FW
The global apparel and footwear industry posted incremental retail growth of $85 billion in 2013, but faces a challenge due to its over-reliance on BRIC countries for growth, says a recent study by Euromonitor International. The agency has also raised concerns over subdued consumer confidence in Western Europe, excessive discounting impeding profits and a slowdown in China. And the company cautioned that the industry’s heavy dependence on the BRIC markets posed a risk in the future.
As Magdalena Kondej, Head of Apparel and Footwear Research at Euromonitor International points out, BRIC countries account for over a quarter of the world’s apparel and footwear sales, they and are expected attract over 64 per cent of projected global sales over the next five years. This situation, Kondej feels carries risk because of the vulnerability of the economy in Brazil and Russia and the slowing economic growth in China.
The research agency has pointed out that there would be difficulty in breaking the cycle of discounting and its impact on margins, with unit prices for apparel falling 5 per cent since the economic downturn.
www.euromonitor.com
The Ministry of Labour and Employment (MoLE) in Bangladesh surveyed 567 RMG factories between October and December last year to know the progress being made on safety related compliance issues. Even the BGMEA (Bangladesh Garment Manufacturers and Exporters Association) and the BKMEA ((Bangladesh Knitwear Manufacturers and Exporters Association) surveyed 910 and 79 factories around the same time to review the progress. However, the surveys conducted by all three have come up with totally different results.
While the MoLE survey found that only 34 per cent of the surveyed factories were up to the mark on the parameters like factory building condition, 45 per cent factories were following the directives on fire-fighting and safety measures, and 42 per cent were at 'satisfactory level' on electrical safety issues. The BGMEA and the BKMEA surveys found 66 to 100 per cent compliance among factories on the above mentioned issues.
As per the MoLE survey, 65 per cent factories had been up to the mark on labour safety, 87 per cent factories were following law on maternity leave and allowances, 80 per cent were following the regulation on leave, 91 per cent were paying wages in accordance with the new wage board, service book provision was being followed at 59 per cent factories, 79 units were providing workers with identity cards with photos, and 74 per cent of the factories had issued appointment letters.
The BGMEA survey states that 100 per cent factories had been up to the mark on electrical safety issue, 99.67 per cent factories were following the instruction on fire-fighting and safety measures, 99 per cent were paying wages according to the new wage structure, 93 per cent had provided appointment letters, 91 per cent were following the law on leave, and 100 per cent factories were following the instruction on building condition.
Whereas the BKMEA survey found 90 per cent factories were paying wages in accordance with the new wage structure, 100 per cent factories had taken measures on labour safety, 98 per cent factories were following law on maternity leave and allowance, and 90 per cent factories had ensured fire-fighting equipment and safety measures.
www.mole.gov.bd
www.bkmea.com
www.bgmea.com.bd
Index, the international nonwovens exhibition will take place from April 8-11, 2014 in Geneva. The event will have more than 560 exhibitors and around 12,500 visitors are expected. At the 2011 event, 530 exhibitors from 43 countries presented their latest products to more than 12,600 visitors.
The four-day event will see several programs and will provide a platform to industry experts for exchanging knowledge and network. EDANA, the International Association Serving the Nonwovens and Related Industries will announce the winners of the INDEX 14 during the exhibition.
The automotive industry would also be the focus with EDANA organising a conference on the main applications and most recent trends in nonwovens for the automotive industry. Presenters will include key decision-makers from supply chain including manufacturers and original equipment manufacturers (OEMs), as well as nonwovens and materials suppliers. The event will also showcase a video on the benefits and applications of nonwovens in the automotive industry.
Geotextiles will also be at the centerpoint of discussion. A free geotextiles workshop will be organized during the event. Nonwovens-related innovations in the field to be discussed include ‘Effects of Nonwoven Geotextiles: Pilot Experiments Aimed at Reducing Snow and Ice Melt at the Presena Glacier (Trento, Italy),’ presented by Antonella Senese, University of Milan; and ‘The Nonwoven Market for Geotextiles — Application Trends, Growth Opportunities and Market Dynamics,’ presented by Silke Brand-Kirsch, Schlegel and Partners GmbH, Germany.
A Nonwovens Research & Innovation Showcase will also take place, where Mathieu Mottrie of Belgium-based Creax Projects NV be the keynote speaker. Mottrie will discuss how developments in one sector can commercially benefit another sector.
www.index14.ch
According to the recent Euratex data, the textile & clothing industry, which is among the largest industrial segment in the European Union (EU), accounts for some 6 per cent of employment in the manufacturing sector and a 3.2 per cent of total merchandises’ exports.
Data suggests that the sector spans a broad range of fields, from traditional segments right through to the newer segments of technical textiles which are setting the pace of innovation. It covers a great number of activities from the transformation of raw materials into fibres into yarns and fabrics that in turn enter into the production of a wide variety of products such as non-woven, trims, felt, cordage, carpets, home textiles and garments. Textiles’ applications are concentrated areas of apparel, home furnishing and industry.
In 2012, the EU textile and clothing industry reached a turnover of €165.3 billion, while the Community Extra-EU exports reached €42.1 billion or 26 per cent of the global sales. Euratex (The European Apparel and Textile Organisation) is a European organisation based in Brussels, Belgium. It represents the European textile and clothing industry, and its main objective is to create an environment within the European Union to the manufacture textile and clothing products.
Euratex.eu
India has emerged as one of the largest exporter of cotton not only to China but also countries like Bangladesh, Pakistan, Turkey and Vietnam. With rise in cotton yarn exports to Pakistan, All Pakistan Textile Mills Association (APTMA) has appealed to the government to impose 5 per cent import duty on cotton yarn since heavy imports are negatively affecting the domestic industry.
APTMA has accused that after Pakistan received the Generalised System of Preferences (GSP) Plus status from the EU, even India started heavily subsidising its textile sector, which in turn is making the local yarn uncompetitive in the Pakistani market. The import of yarn in Pakistan, according to the industry body, has been affecting the local industry in last few months. However, the value-added textile sector, on the other hand has opposed the proposal of imposing a 5 per cent duty on yarn import.
Producers of finished textile goods in the country are against any import duty on yarn as it may end up increasing their cost of production. They say an increase in the price of the local product would adversely impact the expected rise in Pakistan’s export to the EU post the GSP Plus status.
During the first six months (July to December) of fiscal year 2014, total textile exports of Pakistan stood at 6.9 billion dollars against 6.4 billion dollars in the first six months of FY13, showing a growth of 8 per cent. Pakistan exported textile products worth 13.1 billion dollars in FY13, which was 53 per cent of Pakistan’s total exports. The exports were higher than FY12 (12.35 billion dollars) but were still below the figure of FY11 when the country registered record high textile exports of 13.78 billion dollars due to high cotton prices in the world market.
www.aptma.org.pk
Bangladesh's export earnings during July-February period of current fiscal year saw a slump due to a downward trend in shipment of readymade garment (RMG) products. According to the Export Promotion Bureau (EPB) data, the country's overall export stood at $19.82 billion during the first eight months of the fiscal year, registering a 13.96 per cent growth over the corresponding period of the previous fiscal.
However, overall export growth was 18.02 per cent in July-November, 16.56 per cent in July-December, 15.08 in July-January of the current fiscal. The total earnings during the July-February period exceeded the target by 2.17 per cent, according to the EPB data. The single month earning in February 14 also maintained a slow growth rate of 6.36 per cent. Earnings growth drastically fell in January 14 to 7.81 per cent from 16.56 per cent in December. The single month earning in February 2014 stood at 2.38 billion dollars, marking a 6.36 per cent growth. However, the earning fell short of the target by 3.76 per cent.
Earning from knit products stood at 7.91 billion dollars during the July-February period of the FY 14, marking a growth of 17.50 per cent and surpassing the target by 7.39 per cent, according to EPB data. Woven products fetched 8.22 billion dollars, showing a growth of 15.92 per cent. The earning also crossed the target by 2.86per cent. During the July-January period, export of knit and woven products grew by 18.13 per cent and 17.32 per cent respectively.
The EBP data also showed that export of jute and jute goods witnessed a negative growth of 20.71 per cent during the July-February period of 2013-14. Earning from leather and leather goods, frozen food, pharmaceuticals and footwear grew by 44.33 per cent, 49.87 per cent, 24.21 per cent, 23.57 per cent, and 31.86 per cent respectively during the period.
www.epb.gov.bd
At the Dialog's Textil Bekleidung's (DTB) and MODINT's bi-annual Sourcing Convention held from March 6, 2014 in Düsseldorf, Germany, almost all presentations emphasized on the fact that the industry has re-discovered investments in factories and investments in the supply chain.
IAF’s Matthijs Crietee, in his speech, spoke about the elements of ‘2nd phase post MFA’ sourcing pattern following the first drop in imports of apparel from China in 2013. He said that the main beneficiary of a withdrawal from China is Bangladesh, which is clearly visible in the EU import figures of 2013. The most striking element of this new sourcing phase, remarked Crietee, is that the focus has shifted from moving production to improving production.
Among the other presentations, Portugal’s Twintex focused on the 52 per cent energy cost reduction they had achieved by investing in energy saving measures. Several presentations on Bangladesh too focused on investments made in transport infrastructure, investments made in structural safety of buildings and investments in lean manufacturing techniques. Consultancy KS and solution provider GT Nexus have made investments in the supply chain and collaborative planning software.
With COVID-19 disrupting apparel sourcing, fast, flexible sourcing has become top priority for fashion companies. A report by McKinsey & Co indicates around 50 per cent companies have started shifting towards a more flexible, fast, sustainable, digitally enhanced and consumer centric sourcing model.
McKinsey & Company’s 2021 Apparel CPO Survey assesses the industry’s progress in this journey and offers some strategies for staying on course. Half the surveyed companies have started revamping their sourcing and design processes and their ways of working.
Sourcing challenges
However, there are likely to be many obstacles ahead for sourcing executives. Challenges like harbor shutdowns, port congestion, container shortages, and capacity issues. Also, demand is likely to spike post-COVID-19 as consumers release their spending power, straining production and transport capacities. Uneven global recovery rates will continue to affect businesses for at least next year. The industry is beset with supply issues due to slowing down of raw material flow from China. For the first time in 10 years, shipping costs are likely to surge for sourcing executives. Raw-material prices are also expected to increase further leading to the further acceleration of companies’ shift to more sustainable fibers.
Barriers to transformation
These disruptions are likely to lead to substantial adjustments and create internal barriers to organizational transformation. Majority of companies are planning to change their assortment planning dramatically and shifting towards reduced product complexity. Others will follow a “less is more” approach, with greater in-season reactivity and reduced options. Fabric consolidation, prebooking among others will continue to grow with virtual design enabling speed and flexibility, cutting development time, and boosting cost efficiency.
Apparel companies need to find the right balance between reliability and flexibility: diversified strategies for flexibility and speed include accessing a larger number of source countries and more frequently using dual or multicountry sourcing. They need to collaborate strategically with trusted suppliers — especially those that invest in digitization and upskilling and are fast and flexible regarding production cycles and batch sizes. Many companies also need to rethink internal structures, tools, capabilities, and processes.
A shift in sourcing officers’ role
Need for internal upskilling and for more skilled suppliers is leading to a shift in the role of sourcing offices; and a holistic change in organizational structures to fit customer demands.
Sourcing executives are at the forefront of digital transformation, driving skills development and ensuring that ownership of these tools resides in the organization. Investment in internal digital upskilling, new tech developments, and other capabilities is paramount. A fully integrated setup is necessary: rather than focusing on selected tools, we urge apparel companies to work on full-scale digital and analytics transformation.
Develop nearshoing capacities
The organization of the future will define calendars that allow for healthy margins: Many calendars are too vague or not granular enough. Investing in the role of calendar manager and clarifying roles and responsibilities will unlock significant value.
It will be vital to develop strategic nearshoring capacities. A clear vision of the requirements of different product types, as well as the development potentials of each sourcing country, is crucial. Setting proper guidelines and KPIs for sourcing organizations, not just for cost but for flexibility and net margin, will help drive the change.
Partnering with suppliers
Partnering with a set of key suppliers is crucial to achieving flexibility and aids transparency. Onboarding suppliers onto the product life-cycle management (PLM) system pays-off quickly, as does achieving full transparency on manufacturing and delivery timelines. At the same time, building the ecosystem beyond Tier I to ensure sufficient and flexible raw-material supply is becoming more important. Creating a digital ecosystem will not only improve speed and flexibility but also provide assurance that products are sustainable and ethically produced.
Pakistan has almost achieved the revised estimated cotton production target of 12.33 million bales set for the current season 2013-14. This would positively affect the country's exports, especially to EU countries, under the GSP Plus.
The government has fixed cotton production target for the season 2014-15 at 15.10 million bales from an area of 3.128 million hectares out of which Punjab will produce 10.5 million cotton bales from 2.428 million hectares. Sindh will produce 4.200 million cotton bales from 0.650 million hectares, Baluchistan will grow cotton on 0.050 million hectares and produce 0.400 million cotton bales, and Khyber Pakhtunkhwa will cover 0.00035 million hectares and produce 0.0015 million cotton bales.
During 2013-14, cotton was planted on an area of 5.40 million acres against the target of 6 million acres, a 9 per cent decrease from the set target and a 5.2 per cent decrease from last year's area sown in Punjab, where rain and floods damaged about 1,20,000 acres of land. The decline in sowing is attributed to the lower prices of cotton seed during the last two or three years and farmers' preference for maize, sugarcane and rice crops due to monetary advantages over cotton. Further, rains delayed harvesting of potato crop in upper Punjab, which also resulted in late or less sowing of cotton crop in those areas.
The Bangladesh government's move to establish a garment park is now in limbo as manufacturers are not willing to bear the cost of acquiring land for the project. Readymade garment manufacturers say they can’t bear the huge land acquisition cost for the park. They say the government should come forward with the required funds for the acquisition of the land and the owners will gradually repay the loan through installments.
The park will have plots with infrastructural facilities, utility services, medical facilities, central effluent treatment plants, day-care centers, roads, drainage facilities, waste-dumping yards, fire-fighting equipments, banks, insurance offices and information technology parks. The demand for a separate garment park for relocation of rented and vulnerable garment units has become strong among manufacturers after a series of accidents and fires highlighted the need for a safe working environment.
Bangladesh is emerging as the second largest readymade garment exporter after China and the surging export demand also forced the government to think about the garment park. A garment factory with annual exports of more than $12 million needs to pay 40 per cent of the total price of the plot as down payment with three years of repayment period. Manufacturing units with annual exports less than $12 million have to pay 20 per cent of the plot's price with a repayment time of four years.
