Unrest to hit RMG exports

The latest spell of unrest in the garment industry of Bangladesh will negatively impact its apparel exports as many international buyers are cancelling their trips to the country to finalise work orders for the coming seasons.

Bangladesh had become a hotspot for international clothing retailers and brands despite the severe fallout of the Covid-19 pandemic and Russia-Ukraine war, which caused higher inflation in the Western world and disrupted the global supply chains.

This is mainly because the country became the first choice for sourcing garment items in the face of geopolitical tensions, such as the tariff war between the US and China.

Besides, local producers offer competitive prices and have improved their compliance with workplace safety standards following twin industrial accidents, namely the fire at Tazreen Fashions and the collapse of Rana Plaza factory.

Moreover, the country's capacity for supplying garment items has improved a lot thanks to increased investment in the production of diversified and value-added goods.

But if the persisting unrest in the industry continues for long, it will definitely affect the total apparel exports, said an official of a major European buyer seeking anonymity.

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Citing that senior members of sourcing companies often visit factories in Bangladesh to finalise their work orders, the official said many of them have cancelled their trips as the industry remains in turmoil.

"We have already completed the placement of work orders for next summer and now we are planning for next winter. So, the buying trips are very important for us," the official said.

The official also informed that while their company has not cancelled any work orders, many requests for value-added garment items have either been cancelled or postponed by the other buyers.

Reiterating how safety is a big concern for international buyers, the official said their higher-ups think about a "Plan B" for sourcing apparel whenever buying trips are cancelled.

Besides, following risk assessment makes them think about whether the supplying companies would be able to ship their goods on time, the official added.

The official further said that reputational risk becomes a concern in such situations, especially since international buyers often consider negative social media posts before placing work orders in order to protect themselves from any backlash.

As such, the international buyers ultimately shift a portion of their work orders to other sourcing countries, the official said.

Many international buyers are saying that about 5 to 10 percent of their work orders could be affected by the latest spell of unrest in the garments industry alongside other domestic concerns.

"But the shipment of value-added garments will see the most difficulty," the official added.

Bakhtiar Uddin Ahmed, chief operating officer of Fakir Apparels Limited, said his buyers did not cancel any work orders till now as his products are specialised.

He explained that is because it is not possible to quickly shift work orders for specialised products elsewhere as the production of these goods requires specific designs and specialised materials.

Kutubuddin Ahmed, chairman of Envoy Legacy and Sheltech Group, said the unrest has already impacted garment exports as many producers will have to provide discounts and face expensive air shipment alongside shifting of work orders due to delayed production.

The international clothing retailers and brands seek discounts and air shipments from suppliers if the goods are not shipped and received on time, he added.

Md Towhidur Rahman, president of the Bangladesh Apparels Workers Federation, said the unrest is taking place as a certain quarter of people are instigating workers amid the political changeover.

But the workers in some factories have genuine demands, such as ensuring timely payment of their wages and stopping unlawful contract terminations, he added.

Amirul Haque Amin, president of the National Garment Workers Federation, echoed the same while pointing out that workers at several factories have yet to be paid their wages for July.

"This is a major reason for the unrest," he said.

Amin also said the garment industry has some related businesses, such as for supplying meals and transport to workers as well as selling garment waste from the factories, among others.

But with the regime change, new providers of such services have been vying for control and are often clashing with rival businesses or even the workers, Amin added.

Khandoker Rafiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association, said more than 96 percent of the production units have already reopened as normalcy is being restored gradually.

Only 43 garment factories had not reopened as of yesterday, he added.

Islam informed that during a meeting yesterday, the trade body instructed factory owners to be present at their units in order to give their workers confidence.

Islam said the garment factories were shut for 14 days during the anti-discrimination student movement that culminated in the ouster of the Awami League government led by Sheikh Hasina on August 5.

Now though, the factories were shut for three to four days amid the recent violence.

"The buyers are asking about whether timely shipment of goods can be ensured as they are also worried about production in the factories," he added.