China Complaint by KTC Ltd. about Haglöfs October 2016

Complaint by KTC Ltd. about Haglöfs Scandinavia AB – October 2016

The complainant, KTC Limited (KTC), claimed that Haglöfs Scandinavia AB (Haglöfs) failed to provide enough advance notice of its intention to cancel production. The complainant claims that this late order cancellation left a significant gap in production that was very difficult to fill. This production gap left KTC unable to work towards better compliance with FWF’s Code of Labour Practices and could even lead to worker lay-offs.

KTC Limited is an active supplier of Haglöfs, both members of FWF.

Because the case focuses on the purchasing practices of one of FWF’s member brands with in relation to one of FWF’s factory members, FWF decided to seek the input of an independent garment industry expert for assistance in the analysis of the complaint.

This independent expert studied the documentation provided by both parties and provided a list of additional questions to each party. Based on this research, it seems clear from the information provided that an irretrievable breakdown in relationship seems to have occurred between Haglöfs and KTC. The facts point to a significant failure in communication and understanding between the parties.

Based on the findings and conclusions as drawn by the independent garment industry expert, FWF concludes that Haglöfs was detrimental to its and FWF’s shared goal of improved working conditions at its supplier KTC when it made the decision to pull its orders for FW2016 at a relatively late stage.

At the same time, KTC should have been alerted to potential problems with Haglöfs production when it received only 4 carry-over styles for FW2016 and could potentially have acted in a more proactive manner and inquired about Haglöfs’ and its partnership.

In terms of remediation, FWF believes this to be an important complaint, as it relates Haglöfs’ purchasing practices to the impact that it had on the factory. FWF requires Haglöfs to demonstrably and substantively improve its purchasing practices regarding supplier selection, production placement and exit procedure purchasing practices. Specifically, it expects Haglöfs to demonstrate to FWF that it has taken steps to prevent similar situations from happening in the future. These steps must be specified in Haglöfs next Annual Workplan and their implementation reported on in its Annual Report.

For more information, download the full complaint report.

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