Products not being sent on time, export orders decreasing

Some European brands of clothing are produced at the Interloop BD factory in the National University area of Gazipur. They have closed the factory for at least five days in the last two weeks due to gas scarcity. It has not been possible to work full-time during the open days. On average, production is down by 60 per cent. The factory’s production was seen to be down at 2 pm on Tuesday.

Kefayet Ullah Shakil, Head of Operations of Interloop BD Ltd, told Daily Samakal that due to the lack of gas in the line, production was being carried out at 30 per cent less than its capacity through alternative means of getting gas from the CNG station at a high cost. But gas has not been available from any source for the last two weeks. 

He said that the production structure is chain-based. If work is stopped at any stage, the rest of the work cannot be carried forward. Due to this, production is being disrupted. They have had to deliver products by air at least five times in the last one month. This means not only financial losses; at the same time, losing the trust of buyers. Consequently, export orders will decrease further in the future.

An export order for 100,000 pieces of trousers from a French buyer company was in the final stages at the AB Fashion Factory in Narayanganj. Last Monday, they informed the buyer that they do not have the capacity to produce more than 50,000 pieces.

Most of the country’s ready-made garment factories are in such danger due to the severe gas crisis. Many factories are not able to produce products on time as per the agreements with brand-buyers. As a strategy, some factories have announced a four-to-five-day holiday. 

Some factories have given workers a holiday today, Thursday, along with the holiday on August 5. Friday is a weekly holiday. They will coordinate the holiday after Thursday. It is also known that some factories have announced a four-day holiday.

When asked, Additional Inspector General (AIG) of the Industrial Police Gazi Jasim Uddin told Daily Samakal on Wednesday that many factories cannot continue production for more than two to three hours a day because the gas pressure is not at the required level. However, the workers have daily wages. For this reason, some factories have declared a holiday at this time in line with the government holiday. The workers are also happy with this. They are enjoying the holiday. 

However, those who have shipment pressure and are not facing much problem due to gas; some such factory authorities have said that if they have to close on Thursday, they will not pay this day’s wages. These factories were open on Wednesday. They are open today, Thursday as well.

Due to production disruption, some factories are being forced to deliver products by air. In such a situation, export orders have decreased by three per cent in the last one month compared to the previous month. The country’s main export sector is facing the fear of further decline in export orders in the future.

Mohammad Hatem, president of BKMEA, an organisation of exporters and entrepreneurs in the knit category of ready-made garments, told Daily Samakal that production in at least 1,000 garment factories in Dhaka, Narayanganj, Mymensingh, Savar, Ashulia, and Gazipur has almost stopped. There is no gas in the supply line. As a result, day and night are the same. If there is no gas in the line, there is no chance of gas coming at night.

Gas has created a major crisis in the knit garment sector. Almost 100 per cent of the fabrics or cloths of knit factories are collected from local textile mills. 50 to 55 per cent of the fabrics required for the woven (shirt, pants) sector are imported. The main crisis in the garment sector has arisen due to the lack of fabrics, the main raw material for ready-made garments, from textile mills.

The BKMEA president also said that if the products cannot be delivered on the specified date of the agreement made with the brand-buyers, the export order may be cancelled. Buyers will lose confidence in the future. Even if it is possible to produce in the end when the situation returns to normal, the buyers will pay a lower price than the agreement. Otherwise, the exporter will have to deliver the goods by air. There will be a huge financial loss. If buyers do not buy the clothes, they have to sell them in the local market as stocklots at a very low price.

Due to the severe gas shortage for two weeks, the textile mills have not been able to produce even half of their capacity. Dyeing and finishing have also been stopped. Bangladesh Textile Mills Association (BTMA) President Shawkat Aziz Russell told Daily Samakal on Wednesday that the gas shortage in the industry has become a national disaster. The government should declare a national disaster right now.

The BTMA president said that if this situation continues, the banking and insurance sectors, including industries in other sectors besides textiles and ready-made garments, will also face extreme crisis. They had already feared such a difficult situation. For this, efforts have been made to convince the former interim government. However, that government did not even give them time to listen to them. The interim government produced fertiliser with industrial gas, which could have been imported.

He said that because of the disruption of local production due to lack of gas, last year alone, yarn worth Tk 30,000 crore had to be imported from India. In the last two years, 150 textile mills have closed. The production of the rest is below 60 per cent. However, if domestic yarn was used, local value would have been added. Employment would have been created. However, due to wrong policies, we are now becoming an import-dependent country. Not only yarn and clothes; we may have to import bread and bananas one day.

Brand buyers are keeping an eye on the situation. Some buyer representatives have reduced export orders. Some have extended the time. According to BGMEA sources, export orders decreased by three per cent in July. The export order situation can be understood from the Utilisation Declaration (UD) certificate, which allows the import of raw materials after receiving the order. BGMEA and BKMEA issue this certificate on behalf of the government.

BGMEA President Mahmud Hasan Khan told Daily Samakal that there are indications that the ongoing stagnation in exports will be prolonged. However, if energy security is overcome, the confidence of entrepreneurs and brand buyers will increase in the coming months.

BGMEA said in a statement on Tuesday that at a time when the garment industry is facing various adversities, including acute gas shortage and ongoing geopolitical instability, at that time, the export earnings of US$3.89 billion in July, the first month of the fiscal year, is a good start. However, the amount of UD executed by BGMEA in July decreased by about 2.8 per cent. There are indications that the ongoing stagnation in exports is likely to be prolonged. BGMEA believes that the growth trend will return in the coming months if structural constraints, especially energy security, can be ensured and if necessary policy support is provided.