RMG work orders bounce back

Bangladesh’s apparel exporters have started receiving a large number of orders after facing declining orders since September this year due to the global economic crisis.

Industry insiders said their booking capacity is gradually increasing and many exporters have orders till March-April next year.

Many new buyers have already started coming to Bangladesh and the sector’s approaches to the non-traditional markets are helping increase orders.

However, the month of November will not see big changes in the apparel export performance. Besides, the ongoing energy crisis, especially gas shortage, is a big challenge for them, insiders claimed.

International Apparel Forum (IAF) President Cem Altan told The Business Post: “Although the exporters are now navigating troubled waters because of the order shortages, I believe that it will no longer be the case in the coming days.”

“We expect that brands will have a good sale during the upcoming Christmas season. If they are able to clear maximum stock, they will return with a large number of work orders.”

Snowtex Group Managing Director SM Khaled told The Business Post that his factory is continuing production with 90 percent booking in the current month but the factory is able to manage 95 percent works of its capacity in the month of December.

“I have already had 100 percent orders since January. After the end of the upcoming Christmas, most of the apparel manufacturers will receive hundred percent booking.”

Nipa Group Managing Director Md Khosru Chowdhury said in October he had 90 percent booking but now the group has 100 percent work orders.

“I think the sector has started to return to its previous position though it will take more time.”

Fakir Fashions Managing Director Kamruzaman Nahid said his factory has only 60 percent work orders this November but it will increase to 85 percent in December and 95 percent in January.

“I am trying to arrange more orders and after Christmas I will have more orders. The situation is turning for the better day by day.”

TAD Group Managing Director Md Ashikur Rahman Tuhin told The Business Post: “We have been facing severe export order crisis in the last two-three months due to the global high inflation. But the situation is changing.”

Most of the brands started to place orders and woven manufacturers started to receive hundred percent booking from January. After Christmas and winter sale brands will come with a big volume of work orders.

He further said: “To avoid any kind of incident further, exporters should increase the number of their buyers. New markets would be the best option for them.”

According to the Export Promotion Bureau (EPB), Bangladesh performed $42.61 billion apparel export with 35.47percent growth in FY22.

The trend continued till August of this year but in September the RMG sector witnessed 7.52 percent negative earnings year-on-year and achieved just 3.27 percent growth in October.

Price is too tight

Apparel manufactures said due to the ongoing Russia-Ukraine war, global economy, especially Bangladesh’s major export destination countries are facing severe crisis such as record high inflation and unemployment.

For this reason, consumers’ purchase capacity came down and brands have big volumes of clothes in stocks. But thanks to winter season and Christmas sell when buyers will start to place new orders.

But their price is very tight. Basically buyers don’t agree to increase retail price and want to clear their stocks as soon as possible.

“That is why we have to receive work orders with a minimum profit margin,” Southeast Sweater Managing Director Mahbubur Rahman Lucky said.

Snowtex’s Khaled said: “We are compromising with profit margin as it is time to attract consumers and buyers and this is why we are doing it.”

However, Fakir Fashions Nahid said buyers are informed that we are facing work order shortage and this is why they are trying to take advantage. Nobody should receive work orders below breakeven cost because work orders will come with each day
passing.

Nipa Group Khosru said average price is down by 7 percent.

Energy crisis is key threat

Industry insiders said Bangladesh will receive huge volume of work orders within next two-three month. But due to the ongoing gas and electricity crisis, their production capacity is already down by 30 percent.

When new orders will come the crisis will persist and exporters are likely to fail to meet the shipment deadline.

Nafis Ud Doula, Director of Impress-Newtex Composite Textiles, said due to the ongoing gas crisis, they have to spend Tk20 lakh per day to run diesel-fired generator. “I don’t know when the crisis will go.”

Fakir Fashion’s Nahid said the government should ensure uninterrupted gas supply as soon as possible to protect the sector and earn more foreign currency.

“If we will not be able to meet lead time due to the crisis, buyers will rethink to place new orders.”