Textile Today Question of the Month
More than 200 SME factories shut last one year, what are the reasons behind this vulnerable scenario and what should be the policy or ways for the Bangladesh textile and apparel industry to survive in this reality?
According to BGMEA, about 50,000 workers have lost their jobs as 50 small and medium-sized garment factories have shuttered their operations from the last six months and last one year more than 200 units of small and medium category apparel factories closed their business. Due to the higher cost of production and lower prices.
|More than 200 SME factories shut last one year|
|50 small and medium factories closed and about 50000 workers lost jobs from the last Six month|
|Bangladesh has now 1000 small and medium units.|
|Each small factory employs, 500-2000 workers|
|Small factories face restriction in subcontracting|
Md. Junaid Abu Salay Musa, Director, Epyllion Group
After having Rana Plaza occurrence, small and medium-size garments manufacturers had to invest for structural renovation to get business. After that, very recently wages and utility costs have increased significantly leading to higher production costs. As a result, the profit margin has tumbled down to the break-even point and dependency on bank has increased.
Now we must strengthen our credibility by focusing on R&D so that we can offer different value-added products and ask higher price; at the same time marketing skill also has to be polished.
In addition, we need to be more efficient in the manufacturing process by introducing industrial engineering to increase productivity and reduce wastage. Implement automated operation could add value on efficiency. In addition, upgraded and industry-friendly policy from the government is seriously required to solve the crisis.
Asad Sattar, Executive Director, Utah Group
The garment industry is going through a process of market correction. This is a natural phenomenon in any economic sector. We will see market consolidation take place which will benefit the industry as a whole in the long run. Obviously, there are those who will hurt in the short term. Those who don’t evolve their business models will be left behind as large groups use their expertise to grow their market share.
Md. Nurul Islam, Director (Production), MM Knitwear Ltd
This year, all garments owners expected a significant increase – due to trade war – in garments order. But in reality, happened otherwise with, order and product prices both have decreased.
Also, there are some specific seasons in Europe, when we used to get a large number of orders. But due to unprecedented climate change this year, summer was delayed in Europe resulting in lower orders.
As the garments price is declining against higher wages, we should focus on increasing workers’ productivity, as wage increased significantly. We need to maintain the proper efficiency of the factories and keep upgrading with the pace of time.
We should move on from the old conventional machinery to automated procedures. As a result, we’ll see increased production as well as a balanced labor cost.
Md. Ehsanul Haque, Marketing, Director, NZ Tex Group
Nowadays, no one can sustain by continuing traditional ways of production. Only those who are smart, innovative, creative and always introducing variety in their products will get sufficient orders and can run their factories smoothly; others will be parished.
There is no alternative other than to invest more in human capital, innovation, and creativity rather investing only in machinery.
We should also start exploring new markets. Currently, we are dependent on Europe and America. There are certain factories in Bangladesh that are exploring new markets, whereas the majority of the factories are heavily dependent on the US and Europe.
Leading factories are standing out of the crowd by own design studio, office in foreign countries and a good marketing team, etc. and they are doing fantastic.
Engr. Md. Saifur Rahman, Chief Executive Officer, MBM Group
We are always focusing on factory expansion and increasing capacity without considering the global market trend, order and support certainty from the buyers. Manufacturers are investing and going for expansion taking bank loans without proper planning. Now it is high time, we need to reassess and make a balance sheet for our investment to make sure our business sustains.