For now, the leather sector’s priority is to just stay afloat
Leather goods and footwear manufacturers and exporters see little possibility of returning to normalcy this year as demand at home and abroad will be depressed for the global coronavirus pandemic.
The exports of the next most promising sector after garment might fall by 20 to 25 per cent this fiscal year from the $1.3 billion registered in fiscal 2019-20, sector players say.
"We don't do how long the prevailing situation will continue," said Nasir Khan, chairman and managing director of Jennys Shoes, one of the pioneers in manufacturing and exporting of footwear.
There are two seasons for the export-oriented footwear sector: winter and summer.
Local exporters have completed the shipment of summer orders, he said, adding that the winter orders would most definitely be lost.
The order cancellations or suspensions have started to come through though as international buyers are forced to shutter stores owing to demand collapse and strict lockdown measures to flatten the curve on coronavirus.
The amount of work order cancellation in the leather goods and footwear industries was $316 million as of March 26, said Md Saiful Islam, president of the Leathergoods And Footwear Manufacturer & Exporter's Association of Bangladesh (LFMEAB).
Bangladesh's major export destinations, including the US, Italy, Spain, the UK and Germany have been highly affected by the outbreak of the lethal pathogen. When normal life resumes in the countries is up in the air.
"Even if normalcy is restored within the next three months and local production starts as usual, where will we ship our products to? We are in complete uncertainty," Khan said.
The sector can't project what the losses would be in the end, said Mohammed Nazmul Hassan, managing director of Leatherex Footwear Industries.
"It will depend on how long the pandemic lingers," he said, adding that they don't know what the solution should be at the moment.
No member of LFMEAB would be able to recover the losses this year, said a leader of the association requesting anonymity.
"But everybody should accept that staying alive is the priority in the prevailing situation," he added.
In the first eight months of the fiscal year, the leather and footwear sector exported products worth of $851 million, according to data from the Export Promotion Bureau.
Of the sum, footwear exports brought home $596 million, down 9 per cent year-on-year. The state agency has not published the export figures for March yet.
The sector employs around two lakh semi-skilled and skilled people. Forty active factories in the footwear sector employ about 1.5 lakh people.
The government has a target to export $5 billion worth of leather and leather goods by 2021, which, given the surreal times, seem a pipe dream.
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