On the Line is a weekly roundup of sourcing and labor quick hits in the apparel and footwear industry, from worker protests to boardroom maneuvering, tracking the developments shaping conditions on the factory floor and beyond.

Under pressure

The Bangladesh Garment Manufacturers and Exporters Association, the country’s apex garment trade group, said the gas supply crisis has reduced the garment industry’s production capacity by 30-40 percent. But it dismissed reports that several factories, including DBL Group’s, had shut down because of gas and power shortages, calling them “completely false and baseless.”

In a press release issued earlier this week, the BGMEA said that despite severe energy supply constraints, its member factories have kept production running at roughly 60 percent to 70 percent of capacity with government support. Factory owners, it added, are making “every possible effort” to maintain production and ensure uninterrupted export operations.

The organization said reports of permanent factory closures at DBL Group, which employs 25,000 people, reflected holiday coordination, shift scheduling and temporary production adjustments rather than insolvency or liquidation. Although smaller factories, including some in Gazipur recently, have declared short holidays during periods of low gas pressure, the situation does not present a major problem, Mahmud Hasan Khan, president of the BGMEA, told The Daily Star.

Even so, the Dhaka Tribune reported that production at factories in the Savar-Ashulia industrial belt has fallen by 50-60 percent because of low gas pressure and frequent power outages, prompting concerns about timely order fulfilment.

Ahmed Mortuza, director of Projon Sweater in Ashulia, told the Dhaka Tribune that while most manufacturing stages had been completed, inadequate gas pressure had halted boiler operations, preventing finishing and ironing. As a result, the company was unable to pack and transport finished garments to the ports on schedule.

Abu Saleh Muhammad Khademuddin, manager of Titas Gas’s Ashulia Zonal Marketing Office, told the outlet that authorities were working to identify the cause of the supply disruption and restore service, but could not provide a timeline for when conditions would return to normal.

Buyer-supplier disagreement

LPP has suspended certain orders in Bangladesh, citing what it says is the harassment of local employees over a $40 million payment dispute it denies being party to. In response, the Bangladesh Knitwear Manufacturers and Exporters Association, a prominent trade group, has threatened to bar LPP from sourcing in Bangladesh.

“Whether LPP sources from Bangladesh is its commercial choice, but it must clear its legitimate debts to our exporters,” Mohammad Hatem, president of the BKMEA, told the Dhaka Tribune. “If LPP fails to settle its outstanding dues, we will proceed with blacklisting it in Bangladesh. Furthermore, we will take this matter to the European Union, global buyer networks and responsible sourcing platforms.”

LPP, whose annual sourcing volume from Bangladesh surpasses $700 million, said it continues to meet all obligations to suppliers on time and that any claims it has outstanding payment liabilities to local factories are “false and constitute disinformation.” It said the orders at issue were placed by FES, a separate legal entity to which LPP sold its stake in its Russian business in 2022 as part of its withdrawal from the market.

“FES operates independently and on its own account and bears full responsibility for its liabilities,” the company said in a statement. “The orders that are the subject of the dispute were fulfilled during the period when FES functioned as an independent and autonomous organization. We understand the difficult situation faced by FES’s business partners and recognize the challenges confronting them. Nevertheless, any claims should be directed solely to the entity responsible for the obligations in question.”

But roughly 40 suppliers who say FES owes them money argue that, because LPP did business with FES based on LPP’s assurances, it must assume responsibility. In July, the owners of two buying houses acted on that claim, filing separate High Court cases against several officials in LPP’s Dhaka office in an attempt to recover unpaid dues from FES. After the cases were filed, police conducted nighttime raids at the homes of several LPP officials, leading the retailer to scale back its sourcing in Bangladesh temporarily.

“Despite repeatedly providing explanations regarding this matter, LPP continues to face attempts to improperly attribute responsibility for FES’s obligations toward Bangladeshi factories to the company,” LPP said. “This situation has created uncertainty regarding the conditions for conducting business in Bangladesh and has adversely affected our local employees, who have become the target of unfounded accusations and administrative actions.”

Wage dispute

Workers demanding wage increases at Spring Moon Garment Manufacturing in Myanmar’s Yangon Region are facing pressure and threats, the Solidarity of Trade Unions Myanmar, or STUM, said this week. The Chinese-owned factory’s 177 workers have been calling for a pay increase since July 8, it said. Of them, 135 are refusing to enter the factory as they continue their protest.

“The factory management has threatened to sue workers who participated in the demands but were absent due to illness, accusing them of working elsewhere,” the union said in a statement.

The striking workers are seeking to raise the basic daily wage from 10,000 Myanmar kyats ($4.76) to 13,000 kyats ($6.19). They are also seeking to raise hourly overtime pay from 2,000 kyats (95 cents) to 2,500 kyats ($1.19), as well as higher monthly attendance and skill bonuses, paid emergency leave and an end to pay deductions for Sunday rest days.

One of the protesting workers denied that any of the 135 workers pressing the demands had taken jobs at other factories, as alleged. “They have no facts or evidence; they just came and accused us like this to threaten us,” the worker told Mizzima.

STUM said the striking workers feared for their safety, accusing the employer of bypassing standard negotiation procedures and working with regional officials to misrepresent their demands. It added that they would continue their collective action until the concerns of all 135 workers who filed the demands were addressed.

“Although the workers are persistently demanding their demands without receiving wages, they are defying external pressure and threats to make their demands,” the organization said.