FW
An official report on Bangladesh's ready-made garment industry shows poor compliance with regard to issuance of appointment letters and identity cards to the workers, preserving their service records and granting maternity leave and other lawful benefits to them. In the absence of appointment letters, service books and ID cards, the workers are deprived of their lawful rights and benefits. Such deprivation took place in the cases of Tazreen Fashion and Rana Plaza workers, labour leaders alleged.
The Department of Inspection for Factories and Establishment (DIFE) under the ministry of labour and employment has come up with the findings after it carried out monthly inspection in some 212 ready-made garment factories in May 2016. The report says, about 63 per cent of the apparel factories were found engaging their workers in extra hours of work without taking prior permission from the authorities concerned. Only 11 per cent of the factories not affiliated with BGMEA and the BKMEA met the requirements.
Out of the surveyed units, 145 were the members of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and 32 of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). Others are not allowed to join any trade unions because of this. Irregularities are more in apparel factories that are not the members of any of the two trade bodies, according to the report.
Across the world, cotton markets have soared reflecting a burst of speculative buying sparked by concerns about smaller stockpiles. ICE October cotton leapt as much as 5.6 per cent to 75.14 cents a pound on Wednesday, the highest price in two years. Open interest, or the number of contracts outstanding, in the US cotton futures market has grown by 11.5 per cent this week, reflecting an influx of new buyers.
Cotton had been one of the slowest commodity markets in recent years, with prices hovering in a narrow range. That abruptly changed this week, with ICE futures locking at price fluctuation limits on Tuesday and Wednesday.
Meanwhile, one trigger was the release of supply estimates by the US Department of Agriculture. The agency estimated global stockpiles would drop 9m bales on year to 91.29m bales by July 2017, 3.4m lower than its previous estimate on increasing Chinese demand. A cotton bale weighs about 500lb.
China’s textile mills sector makes the country the world’s largest cotton consumer. The cotton market has for years been capped by uncertainty over a bloated Chinese state reserve built up under a price support programme for farmers. This year, sales from the reserve have been ‘very strong’ with the base sale price reaching nearly 90 cents a pound, suggesting ‘demand is more broadly-based than previously considered,’ USDA said.
India, the largest cotton producer, has been importing bales to replenish supplies after exporting heavily last year. Cotton farmers in India have also been battling a damaging pest called whitefly.
Due to crop damage in major producing states, India’s cotton output is likely to decline 12.4 per cent to hit the lowest in five years for the current crop year (October 2015–September 2016).
Recently, the Cotton Advisory Board (CAB) under the Union Ministry of Textiles lowered the forecast it had made in February, saying the picture was now clearer. Output is now estimated at 33.8 million bales (a bale is 170 kg) for the current crop year, as against 38.6 mn bales the previous year (when drought had hit many states). The CAB had constituted three Sub-committees in its last meeting held in February last.
The sub-committee on prices recommended the format for compilation of prices and price reporting may be gradually shifted to metric system. For prices it recommended to refer to 29 mm length cotton indicating CAI’s spot prices, ICF prices, MCX Futures along with cot look prices. The Sub-committee on best practices on cotton farming is working and is likely to submit the report in next CAB meeting.
Its February forecast was 35.2 mn bales. Due to the expectation of less output this year, there has been a rise in prices; the benchmark Shankar-6 variety has increased by 35 per cent in five months, to Rs 12,710 a quintal at present. This is the highest since October 2013. As a result, garments are likely to get costlier.
Nandan Denim is in the midst of expanding its capacity from 99 million metre per annum (mmpa) to 110 which would come on stream in the next three months, according to the company's president Govind Sharda.
Sharda said the company expects volume to grow at 6-7 per cent in FY17. The company will see higher realisation due to more value added products. The current share of the value added products is expected to be less than 10 per cent and realisation is around Rs 135-136 per metre for the denim fabric.
Currently, the company is operating with a capacity of 99 million meter and another three months they will be operating at 110 million meter. They are also working on building up the spinning capacities for our backward integration. So they expect all this to happen by August and September 2016.
As far as denim manufacturing is concerned, Nandan Denim was originally targeting June but was having some bit of ambitious calculations, but now the revised target is that by September end the company will be having 110 million capacity.
North American apparel brands and retailers’ group have decided to stay with readymade garment (RMG) sector in Bangladesh despite the terrorist attack on July 1 that saw the killing of 20 people including 17 foreigners. In a conference call for journalists, James Moriarty, country director for the Alliance for Bangladesh Workers Safety, the platform of North American buyers and brands said that many major brands were desisting sending foreign staff to the country although most had Bangladeshi or South Asian staff leading their operations in the country.
On behalf of the Alliance, Moriarty, a former US ambassador to Bangladesh, expressed his sympathy for the people affected by the recent violent attacks in Dhaka mainly the victims, the loved ones of those who lost their lives or were wounded, and the members of the community who were rocked by this attack. Moriarty further said that in spite of this tragedy, the Alliance and our member companies will continue to stay with the RMG because improving safety for the millions of men and women who make a living in Bangladesh’s garment sector is a moral imperative.
The Pakistan’s textile industry is likely to be exempted from load shedding, the textile industry was vying for resumption of load shedding by the end of the holy month of Ramadan but no decision was made by PEPCO the authority despite availability of surplus power.
Surplus power was available but the secretary water and power had left for Karachi well before Eid, therefore the decision to resume power supply to the textile industry was deferred till his return, the sources added. It may be noted that the Ministry of Water and Power had withdrawn exemption from load shedding to the textile industry with the start of the holy month of Ramazan. The textile industry was exposed to 10 hours a day load shedding, starting half an hour before Iftar and resuming half an hour after Sehri.
The relevant quarters had well-informed the authority that surplus power would be available during the Eid holidays due to reduced power consumption both by the domestic and commercial consumers. But the authority kept delaying the decision, apprehending any untoward situation in case the domestic consumers face in any trouble due to power supply to the industrial sector.
The Bangladesh garment industry has generated exports worth $28.09 bn in 2015-16 with a 10.21 per cent growth from the previous year, according to a data of the Export Promotion Bureau. The growth has been attributed to political stability during the year, increased productivity, entrepreneurs’ resilience and improvement of workers’ safety standards in factories, according to exporters and analysts. Data released yesterday shows earnings also exceeded target $27.37 bn set for the year. Of the total figure, the knitwear constituted $13.35bn and woven products $14.74bn.
Siddiqur Rahman, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) points out, though profit margin declined, manufacturers didn’t stop taking work orders. Hence one has to give credit to them for seeing an even better export growth in the country’s garment sector. He added that the start of manufacturing of high-end products by some entrepreneurs and the increase of workers’ productivity also contributed to achieve healthy export earnings.
Bangladesh earned over $34bn from exports in the 2015-16 fiscal and registered around 10% growth compared to last year. The figure also exceeded the export target set for the year by $743m.
Seeing a comfortable cotton supply position for the cotton season of 2015-16, the Cotton Advisory Board (CAB) has estimated the closing stock at 43 lakh bales as against its previous estimate of 35 lakh bales for this season. Similarly, the area under cotton has also been revised to 119.10 lakh hectare as against its previous estimate of 118.81 lakh hectare for the 2016-17 season.
M Senthilkumar, Chairman, The Southern India Mills’ Association (SIMA), points out cotton position in the domestic and international market is very comfortable. Accordingly, he has advised mills to avoid going in for panic purchase as the traders are taking undue advantage and have increased the prices abnormally closer to R48,000 per candy as against R33,200 per candy that existed in April this year.
The SIMA chairman said that the current domestic cotton price was expensive by over R3,000 per candy and therefore he suggested that larger mills should opt for import so that the domestic prices soften.
The SIMA chairman pointed out that the traders have been speculating on the prices, saying that the acreage for the forthcoming season would drop. On the contrary, CAB has estimated a reasonable area and therefore, the cotton supply position would be comfortable in the forthcoming season also, he added. Abnormal increase in cotton price would have a serious impact on the entire textile value chain as the international cotton price is around 10 per cent lower and the Indian cotton textiles and clothing industry cannot compete in the international market and the exports would drop further.
He also appealed to the Centre to strongly consider its earlier proposal of Cotton Price Stabilisation Scheme for spinning sector consisting of 5 per cent interest subvention for cotton purchase during October to April (peak season), increase the credit limit from three months to nine months and reduce the margin money from 25 to 10 per cent adding that this would greatly benefit the farmers and the industry and curb speculations.
"More than 64 per cent of supply chain professionals in manufacturing and retail plan to ramp up spending on supply chain digitization in the next three years. More than 25 per cent said they would increase the spend significantly. Shoppers in the US are continuing to flee into the more organised arms of online retail, whereas for the first quarter of 2016, retailers were hemorrhaging."
More than 64 per cent of supply chain professionals in manufacturing and retail plan to ramp up spending on supply chain digitization in the next three years. More than 25 per cent said they would increase the spend significantly. Shoppers in the US are continuing to flee into the more organised arms of online retail, whereas for the first quarter of 2016, retailers were hemorrhaging. The major force behind what is now - and finally - becoming a sea change, is consumers who refuse to waste their time and energy on things that aren’t innovative or efficient. And retailers taking too long to catch on to that fact are feeling it in their bottom lines.
Companies’ need a more balanced process and that process needs to be digitized, according to Robert Sinclair, COO of Li & Fung’s sourcing business. He said in the past the sourcing world has been very transactional, very linear. It’s sequential and that worked for decades. But as the industry matures, the economic balance between mitigation of the product lifecycle management of a manufacturer - which is extremely stressed, financially fragile - retailers and brand owners are also experiencing the same phenomenon, not making the same margins they used to. At either end of the supply chain, the manufacturers and the brand owners and the retailers face similar problems, so a balanced process is really the solution.
Compared to brands and retailers, manufacturers have worked to improve some efficiency over the last 30 plus years, many brands and retailers haven’t done enough to address their internal efficiency. He explained, now the industry has reached a point where brands and retailers have little other choice than to ask themselves the pressing, fundamental question: Are we as efficient, are we as streamlined and lean as we could be?
According to Sinclair, the answer to that question is no. The solution is collaboration between manufacturers of textiles, bags, shoes, in conjunction with the brand owners and retailers. Align productivity through the supply chain. It’s not looking at one as a standalone; you have to look at the supply chain holistically. Duplication, triplication, cut that out. And a digital supply chain will address that. Checking the checker has been the bane of many companies for years and even now, but that level of inefficiency won’t fly for much longer in today’s market.
Enabling the supply chain
Digitization enables movement and it enables efficiency because it provides efficiency and transparency. Think of it like the interstate highway network across North America, Sinclair offered. Those roadways weren’t built and connected overnight, it took decades, but their interconnectedness enabled movement in the same way that electricity enabled light.
Fundamentally it connected things on a massive scale and ultimately, it drove costs down, and digitization will do the same for manufacturing and supply chain, Sinclair said. Digitization is not an end game, it’s just the beginning. Digitization of the supply chain and everything about your business is a fundamental requirement for survival. It’s only a vehicle, an enabler, to stay in the game.
The bigger question companies have, beyond just getting on board with a digitized supply chain is what to do with the business once the supply chain has successfully been converted for the modern era.
What’s after digitization?
It’s going to be up to companies and corporations to leverage the platforms, according to Sinclair. Digitization is the creation of a platform, and what you do with that platform becomes your competitive advantage.
That companies will get left behind for failure to digitize isn’t just an overblown concept - those that don’t will die, with bankruptcy being their burial. There’s going to be a lot of casualties,” Sinclair said. But there’s also going to be a lot of new entries and new platforms that use this new grid to build on. Your competitive advantage is how you mine it, how you monetise it.
Today, manufacturing is a very labor-intensive business, and also a very administratively intensive one, with ‘track and trace’ taking up the lion’s share of time.
According to Sinclair, if you were to digitize the manufacturing process so that RFID (radio frequency identification) picks up the movement of all of the things just described, that sends it to pre-formed reports in the cloud, and it’s being tracked and traced automatically. That’s easy to view real time by the factory, ourselves. It’s powerful but it’s going to create a huge amount of technical unemployment. Companies may not yet have a firm grasp on just how to digitize their supply chains or what will follow after that digitization; many are already making the steps to invest in doing so.
According to a study done by software firm and consultancy JDA Software Group found that more than 64 per cent of supply chain professionals in manufacturing and retail plan to ramp up spending on supply chain digitization in the next three years. More than 25 per cent said they would increase the spend significantly. Nearly 60 per cent of those surveyed cited supply chain visibility as the driving factor behind the in-place plans.
Lectra, the world leader in integrated technology solutions dedicated to industries using fabrics, leather, technical textiles and composite materials, recently co-hosted a Design & Technology seminar in Milan with the Department of Design and the POLI.design Consortium of Politecnico di Milano, one of Italy’s largest technical universities.
Politecnico’s Department of Design joined Lectra’s Education Program in 2014. The partnership between the two organisations is based on a commitment to training students on the latest innovations in design technology and techniques to give them an advantage on the labor market. Students benefit from hands-on experience using Lectra’s latest generation technology, as well as its expertise and knowledge of industry best practices.
The seminar was an opportunity for students and executives from the upholstered furniture, marine, and automotive markets to gain valuable insights into the ways recent technological innovations can bolster design creativity and development efficiency.
