FW
Unions are furious with Cambodia’s garment factories as they have shown inclination towards meeting worker’s demands for increasing the minimum wage next year. As per a survey among members of the Garment Manufacturers Association in Cambodia (GMAC), 63 per cent do not want a raise and 26 per cent support only marginal hike of $1-$5. The GMAC represents the country’s more than 500 factories. The factories and unions are to hold talks next month regarding the demand for a hike from the current monthly $128 minimum to $177 in 2016. A final decision will be made in October.
Ken Loo, Secretary General, GMAC says they asked members how much hike they could afford, but the members stated that could not afford any rise in wages. The garment industry is the largest economic sector in the country. However, it seems it’s going to be hard to sustain the $5 billion sector now. An increase in wages could placate workers, but will make the country uncompetitive, while protests by unions could scare investors away.
The garment industry in Cambodia has created 600,000 jobs that sustain rural families and has grown phenomenally through the years. However, strikes by increasingly assertive and politicised unions have become troublesome. The unions were outraged and threatened to go on strike if factories were unwilling to revise the wages.
Chea Mony, President of Free Trade Union said that if factories don’t hike pay, they could face problems of having no workers. Pav Sina of the Collective Union Movement of Workers, agreed with Mony saying that their workers would not be quiet as there would be no choice left for them.
A strategic cooperation agreement was signed regarding the purchase of polyester fibre produced by Dinh Vu PetroVietnam Petrochemical and Textile Fibre JSC (PVTEX) was signed by Petrovietnam oil and gas group (PVN) and Vietnam National Textile and Garment Group (Vinatex). After over a year of commercial operation Dinh Vu Polyester plant, they signed this agreement.
Vinatex committed to purchasing as much fibre products as possible from Dinh Vu PVTEX and also to use no less than 50 per cent of that purchased in its production. Meanwhile, PVN would direct Dinh Vu PVTEX to provide polyester fibre products of good quality and competitive prices for Vinatex. Besides, as per the agreement when Vinatex uses polyester fibre products of Dinh Vu PVTEX as inputs for export production lines, they would would work closely in the development of markets.
Its products have been domestically and internationally credible so far and the quality too has improved to be on par with imported goods. PVN said that now, the background was stable for close and comprehensive relation between the two groups in various fields such as polyester provision, export market extension cooperation, staff training and product evaluation. Also, they could work closely on other aspects for the mutual benefit and enhancement of trademark value for both.
With this cooperation, the product competitiveness would increase, as well as the market extension for Vinatex enterprises. However, besides this, the cooperation would also help Vietnam garment trademark promotion and wouldincrease domestic rate of textile industry to 60 per cent.
Pakistan's textile sector has been struggling to stay afloat as it battles high costs and high electricity surcharges. The country could lose billions in export orders if moves aren’t made to reverse the downward trend.
Pakistan’s exports for July have declined 17 per cent. The Pakistan rupee is overvalued, and that, coupled with a harsh tax regime (electricity surcharges alone can run as much as 45 per cent more than regional competitors pay), has what has killed the country’s competitiveness. A gas infrastructure development tax plus taxation on export-oriented goods has added to the burden.
The government has the option to either devalue the rupee by 12 per cent to 15 per cent or remove the additional taxes on export industries to make them zero-rated.
The government has promised to remove the bottlenecks in the way of exports. It would address the high costs and surcharges by the end of this month.
The textile sector in Pakistan has an overwhelming impact on the economy, contributing 57 per cent to the country’s exports. In today’s highly competitive global environment, the textile sector needs to upgrade its supply chain, improve productivity, and maximise value addition to be able to survive.
Todd Buchholz, former Director for Economic Policy at the White House and a leading expert on the US and global economy, will take charge at the forthcoming ‘San Francisco 2015’ trade event, scheduled to be held on October 30 and 31. The event is expected to attract over 600 delegates from across the world.
After serving under George HW Bush, Todd was Managing Director of the $15 billion Tiger hedge fund and an award-winning economics teacher at Harvard. He is a regular columnist for the Wall Street Journal, the New York Times and NBC and is the author of a number of best-selling books.
Speaking ahead of the event, Todd said, “The ICA’s San Francisco trade event presents a perfect opportunity to think about how the world economy fits together, from farmers in the fields to designers in Milan to fast retailers competing for consumer spending across the globe.”
Todd’s address will provide delegates with an in-depth view of global politics, economics, society and culture – looking at where the world is, where it is going and what it means for businesses and individuals.
The spinning and garment industry is worried with the recent devaluation of the Yuan by China.
Spinning industry is plagued by worry about further slowdown in demand when players are over-dependent on China. While apparel exporters are worried that competition will intensify with China. As spinning industry is already in crisis because of the growing dependence on China and addition of capacities is another cause for getting panicked.
Dwindling demand from the Chinese market have affected yarn export form India, while some apparel orders shifted to India because of slowdown in China. However, according to industry players feel it was too early to estimate the extent of impact by the devaluation. Yet, they say that the textile industry could get worse due to the deliberate devaluation of Yuan, giving an example of competition in apparel exports with China, which could get worse.
This also could be a sign of increased competition from China, feel garment manufacturers, industry believes that this move by China was completely unexpected, this will result in merchandise exports getting severely affected, if the rupee remained overvalued.
The total textile export from China is $150 billion per year, which is 10 times bigger than India, so, industry feels that the Indian government should think seriously about improving India’s global participation.
The garment industry accounts for almost 80 per cent of Bangladesh's total exports. Bangladesh intends to double its apparel exports to $50 billion by 2021. To this end, the country is setting up garment villages. These villages are aimed at making conditions safer for workers. Currently factories in Bangladesh tend to spread around in an unplanned manner, which makes them hard to monitor, and they spring up wherever space is available, including in decrepit, unsafe buildings.
Factories that don’t comply with regulations will be moved to villages, where workplace, health, and fire safety regulations can be enforced. There will be facilities for medical treatment, proper waste disposal, and day care. A village can have several hundred factories.
The US, which is the largest importer of garments from Bangladesh, will help the country build garment villages. The US will reportedly join two Bangladeshi banks in offering a $22 million credit guarantee on loans to help improve safety in garment factories. The rapid growth of Bangladesh’s garment industry has been a blessing and a burden to the country. Even as it has provided jobs to millions and helped Bangladesh reduce its poverty rate, it has also exploited the nation’s poorest and most desperate, leading to the deaths of thousands.
Garment manufacturers and exporters of Bangladesh have undertaken ‘Branding Bangladesh’ initiative. This involves organising visits to factories for foreign diplomats, donor representatives and dignitaries with stakes in the sector. The purpose is to highlight the progress the sector has made since the Rana Plaza tragedy two years ago and the fact there are many garment factories in the country that do practice international standards.
Visitors from the United States, the European Union, Canada, the Netherlands, Germany, France, Spain, Australia and Denmark will be shown the situation inside factories including working conditions, workers’ rights, safety and compliance standards and other good practices.
In turn, these visitors as stakeholders are expected to help brand the image of the local garment sector through sending out the right message to their respective countries. Many changes have taken place in Bangladesh’s garment sector and many more are in the process following inspections by western retailers.
The image of the country’s apparel sector was hit badly following some tragic incidents. Bangladesh had to undertake a damage control exercise, put its house in order and reassure its buyers that safety measures were being implemented in earnest and that its garment factories were committed to safe and responsible production practices.
Announcing the long-awaited launch of a contract that faced several hurdles, the New York Intercontinental Exchange's (ICE.N) world cotton futures contract will finally start trading on November 2, 2015 after a pending regulatory approval. This contract which allows only for delivery of US cotton, has for long been considered as the world benchmark, though the US has been surpassed as the world's largest grower. Merchants have been pushing for years for a world contract.
The exchange said, origins will comprise of the US, Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast, and Mali. The contract will consist of 12 delivery points in the US, Australia, Taiwan, and Malaysia. The exchange first said it planned to introduce the contract in 2013, but progress was stymied by regulatory issues in the United States and other key regions. The new contract will trade alongside the cotton No. 2, ICE said.
The exchange will enjoy discounts by delivering to locations in Australia and the US. The Asian delivery points are located near the world's biggest textile markets. For pricing, US cotton will be used as a benchmark, with other origins trading at discounts and premiums. ICE stated that those differentials will be announced closer to the launch date.
‘Made in USA’ in danger
Big companies like Nike, Gap have been strongly supporting the TPP along with industry groups like the US Retail Federation and the US Fashion Industry Association, which formed the TPP Apparel Coalition since they can source their product requirements at a much cheaper rate.
However, local manufacturers are of the opinion that the demand for ‘Made in USA’ would decline further leading to factory closures and job losses. Employment fell by 80 per cent from 1990 to 2010, according to the US Labour Department. Manufacturers having their base in the LA-area haven’t fared well. From 2002 to 2012, almost 60 per cent of job losses were reported in California, according to the Los Angeles County Economic Development Corporation.
In a report last year, the non-partisan Congressional Research Service warned the TPP could increase competition for western manufactures and reduce demand for US textile exports because Asian apparel producers would be able to export clothing to the United States duty-free.
Possible impact of TPP on US manufacturing
According to Sheng Lu, Department of Fashion & Apparel Studies, University of Delaware, some of the several results of potential impact of TPP on US textile and apparel manufacturing, compared to 2011 include: overall negative impact on US domestic textile and apparel manufacturing. In all simulated scenarios, the annual manufacturing output in the United States will decline.
The ‘yarn-forward’ rule may not substantially benefit US domestic textile and apparel manufacturing as some people had suggested, for two reasons: First, results show that Vietnam is more likely to use Japanese textiles than US textiles when yarn-forward rule is in place; second, US apparel imports from Vietnam directly compete with those imported from NAFTA and CAFTA regions, the largest export market for US-made yarns and fabrics. When NAFTA and CAFTA’s market share in the US apparel import market is taken away by Vietnam, US textile exports to NAFTA and CAFTA will decline anyway, regardless of whether Vietnam uses US-made textiles.
The results suggest that compared with ‘yarn-forward’ rule, development of Vietnam’s local textile industry will have even larger impact on the future of US domestic textile and apparel manufacturing. Particularly, when Vietnam becomes more capable of creating textile inputs on its own, not only Vietnam’s overall demand for imported textiles will decline, but also apparel exports will become even more price-competitive in the US as well as the world.
Ustr.gov
Andhra Pradesh will announce a Rs 125 crores loan waiver scheme to benefit weavers. This will benefit about 2.80 lakh weavers from the state. Andhra Pradesh is an important handloom producing state. AP is also considering a plan to provide interest-free loans to weavers to promote the traditional handloom sector. It may re-introduce the Janata cloth scheme for the poor at an expenditure of Rs 550 crores to supply a dhoti and a sari to all poor people in the state.
The central government has decided to set up mega clusters with an investment of Rs 26 crores in Guntur and Prakasam. Andhra Pradesh is renowned for its fine range of silk brocades and cottons. Each range has a unique blend of designs, colors and textures. The state also has a cooperative society for handloom weavers and assists them in purchasing raw materials and appliances, tools and machinery. It organises exhibitions and sales units for the purchase and receipt of finished products of the member societies. It assists in establishing and hiring processing units to undertake and provide processing services including dyeing, mercerising, printing and furnishing. It arranges for the training of weavers in improved methods of weaving and the latest techniques.
