Zara store

MEXICO CITYZara chain owner Inditex is set to gradually increase throughput at its key Spanish logistic hubs in anticipation of a recovery in global apparel demand as nations begin to see a peak in coronavirus cases, boosting hopes that economies will recover quicker than anticipated.

The retailer has three main logistic hubs in Spain, located in Madrid, Zaragoza and Arteixo, A Coruña, where it has its global headquarters. The facilities process “many millions of garments” a month at demand peak times, according to trades union leaders.

“Our logistic warehouses will start increasing capacity next week as demand starts to increase,” confirmed Roberto Perez, who heads Spanish union Cig’s mission at Zara logistics in Arteixo.

Not that Inditex has kept its warehouses idle. “They are expecting a demand spike [post-COVID-19],” Perez continued. Therefore, “they have kept their warehouses operating at half capacity but moving and stocking merchandise so that when markets reopen, they can service them faster and better than competitors.”

Inditex, which temporarily shuttered 3,500 stores because of lockdowns around the world, has also kept some of its sewing shops in Arteixo (which typically engage in cutting and pattering of items before assembly in Asia, Morocco or other factories) producing medical equipment.

Perez said three specific locations have been producing thousands of pajamas, sheets and other health gear to help fight the virus in Spain, where the infection curve is starting to flatten in common with Italy and other European countries as cases begin to plateau worldwide.

Inditex declined to comment.

Inditex has also received kudos for helping bring up to 35 million medical gear units from China, which were then purchased by Spanish authorities or donors that distributed them around the country, including Inditex itself. The items included 21 million face masks and 1,200 ventilators, as well as 485,000 COVID-19 testing kits among other items.

Labor union leaders have unusually welcomed the cash-rich retailer’s decision to keep workers paid throughout Spain’s and also Europe’s lockdowns. That is starting to change, however, as the chain’s store employees were temporarily furloughed in England recently and faced a similar fate in Portugal last week, Perez claimed.

In Spain, unions are hoping that the company won’t fulfill a previously stated intention to hand so-called ERTES, or temporary pink slips, to staff after April 15, the date that Spanish lockdowns were expected to end but which has been extended until April 26.

“They haven’t told us anything yet,” Perez said. “We are waiting but as they have just a few days left, we don’t see why they can’t wait it out until the 26th.”

If Inditex, which employs more than 30,000 store workers in its home market, decides to furlough them, it will likely continue to pay 30 percent of their salaries to complement Spain’s decision to subsidize up to 70 percent of COVID-19-hit workers’ paycheck amid the crisis.

Unlike other retailers such as department store chain El Corte Ingles or archrivals H&M or Primark, Inditex has paid Spanish workers their full salaries for the longest period of time. This has freed cash for the state to provide additional aid to help low-income people cope with the pandemic’s economic toll, according to union leaders.

“They have paid 100 percent of salaries, helping the government have more funds to help other retailers who have only been able to contribute 30 percent of salaries and only for the first phases of the lockdowns” starting mid-March, said Estevez. “If any company can survive this crisis more than others in Spain it’s Inditex. They have the financing muscle to do so.”

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