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Accord will inspect 200 more garment factories in Bangladesh that were added to its list after completion of its initial assessment in September. It rolled out its initial safety inspection in February 2014 and completed assessment of some 1,103 factories in September 2014.
Accord is the European Union-based group with over 190 members including H&M and Inditex. The platform was formed to ensure workplace safety in Bangladesh’s apparel industry for a period of five years following the Tazreen and the Rana Plaza tragedies that killed more than 1,200 workers. On December 17, Accord sought a proposal from interested firms for carrying out fire, electrical and structural integrity assessment of 200 garment factories.
Accord has some 38 full-time permanent local engineers. After each factory is inspected for fire, electrical and structural safety, factory owners and signatory companies will develop a Corrective Action Plan, which will be published online after approval by Accord.
After its initial assessment, Accord found more than 80,000 safety hazards in its assessed garment factories. Accord inspections have also identified more substantial safety requirements, such as installing fire doors and automated fire alarm systems, establishing fire protected exits from factory buildings, and strengthening columns in the buildings.
Apparel Training and Design Centre (ATDC), one of the largest vocational training provider for the apparel industry was awarded as the ‘Best Institute: Innovation’ by ASSOCHAM at ‘Summit-cum-Awards on Skilling India’ held on January 20 in New Delhi. ATDC has received this award for their exemplary contributions in introducing new innovative skill development training courses for youth and having different verticals to work with Ministry of Textile that include: long term courses with DGET, Ministry of Labour and Employment, and vocational courses with AICTE thus offering a bouquet of courses for career and skill development in a cohesive manner with a focus of skilling for aspirational Indian youth.
Recognizing the importance of skill development and entrepreneurship in the country, the new government has laid highest priority on skill development and entrepreneurship. The event was organised by ASSOCHAM in partnership with various ministries to discuss current scenario on skill development and catalyse the initiative by recognizing the outstanding work of different agencies in skill development.
The focus of the summit was forecast of skills linked to new business order, models of collaboration & partnerships towards successful skilling, strategy for effective execution for real success & sustainability, from employability to employment: challenges & way forward in skilling to placement), enabling financial support for start-up businesses/ entrepreneurship and skilling to placement – a case study.
While rising production costs in China and its shift towards value-added goods has not really undermined its position in the world textile and apparel sourcing market, however, western countries are increasingly looking for low-cost sourcing destinations and shifting focus on near sourcing manufacturing.
As Rahul Mehta, President, IAF points out, “The concept of manufacturing closer to home is catching on. It will impact global dynamics. Manufacturing countries will look at non-traditional markets since they can’t afford to depend on markets that are not growing much. Europe and South America will expand faster. Production will be higher in South America since US companies are looking to source from them.”
Sourcing closer home, a new trend
The emerging trend among developed economies is moving facilities closer to suppliers. One of the ways, companies are following is ‘near-sourcing’, a supply chain strategy that minimizes the distance goods travel between suppliers and distributors. Near-sourcing reduces the total cost of doing business, which has risen exponentially in the last few years, making profitability more difficult to maintain. While European companies are moving facilities to the United States, the American players are looking south of the border. South America has become an attractive location for these companies looking to reduce the cost of ocean crossings from facilities in Asia.
The textiles industry in Mexico, for instance, is recovering from a decade of losing ground to
lower-cost Asian rivals. More recent developments are playing in the country’s favour, causing both domestic demand to rise and US companies to shift their orders back to Mexico. As Asian wages climb, sourcing from Mexico is becoming increasingly attractive due to its comparably high-skilled labour force, its improving infrastructure, its membership in the North American Free Trade Association and, most importantly, its proximity to the United States, which allows for short lead times. Indeed, Mexico is becoming known as an affordable place to produce and one whose facilities provide a high level of customer satisfaction.
Honduras, meanwhile, has become America’s single largest source of T-shirts, helped by the US-Central America Free Trade Agreement (CAFTA), which went into effect in 2006. When ranked among the top apparel exporters to the United States, it sits at number seven.
Other emerging low cost sourcing options
According to a Kurt Salmon Global Sourcing Reference report although Bangladesh continues to be among the top five exporters to the United States, it won’t be for long unless it amends its production to become more socially and environmentally responsible. Vietnam and Indonesia, which occupy the number two and three spots on the US exporters’ list, face a similar challenge as well.
However, Mehta feels buyers are putting pressure on Bangladesh factories to improve wages, labour standards and safety standards but the question is when Bangladesh standards improve, will they be as competitive as they are now? “In the meantime many buyers are looking at other sourcing options,” he says.
Cambodia, the reports says is showing strong double-digit growth in six out of 10 product categories, but its market share remains relatively small. And CSR is not the only challenge for low-cost sourcing centers or those countries aspiring to be; many still lack the required infrastructure as well as the supply chain and production capabilities needed to offer volumes similar to those of China. For example, India, in order to hold onto its place as the sixth-biggest exporter of apparel to the United States, has to solve its infrastructure, productivity and business environment issues and better leverage its materials, which are more consistently available than those of many other low-cost sourcing countries.
“So far India has failed to grow beyond its traditional strength in apparel exports. We are not looking seriously at product expansion, category expansion, and market expansion. We are too much dependent on our traditional strengths. To grow exports, India needs to look at new markets and have a broader product basket. We should move away from cotton based and summer based exports. Capacity should be used around the year that will reduce cost of operations, increase profitability and turnover,” opines Mehta.
Experts say that tomorrow’s sourcing road will be a bumpy one, with raw material prices difficult to predict and constantly shifting consumer expectations. Sums up Mehta saying, “South Asia’s importance in apparel will grow. I think there is potential for intra trade. Both as a market and as a support system, South Asia will grow. South Asia and the Far East can be seen not only as markets but as sources of supply. Apparel has shifted from high cost economies to low cost economies. It has moved from the US and EU to China to Bangladesh, Vietnam and Cambodia. Myanmar and Africa are the only countries left now.”
Brazilian cotton output might again reduce in 2014-15, but would still be close to the average registered over the last 11 seasons. Worldwide, a decrease in supply is expected for the third time in a row, but despite that, ending stocks might continue to increase. In Brazil, prices will depend on export parity with international prices, export costs and exchange rate ratio and on the volume effectively shipped, which will determine domestic surplus.
Producers who are able to access the global market might obtain remunerative prices, especially if the exchange rate is higher than that observed in December. Since mid-2014, regional quotes are below the official price floor, and data indicates a tight situation, when revenue and costs of the new season are compared.
When comparing the same parameters like cost of inputs in November 2014 to export value in September 2014, profitability was six per cent positive. In spite of possible smaller area and production, considering prices, exports will be a major market definer in 2015, which can change the benefit/cost ratio.
On behalf of the apparel export community, Garment Exporters Association has forwarded pre-budget recommendations to the Finance Minister Arun Jaitley, to make Indian exports competitive in the global trade.
The recommendations include reduction of transaction costs, hike in duty drawback rates by five percent to ensure full refund of excise duties, custom duties, education cess and other central and state-level taxes. The association further sought reduction in interest at pre- and post-shipment levels and keep it capped at 7 percent. It asked the minister to continue the three percent interest rate subvention scheme for three more years that expired on March 31, 2014.
Since most of the competing economies allow import of garment and textile machinery without customs duty, the industry body appealed that even Indian government should not levy any customs duty on import of textile machinery and accessories. Implementation of GST (goods and service tax) must be the prime focus and it should be implemented immediately to simplify the present tax structure. It suggested that the Technology Upgradation Fund Scheme should also get more funding to encourage upgardation of technology to improve productivity. To make Indian products competitive in the global market, the government also needs to allow duty-free access to yarns and fabrics, so that the final product prices could be kept under control.
Apart from the above recommendations, the association has also appealed to the government to make India, an easy to do business destination to attract more investments into the country, fixing of rupee value against the dollar so that exporters don’t suffer in-case of currency fluctuations and easing labour laws to improve labour productivity by granting ‘seasonal industry’ status to the garment export business.
Bangladesh garment exporters are facing problems in transporting goods to the port due to a blockade enforced by the opposition party. The number of vans carrying readymade garment products to the Chittagong port for shipment has almost halved. Though the police have provided escort in transporting goods to and from the Chittagong port, most exporters and transport owners are not willing to transport goods as they on previous occasions have experienced arson attacks and vandalism despite having the protection.
Apparel manufacturers fear the current political instability might lead to huge loss for the sector through shipment delay and cancellation of orders. Exporters have already started to face shipment delays, order cuts and cancellations due to the political turmoil. They feel that if the problem continues, global buyers will decrease the volume of orders. In fact, many American buyers have stopped visiting Bangladesh. That means owners of companies in Bangladesh have to go abroad to negotiate orders.
Exporters say the transportation of goods under police protection is a piecemeal solution and that the export business requires a stable situation. In a normal situation about 600 trucks carrying readymade garment goods ply to the Chittagong port every day.
Italy's Pitti Uomo show held from January 13 to 16 saw 15 per cent increase more visitors than the January 2014 edition. Foreign buyers grew by 11 per cent while Italian ones increased by 17 per cent. The event registered 35,000 visitors, of whom 24,000 were buyers.
The show covers men’s apparel like formal and classic, rock n roll. Pitti Uomo offers an energetic and stimulating atmosphere in terms of brands, colors, materials and fabrics. Very positive and enthusiastic comments came from US brands that participated in the maiden ‘Born in The USA’ area.
Starting off with a crowded first day, similar to previous editions, from the second day on, visitor numbers increased notably and halls were crowded. A positive atmosphere pervaded the halls. Many exhibitors were pleased with the quality and quantity of visitors, and buyers also showed their enthusiasm for the varied and interesting selection of brands and products on show.
This was the 87th edition of Pitti Uomo. Nudie Jeans has chosen to be part of Pitti for the past two seasons for the show’s international environment and its reputation and for the variety of visitors it attracts. The show offered possibilities for meeting good quality clients.
www.pittimmagine.com/en/corporate/fairs/uomo.html
Techtextil the a trade fair for technical textiles and nonwovens will be held from May 4 to 7, 2015. Manufacturers from all over the world will present their latest developments in the fields of functional apparel textiles and smart textiles. Countries like Belgium, China, France, Great Britain, Italy, Portugal, South Korea, Taiwan, Turkey and the USA will have their pavilions.
The new heart of Techtextil is the ‘Innovative Apparel Show’, where four universities and fashion schools will present their innovative designs on all four days of the fair. After a live walk, they will explain the processes and materials used. This year the event will host the Techtextil Symposium. The subjects to be covered include: thermo-plastic composites, bio-based polymer composites, hybrid yarns, self-cleaning textiles, 3D printing, 3D spacer fabrics for personal protective equipment, multi-axial technologies for customised technical textiles and smart fabrics.
Students will compete to come up with innovative and realistic approaches for building with textiles or textile-reinforced materials. Awards will be presented for outstanding inventions and developments in the fields of technical textiles, nonwovens and functional apparel textiles.
techtextil.messefrankfurt.com/
The Woolmark logo will be seen on a more diverse range of products. This includes: more sports, outdoor, casual, denim and wool-filled products. Woolmark has introduced a sub-brand Australian Merino Wool.
Sports and outdoor apparel products have traditionally been dominated by synthetics or feather and down products. Now apparel products made of wool are catching on in a big way. With the increasing trend toward casuals, Woolmark has established a category called ‘Contemporary’, cementing wool’s place as a modern, contemporary fiber. In line with this, specifications have been established for machine washable or machine wash and tumble dry wool denim products.
The minimum wool content for interiors and floor covering products using the Woolmark logo has been reduced from 80 per cent to 50 per cent. This means the same minimum wool content for all products - interiors and apparel - using the Woolmark blend logo. By reducing the minimum wool content it is hoped more interior companies will qualify to become Woolmark licensees and more wool products will be seen on shelves.
The Woolmark logo certifies both garment quality and fiber origin and promotes the fiber of Australia’s wool growers to an international audience. These changes to Woolmark’s licensing program represent positive movements into new areas of the wool industry.
www.woolmark.com/
With a view to resolve disputes in arising out of non-payment for cotton and explore means for future cooperation, a high-level delegation of the International Cotton Association (ICA) is likely to visit in Dhaka soon. As per sources, the ICA has already informed BTMA (Bangladesh Textile Mills Association), the apex body of the country’s textile mills, urging it to make necessary arrangements in this regard. In November last, ICA president Jordan Lea had visited Bangladesh and held discussions with BTMA president Jahangir Alamin and requested him for arranging mediation for early settlement of disputes.
It must be mentioned here that ICA has recently introduced mediation mechanism for quick settlement of disputes between the party and the review board. BTMA has already written to member mills, which have defaulted on behal of ICA, in this regards.
Liverpool-based ICA, which oversees the global cotton trade, introduced the mediation services to help resolve disputes over reneged contracts that have blocked hundreds of blacklisted firms from doing business. The ICA prepares the list based on complaints from cotton supplying companies worldwide. The companies became defaulters as the importing companies did not receive shipments for an abnormal price hike of the item in 2010-2011. It has blacklisted as many as 700 companies as defaulters including 96 from Bangladesh for failing to make payments to suppliers. The group is now trying to find ways to help get them off that list
BTMA has informed ICA to appoint arbitrators in Bangladesh to resolve disputes in payment as it was very expensive to attend the hearings in UK.
