The flow of work orders to the garment industry seems to be rebounding strongly on the back of the reopening of stores of retailers and brands in the West, especially Europe and the USA, which are the two main export destinations for the apparel manufacturers in Bangladesh apart from the large-scale vaccination drives being carried out, which many feel, also contributed to the same.
It may be mentioned here that earnings from merchandise exports significantly rebounded in August by 14 per cent year-on- year to reach US $ 3.38 billion, buoyed by garment shipments, particularly knitwear items even as according to data from Export Promotion Bureau (EPB), the earning in August 2020 was US $ 2.96 billion
Meanwhile, knitwear shipment increased 17 per cent while woven by 4.4 per cent and overall garment shipment grew by nearly 12 per cent in August of this year compared to the same month last year, underlined the EPB data.
With exports on the rebound, local suppliers to global brands and retailers estimate that their exports in the next summer might go up by 20 to 30 per cent — the production for the season runs from September to March — which is undoubtedly a very positive development for the industry, which has been struggling with the fallouts of the COVID-19 pandemic ever since its breakout.
“Usually, the work orders for the summer season are higher in volume than that for the winter season due to the nature of the garment items produced in Bangladesh,” reportedly stated Chief Operating Officer (COO) of Fakir Apparels, Bakhtiar Uddin Ahmed, interacting with the media, who further underlined that the value of monthly exports from Fakir Apparels varied between US $ 10 million and US $ 11 million over the past one year but he expects it will go up to US $ 13 million-US $ 14 million from September onwards.
Similarly, Narayanganj-based Kappa Fashion Wear Limited has reportedly received nearly 25 per cent higher work orders from its buyers for the next season even as the company mainly ships T-shirts and polo shirts while the pandemic forced it to cut production by almost half even as the Chairman of Kappa Fashion Wear, Ahmed Fazlur Rahman, on his part added, “…business is making a revival now.”
Meanwhile, the issuance of the utilisation declaration (UD), which is required in the processing of bonded warehouse facility, from the BGMEA, has reportedly rose by 30 per cent for the next season compared to last season even as the First Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) maintained the issuance of the UD went up by at least 20 per cent for the next season.
Many amongst the woven garment makers have also expressed optimism about export recovery as they have booked work orders to almost their full capacities for the next five months even as some said another season might be needed for the sector’s full recovery.
But even as things are improving significantly on the export work order front, the age-old issue of faltering price points seems to have remained unchanged with many in the industry even claiming that buyers are still offering prices that are 10-15 per cent below the pre-pandemic levels even if a very small number of suppliers are getting orders at the previous rates or even higher.
Sharing their viewpoints on the condition of anonymity, some industry leaders underlined it is high time to negotiate with buyers for better prices even if they said manufacturers should say no to buyers if they are not willing to pay ethical prices while also adding that booking more orders than the capacity at low prices might lead to non-delivery of products as well.
Meanwhile, many are of the opinion that thanks to last year’s prolonged shutdowns due to the pandemic, retail outlets in the US and Europe incurred significant losses even as scores of outlets were forced to close down while some managed to survive taking advantage of the online selling avenues while also offering big discounts to attract the buyers and, now that retail sales have started to pick pace, retailers are trying to get back to business without raising prices further, the implications of which are perhaps now being witnessed in terms of prices being offered to the suppliers back in Bangladesh.
What is perhaps adding to the manufacturers’ woes further is that garment makers are also forced to deal with rise in the cost of production fuelled by hikes in yarn prices and freight charges in the wake of a recovery in export even as some entrepreneurs claimed that the cost per unit soared by as much as 30 per cent from that a year ago on the back of significant increase in cotton prices to add to which was increase in the freight charges as well.
“The per unit cost of production increased between 20 and 30 per cent depending on the product for different reasons,” reportedly claimed the Chairman of Envoy Group, Kutubuddin Ahmed, adding, “We have a lot of work orders from international retailers and brands…,” and went on to further underline the garment sector in Bangladesh was rebounding strongly.
This increase in work orders, many in the industry believe, led to a sudden rise in demand for yarn and other raw materials and thus the surge in freight charges and yarn prices.
Meanwhile, Viyellatex Group, which is a major garment exporter and yarn producer, reportedly sold around 30 tonnes of yarn daily a year ago, which has increased significantly of late.
“Now it stands around 90 tonnes, which indicates that there has been a major jump in international orders,” reportedly explained the Chairman and Chief Executive Officer (CEO) of the Viyellatex Group KM Rezaul Hasanat even as A Matin Chowdhury, Managing Director of Malek Spinning Mills, one of the leading spinners and a garment exporter, said his knitwear work orders for the next year had increased by more than 15 per cent even as according to Mohammad Ali Khokon, President of the Bangladesh Textile Mills Association (BTMA), demand for knitwear products increased by 22 per cent worldwide on account of change in consumer behaviour due to longer stay at homes, as a result of which, the demand for cotton-made yarn went up.
“This indicates that international retailers and brands are placing an increased volume of work orders in Bangladesh,” claimed the BTMA President.
So, at a time when work orders are rebounding strongly even as export earnings have also started to go up, industry is very hopeful things would improve further in the days to come. In the given scenario, all one would expect is fair pricing by the buyers, which if offered, would invariably go miles to speed up the recovery process of the individual suppliers, who have been forced to deal with the covid-induced business glut for long!