Garment makers meet retailers abroad as blockade lingers
Some apparel retailers have cancelled their scheduled flights to Dhaka due to a political upheaval and asked their suppliers in Bangladesh to meet them abroad to wrap up work orders.
Industry insiders fear a reduction, cancellation and shift of work orders to other countries due to political tensions. The country has already witnessed 15 days of a nonstop blockade.
Garment makers or their representatives are travelling to Hong Kong, China, India, Thailand and European nations, spending thousands of dollars, to attend the meetings that were initially planned to take place in Dhaka. They will have to count losses from discounts to buyers and expensive air shipments to maintain the strict lead-time set by the retailers, according to industry people.
“Investor confidence is waning. The image of the country's apparel sector will be tarnished again. That will be the biggest loss,” Shahidullah Azim, vice-president of Bangladesh Garment Manufacturers and Exporters Association, said by phone.
“A Canadian buyer was supposed to come to my office in Dhaka, but unfortunately the retailer cancelled the trip and set the meeting in Thailand instead,” said Azim.
During any long political crisis, Azim said retailers do not place the full work orders all at once as they fear delays in shipment as production cycles are hampered by slow transportation of raw materials and finished goods and a thin presence of workers in factories.
Work orders may shift to India, Vietnam or Pakistan due to prolonged political conflict, Azim added.
In 2013, the sector had to bear air shipment bills worth Tk 5,000 crore and offer discounts worth Tk 9,000 crore because of political unrest, BGMEA said in a press statement on Tuesday in Dhaka.
Real production in the garment sector is valued at Tk 430 crore a day. So, if half a day of production is hampered, output worth Tk 215 crore is damaged, according to BGMEA. The sector lost Tk 450 crore in 12 days.
“As in 2013, BGMEA sent forms to factory owners to know their real losses due to the ongoing political crisis. We will disclose the amount of losses soon after receiving the responses.”
The Daily Star spoke to a number of garment exporters to know the situation, and everyone shared a similar experience.
“I am going to Germany on January 26 to attend a meeting with a retailer, although the meeting was supposed to be held in Dhaka,” said Bakhtiar Uddin Ahmed, general manager at Fakir Apparels Ltd, a Narayanganj-based garment maker.
In a desperate effort to maintain the lead-time, garment makers are sending goods trucks to Chittagong Port braving the blockade.
The buyers are still satisfied with the supply of goods, but the apprehension remains as the political impasse is deepening and lingering, he added.
“One of my Australian buyers has asked me to go to China to attend a meeting that was supposed to be held in Dhaka. I will have to go to there if I want to maintain business with them,” said Syed Shafqat Ahmed, managing director of Saiham Knit Composite Ltd, a leading garment exporter.
“Buyers have booked work orders up to March, so in short term, they might not shift work orders in bulk quantities to other countries. But in long term, they will think about alternatives to Bangladesh.”
Despite several internal and external shocks over the last two years, the key export earning sector was still going strong, as the sector earned $2.3 billion in December last year, the highest in the last 30 months.
Shipments overseas rose 2.4 percent in December from the same month a year earlier on the strength of foreign demand for woven items up 11.2 percent, while exports of knit apparel shrank 8 percent.