There’s no doubt that Bangladesh garment sector has suffered some reversals in the recent past, be it in terms of falling apparel exports or closure of factories! However, that does not signify that all is not well within the industry, which not only accounts for large-scale employment generation but is also considered the backbone of the country’s economy.
As per reports that cited President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Dr. Rubana Huq, around 60 factories (members of the association) had to stop operations (from January to October) owing to financial crunch, which resulted in job loss to around 29,594 garment workers.
Now, on the positive side, information has emerged that in the same time period at least 58 new units have not only come up, but some of them have even started production as well. What’s more all these units are compliant, which is perhaps the foremost requirement to be in the business in the changing milieu.
“All the new units have not gone for full production,” opined Rubana speaking to the media while underlining that 33 new factories are owned by the existing garment entrepreneurs and the rest are owned by business people that were not in the readymade garment (RMG) sector previously.
Out of these new factories, 13 are knitwear manufacturers, 14 woven, 8 sweater and 23 of assorted items. Together the new units have added a cumulative production capacity of 354.45 million dozens pieces of apparels per year.
Many experts and those within the industry believe that the closure of these 60 factories is merely a natural phenomenon and the coming up of the new and compliant units underline that the industry is going through a phase of consolidation and streamlining, which undoubtedly is the need of the hour.
According to the Additional Research Director of Center for Policy Dialogue (CPD), Dr. Khondaker Golam Moazzem, the closure of factories and opening of the new ones are the natural trend of business. Moazzem, however, is for identifying the reasons behind the closure and taking necessary measures in this regard while stressing on the need for policy supports like providing incentives to encourage fresh investments in value-added and diversified products to remain competitive and profitable, as globally demand and price of apparel items have taken a nosedive and, under the given circumstances, little support and some hand-holding are a must.
The factories that have come up in the said period are modern, compliant and boast of green technology, while the ones that have gone out of business are the small and non-compliant ones that have failed to sustain in today’s competitive market, feels industry insiders.
According to the BGMEA, in the last 4 years, entrepreneurs have set up around 374 new units (at an average of 93 units per year), while 332 units have faced closure (at an average of 83 units per year).
“We are in the garment business for the last 18 years. Our experience and knowledge is our strength to start a new green venture namely Snowtex Sportswear Ltd.,” stated Managing Director of the company SM Khaled who to his credit has 3 more units beside the newly opened Snowtex.
Khaled’s new unit established at a cost of US $ 50 million has also started production of value-added sportswear and outerwear along with bottoms, keeping in line with the changing market dynamics. The 80-line factory has also created employment for around 8,000 people and has an export target of US $ 100 million annually.
Even though experts don’t rule out some more factories closing operations in the days to come, the trend of opening of the new units that are at once modern and compliant, is definitely a positive development, which augurs well for the future of the industry, especially in context with the changing business dynamics and market requirements.