US childrenswear retailer TCP cancels millions of dollars of apparel orders from Ethiopia

The Largest US children’s wear retailer, The Children’s Place (TCP), blames COVID-19 for move from Ethiopia, as employees say they are struggling for even food after wage cuts! By canceling millions of dollars’ worth of clothing orders from suppliers on 26 August 2020, they pushed companies into debt after buying raw materials and paying workers.

Figure 1: Ethiopian suppliers claim that TCP has demanded retroactive rebates on products that had been shipped before the crisis. Courtesy: Collected

Ethiopian suppliers claim that TCP has demanded retroactive rebates on products that had been shipped before the crisis. They are showing the company’s force majeure clause … in its contracts as a reason not to pay, due to Covid-19.

But Gregory Poole, TCP’s Chief Supply Chain Officer, said the company had canceled fewer than 3% of orders from Ethiopia. That had dire consequences for their business. One supplier told that his company had lost its credit line after losing nearly $1m because of contract cancellations.

Ethiopian workers are the lowest paid in the global garment supply chain. According to a report by the NYU Stern Center for Business and Human Rights, the minimum wage is $26 a month, compared with $95 in Bangladesh and $326 in China.

“We are a company with 95% of women workers. Some of the workers are mothers,” one supplier said. Asked what the company could do legally to recoup the hundreds of thousands of dollars lost, the supplier responded: “How do you fight such a big US corporation? They have endless pockets.”

Another supplier said that although TCP had started to pay back some money, the company still owed it hundreds of thousands of dollars.

The Children’s Place is one of four leading US apparel brands sourcing goods from Ethiopia, alongside PVH, JC Penney and H&M. In its annual report last year, TCP cited Ethiopia as a “key sourcing region”. The Worker Rights Consortium said at least seven factories in Ethiopia were producing clothing for TCP stores, employing about 15,000 workers.

In 2016, the Ethiopian government opened its flagship Hawassa Industrial Park to help boost Ethiopia’s economy.

But the pandemic has derailed the government’s plans. In April, the International Monetary Fund downgraded Ethiopia’s 2020 economic growth rate from 6.2% to 3.2%.

Aida*, 20, who has worked for a factory that produces clothing for TCP for three years, said her wages had been cut from $26 a month to $10 since March.