by Deepak Mohindra
03-January-2020 | 4 mins read
Even today, the country dynamics are critical to the apparel manufacturing industry working for exports. And now coupled with the growing awareness to be sustainable, following the concepts of the 4Rs – Reduce, Reuse, Recycle and Recover – the situation is at a point which requires deep deliberations at all levels of the supply chain. Other trends that are and will impact the garment export industry are FTAs and ‘nearshoring’.
The old guard suppliers are losing their prime position because of the increasing labour wages, rising infrastructure and logistics cost. They no longer come through as competitive in the new preferred supplier matrix.
A case in point is Bangladesh, which was projected to reach US $ 50 billion by 2021 and is still way behind the target, all because of the rising wages from US $ 50 to US $ 96 per month in just about a year’s time. The ‘growling’ is for US $ 171 (16,000 Taka)! The sad part is that it is not only about rising wages; the reality is that coupled with high inefficiencies, the cost of production has soared substantially.
The fact of the matter is that the efficiencies have hardly improved even as the wages continue to move upward. The efficiency level of labour in Bangladesh is between 30-60% as per various surveys, and which I doubt is realistic!
Now look at Ethiopia, which is projected as the next Bangladesh; and rightly so if we compare wages that are at the pre-2018 levels of Bangladesh. The infrastructure is clean and cheap, the backward integration in cotton cultivation is strong and the companies working there are putting a lot of efforts on training the workers.
Even the Government is very supportive since international pressures from people to comply are not on them, yet! What I have seen and observed is that the nations that are the newest in manufacturing and enter global trade at a later stage, always pick up the best of technologies and techniques available. The late entry of these nations in the global arena where standards and benchmarks have already been set, is also another reason why their journey to comply with the will of international buyers is smoother and faster.
It is not just Ethiopia, but there are many other manufacturing destinations as well which are growing, and are also being preferred, exerting themselves as viable options as they have the potential. But that is only one angle to the story. In fact, it is not the end, but a new beginning as Bangladesh is well adapted to taking up fights, and winning.
Look at how the entire industry has changed and upgraded, with 150 factories, all now lead-certified. In which other part of the world will you see this happening, and that too in just about 4 years’ time?
What Bangladesh needs to do is relook at the manufacturing process/systems to focus them on small orders catering to fast-fashion, and find newer destinations closer home to sell. For this, the industry has to once again move out of its comfort zone and go to the drawing board and re-strategise.
Don’t let yourself fall like India, by becoming complacent. Keep your fighting spirit alive, as a nation and as individual entrepreneurs to ensure that Bangladesh remains at the forefront of global apparel manufacturing business, whichever the market may be!
And I am sure that as we step into a brand new year, the industry will address the concern areas to come out triumphant. Wishing the industry the very best in 2020, which it truly deserves!
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