Gildan ‘Devastated and Saddened’ After Honduran Employee Deaths
Gildan Activewear will be shuttering its San Miguel sewing factory in Choloma, Honduras, Sourcing Journal has confirmed.
The company, one of North America’s largest T-shirt manufacturers, said that the facility will start to “gradually ramp down” at the end of July. It’s making the “difficult decision” to reorganize its basic apparel sewing production, it said, to respond more effectively to changes in market conditions, global competition, optimization and diversification of its operations.
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“It is with a heavy heart that we announced this decision to employees mid-June as we wanted to provide as much notice as possible and work collaboratively with the union to facilitate the transition for employees,” a spokesperson told Sourcing Journal.
Gildan said it will ensure that all 2,700 affected workers are paid all termination entitlements owed under Honduran law. The American Apparel owner is also “actively” considering additional support initiatives to assist employees further during the transition, it said.
“The company is genuinely committed to making every effort possible to alleviate the impact of this difficult decision on its San Miguel employees,” the spokesperson said.
All this is happening as Gildan’s San Miguel employees are still grieving over the loss of their union president, Xiomara Cocas, and union leaders Delmer Garcia, Lesther Almendarez and José Rufino Ortiz, after they died in a mass shooting in the La Victoria neighborhood two weeks ago. Sindicato de Trabajadores de Gildan San Miguel was in discussions with the factory’s management about the closure at the time, Gildan confirmed.
The Under Armour licensee said that following the tragedy, its employees in Honduras observed a three-day mourning period to pay their respects. Psychological support was also offered across the dozen or so sewing, screenprinting, dyeing and distribution units that it owns in the country, it added.
Honduras is Gildan’s largest manufacturing hub. It also operates factories in the Dominican Republic, El Salvador, Guatemala, Haiti and Nicaragua.
The Montreal-headquartered firm is currently working with local authorities now that an investigation into the shooting is underway. At this point, it doesn’t have much information regarding the circumstances surrounding the deaths, it said.
“As you can imagine, we were devastated and deeply saddened to find out that some of our employees were killed,” the spokesperson said. “We have extended our deepest condolences to their families and loved ones and are providing them with the support and assistance they need during this difficult time, including assisting with the funeral arrangements and some financial support.”
Gildan generated net sales of $703 million in the first quarter ended April 2, a 9 percent drop over the previous year, which it attributed to headwinds tied to the current demand environment and a comparatively strong performance in the first half of 2022. The company’s operating margin came in at 18.2 percent including a $25 million gain from the sale and leaseback of one of its U.S. distribution facilities.
It said it expects full-year revenue growth to be in the low single-digit range, and its full-year adjusted operating margin to land within its 18 percent to 20 percent annual target range.
“We are pleased with our top-line results having met our sales expectations for the quarter,” Glenn J. Chamandy, Gildan’s president and CEO, said in its earnings statement. “Moreover, even though the economic environment remains uncertain, we remain comfortable with our full-year outlook given our strong competitive position, which we are reinforcing with the Gildan Sustainable Growth strategy, and [point-of-sale] trends across our business coming in line with our expectations during the first quarter.
