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Fabric Manufacturing (Knitting & Weaving) Industry Insight

‘Knitting’ growing fast with great prospect still without business viability!

Bangladesh has one of the largest knitting capacities in the world

Bangladesh has a historical reputation in production of textile products in addition to famous Dhakai Muslin. From that time, in rural communities both men and women are involved in weaving. Artisans were also involved in hand knitting specially making sweaters. These skills and disciplines in sewing and weaving are passed down through generations and quickly transferred to production line in knitwear factories. And meanwhile knitting and knitwear sector got phenomenal growth in Bangladesh. If the installed capacity and volume of production is considered, industry insiders opined that Bangladesh is having one of the largest knitting capacities in the world. Particularly for knitting cotton based knitwear and sweater Bangladesh is a clear market leader after China. Besides basic machine and hand knitting Bangladesh eventually has seen a revolution in automatic knitting as well.

Knitting & knitwear trend

Knitting and knitwear firms in Bangladesh once was mainly located in and around Narayangonj. But now it is well spread throughout major garment manufacturing zones. Small knitting units are more available in Naryanganj area. The hosiery sector was expanded and accelerated since 1980’s and 1990’s into knitting industry after the expansion of RMG sector. The industry expanded both vertically and horizontally to meet the growing demand for fabric within a few years. Due to the increasing demand of knitwear product, the volume of export in different countries drastically increased.

Figure 1: Knitwear export and its growth trend in Bangladesh.
Figure 1: Knitwear export and its growth trend in Bangladesh.

From figure 1, it is clear that the demand of knitwear product is increasing. Even in the last fiscal year 2016-17 when Bangladesh apparel export has seen lowest growth in 15 years the knitwear export increased by 3.01 percent. Knitwear export stood to 13757.3 million USD in FY 2016-17 while it was 13355.42 million USD. For the FY 2017-18 Bangladesh has set an ambitious target to increase knitwear export to 15.1 billion USD.

Bangladesh can cater more than 90 percent demand of its knit fabric required by the knitwear manufacturing garment companies. And so, ‘knitting mills and units’ are playing a vital role in keeping foreign currency inside Bangladesh.

‘Knitting’ is not business viable anymore:

The ‘Knitting’ activities whether it is in the vertical composite industries or in a separate ‘knitting’ cottage industry is no more viable in this business, if separately only ‘knitting’ cost & price is calculated. While cost of production of average single jersey regular ‘knitting’ varies between BDT 20-24 per kg the rate of knitting for the same fabric still fall within BDT 12-15 per kg. It shows a huge discrepancy in the business model for the ‘knitting’ industries or the knitting units within the composite industries.

Figure 2: Investment is needed in 'Knitting' not only in capacity building but also in reducing cost and increasing value on the products.
Figure 2: Investment is needed in ‘Knitting’ not only in capacity building but also in reducing cost and increasing value on the products.

However, contribution of those ‘knitting’ units could never be undermined within the whole value chain of the knitwear products. Success and quality of the knit garments going to the selves of top global brands in big part depends on proper ‘knitting’. But the matrix of the ‘knitting’ rate is hindering new small investments in knitting factories. Vertical composite industries are investing more in knitting to just make sure seamless delivery and production of fabric. The accounts books of all the ‘knitting’ units are showing loss. And so the question is how this business is running and what is the future of this?

And so reducing cost is very important in the ‘knitting units’. And more importantly price of ‘knitting’ job work must be increased. Talking to this reporter Engr. Md. Ishaque Hossain, Sr. Manager of Knit Concern Ltd., of ‘Knitting Department’ told that while our merchandisers negotiating price with the buyers they calculate the knitting price at a rate which is not business viable. “A complex and important operation like ‘knitting’ is not now done by the owners to do profit but only to support the overall vertical set-up.” He added. Mr. Hossain told that this position has come mainly because of the irrational capacity increment by the owners. Now buyers are ruling on the price because the factory owners need big volume orders just feed huge capacity they have built.

Investment needed in ‘Knitting’:

To achieve the goal of 2021 to export RMG of 50 billion every year, Bangladesh will have to rely heavily on its knitting and knitwear industry. This sector is the strength of the country. And so the country should build further on this. That’s why Bangladesh requires more investment in ‘Knitting’. In a reality where current business model is not viable it is not likely that new investment will come to the sector. And in recent times not many small cottage like knitting factories are built. Most of the new machinery is bought only by the big companies to build vertical capacity reducing outsourcing in ‘knitting’.

However most important part is when a sector needs investment, it should not just go behind machinery and capacity building.  Investment should be done to reduce cost and to increase value addition. Knitting units should invest to increase productivity, efficiency, reduce cost and increasing automation.

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

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