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According to a survey of the Chamber of Commerce and Industry of Vietnam on labour market trends, with the technology movement gaining ground in Vietnam, millions of workers in the textile sector are likely to get affected. This is one of the major downsides of the technological revolution that has, for many years, also greatly benefited people and economies.
To ensure jobs, not only the State and enterprises, but also the workers themselves have to improve their skills to adapt. This statement came from Dao Thi Thu Hien, chief of office of Canon Vietnam seven years ago. Canon Thang Long Plant in Dong Anh District employed 13,000 workers but the number had dropped to 8,000 with automation while turnover and production remain stable. According to Hien with robots and computing advancements replacing workers, especially those performing repetitive tasks, low-skilled workers have been the most harmed.
Deputy General Director of the Garment No.10 Corporation, Nguyen Thien Ly said that the trend of using technology to replace human labour was indispensable in order to reduce costs and compete. In recent years, the company had to invest in equipment to cut labour costs, she said. For example, an automatic cutting machine could replace 12-15 employees, said Lý. Over the past year, the garment industry faced difficulties due to the increase of labor costs in Vietnam while there were fewer preferential tax policies so application of new technologies replacing labour will partly help solve this difficulty.
According to a survey by the International Labour Organisation (ILO), some foreign-invested garment factories in Vietnam put advanced technology in use last year to replace 10 to 15 workers in each stage of production to meet the trend of integration. In the coming years, 86 per cent of Vietnamese workers are at high risk of losing their jobs to automation, according to the ILO’s study. Robots will replace three-quarters of the workers, the study said.
Former Peruvian Ambassador to Washington Harold Forsyth has said that the bilateral relationship between Peru and the United States will remain positive and solid under the Donald Trump administration once he takes office in January. Historically, the relations with the world’s leading power have been quite good and were strengthened under the Obama administration.
Forsyth, who served as Deputy Minister of Foreign Affairs under the Toledo administration (2001-2006), noted that Peru and the United States work together in many fields, such as trade and cooperation, which raises hopes of an excellent future. Bilateral trade has remained intense to such an extent that currently, the US is the second largest trading partner of Peru after China.
In addition, Peru has a free-trade agreement (FTA) with the US in effect for nearly eight years. Peru has signed an FTA and commercial interests are quite strong on either side. This is a good opportunity to encourage Peruvian entrepreneurs to use the FTA and boost their non-traditional products where there is plenty of space, he observed. The ambassador sounded confident that the bilateral cooperation in the fight against drugs will remain active and effective within the next four years. Donald Trump will take office on January 20 after a nearly two-year campaign that concluded on November 8 with his victory on Democrat Hillary Clinton.
As per the 46th national collective agreement, the minimum wage of the Nigerian textile and apparel workers will increase by 13 per cent to N32,000 (US$101) per month. The said agreement has been signed by the National Union of Textile, Garment and Tailoring Workers of Nigeria (NUTGTWN) and the Nigeria Textile Garment and Tailoring Employers Association (NTGTEA).
Post the wage hike, the minimum wage in Nigerian textile and garment industry would be more than 70 per cent of the current national minimum wage of N18,000. Sources say that the increase in minimum wage rate will enable the labourers in the textile industry to deal with the economic recession.
Through the collective bargaining process, there was 18 per cent and 15 per cent rise in the wage rate in 2012 and 2014 respectively, according to NUTGTWN. Collective bargaining is a process of negotiation between employers and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other areas of workers’ compensation and rights.
The rollout of the goods and services tax (GST) is likely to be delayed by two or three months, it is understood. Though the government is yet to lock down a date, but is likely to settle for either the first day of June or July 1.
Expectations are that the GST legislation will be introduced in the first half of the budget session by the Ministry of Finance when the government will seek to get it passed after the recess. While the new dates would delay the rollout, they are also well within the mandatory deadline of September after which the central and state governments will lose powers to levy any indirect taxes other than GST. Differences between the centre and the states, especially over the sharing of powers, has delayed the final approval for supporting legislations for GST, a tax reform which will for the first time bind the country into a common market.
Arguing that state finances cannot withstand the double whammy of demonetization and GST, states like Kerala and West Bengal had sought a delay in the implementation of the tax. GST will subsume a host of indirect taxes levied by the centre and the states, including excise duty, service tax, value-added tax, entry tax, luxury tax and entertainment tax.
Though its implementation would have been easier from the beginning of a fiscal year, it can be implemented anytime. GST is an indirect tax levied at the point of sale and hence can be introduced at the beginning of any month.
Finance minister Arun Jaitley is expected to announce the timetable for this ambitious tax reform in his budget speech on the first of February. The finance ministry will also have to work out its revenue estimates for 2017-18 based on GST’s implementation date.
Prices of cotton seed oilcake has been trending lower over the past couple of months. Traded on the National Commodity & Derivatives Exchange Limited (NCDEX), the by-product of kapas (raw cotton) peaked at Rs. 2,791 per quintal in July and has since fallen by a steep 28-odd per cent to Rs. 2,012 per quintal now.
Expectations of higher production of cotton this year led to a sharp fall in prices over the past couple of months. From here on, while prices may not correct sharply, they are likely to remain under pressure in the near term. Kapas is unginned cotton or the white fibrous substance covering the seed, obtained from the cotton plant. Upon ginning, the lint (about one-third in weight) and the seed (two-thirds in weight) get separated.
While lint becomes the raw material for cotton yarn or thread, the seed is crushed for extraction of oil. The by-product which remains after extraction of oil is called cotton seed oilcake, which is mainly used as cattle feed. The cotton seed oil recovery is around 12 per cent while the oilcake forms 86 to 88 per cent.
As of mid-December 2016, exports from garments firms in Myanmar, employing the cutting, making and packaging (CMP) system, rose to $1.157 billion up 83.7 per cent as against $629.709 million in the same period of the last fiscal. Exports to Japan, the largest apparel importer from Myanmar accounted for 33 per cent of all clothing exports.
Quoting statistics from the Myanmar ministry of commerce, it has been reported that Japan was followed by South Korea and Germany with 25 per cent share each in exports in addition to shipments to China and the American markets. A majority of the investments permitted by the Myanmar Investment Commission (MIC) in the current fiscal has streamed into the clothing production industry. There are over 400 apparel manufacturing units in Myanmar that employ over 300,000 people.
In continuation of the last month’s positive performance, Pakistan’s external trade showed improvement in November 2016 with exports amounting to US$1.76 billion, says an analysis. This showed a reversal from the consistent monthly downward trend seen this year. The textiles and clothing sector, that constitutes more than 60 per cent of the country’s exports also picked up its pace, rising 9.7 per cent Y-o-Y to US$1.05 billion in the month under review.
This growth was broad-based recovery in both low value (+15.6 per cent Y-o-Y) and value-added segments (+7.6 per cent Y-o-Y). However, on a cumulative basis, 5MFY17 textile exports were still lower at US$5.13 billion.
Going forward, analysts expect textile exports to largely remain under pressure due to one, demand side bottlenecks with weak Chinese demand outlook and economic slowdown in the EU following Brexit, two, lower currency competitiveness amid sharp depreciation in regional currencies and three, low commodity prices.
Having talked about that, the sector anxiously awaits the yet to be announced incentive package estimated at around Rs75 billion by the Government of Pakistan (GoP). This package is aimed at enhancing export competitiveness over regional countries and providing relief to the textile sector.
Performance of the value added sector posted growth with Knitwear, Readymade garments and Bed wear registering double digit growth. Moreover, the low valued added segment depicted a commendable recovery after a consistent decline this year, where the exports of cotton yarn increased by 42.1 per cent Y-o-Y/10.3 per cent M-o-M. However, on a cumulative basis, textile exports after recovery still remained unimpressive with 5MFY17 exports recording a decline of 2.0 per cent Y-o-Y.
Overall textile exports from Pakistan continued to present a dismal picture for another year. By this, the industry has been rendered unviable by the high cost of doing business as a consequence of which textile exports fell further by $600 million, said All Pakistan Textile Mills Association (Aptma) chairman, Aamir Fayyaz.
Total exports of the country are understood to have fallen by $1.2 billion in the current year as per the present trend. Foreign exchange receipts on trade account are important to be revived and given a new impetus to arrest the country’s trade deficit that has swelled to an alarming and unmanageable level of $28.3 billion, the Aptma official added.
He further said that owing to unrealistically high energy costs, the textile industry continued to face the handicap of being 10 per cent more expensive against international competitors. He also claimed that since 2013, the price of energy has been higher than that of competing countries by 4 cents per kilowatt hour.
According to Fayyaz due to unrealistically high energy prices in the province where 70 per cent of the country’s textile industry is located, the Punjab-based textile industry was exposed to a severe disparity in energy prices. Resultantly, a bulk of the textile manufacturing capacity lies under utilised and over 70 textile mills have shut down in the last six months. The two basic raw materials of textile industry, cotton and man-made fibres to which the textile industry adds value for export have to be imported as their domestic availability falls far short of the industry’s requirement.
Lastly, Fayyaz rued that the completely oblivious approach of the government to this scenario and its subjection of raw materials to increased import duty besides other levies such as sales tax and withholding tax is indeed regrettable and denies the textile industry raw material availability at competitive and viable prices. Besides, the presumptive and innovative tax regime in the country is an additional burden on the organised segment of the textile industry.
"Lectra’s latest white paper ‘Integrate to Collaborate’ emphasizes multinational supply chains and omni-channel retail distribution networks are standard and seasonal, geographic and size variability generate both huge numbers of SKUs (stock keeping units) and incredibly complicated product development and distribution processes. The paper says, without integration, this complexity creates more blind spots when it comes to transparency, visibility, and the ability to respond to change, than it does in perhaps any other industry."
Lectra’s latest white paper ‘Integrate to Collaborate’ emphasizes multinational supply chains and omni-channel retail distribution networks are standard and seasonal, geographic and size variability generate both huge numbers of SKUs (stock keeping units) and incredibly complicated product development and distribution processes. The paper says, without integration, this complexity creates more blind spots when it comes to transparency, visibility, and the ability to respond to change, than it does in perhaps any other industry. But as a result, the fragmented nature of the fashion industry means that it stands to benefit more than other industries from establishing a consistent, contemporaneous thread of data that links essential processes and carries through every iteration and variation from design to delivery.
This does not mean, however, that every conceivable data point should be integrated with a common backbone, and while an IT professional may be better equipped to visualise where data sets are separated, executives have a unique vantage point when it comes to charting the opportunities for linking different cultures, and bridging the right divides to enable better-informed decision-making. Beyond design tools, further common points of integration that can deliver whole-business benefits include: manufacturing hardware (cutters, spreaders, and plotters) with native file support shared with CAD and PLM; merchandise planning solutions that draw business intelligence from previous years’ sales performance; supplier management ranking tables that can be directly linked to sustainability indexes and auditing tools; and collection management and marketing modules that leverage metadata created during the earliest stages of inspiration.
Benefits of integration
Many of these points of integration have already delivered value for brands and retailers: between patternmaking solutions and PLM have delivered greater accuracy in bills of materials; detailed material characteristics made available beyond the point of creative design have improved communication with mills, manufacturers, and trim and packaging suppliers, allowing sourcing managers to negotiate better pricing based on sound business intelligence; three-dimensional prototypes and virtual samples, created with 3D CAD tools and made available to view within PLM, have dramatically decreased the cost of sample creation and logistics; successful integrations of design and development solutions with sourcing and supplier management systems have given rise to a ‘design-to-cost’ approach, where creative teams are able to visualise the bill-of-material and bill-of-labour impact of their decisions.
This allows for more accurate pricing, reduced lead times, more effective production, and better positioning across international markets; CAD to PLM integration, with in-application access to components, materials, and other libraries stored within PLM, has afforded designers more time to experiment, and resulted in greater style variety within collections, as well as helping them to reach markets more quickly; integrating PLM with ERP – the two pillars of most information environments – can provide a more holistic view of products and collections, with retail performance reports informing the styles, colours, fits and prices of future collections. Keeping data consistent from the inspiration stage to the final production stages allows marketing and retail teams to better tailor collections to their target audiences.
Aligning business goals
These levels of integration, however, can be difficult or expensive to achieve when working across different ecosystems, where data formats, inputs, outputs, and interfaces vary widely. Many brands and retailers find considerable value in working with a vendor who offers standardised data interchange between their own design tools, patternmaking products, and PLM, avoiding the need to develop potentially costly, bespoke integrations between different families of solutions. Whoever modern brands and retailers choose to obtain their software from, integration should not be considered just a matter of linking one technology to another, but rather an opportunity to create an information environment that aligns with whole-business goals whilst simultaneously improving the user experience, collaboration, and other important metrics at the individual process level.
ICRA has noted that exports of cotton yarn are under pressure due to lower demand from China, said to be the largest importer of yarn from India. Moreover high cotton prices due to low arrivals are set to hit spinners.
Jayanta Roy, Senior Vice-President and Group Head, ICRA revealed that the fall in export demand for cotton yarn was a major challenge for spinners as the industry has been exporting a third of yarn produced for the last four years. With the fall in demand, spinners have to cut down on capacity utilisation which is likely to put pressure on their profitability.
Apart from lower profits, the high cotton prices will translate into higher working capital requirements leading to higher borrowings and weaker credit metrics of players, noted ICRA. In the last seven months of this fiscal year, exports of cotton yarn have fallen 23 per cent as China has been pushing its mills to consume cotton produced domestically to reduce dependence on imports.
China’s overall yarn import declined 20 percent in seven months of this fiscal year with a 54 per cent fall in purchases from India. Though cotton prices have fallen since the beginning of the harvest season, it is still 17 per cent higher compared to the same period last year due to the hangover of the shortage faced last year.
This apart, cotton arrivals have slowed down after the demonetisation of high-value currency last month and uncertainty related to the extent of improvement in the domestic crop-size estimate. While the impact of the sharp fall in exports has been cushioned by an estimated recovery in domestic consumption, a sustained revival will be challenging due to the adverse impact of demonetisation on disposable income and consumer spending, averred Roy. At 1.1 per cent, yarn production registered the lowest growth in four years in the first half of this fiscal year while cotton yarn production fell 1.8 per cent during the same period last year.
