Uncovering Bangladesh
The Changing Face of the Garment Industry
Perceptions are built from scratches of information gathered from those who ‘know’, but
first hand information always adds a new dimension, bridging the gap between perception
and reality. Team Apparel Online was recently in Bangladesh for nearly a week and had the
opportunity to interact with more than 20 companies from the export and buying side. The
feedback is indeed an eye-opener giving deep insight into what is happening in Bangladesh
and how they are preparing for the future. As competitors they have an edge on scales, but
in the value-added segment, they look up to India for inspirations. With growth in garment
exports slowing down after a decade of very steep growth, Bangladesh is finally looking for
a makeover in numerous areas from worker management to final product to stay on top.
Among the first things
that standout when
landing in Dhaka is
the importance of the
sector in the economy of the
country… where else would
you find huge hoardings of
garment exports and machine/
accessory suppliers at the
airport! Interestingly, every one
of importance from politicians
to film personalities has a
stake in the over US $ 18 billion
garment export industry. It
would not be wrong to say that
the wealth of Bangladesh comes
from the industry and so do
the wealthy! Indeed, finance is
not a constraint for most of the
companies and expansions are
happening at will, if there is a
constraint then it is the real
estate availability in and around
the two garmenting hubs of the
country, Dhaka and Chittagong.
Another constraint is the
shortage of energy with no new
power connections given in the
last two years, so it is a challenge
to build a new factory.
Today, most of the companies
looking for expansion are buying
out smaller companies who have
property and power connection,
but not the resources to run
the factories. This is leading to
consolidation of the industry into
fewer hands. The Governmentsponsored
EPZs are not finding
many takers and the much awaited Padma Bridge, a
multipurpose road-rail bridge
across the Padma river
linking the south-west of
the country, to northern and
eastern regions is taking
longer than expected, pushing
projects behind.
Surprisingly, for an
industry that is so
important, there is
a real shortage of
local people to fill the
middle level positions
in merchandising
and production.
Today a lot of Indian
and Sri Lankan
expats are working
in Bangladesh, but
the companies would
favour Bangladeshi
talent any day, as the
employee cost to the
company proves very high, but
there are no institutes/training
facilities of significance
in Bangladesh to provide
skilled workforce, leave aside
management cadre.
Though wages have been on
the rise, they are still one of
the cheapest in the world at
Tk. 3000 per month. While
many Bangladeshi companies
are now talking about lean,
they are struggling with the
shop floor level workforce as
they do not have requisite number of people with
management skills to implement
such projects. Hence, the sewing
floors have very high WIP and
since wage rates are not an
issue, companies overlook this
aspect; in fact, concepts like
man-machine ratio are not really
relevant as putting more men on
the floor means more production.
Players justify the attitude
saying that if just by paying a
small additional amount to the
helpers (small, compared to
global labour costs) and getting
three times the production,
why it should matter. The
manufacturing systems are
quantity-oriented and the worker
efficiencies in the country are
between 30 to 40 per cent, way
below most of the south-Asian
countries, but then again at the
end of the day, if the quantities
are produced and money is
made, they have no issues. Yet,
ironically a lot of resources are
spent on training workers,
which is a matter of unhappiness
for the industry.
Bangladesh is a very important
market for technology
suppliers as the industry is
currently looking at expansion,
diversification and upgradation
with factories searching for
latest solutions to counter skill
deficiency, increase product
basket and value add for higher margins. Many new product
categories are coming up
beyond the four core products
of T-shirts, sweaters, men’s
shirts and bottoms (including
denim), which requires new
machines. Sportswear in three
sub-categories – performance
wear, wellness wear and activity
based clothing – are picking
up fast. Kid’s wear is another
category that is high in demand
from Bangladesh, also a number
of suit factories are coming up.
This is only the beginning of
product diversification.
It is also interesting to note
that while the industry grew
on the strength of flat knitting,
having some of the world’s best
and biggest integrated facilities
in knitting; the thrust today is
on woven garments, basically
trousers and men’s shirts. That
is not to say that knitting is not
a growth segment and even
today many are expanding in
knits, but the focus is shifting to
more high-end products
with value additions. In flat
knits, computerized machines
are replacing hand flats, and in
circular knits a lot of
variety in yarns is being
experimented with.
With woven becoming a growth
segment, another area of
concentration is to develop
textile capacities with the vision to be a self-sufficient industry
in 15 years time. Major projects
are on hold for the time being
because of the non availability
of gas, but with the issue
attracting the attention
of the pro-industry
Government, this wait
will not be for long.
While denim fabric is a
major growth segment,
some basic cotton
fabrics are also coming
up in Bangladesh. As
of now most of the
players outsource
fabric from Pakistan,
Taiwan, China, Sri
Lanka and India, and
they are happy with the
arrangement. However,
since a majority of
the fabric is imported in large
quantities because of which
working in smaller quantities is
a problem for the Bangladesh
industry and an impediment to
work with fast fashion.
Yet, a very interesting
development that is currently
seeping into the industry is the
growing awareness of moving up
the value chain, though both, the
buyers as well as the exporters,
admit that the prime strength of
the manufacturing in Bangladesh
is huge capacities of basic
garments. Even those who are
concentrating on tech-packs for
designs are now experimenting with new ideas in value
additions like washes,
printing, and embroidery
to suggest to their buyers.
While basic is defined as
products in which they
can keep the garment
price at a reasonable rate
so that a buyer can order
volumes, fashion on the
other hand is only about
fabric, washes, printing
and embroidery, all of
which need machines and
equipments to add value.
Despite this effort, even buyers
who deal in fashion items, prefer
to work with Bangladesh for
its basic, more so because the
industry does not understand how to handle a complicated style nor have the capabilities to manufacture fashion items. May be it is because Bangladesh does not have a tradition of textile and tailoring, and skills of value addition do not come easily to the workers. Basics are the strength of Bangladesh and the industry has infrastructure to give a million trousers a month, and continue to strengthen the volume business rather than get hassled with the nuances of small complicated orders. But the trend is undoubtedly changing as exporters firmly believe that basics are not attractive anymore and for the future the PD and design development has to happen.
The urgent need to
expand and get into new
markets is increasing
the need to get into full package
offerings in the future. In the
meanwhile, the bigger companies
have started to invest in product
development and a few among
them have a huge design team
consisting of many Indian and
Western designers picked up
from the best fashion schools
around the world. But by and
large it is still concentrated to a
few very big companies.
This expanded product profile
has helped the country expand
its exporting horizons by
catering to countries other than the European Union
for which it enjoys duty-free
access. The country has been
recently getting good work
from India, China and Turkey.
Over the years, Bangladesh has
developed markets in Brazil
and other South American
countries. In fact, the country
has registered over 200 per cent
growth in some markets like
Japan, Australia and
South Africa.
Compliance has been a sore
point for Bangladesh and while
the big business houses are fully
compliant, buyers admit that as
an overall industry with about
5000 garment exporters, only 40
per cent are compliant factories.
It is ironic that the industry
blames buyers for the slow
development in compliances
as many buyers ignore ‘norms’
to get the ‘right’ price, sending
out a wrong signal to the
industry. The industry at large
is upset that the Western press
has projected the country in a
bad light without supporting
the transition. Many buyersponsored
projects have
come up recently and the
industry understands the
need to be involved to stay a
preferred supplier.
A mature and common thought
process with many players is
that the Indian sub-continent
has to think like a region or
cluster to grow in the future.
The edge that the West have
had till now is because they
partnered with the strengths
of their neighbouring nations
to work together as a region,
which we have not done till
now. If Bangladesh and India,
and maybe Pakistan, think of
each other as partners in the
future, we all together can
grow as a region conquering
manufacturing. Bangladesh can
support India for its production,
while India can use its skill
and industry for filling in other
missing categories, and if we
stop thinking of each other as
individuals and competitors, we
can rule the world in the future.
It may sound far-fetched, but
the thought is certainly worth
consideration and a debate…
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