Textile News, Apparel News, RMG News, Fashion Trends
Editorial

It is high time for the RMG manufacturers to set survival strategy

Though the apparel cost element is still lowest in Bangladesh among its major competitor countries, the profit margin is very low

Bangladesh is still a popular sourcing destination for lower ended products considering its low labor cost and abandonment of natural resources. If we see the history, textile manufacturing industry always belonged to the developing or under developing countries and that’s why it’s called a volatile industry.

RMG manufacturers survival strategy
Figure: Bangladesh is the lowest in labor productivity as per the data Asian Productivity Organization (APO) Database 2018.

From the very beginning, international brands and buyers put their basic products’ orders here – in Bangladesh – and we grew up in that way. After many years of expertise and expansion, now it is a burden itself! Because, fast fashion, and value-added products, etc. have made this whole scenario utterly challenging.

Present trend of apparel manufacturing: Focusing on basic items

In the 2018-19 fiscal year, Bangladesh earned $34.13 billion from RMG export, where around 72.95% ($24.90 billion) came from five types of readymade garment (RMG) products – trousers, jackets, t-shirts, sweaters and shirts. According to BGMEA, t-shirt is the most exported item ($7.01 billion) among them.

This data of the last fiscal year has both positive and negative impacts. Positive in the sense that now at least we have expertise in these items, on the other hand, it is negative because we are not known value-added items on a large scale.

Over the decade we just grew bulkier for some selected basic items. Though we are consuming our gas, water, electricity, manpower, etc. to manufacture some selected basic items but we could manufacture value-added products by using similar manpower and resources. This is high time to rethink the industry that where should we focus.

Table- 1 shows why Bangladesh is still the most attractive manufacturing destination all over the world. What is important, now manufacturers must approach for high-end and diversified products, otherwise, they cannot survive in the near future.

The challenges of Bangladesh to be competitive

Recently some apparel factories have closed their units and claimed they closed due to not having enough orders from buyers. Why this sudden lack of orders from buyers?

In this regard, Kazi Iftaquer Hossain, President of BGBA said, “The factories those closed their units never go for the diversified products and there are still many factories in Bangladesh those are doing same category products from the beginning to present. And they struggle to get the order.”

Bangladesh textile and apparel manufacturers already designed their units for basic items, so to produce value-added items they need to reinvest along with strengthening their global branding, as they are globally known for manufacturing lower-cost products.

Though manufacturing cost is low here, there are few reasons for which global buyers and brands feel less enthused to give orders for the sophisticated products. In fact, even for fast fashion trends, many global buyers have a reservation in choosing Bangladesh – as it is not a quick supplier. Major causes are mentioned below-

  1. Lead time

Bangladesh is the major destination for international brands but due to longer lead time, Bangladesh is losing many opportunities. Because in today’s competitive market, fashion trends are changing frequently so retailers prefer the fastest delivery to catch up with the trends.

In this case, shorter lead time can help them to secure the business just before the trend goes off from the customer’s mind. So, maintaining the lead time has now become a major challenge for the country’s apparel industry.

The below graph illustrates competitors of Bangladesh can provide goods in the shortest lead time so they are getting orders for value-added products and receiving a standard price for their basic products.

Md. Nurul Islam, Director Production, M.M. Knitwear Ltd said, “Longer lead time might be the biggest barrier and restrain the export growth in the near future. If the government cannot give policy support to shorten the lead time the sector must suffer and will plummet in the international market position.”

  1. Workers inefficiency

Labor productivity is also the lowest in Bangladesh than its rival countries, even Myanmar is standing up than Bangladesh. According to the data provided by the Asian Productivity Organization (APO) Database 2018, per hour productivity is valued at $3.4 for Bangladesh which is far lower than its competitors.

Sri Lanka is recorded as the highest labor productivity at $15.9, followed by Indonesia $12.3 and the Philippines $8.7. Other countries like India, Vietnam and Myanmar are also standing in a better position at $7.5, $4.7 and $4.1 respectively.

But Industry insiders of Bangladesh believe that worker efficiency is now increasing every year because of motivation, guidance and specific training on sewing operation. In this regard, whatever present improvement achieved that a positive result can be seen after one or two years. So, it can be said the present crisis is not permanent rather it is for a short period of time.

According to Anisul Hoque Ansari, Senior General Manager, Operation, HA-MEEM Group, “We never think of worker’s efficiency before and did not invest in process development as well as waste management. Now it is time to improve worker’s efficiency by providing proper training and guidance.”

  1. Port congestion

Bangladesh attracts foreign buyers mainly for the easy availability of cheap products, otherwise, the business environment is not up to the mark at all. Here port congestion is adding to the problem and making the situation even worse. It is adversely affecting our current business and threatening our future.

The below graph is showing Pakistan takes the most time among the seaport of 19 countries. To release the imported goods, Pakistan takes 16.6, Bangladesh 15.8, Myanmar 13.3 and India 12 days. Likewise, Bangladesh takes the most time in the airport. That is 7.9 days.

 

Bangladesh textile and apparel industry could have more orders from brands and retailers to sell its value-added products, and manufacturers could easily demand smart price both for their basic and value-added products if port congestion did not lead longer lead time.

Conclusion

In fine, textile and apparel manufacturers should invest in the human capital transformation that will lead to an increase in workers’ and professionals’ efficiencies as well as open the door to make value-added products. At the same time, they need to demand smooth port facilities including other infrastructure development, from the government. Without government support, port congestion will not be eliminated that is mainly responsible for long lead time.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

Related posts

Bangladesh garment industry has a great scope to diversify product basket

Textile Today

It is high time to think about creating online platform

Rakibul Islam

Bangladesh’s RMG to collapse if fashion brands do not support during COVID-19 pandemic

Textile Today

Latest Publications

View All