Al Amin :
The readymade garment sector, the major export earnings industry, is bracing multiple troubles as buyers are either withholding orders or delaying shipments.
Drop in global demand and energy crisis at home are threatening to thwart the pandemic recovery of the industry, the second largest exporter after China.
Apparel production has declined by around 50 per cent for high fuel price and shortage of supply, the entrepreneurs of the industry said.
They said reputed brands in the USA and the Canadian markets are requesting suppliers and factories for slowing shipments as sales drop significantly in their countries.
“Retailers in both European and US markets are either deferring the shipments of finished products or delaying orders as inflation is soaring in the major export destinations, which has a serious impact on us,” Md Shahidullah Azim, Vice-President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told The New Nation.
Following this, the sector is now bracing for another battle for survival as most factories are getting orders less than 30 per cent of their capacity as record inflation rates across Europe and the US make consumers less willing to loosen their purse strings for new outfits and fashion accessories.
The woes began with the Russian invasion of Ukraine. As sanctions were meted out to rein in Russia and an energy crisis tightened the screws of the European economy, inflation rates started to climb sending jitters into the market and soon to hit headlines as historic numbers in the European Union and the US economy.
Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, “We are facing a combination of multiple problemmes at home and abroad and the export oriented sector is now facing a big uncertainty.”
“Factories are reporting booking orders for less than 30 per cent of their production capacity. Besides, many factories will miss shipment schedule as uninterrupted energy supply is the key to delivering products in time,” he said.
BGMEA Director Mohiuddin Rubel told the New Nation, “Yarn price increased by 62 per cent in last 1.5 year, freight cost by 500 per cent, dyes, chemical cost by almost 60 per cent and minimum wages by 7.5 per cent in the beginning of the last year.”
“As a result, our average production cost has been increased by 40-45 per cent in last 5 year. Along with that, productivity and efficiency is a major concern for us. Average productivity in Bangladesh is around 45 per cent, while productivity in Vietnam is 55 per cent and in Turkey around 70 per cent,” he said.
Md Akhtar Hossain Apurbo, Director of Wisdom Attires Ltd and Vice-President of BKMEA, said, “All buyers have reduced their orders at least 25 per cent in recent time.”
“Besides, production has declined by almost 50 per cent due to severe gas shortage. As a result, we will miss shipment schedule,” he said.
Expressing worries over the global economy, he said the record inflation may hurt apparel orders for upcoming months as well.
Plummy Fashions Ltd, a supplier to PVH Corp, the parent company of fashion brand Tommy Hilfiger, and Inditex SA’s Zara, saw new orders in July drop 20 per cent from a year earlier, according to the entrepreneurs.
Waning orders are a risk to the economy, where the garment industry makes up more than 10 per cent of gross domestic product and employs four million people.
It couldn’t be happening at a worse time for Bangladesh as authorities are resorting to productivity-killing power cuts to preserve fuel reserves amid a region-wide energy crisis, caused in part by the war in Ukraine.
Clothing exports fell to a five-year low of $27.95 billion in the fiscal year to June 2020, before staging a recovery. The nation saw garment exports climb to a record $42.6 billion in the year ended June, accounting for 82 per cent of total exports.
