other labor and nongovernment organizations two weeks ago, IndustriALL set a deadline of this Wednesday for retailers to sign on to what has often been called the PVH-Tchibo plan.

Article source: http://www.nytimes.com/2013/05/14/business/global/hm-agrees-to-bangladesh-safety-plan.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Cost Cuts Helped Air France-KLM Trim Operating Loss in 2012

February 22, 2013 by Leave a Comment

Air France-KLM, Europe’s third-largest airline by passengers, recorded an operating loss of €300 million, or about $400 million, for 2012, compared with a €353 million loss a year earlier, as efforts to rein in seat capacity led to higher average fares. Revenue for the year rose 5.2 percent to €25.6 billion, while net debt declined to €6 billion from €6.5 billion in 2011.

But one-time expenses associated with a deep restructuring begun last year widened the airline’s net loss to €1.19 billion from €809 million in 2011.

“They have made a good start, but it is an improvement that is still just barely visible,” said Yan Derocles, an analyst at Oddo Securities in Paris.

Air France-KLM unveiled plans last June to shave more than €2 billion in costs, reduce debt and return to profit by the end of 2015. Despite the modest improvements achieved in the plan’s first six months, Jean-Cyril Spinetta, the carrier’s chief executive, stressed Friday in a statement that the company had laid the ground work for a more significant recovery this year.

“In 2013, we will maintain strict discipline in terms of capacity management, investments and costs,” Mr. Spinetta said.

Air France-KLM said passenger traffic rose by 2.1 percent last year, while seat capacity increased by just 0.6 percent. But while revenues per available seat rose by 5.9 percent from a year earlier, cargo revenues continued to slide, falling by 6.3 percent despite a 3.5 percent drop in capacity, as the economic slowdown reduced shipments.

Despite intense pressure from the French government to avoid layoffs, Air France-KLM has moved ahead with plans in 2012 to slash more than 5,100 jobs at its Air France unit by the end of this year — just over 10 percent of its work force of 49,000. Another 1,300 jobs are being eliminated at its smaller KLM unit.

Philippe Calavia, the chief financial officer, said Friday that the company had reduced staff by around 2,000 in 2012 through early retirements and other voluntary departures. Restructuring costs linked to those job cuts amounted to €471 million in 2012.

Labor costs have been a major drain on profit at Air France-KLM for years — equivalent to more than 30 percent of the group’s total revenue and even exceeding its fuel bill, which amounts to around 26 percent. By contrast, labor costs as a share of revenue are less than 10 percent at its low-cost rival, Ryanair, and 12.4 percent at EasyJet, according to the Center for Aviation in Brussels.

Given the uncertain outlook for the European economy this year, Air France-KLM declined to provide a forecast for 2013, although Mr. Calavia maintained the company’s targets of reaching net profit within two years. Analysts said they expected a modest improvement in operating profit this year, although annual restructuring costs were also expected to rise, possibly above €500 million.

Air France-KLM continues to lag behind its larger rival, Lufthansa of Germany, in its efforts to return to profitability. Lufthansa, which announced its own painful restructuring last year that involved 3,500 job cuts, this week reported a net 2012 profit of €990 million, bolstered by asset sales, compared with a loss of €13 million in 2011. The carrier also suspended dividend payments to shareholders in order to make more cash available to finance its turnaround.

Article source: http://www.nytimes.com/2013/02/23/business/global/23iht-airfrance23.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Banks Quietly Ramp Up Consumer Fees

November 14, 2011 by Leave a Comment

Need to replace a lost debit card? Bank of America now charges $5 — or $20 for rush delivery.

Deposit money with a mobile phone? At U.S. Bancorp, it is now 50 cents a check.

Want cash wired to your account? Starting in December, that will cost $15 for each incoming domestic payment at TD Bank. Facing a reaction from an angry public and heightened scrutiny from regulators, banks are turning to all sorts of fees that fly under the radar. Everything, it seems, has a price.

“Banks tried the in-your-face fee with debit cards, and consumers said enough,” said Alex Matjanec, a co-founder of MyBankTracker.com. “What most people don’t realize is that they have been adding new charges or taking fees that have always existed and increased them, or are making them harder to avoid.”

Banks can still earn a profit on most checking accounts. But they are under intense pressure to make up an estimated $12 billion a year of income that vanished with the passage of rules curbing lucrative overdraft charges and lowering debit card swipe fees. In addition, with lending at anemic levels and interest rates close to zero, banks are struggling to find attractive places to lend or invest all the deposits they hold. That poses another $8 billion drag.

Put another way, banks would need to recoup, on average, between $15 and $20 a month from each depositor just to earn what they did in the past, according to an analysis of the interest rate and regulatory changes on checking accounts by Oliver Wyman, a financial consulting firm.

For consumers, the result is a quiet creep of new charges and higher fees for everything from cash withdrawals at ATMs to wire payments, paper statements and in some cases, even the overdraft charges that lawmakers hoped to ratchet down. What is more, banks are raising minimum account balances and adding other new requirements so that it is harder for customers to qualify for fee waivers.

Even the much-maligned debit usage charges have effectively been bundled into higher monthly fees on checking accounts. Bank of America abandoned its $5 a month debit card usage fee in late October amid a firestorm of criticism. Yet, it more quietly raised the cost of its basic MyAccess checking account by more than $3 a month earlier this year. Monthly maintenance fees now run $12 a month, up from $8.95.

Chase and Citigroup, which quickly distanced themselves from the debit card usage fee, ratcheted up the price of their entry-level checking products without the public relations nightmare. This month, Citigroup’s basic checking account jumped to $10 a month, up from $8. Chase raised the fee on its standard checking account to $12 a month in February; many of those customers were previously charged nothing at all.

Officials at all of those banks are adamant that they have been transparent about the price increases and are providing ample ways for customers to avoid the monthly charges, like maintaining a minimum balance or signing up for direct deposit. Given the uproar, some bankers say the ultimate answer lies in enticing customers to give them more of their business in other services — not by making up the lost revenue on checking accounts.

“The long-term game is improving customer experience scores, so over time you win more business and make more money,” said Todd Maclin, the head of Chase’s retail and commercial bank.

It costs most banks between $200 and $300 a year to maintain a retail checking account, from staffing branches to covering federal deposit insurance premiums. In the past, the fees banks collected from merchants each time customers swiped their debit card or overdrew their account covered much of that expense. Banks offered “free checking” to the masses as a result.

But the economics have drastically changed over the past two years. Income earned on deposits has fallen, while the revenue gained from fees has plunged by as much as half because of the new regulations. Today, according to Oliver Wyman, banks are expected to take in, on average, between $85 and $115 in fees a year per account — making it especially hard to turn a profit on customers with low balances.

Article source: http://feeds.nytimes.com/click.phdo?i=d97de8daad0c2890f2696b91507f07df

Filed Under: Business News Tagged With: , ,