Grim outlook for small apparel makers
Large eco-garment factories are content to receive a steady stream of work orders, but small, medium and outsourced units are suffering from volatility in the global apparel supply chain resulting from the Russian-Ukrainian war .
However, the influx of work orders based on which local garment factories would make deliveries next season has decreased by 20% compared to the previous season.
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The following season will start in September and will continue until November while the previous season will run from July to October.
The decrease in the influx of work orders is mainly felt by small, medium and contract factories, as retailers and international brands consider productivity and financial strength when placing orders for work.
Green factories have their reputation and international retailers and brands place orders in these units even in times of crisis because they believe that the demand for garments made in green factories is higher than that of others.
Jahangir Hossain, manager of contract-turned-direct supplier Patriot Garments, has been doing well since September 2018.
But next season it could face a shortage of orders as its European, Canadian and American buyers complain about the effects of the Russian-Ukrainian war.
For now, he is happy with the influx of work orders in his unit. Hossain employs 270 workers and exports clothes worth $70,000 in a month.
Md Ehterab Hossain, managing director of Base Fashions, a Gazipura-based knitwear factory, said the influx of work orders had slowed as one of the fallout from the war, which had triggered soaring global inflation.
Hossain employs 1,000 workers and exports, mostly to Europe, T-shirts, polo shirts and other knitwear worth $1.30 million a month.
“My European buyers regularly complain about inflation and fear that work orders will be reduced next season,” he said.
However, the volume of work orders from September has shrunk to a trickle, Hossain said.
Likewise, Ahmed F Rahman, chairman of Fatullah-based Kappa Fashions Wear, said it was sold out until September.
But from October the influx of work orders slowed as international retailers and brands adopted cautious measures due to the fallout from the war and inflationary pressure, mainly in Europe, he said.
European retailers and brands are also pressuring local exporters to cut prices as the profit margin drops sharply due to the reduction in the exchange rate difference between the euro and the US dollar, it said. -he declares.
European retailers and brands buy clothes in US dollars and resell them in euros.
Earlier earnings were good, but now there is little difference in the exchange rate.
Exporters said that with the resumption of the global supply chain since last September, the influx of work orders was so high that local garment manufacturers had even refused some.
However, now the scenario had started to change to war and inflation, garment exporters also said.
Asif Ashraf, managing director of Urmi Group, said he had received 20% fewer work orders for next season’s deliveries because of the war.
This was contrary to the fact that he had a large green unit that employed 13,000 workers and exported goods worth $185 million in one year.
“The downturn in the influx of work orders has already started and we don’t know when and how it will end. The demand for clothing items is decreasing due to global inflation,” Ashraf said.
AK Azad, chairman of Ha-Meem Group, which exports more than $500 million worth of clothing items in a year, said he had handled a good volume of orders so far.
But next season’s could be down 15% overall due to fallout from the war, he said.
Fazlul Hoque, managing director of Plummy Fashions, the world’s greenest knitwear factory, said he was doing well with the current influx of work orders, but the quantity could decrease next season.
Faruque Hassan, chairman of the Bangladesh Garment Manufacturers and Exporters Association, said a lackluster season prevailed as summer sales continued in Europe.
However, it is really difficult to predict what might happen in the future as the war continues and inflation rises, he said.
However, the good news is that the price of oil is falling, which could bring some relief to consumers, he added.
But transportation costs are still very high, which also affects the price of clothing items at the retail level, he added.
It is obvious that small and medium-sized subcontracting factories are the most affected when the influx of work orders slows down, because large units cannot arbitrarily send part of the orders to subcontracted garment factories. licensed nurses, Hassan said.