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Orders sliding in ’14: GMAC

A garment worker performs quality control checks on a jacket at a factory in Phnom Penh
A garment worker performs quality control checks on a jacket at a factory in Phnom Penh’s Por Sen Chey district earlier this year. Vireak Mai

Orders sliding in ’14: GMAC

Continued instability in the garment sector has led the Garment Manufacturers Association in Cambodia (GMAC) to forecast a bleak outlook for the rest of 2014.

According to a sample of survey results supplied to the Post, 50 per cent of GMAC’s 247 members said they did not have enough orders to fill production for the remainder of the year. About 160 factories said orders had been reduced on average by 40 per cent, and 26 per cent said they had been forced to close lines or partially suspend operations due to a lack of orders.

“Buyers don’t have confidence in stability here, in the factories’ ability to deliver the goods, because we are under the constant threat of strikes, regardless of whether the unions, or those that threaten to strike, even have the ability or the power to deliver on their threats,” GMAC secretary-general Ken Loo said on Monday.

The main buyers that have reduced orders are Wal-Mart, H&M, Levi Strauss and Adidas in addition to a number of smaller buyers, factories said.

Contacted yesterday, neither Wal-Mart, H&M nor Levi Strauss would comment directly on the status of their orders in Cambodia, but all called for stability in the industry and respect for workers’ rights.

“Predictability of supply and its converse, disruption of production, is a concern to Levi Strauss & Co. and any brand sourcing from Cambodia,” a spokesperson from Levi Strauss said via email.

“For Levi Strauss & Co., repression of worker and human rights in Cambodia is also a very serious concern.”

The GMAC survey comes as debate over the industry’s minimum wage is heating up.

On Monday, eight union leaders held a press conference threatening nationwide strikes if minimum wage discussions went down a similar path to talks last year, when they believe their demands were not seriously considered.

On December 25, a 10-day strike over the minimum wage led to the death of at least five demonstrators after security forces opened fire with live rounds on January 3.

Unions at Monday’s conference are calling for the current $100 minimum wage to be raised to $177 a month.

Loo denied the timing of the GMAC data had anything to do with Monday’s union announcement. He said he was sharing this information with unions, the government and the Labour Advisory Committee to demonstrate buyers’ reaction to industry turmoil and to support his members’ position that a $110 minimum wage rise was the maximum the sector could afford.

“Anything above this means that places will not be able to afford it and will have to close, so the higher the minimum wage the more difficult it will be for factories to continue operating in Cambodia,”
Loo said.

Dave Welsh, country director for labour rights group Solidarity Center, said yesterday he could not verify the GMAC data but that there was no doubt that orders had dropped in the second half of the year after January’s protests.

“There is a decline, but our point is that the decline is not linked to minimum wage discussions – the decline is linked to buyers’ increasing frustration over so many unresolved issues from the events in January,” he said, referring to uninvestigated deaths of protesters and current charges against union leaders.

“Further industrial unrest on the scale that we saw last year could really be devastating for the industry, but that has nothing to do with the economics of the wage demand,” he added.

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