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  • Walmart changes rules after factory fire

    Retailer warns suppliers of stricter measures
  • BENTONVILLE, Ark. — Walmart Stores Inc. has alerted its global suppliers that it will immediately drop them if they subcontract their work to factories that haven't been authorized by the discounter.
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  • BENTONVILLE, Ark. — Walmart Stores Inc. has alerted its global suppliers that it will immediately drop them if they subcontract their work to factories that haven't been authorized by the discounter.
    Walmart's stricter contracting rule, along with other changes to its policy, comes amid increasing calls for better safety oversight after a deadly fire at a Bangladesh factory that supplied clothing to Walmart and other retailers. The fire in late November killed 112 workers at a factory owned by Tazreen Fashions Ltd. Walmart has said the factory wasn't authorized to make its clothes.
    In a letter sent Tuesday to suppliers of its Walmart stores as well as Sam's Clubs in the U.S., Canada and the United Kingdom, the company says it will adopt a "zero tolerance" policy on subcontracting without the company's knowledge, effective March. 1. Previously, suppliers had three chances to rectify mistakes.
    Walmart also said it plans to publish on its corporate website a list of factories that haven't been authorized to manufacture goods for Walmart.
    Also, starting June 1, suppliers must have an employee stationed in countries where they subcontract to ensure compliance, rather than relying on third-party agents.
    "We want the right accountability and ownership to be in the hands of the suppliers," said Rajan Kamalanathan, Walmart's vice president of ethical sourcing. "We are placing our orders in good faith."
    Walmart will hold a meeting for clothing suppliers from the U.S. and Canada on Thursday to explain the new policy changes.
    Critics quickly dismissed Walmart's moves as inadequate and said that the retailer needs to do more.
    "It shows that Walmart is feeling a great deal of pressure in the wake of public scrutiny," said Scott Nova, executive director at Workers' Rights Consortium, a labor-backed advocacy group. But he noted the company's response isn't adequate unless Walmart and others pay their suppliers more so they can cover the costs of repairs.
    Nova's group is one of several organizations trying to get retailers and brands to sign a first-of-its-kind contract that would govern fire-safety inspections at thousands of Bangladeshi factories making T-shirts, blazers and other clothes Americans covet.
    The contract would call for companies to publicly report fire hazards at factories, pay factory owners more to make repairs and provide at least $500,000 over two years for the effort. They also would sign a legally binding agreement that would make them liable when there's a factory fire.
    PVH Corp., a New York City-based company that sells the Calvin Klein and Tommy Hilfiger brands, last March signed the agreement after a national TV news report that chronicled the dangerous conditions in one of its Bangladesh factories. But PVH pledged to start the program only if at least three other major retailers sign on. So far, only one has: a German coffee chain named Tchibo that also sells clothes. Nova said that his organization is in discussion with other retailers.
    Walmart says it has no plans to sign the contract, said Walmart spokeswoman Brooke Buchanan.
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