Textiles pile up in warehouses in Bangladesh as Western orders drop

(KTSG Online) – Clothing shipments are stagnant at warehouses in Bangladesh – the world’s second-largest textile producer, as consumers in the US, Europe and other major markets tighten their belts. austerity” in the context of high cost of living due to inflation.

According to Bangladeshi garment manufacturers, orders have slowed since July due to the war in Ukraine and Western sanctions on Russia, as well as the impact of these events on inflation. , interest rates and mortgage loans worldwide.

Faruque Hassan, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Financial Times: “Everything goes up in price, so the clothing budget (in the West) is tight. That’s why some brands, some fashion importers cut their orders.”

Hassan revealed that some Western fashion retailers have asked Bangladeshi suppliers to stop garment production or delay delivery for up to 3 months.

“That has had a huge impact because all of our factories have bought fabric for production, and now they are going through a serious crisis.”

The decline in global clothing demand comes as the government of Bangladeshi Prime Minister Sheikh Hasina faces higher import gas prices, leading to power cuts, affecting some garment manufacturers.

The opposition Bangladesh National Party (BNP) has staged massive protests in recent weeks in an attempt to capitalize on mounting dissatisfaction with the weakening economy to woo voters ahead of next year’s general election. .

This month, Bangladesh received a credit of US$2.3 billion from the International Monetary Fund (IMF) and another US$1.3 billion from its Sustainability and Recovery Fund. mission to help poor countries tackle climate change and other long-term challenges.

Unlike its regional neighbors Sri Lanka and Pakistan, Bangladesh is not facing a full-blown liquidity crisis. But the South Asian nation’s foreign exchange reserves have plummeted this year amid a stronger US dollar, which has weighed on prices and consumer demand.

Clothing and textiles manufacturing, the largest industry in Bangladesh, benefited from soaring sales after the global Covid-19 control lockdown was lifted.

According to BGMEA, Bangladesh exported US$42.6 billion worth of apparel and US$2.6 billion worth of textiles in the 12 months to the end of June, accounting for about 85 per cent of total merchandise exports. culture of the country.

Producing clothing for fashion retailers such as Walmart, Primark, H&M, Target as well as other global chains has lifted more than 160 million people, mostly women, in Bangladesh out of poverty.

According to Ranjan Mahtani, CEO of Epic Group, a large American fashion business with a factory in Bangladesh, clothing sales have spiked in the post-Covid-19 era, but are now falling, resulting in huge inventory volumes at retailers.

During the first months of the pandemic, Bangladeshi garment manufacturers were hit hard as many fashion retailers in the West canceled orders. Some manufacturers responded by turning to masks and personal protective equipment as demand for those products increased rapidly.

Vidiya Amrit Khan, director of Desh Garments, which supplies brands including Calvin Klein and Tommy Hilfiger in the US as well as Crew Clothing in the UK, says: “In a country that looks chaotic from the outside, Outside, everyone is really focused because we need to survive.”

BGMEA President Hassan said that in the latest drop in orders, retailers did not cancel orders immediately. Instead, they ask for a discount or charge a storage fee on top of what they have paid manufacturers for shipments of clothing that they cannot sell immediately.

Hassan added that the garment industry has asked the Bangladesh Central Bank to press commercial banks to allow delay in payment of loans so that garment factories can prioritize payment of wages and bills. water electricity.

Power cuts cause further difficulties for textile manufacturers. Syed Naved Husain, CEO of Beximco, one of Bangladesh’s largest apparel companies, said: “Energy is a problem that causes many garment companies to have bad months.”

Husain says he thinks apparel companies should buy energy at today’s prices even if it causes the cost of clothing to skyrocket.

In a fiercely competitive industry with low profit margins, clothing manufacturers in Bangladesh are particularly vulnerable to changing tastes and needs of global consumers.

As fashion retail chains deal with pressure from consumers and shareholders to improve their sustainability practices, apparel manufacturers in developing countries like Bangladesh need to invest in machinery and equipment to reduce the use of water, electricity and other resources.

Faruque Hassan’s apparel company has installed solar panels, new jeans washing machines and other appliances. “What’s happening now is that the fashion industry is being attacked,” he said.

Bangladesh’s Commerce Minister Tipu Munshi confirmed the country’s garment exports were slowing, but noted people “still have to wear clothes” even during tougher economic times.

“Maybe you only buy 2 out of 4 pieces of clothing that you plan to buy, but you still have to buy it,” he said. And no other country can beat our affordable clothing prices.”

According to the Financial Times