Small and medium-sized garment factories in Bangladesh are grappling with growing challenges as the cost of production rises and international clothing retailers and brands reduce their work orders.
Reports underlined this adding these SMEs, crucial components of the apparel supply chain, are particularly susceptible in the current volatile environment due to their comparatively weaker financial positions, and the sustained reduction in orders could jeopardise their existence.
While the crisis is not new to them, what’s deeply concerning is its continuous exacerbation. The external and internal factors contributing to their ongoing predicament show no signs of abating.
The outbreak of the Russia-Ukraine conflict initiated a decline in work orders to Bangladesh, coinciding with the global economy’s ongoing struggle with the aftermath of the coronavirus pandemic. This challenging period is characterised by record inflation in the Western world and higher global commodity prices.
Md Ehterab Hossain, the Managing Director of Base Fashion, shared his experience. His factory, which primarily exports T-shirts, polo shirts, and running clothes to Germany and Spain, typically receives a surge of orders between October and December. However, this year, the orders only amount to approximately 70 per cent of their capacity. Furthermore, his factory is currently booked only up to December, in contrast to the past when they had orders piled up until March and April.
Hossain faces additional challenges as buyers delay placing fresh orders due to global economic volatility and declining retail sales.
Reports further added the cost of production in Bangladesh has surged nearly 20 per cent over the past year, primarily driven by a 100 per cent increase in domestic gas and petroleum prices, coupled with rising yarn and transportation costs.
However, international buyers have not reportedly adjusted the prices of the garment items sourced from the country, which exported nearly US $ 47 billion worth of products in the financial year that ended on 30th June.
