Home ›› 21 Aug 2022 ›› Front
Over one and a half decades ago, factories in Bangladesh manufactured sweaters through manual labour, which was costly and took a long time. Because of that, manufacturers were unable to produce value-added goods and buyers were not interested to place more orders.
But now, in 2022, the sweater factories in the country are nearly 100 per cent automated, which has not only reduced production costs but also significantly increased productivity.
Moreover, thanks to excellent marketing in non-traditional markets, manufacturers now get work orders from international buyers throughout the year, including during the winter season when orders have always been low in the past.
As a result, the country earned more than $5 billion from sweater exports — for the first time in history — in the last fiscal year of 2021-22.
According to Export Promotion Bureau (EPB) data, Bangladesh exported $5.64 billion worth of sweaters in FY22 — marking a 28.19 per cent growth compared to the $4.05 billion in FY2020-21.
In FY2019-20, the country had exported $3.6 billion worth of sweaters. The amount was $4.26 billion in FY2018-19.
There are more than 500 sweater factories around the country at present, according to Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
With work orders shifting from China and global fashion trends changing, Bangladesh has started to become a major sweater sourcing hub for retailers and brands around the world in recent years.
According to industry insiders, Chinese manufacturers do not want to make sweaters due to the complicated manufacturing process, higher production costs and a shortage of skilled workers. As a result, sweater exports from Bangladesh, the second-largest garment supplier in the world after China, have seen a significant rise.
However, though the latest achievement created much hope among manufacturers, the ongoing Russia-Ukraine war that started in February and the ensuing global economic crisis have made things uncertain with orders recently dropping by around 30 per cent.
Exporters say they will only be able to recover if the crisis does not prolong and the government manages to provide uninterrupted energy and power supply.
What paved the way?
The revolution in the sweater industry started back in 2005 when Rupa Group set up 10 automatic machines. That was the first initiative in Bangladesh at a time when nobody had any experience in this area.
But Rupa Group Managing Director (MD) Shahidul Islam took the risk, bought the machines and decided to pave the way by becoming the pioneer.
“The Japanese machine suppliers gave me the opportunity to visit several automated sweater factories in India, which showed me how far behind we were. They also pledged to train my workers and take responsibility for any technical problem,” Shahidul told The Business Post.
The suppliers at first gave a worker the chance to go to Japan and learn how to operate the machine. Later, they trained 10 more workers here, who in turn trained others, he said.
A few years later, Shahidul set up another 40 machines after he found that automatic machines were more profitable than manual labour.
His factory currently has 600 automated machines churning out sweaters and more than 1,500 workers operating them. The company sells sweaters worth $30 million a year.
“If we didn’t have the machines, we would have needed at least 3,500 workers in total to produce the number of sweaters we currently manufacture and export,” he said.
“Seeing our success, many other entrepreneurs also set up automatic machines. Now, I don’t think there is a single factory in Bangladesh that makes sweaters using manual labour,” Shahidul added.
The ups and downs
Not only automation, but good marketing and policy support from the government also boosted the sweater exports over the years. High prices of raw materials played a role as well in crossing the $5 billion mark in export earnings last fiscal.
Industry insiders said the manufacturers used to get fewer work orders previously from international buyers during the winter season here since their main market was the US and the European countries, which source the goods from Bangladesh during the summer and rainy seasons.
But over the last five years, exporters had focused on approaching the non-traditional market to boost sales. As a result, they currently export sweaters to Russia, Australia, Japan, South Korea, India, Brazil, and many other countries, including several in Africa, after getting work orders throughout the year.
Canada, Europe and the US, however, are still the largest sweater markets for Bangladesh.
After the Covid-19 pandemic sent the world into lockdown mode, global buyers had postponed or cancelled many existing work orders and nearly stopped placing new ones — which badly hurt the industry.
However, buyers started placing more work orders than before when the pandemic came under control and everything began returning to normal. At the same time, many international buyers started looking to Bangladesh as the alternative sourcing hub due to the US-China conflict, power shortage in China, pandemic crisis in Vietnam and political unrest in Myanmar.
But after Russia invaded Ukraine, the global economy again fell into another crisis. Currently, the European Union and the US are facing record inflation.
Due to this war, Bangladeshi exporters have also been forced to stop sending products to Russia, which in recent years has become an emerging sweater market, since western countries imposed many sanctions on the country.
Hopes and challenges
Talking to The Business Post, Fame Sweaters Ltd MD Md Moshiul Azam Shajal said despite the war-induced crisis, they are still getting orders from non-traditional markets. While consumers’ purchase capacity has reduced, makers of low-cost goods will still benefit and Bangladesh is ahead there.
Bangladeshi manufacturers are also getting more work orders due to the ongoing US-China conflict, he said.
“But to utilise these opportunities, the government must improve ease of doing business and ensure uninterrupted energy and power supply. If we will fail to send shipments on time, buyers won’t come to us,” he added.
Shahidullah Azim, acting president of BGMEA, said, “Due to the fully automated and skilled setup in the sweater industry, there is a huge opportunity to earn more foreign currency. But policy support from the government is most important to make that happen for sure.”
Fabrica Knit Composite Ltd MD Mijanur Rahman also told The Business Post, “While the automated machines had reduced manufacturing costs, the cost of setting up and running them is still high.”
“A manual machine costs $300 and an automated one costs a minimum of $25,000. The automated machines also need to be run in an air-conditioned environment. It’s also become tough to find skilled workers to operate them,” he said.
