The Bangladesh apparel sector, $34 billion industry and the lifeline of the export earnings saw the closure of 133 factories in 2019, which made 62,582 workers jobless.
According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), it’s 63 member factories were closed in 2019, which made over 32,582 jobless, while 70 knitwear manufacturers under Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) have also shutdown making about 30,000 people unemployed in the same period.
Non-compliance and implementation of new wage structure are largely blamed for the closures and the nature of laid-off factories are small and medium (SMEs).
Losing competitiveness due to the rise in production cost is another big reason for the readymade garment (RMG) factory closure.
“It is not like that all the factory owners closed their manufacturing units because of non-compliance. They laid off factories due to lack of enough work orders and manufacturers also lost competitiveness due to higher production cost caused by the new wage structure implementation as well as electricity, gas and other utility service charges,” BGMEA President Rubana Huq told Textile Today.
If the compliance was the only reason for the shutdown, then it could be earlier, she argued.
Amid these challenges, they are not getting banking support in improving compliance and meeting other necessary expenses, which expedited the closures, said Rubana.
However, some factories housed at shared building and run on rent had been shut on compliance grown as the building owners are unwilling to spend for making compliant.
“It is not like that all the factory owners closed their manufacturing units because of non-compliance. They laid off factories due to lack of enough work orders and manufacturers also lost competitiveness due to higher production cost caused by the new wage structure implementation as well as electricity, gas and other utility service charges.”
“After the Rana Plaza incident, workplace safety and compliance were major challenges for the manufacturers. As a small factory owner, I failed to make an investment, while building owners did not make an investment, seeking anonymity, a factory owner told Textile Today.
For this, like me a good number of owners shut factories and planned to relocate in purpose-made building or own building out of the capital, he added.
He also argued that due to lack of compliance, buyers were not placing orders as well as the local companies stopped providing works on subcontracting.
How to save the small entrepreneurs
Small and medium enterprises failed to maintain compliance, while they were unable to adjust the new structure. Being hit hard by the cash crunch, the SMEs were forced to shut down the production,” BKMEA first Vice President Mohammad Hatem told Textile Today.
So, the government has to come up with financial support and low-cost financing to improve safety standards or to relocate from the shared building, said Hatem.
Meanwhile, BGMEA stressed on establishing a common compliant place for the SMEs to give them room to sustain.
“We have pledged to protect the small and medium enterprises. I think, it is time to save small manufactures as the taste of consumers is changing and they are buying less at higher prices,” said Rubana Huq.
For creating an opportunity for the small and medium entrepreneurs, BGMEA has sought allocation of 200 acres of land at Mirsharai in Chattogram to build shades for them with compliance. If we can do it, they will be able to produce quality products, the business leader said.