Bangladesh is the second largest readymade garment (RMG) exporter country in the world. The primary textile sector (PTS) is producing yarn and fabric needed for readymade garment sector (RMG). PTS is the backbone of clothing industries because it provides the backward linkage for both the woven and knit sector .This sector provides the yarn towards the clothing industries where yarn is the primary raw material of these industries to produce fabric. PTS is usually the factories under the leadership of Bangladesh Textile Mills Association (BTMA) comprises of spinning sector and weaving and woven processing sector of Bangladesh. This article focuses on the spinning sector, tried to find out demand and supply gap of its output yarn.
To realize a short overview and probable interventions about spinning sector, a complete SWOT analysis is given below:
Strength of Bangladesh spinning sector:
- Competitive workforce- skilled manpower available at a lower cost.
- Bangladesh spinning factories mostly possess high-tech sophisticated machinery from Europe, Japan and US.
- Courageousness and resilience of local entrepreneur.
- Strong export oriented RMG sector- can supply yarn to the factories very fast; can provide great after sales services.
- Sufficient demand of woven and knit yarn.
- FDI (foreign direct investment) is legally permitted
- In-house demand is increasing every year- demand for yarn for the locally sold clothing items are also potentially increasing.
Weakness of Bangladesh spinning sector:
- Key raw materials for the sector is almost all imported- cotton, polyester, viscose most used fibers almost all imported.
- Lack of adequate research and development within the factories- not being able to reduce cast and make sure best value products out of the resources available.
- Not producing much of value added diversified yarn.
- Insufficient expertize of optimum use of existing machinery and technologies. Weak in proper adoption of new technologies.
- Lack of productive and efficient level management- Factory managements are not using modern effective concepts, techniques and tools.
- Lack of corporate culture.
- Lack of proper motivation towards employees.
- Communication gap between local personnel and foreign expertize.
- Lack of gas and power- utility supply is insufficient and not uninterrupted.
- Lack of land and infrastructure- land is scarce in Bangladesh and very costly.
- Lack of consistent and timely policy support- government policy is very important for a sector which is all dependent on foreign raw materials and also most product are sold for foreign buyers.
- Global and regional economic uncertainties- the sector suffer badly for price fluctuations raw materials and final products.
- WTO open market policy and recent changes in ‘Rules of Origin’ policies of European Union and US is putting Bangladeshi spinning mills under huge competition against the mills in India and Pakistan.
- Fall in consumer demand including closure of outlets of fashion house.
- Textile education system’s curriculum is failed to meet up the demand of 21 century textile world.
- No development of new fiber spinning process and its application in business arena.
- With the increasing cost of utilities and cost of doing business in Bangladesh- new investor is not sufficient. Payback from this sector is becoming longer and higher risks are exposed.
- Negative attitude of investor about diversified product investment.
- No Capability of local textile machineries production as well as necessary spare parts.
Opportunities for Bangladesh spinning sector:
- Possibility of producing high value diversified yarn.
- Yarn export possibility creation by means of diversified yarn production and exploring new market opportunities.
- Now a day, investors come forward to research and development sector that causes the possibility of increasing economic social and environmental sustainability of the companies.
- Quality cotton production that decreases the dependency to the overseas for quality cotton.
- The opportunity of low grade value added product production because china is falling back from this sector.
- Focusing more to the Public Relation buildup of the companies, doing branding, marketing and promotion of the companies. The companies can showcase their products and developments at global platforms.
Threats for Bangladesh spinning sector:
- Absence of visionary government and political instability.
- Continuous Pressure from ILO (international labor organization) and other agencies to increase the salary of workers.
- Illegal action of accord and alliance towards RMG sector that paves way of many closure of garments industries. As a result, deficiency of yarn demand and supply is happened.
- Though India, China, Pakistan passes out from low value added product, it still produces huge amount of value added yarn.
- India, one of the big competitors of Bangladesh because India exports all types of less or high value and diversified products all over world.
- Vietnam is now becoming a new competitor because they start producing different types value added products.
Present scenario of spinning industries:
At present, 424 spinning mills are running and they still contribute in the spinning sector. It’s a matter of great joy that number of spinning mill and spindle capacity is increasing every year with the time period. Their contribution helps to continue the export growth of the RMG sector of Bangladesh. Number of spinning mills and spindle capacity are given below;
|Table 1: Structure of the spinning industry of Bangladesh. Source: Bangladesh textile mills Association (BTMA)|
|Calendar year||No of mills||Spindle capacity (Kg)||Growth in no of mills (Percentage)||Growth in spindle capacity (Percentage)|
As per the information provided by BTMA, “The growth in the export of clothing with the phasing out of MFA in 2005 has led to the setting up of 350 spinning mills. Since 2001 there has been a boost in investment. The private sector spinning mills can now meet around 100% demand of yarn at the domestic level as well as 95% of the demand for yarn for export oriented knit fabrics mills. In addition, almost 85% of cotton yarns, and 50% demand for synthetic and blended yarn of export-oriented fabric producing mills are being met by the private sector spinning mills.”
Most spinning mills of Bangladesh produce low-grade yarn. Though there are some advanced factories currently producing a range of diversified value added products. The existing capacity is capable to produce & supply good quality combed yarn and polyester/cotton blended yarn for meeting the requirement of the clothing industry. The products of the spinning sub-sector are cotton yarn, polyester, synthetic yarn, woolen yarn and blended yarn mixed of cotton and polyester of different counts (mostly up 80s count). Yarns are being used by the weaving sub-sectors like specialized textiles, handlooms, and knitting and hosiery. The table 2 is given below shows Bangladesh’s total yarn production as well as yarn consumption.
|Table 2: Bangladesh yarn production and consumption pattern. Sources: Bangladesh Textile mills Association (BTMA), Fiscal Year: (July- June), Consumption =Production + Import.|
|Calendar year||Production(1,000 ton)||Consumption(1,000 ton)|
Bangladesh mainly imported their required yarn from India to fill the demand-supply gap. But the spinning sector of our country has been witnessing robust growth over the past decade due to growing demand for yarn from both the domestic textile market and the export-oriented ready-made garment (RMG) sector as a result import of yarn is reducing year on year which states a strong suggestion that our spinning sector is becoming self-sufficient and carryover of domestic yarns is becoming more strong. After the change recent change in the GSP rules, the yarn import may increase significantly in the following years.
According to BTMA officials “Bangladesh spinning industries can meet up 90% demand of knit wear garment industries. On the contrary we are able to meet 35-40% demand woven oriented demand. Maximum demand is fulfilled by India. As a result we take say that India is the main Competitor for Bangladeshi spinning Industries’’.
At present, RMG sector has achieved investments of different foreign countries and different fashion retailers in the world are setting up their sourcing and trading base and garments manufacturing units here. But, still now spinning sector cannot grab the huge foreign investment. All most all of the spinning sector is invested and run by local entrepreneurs. They contribute to the spinning sector for years and years.
According different mill owners “Yarn price is constant is for one year but the raw materials price always fluctuates. It is not easy for new investor to set up new spinning industries because of being feared about attaining desired profit margin. Generally 400 million taka is needed to set up a medium size spinning industries. Its maintenance cost is also high. These are the reasons why much new investors are not to set up new industries’’
According to BTMA officials ‘’Necessity is the mother of invention .At present there is no need for new investment. We are capable to meet up the all demand. At present 100 spinning industries are prevailing idle that is the crucial issue for spinning sector.”
The officials also added, “Generally 20,30, 34 and 40 count yarn are mostly used but diversified yarn is needed for woven market. It is very easy to meet up the demand of the knit sector. On the contrary we have the ability to meet up the demand the woven market by our proper capacity utilization, market analysis, skilled man power creation and updated technology adaptation. Good this for us that many spinning industries have started different diversified yarn production. As a result our demand supply gap will be reduced within short time .It must reduce the lead time and foreign LC order complexity and paves the way of sustainable RMG business”
It’s time for us to rethink our ability and focus on capacity utilization and diversified yarn production .Great news that every year new value added yarn is added in our market. When entrepreneur can realize about their better profit earning possibility from diversified yarn production and come forward to huge production, we can easily establish a sustainable spinning sector. As a fact of globalization, every day technology is changing and people are likely to more conscious to environmental issue. We must focus on different fiber and its production and spinning procedure development such as flax, ramie, modal etc. if we coordinate total task properly within time period, our spinning sector will be most prosperous industrial sector in our country.
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