With Government curbs being imposed on factories located in city centres, many companies have started shifting their factories, Galpex is one of them. Located in Mirpur, which according to new directives will now become a purely commercial and residential area, Galpex is now shifting its factory to Hemayatpur, near Savar on the outskirts of the city.
M. Rezaul Alam Miru, the young Managing Director of Galpex, who initially ventured into buying before starting garment manufacturing in 2005, presently runs two factories: one for wovens and the other for knits. The woven factory currently has 250 machines and 7 sewing lines, another 300 machines would be added subsequently to this unit. The factory for making knits has 300 sewing machines. “Shifting a factory involves capital investment and the only incentive that the Government is offering is 3% interest for building dormitories for workers, who would become jobless if they do not shift to the new location of the factory,” informs Miru.
“The company has a policy of not working with importers because they demand huge sampling quantities and are quick to cancel shipments even in case of a little delay. Because of working with importers, many factories have become sick or even defunct in Bangladesh.” – M. Rezaul Alam Miru
Despite Government incentives, Galpex does not plan to build a dormitory for its workers, as of now. Justifying his stance, Miru says, “Hemayatpur is not that far off; moreover, we will be providing transportation to our people with two buses plying between Mirpur and Hemayatpur for our workers’ convenience. We know that we will not find skilled workforce in the region, so such facilities are necessary. Later on, once the picture is clear we will make a dormitory for some people working in the Hemayatpur factory.”
Another issue that has hit smaller factories in a big way is the compliance drive undertaken by Accord and Alliance. Discussing the issue, Miru says that though small factory owners are willing to make their factories compliant, but still buyers who are part of the two international compliance bodies are not willing to place orders with them till the time the factories are inspected. “Due to this, nearly 500 sub-contracting factories have closed down in Bangladesh, but of the big ones, only 11 have closed down,” he argues.
The survival of smaller factories in Bangladesh is getting tougher year after year as new issues keep challenging their sustenance; among the recent are the Government rules which mandate shifting factories from city centres to the outskirts; enforcement of compliance norms by international agencies; and rising labour wages which is increasing the cost of manufacturing and forcing companies to reduce overheads in all ways possible. Taking a proactive approach, Galpex is implementing change to combat all these challenges.
Besides having to pump in money to upgrade their infrastructure, smaller factories are also being hit by rising labour wages, which is adding to their manufacturing costs, but the upside is the increased productivity per worker. “We were targeting 20% improvement in efficiency as wages had increased by 70%, and as per my calculation, 40% hike in output with the same workforce is necessary to compensate for the wage hike, keeping in mind the operating overheads (which we have started to bring down),” avers Miru. He is now inducting more industrial engineers in his factories to initiate methodology and time improvement practices.
Arresting wastage is another measure that Galpex is taking to reduce overheads. This includes reducing fabric wastage and stricter inventory control. The company is making its calculations based on per metre of fabric required for a particular order. “We do not order more than 1% to 2% of extra fabric as we want to control the wastage that happens during cutting, sewing, washing, etc. Some factories incur wastage as high as 15% and if you are able to keep it down to less than 5%, then you definitely have an edge over them,” avers Miru. The company is also installing more automatic sewing machines, and reducing the number of helpers in the sewing lines from 30-35 to 10-12. “We are also trying to reduce the overtime of sewing operators, which will further reduce our wage expenditure. Overtime also leads to start-up losses the next day and higher electricity bills as the power tariff is higher in the evening,” he adds.
Galpex has also brought a change in its recruitment procedure of sewing operators; it has started checking the operator’s work experience including operating knowledge of machines and other skills. “We look at the companies they have worked in, what operations they have done, what machines they have operated, and other such critical areas. This helps us in creating a skill matrix for training them further. Most companies in the apparel industry of Bangladesh usually ignore this aspect while recruiting, but companies that give importance to worker training and motivation are really doing well. Still, I feel that the present level of productivity in Bangladesh is not up to global standards,” states Miru.
Galpex is presently doing a turnover of US $ 10 million, and though its major market is Europe, it also has buyers such as Walmart. With the current expansions at its wovens factory, Galpex expects to touch US $ 18 million, thereby adding US $ 7.5 million to the factory’s topline.
