Fashion giant PVH to close factory; Ethiopia blames U.S. sanctions

ADDIS ABABA (Reuters) - Global fashion giant PVH Corp (NYSE:PVH). is closing a manufacturing facility in Ethiopia, the company told Reuters on Friday, two weeks after the African country lost duty-free access to the United States over the ongoing conflict in Tigray.

Government spokesperson Legesse Tulu said the closure showed the impact of the "unfair sanctions" from the U.S. which would disproportionately affect the country's poor and women.

The move by PVH, which owns Calvin Klein, Speedo and Tommy Hilfiger, is the first retreat from a large manufacturer following suspension of duty-free access. It is a blow to the Ethiopian economy, already grappling with high inflation, drought, and a year-long war that has killed thousands of civilians and displaced millions.

This year, PVH sold several brands, and the company said this prompted it to begin planning a transition of the facility to a trusted supply partner active in Ethiopia.

"The speed and volatility of the escalating situation there made the transition no longer possible, resulting in the difficult decision to close the facility," PVH said in a statement.

On Nov. 2, U.S. President Joe Biden moved to suspend Ethiopia from the African Growth and Opportunity Act (AGOA) "for gross violations of internationally recognised human rights."

Ethiopian officials had warned the suspension could take away 1 million jobs, disproportionately hurting poor women who are the majority of garment workers.

Conflict erupted last year between the federal government and the Tigray People's Liberation Front (TPLF), which used to dominate national politics and now governs Tigray.

Around 400,000 people are believed to be living in famine conditions in Tigray, where the U.N. said on Thursday it has been unable to deliver food for a month.

All sides fighting in the conflict have committed violations that may amount to war crimes, the U.N. has said.

PVH arrived in Ethiopia in 2017. Like most of its peers, it was in Hawassa Industrial Park, located south of Addis Ababa and designed by the government to attract garment and textile manufacturers and make Ethiopia a light manufacturing hub.

The AGOA suspension threatens those aspirations and could force other manufacturers to close, too.

PVH did not say how many people worked at the factory and did not immediately answer a question about it.

Ethiopia exported $237 million duty-free to the U.S. last year, U.S. Commerce Department data said.

PVH said in its statement that it was still "committed" to its third-party manufacturing partners in Ethiopia.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App