Global supply chain volatility to blame
Big and green apparel factories are content bagging a constant stream of work orders but small, medium and subcontracting units are suffering amidst volatility in the global garment supply chain stemming from the Russia-Ukraine war.
However, the inflow of work orders based on which local garment factories would make deliveries next season declined by 20 per cent compared to the preceding season.
The next season will begin in September and would continue up until November whereas the preceding season will run from July to October.
The decrease in the inflow of work orders is mainly being felt by the small, medium and subcontracting factories as international retailers and brands give consideration to productivity and financial strength when placing work orders.
Green factories have their reputation and international retailers and brands place work orders in those units even in times of crisis as they think the demand for garments made in green factories is higher than those from others.
Jahangir Hossain, manager of Patriot Garments, a subcontractor turned direct supplier, had been faring well since September 2018.
But next season he may face a dearth of work orders as his European, Canadian and American buyers are complaining about the impacts of the Russia-Ukraine war.
As of now, he is happy with the inflow of work orders to his unit. Hossain employs 270 workers and exports $70,000-worth garments in a month.
Md Ehterab Hossain, managing director of Base Fashions, a Gazipura-based knitwear factory, said the inflow of work orders had slowed down as one of the fallouts of the war, which had ushered skyrocketing global inflation.
Hossain employs 1,000 workers and exports, mainly to Europe, t-shirts, polo shirts and other knitwear items worth $1.30 million in a month.
“My European buyers are regularly complaining about the inflation and apprehended that work orders would be reduced next season,” he said.
However, the volume of work orders for September onwards has reduced to a trickle, said Hossain.
Similarly, Ahmed F Rahman, chairman of Fatullah-based Kappa Fashions Wear, said he was fully booked up to September.
But for October onwards the inflow of work orders has been slowing down as the international retailers and brands are adopting cautious measures because of the fallouts of the war and inflationary pressure, mainly in Europe, he said.
European retailers and brands are also putting pressure on local exporters to reduce prices as the profit margin is declining sharply because of the reduction of the difference in the exchange rate between the euro and the US dollar, he said.
The European retailers and brands buy garment items in US dollars and sell those in euro.
Earlier profits were good but now there is little difference in the exchange rate.
Exporters said with the recovery of the global supply chain since last September, the inflow of work orders was so high that local garment manufacturers had even turned down some.
However, now the scenario had started to change for the war and inflation, the garment exporters also said.
Asif Ashraf, managing director of Urmi Group, said he has received 20 per cent less work orders for deliveries next season because of the war.
This was contrary to the fact that he had a big green unit which employed 13,000 workers and exported goods worth $185 million in a year.
“The slowdown in the inflow of work orders has already started and we do not know when and how this will end. The demand for garment items is going down because of global inflation,” said Ashraf.
AK Azad, chairman of Ha-Meem Group, which exports more than $500 million-worth of garment items in a year, said until now he has been dealing with a good volume of work orders.
But those for next season may overall be a decline of 15 per cent because of the fallouts of the war, he said.
Fazlul Hoque, managing director of Plummy Fashions, the greenest knitwear factory in the world, said he was doing fine with the current inflow of work orders but the quantity may decline next season.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, said a dull season was prevailing as summer sales were ongoing in Europe.
However, it is really difficult to forecast what may happen in the future as the war is still continuing and inflation is rising, he said.
However, the good news is that the price of petroleum is declining, which may bring some relief to consumers, he added.
But freight charges are still very high which also affects the price of garment items at the retail level, he added.
It is obvious that the subcontracting, small and medium factories are the worst sufferers in case of a slowdown in the inflow of work orders as the big units cannot arbitrarily send a portion of the orders to authorised subcontracting garment factories, Hassan said.
