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ITET stresses the need for cost reduction, right sizing and new product ranges to survive (Video)

ITET look forward to taking more direct roles to help the industry revive from the Corona hit realities

Bangladesh RMG industry is in the most vulnerable situation today under the impact of the Covid-19 pandemic. Already more than $3.2bn work orders have been canceled or postponed and more $3bn work order cancellation is about to happen. About 30% of the global apparel demand may disappear. The export of almost two quarters may be affected due to the pandemic. In these realities, what would be the way out? Institution of Textile Engineers and Technologists (ITET), the largest organization representing the textile engineers of the country stressed the importance of cost-cutting, right sizing and developing new product ranges like medical textiles at their leader’s discussion.

ITET-stresses-cost-reduction-right-sizing-new product
Figure 1: In the post-pandemic world RMG industry needs to revive from the Corona hit realities by cost reduction, right sizing and new product ranges.

The government is offering many soft loan packages which are not enough, according to the industrialists. Almost all factories have been laid off till 25 April, now the factories have started operation on a minimum scale. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has already given its guidelines to the member factories.

Figure 2: Engr. Md. Shafiqur Rahman, President, ITET.

But the workers got stuck in between the anomaly decision from the government and the association. Factories raw materials stuck at the port. Brands are looking for up to 50% discount which is unacceptable for the factories. Banks are not clearing the back to back LC payments.

Altogether there are many policy level loopholes, which had been come up in a webinar organized by Institution of Textile Engineers and Technologists (ITET) on 23 April 2020, where about 20 industrialists and experts exchanged their views on ‘Impact of Covid-19 on Bangladesh garments sector and the future action’ in two phases of discussion.

The key outcomes of the discussions will put forward to the government by ITET so that the government can take the proper decision regarding the textile and apparel industry in this critical situation.

“It is the time to take the right decision and hopefully together we all will overcome this critical situation to the better future”

Engr. Mozaffar Hossain, Managing Director, Sim Group and Member of Parliament

Mohammad Salim Reza, Senior Vice-President‎, Institution of Textile Engineers and Technologists (ITET) moderated the session and Textile Today was the media partner of this initiative. Engr. Md. Shafiqur Rahman, President, Institution of Textile Engineers and Technologists (ITET) and Managing Director of HAMS Group was presiding over the discussion.

Figure 3: Engr. Mohammad Salim Reza, Senior Vice-President‎, ITET moderated the session.

Engr. Mozaffar Hossain MP, Managing Director, Sim Group and Member of Parliament was the Chief Guest.

Before this pandemic, Bangladesh’s textile and apparel industry was in a vulnerable situation. Now it is getting worsen.

“It is the time to take the right decision and hopefully together we all will overcome this critical situation to the better future,” said Engr. Mozaffar Hossain, Managing Director, Sim Group and Member of Parliament.

Md. Shafiqur Rahman, President, ITET stressed the possible important role the textile engineers can take in this crisis. The discussants agreed that proficient engineers only can come up with innovative ideas and solutions to rescue businesses from a dire situation like this.

On 8 March 2020 first Corona case was confirmed in Bangladesh and the country went under lockdown from 25 March and step by step it has been extended to 31 May 2020 latest.

Most of the financial activity also been stopped due to the situation demand. Within this time buyers started to cancel orders which panicked owner to worker level. Later some brands assured that they will receive finished and work in process goods but asked to stop all other orders.

Figure 4: Engr. Mozaffar Hossain, Managing Director, Sim Group.

“Buyers used to say that they are the strategic partner of us (manufacturers) but when the time comes to take responsibility, they have overlooked us,” saying Engineer Md. Shamsuzzaman CIP, Managing Director, Micro Fibre Group.

“Buyers also asking for discount up to 50% which is disappointing,” he added.

In the meantime, the government announced a Tk 5000 crore loan package to give workers’ salary on 2% interest under some condition where alone textile and apparel industry needs about Tk 4200 crore for one month’s salary.

“Under such conditions and vague policy 60% factory cannot take this loan. The government also take an initiative to give salary directly to the workers through mobile banking or bank account which is not realistic,” Md. Shamsuzzaman CIP added further.

Figure 5: Engr. Md. Shamsuzzaman CIP, Managing Director, Micro Fibre Group.

To solve this problem, the government can give funds to the banks and banks will distribute this fund to the factories according to their previous performance and transparency, a proposal from Engineer Md. Shamsuzzaman CIP, Managing Director, Micro Fibre Group.

Amid this pandemic, people will buy garments for basic needs. According to experts and insiders, overall garments consumption will reduce to 30-50% this year. But still, there is hope, because this year is the year of survival. So cost minimization and control is a must now.

Engr. Abdus Sobhan, Managing Director of Auko-Tex Group said, “Right now we should look into improving efficiency, supply chain, value chain, etc. to survive this grave situation. Because achieving lead time is very crucial right now, otherwise, there is a possibility of canceling more orders even migration of orders and buyers. So, partially we have to keep the production line open.”

Figure 6: Engr. Abdus Sobhan, Managing Director of Auko-Tex Group.

To achieve this, our marketing guys should learn a more effective supply chain, he further added.

ATM Mahbubul Alam Chowdhury Milton, Executive Director of Masco Group emphasized industry 4.0 revolution to cover the damage after the pandemic.

As total apparel business is shrinking, Mahbubul Alam Chowdhury noted some points for the owners to mitigate this recession effect- right decision making, workforce management, digital marketing, efficiency increasing by giving training to staff and workers, etc.

Figure 7: Engr. ATM Mahbubul Alam Chowdhury Milton, ED of Masco Group.

He also mentioned some points to control costs and stressed on sound supply chain and to increase investment in online technologies by reducing from other sectors.

Bangladesh garments manufacturing firms have grown unplanned. There is a huge gap between demand and supply. This is happening because of lacking foresightedness, no proper market analysis, and financial analysis. “We always think about expansion, we never thought about rightsizing of our industry. And the overcapacity is now the burden for all of us,” said Saiful Islam Khan, Managing Director, Essential Clothing Ltd.

“In this crisis moment manufacturers can take advantage of the EDF LC. Banks should extend the timeframe up to 1 year of EDF LC,” he added.

Many suppliers are supplying raw materials against back to back LC. According to the industry insiders, thousands of documents are pending that banks are not receiving to avoid the liability that causes huge suffering for the suppliers. Banks are also saying that they do not have enough liquidity and they are in fear of bankruptcy. The government can give a smart package in low interest for back to back LC, they opined.

Figure 8: Tareq Amin, Founder & CEO, Textile Today.

Many buyers refused to play against the master LC. Thus, factory owners are in huge crisis as they have to pay their workers and staff. “Bangladesh government should protect the master LC by law and discussion between government to government level can also solve this problem,” said Tareq Amin, Founder & CEO, Textile Today.

He also emphasized the rightsizing of the industry to reduce risk and ensure business sustainability.

Before the pandemic, western countries were promoting re-shoring (which also can be termed as anti-globalization) and now they have a better reason to do so. Already the garments manufacturing firms of the UK are getting a significant amount of orders which indicates the re-shoring trend.

“Geographically Bangladesh is far from the raw materials sourcing hub and the market also. So modular value chain can be a good solution and we should work on the major changes,” Tareq Amin added further.

The industry is in the hour of transformation, all are realizing that. Textile Today already has taken a project for ‘Setting Transformation Blueprint’ for the textile and apparel industry. Under this project 100 Transformation Team will work in the industry (more than 10 factories already joined this initiative) to develop the practically tested transformation model.

Figure 9: Shakhawat Hossain Talukdar, General Secretary, ITET.

The world has already seen the crisis of medical protective gear. It is considering an opportunity for Bangladesh, but raw materials are the main factor here again. To produce the protective gears many types of chemicals are needed. To ensure uninterrupted supply there are need for a bonded warehouse facility which is not allowed in Bangladesh.

“Bangladesh is already 90 days behind in supply chain for its poor infrastructures and the location. If the government gives us the facility of bonded warehousing like other countries, we can save huge time in the supply chain,” Syed Ismail, Head of Marketing and Business Development at Archroma (Bangladesh) Ltd. emphasized.

We have already embraced a new way of life, doing a meeting online, most of the people working from home and we should increase this kind of digital application in future also to save time and money, he further added.

Figure 10: Syed Ismail, Head of Marketing and Business Development at Archroma (Bangladesh) Ltd.

Engr. Masudur Rahman, Ex ITET President and newly elected Chairman of Textile Engineering Division, The Institution of Engineers, Bangladesh (IEB) and Shakhawat Hossain Talukdar, General Secretary, ITET have given their commitments about giving support the textile engineers which will lose their job during this vulnerable situation.

Engr. Shafiqur Rahman, President, Institution of Textile Engineers and Technologists (ITET) and Managing Director of HAMS Group concluded the view exchanging discussion by giving thanks to all panelists.

In a nutshell, this is the situation which is unknown for all. But the policy, strategy and action should be precise. The government should take the major responsibility to protect the industry, factories should care for its workers and employees and buyers should act as the strategic partner like always they say.

Leading figures of Bangladesh textile and apparel industry shared their opinion in the ITET Webinar session: 

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

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