Indefinite closure of Ashulia units a severe blow to RMG sector

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Monira Munni The country's ready-made garment (RMG) industry is set to face yet another blow following the declaration of the indefinite shutdown of its manufacturing units in the Ashulia industrial belt. The belt accounts for about 30 per cent of the total apparel export production, industry people said Tuesday. They said the $20 billion industry was already facing several challenges like tremendous pressure and criticism from both local and international quarters. Its image had already been immensely tarnished following the two successive industrial blazes at Tazreen and Smart factories and the collapse of Rana Plaza at Savar that housed five garment units. Factories in the Ashulia belt have been kept shut at a time, when the sector is struggling to cope with the losses caused by the spate of frequent hartals and stave off the Tazreen fire's negative impact. Against this backdrop, a further suspension of production for an indefinite period will create a great pressure on it and invite uncertainties for the garment business, the apparel sector people added. They expressed the fear that many garment factories would face order cancellation, opt for expensive air shipment, sales on discount --- leading to shifting of buyers to other destinations if the suspension persisted for a long time. According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the sector will incur a loss of about Tk 850 million in terms of value addition for a signle day's shutdown of factories in Ashulia. A whole day's production suspension in all factories across the country will prompt a loss of about Tk 2.85 billion in terms of value addition, according to BGMEA. The sector loses around Tk 2.0 billion on each hartal day owing to disruptions in production, it added. "At this time, when we are trying to recoup the losses caused by hartals and the Tazreen blaze, the closure of factories following unrest and security concern is just another heavy blow to the industry," BGMEA president Atiqul Islam said. "We don't want to suspend production but have been forced to do so as the owners feel insecure following the continuous unrest", he added. "The impact of suspension of production is enormous and unbearable," Abdus Salam Murshedy, managing director of Envoy Group, that runs its manufacturing activities in Ashulia, told the FE. The total supply chain, that moves round the clock, from production to shipment, has come to a halt, he said adding this situation would lead to uncertainties. He said following the suspension of production, manufacturers have to pay for expensive air shipments and give discounts to the buyers, and even they will face cancellation of orders. "Buyers will lose their confidence in placing orders in Bangladesh fearing that we might not be able to make timely shipments," said Md Shahidullah Azim, Managing Director, Classic Fashion Concept Ltd. Many of the buyers have already started reducing the volume of orders for the next season, he said. Orders for next spring and summer will end in June and July, he said adding if such situation continued further, "we will lose those orders as buyers have already started searching for alternatives to Bangladesh." "These orders might be shifted to neighbouring countries," he said expressing his fear. After the Savar tragedy, production at most of the factories in Ahulia was suspended for about 10-12 days including the two days' suspension by the BGMEA. "Now production is hampered every day due to unrest," manufacturers said. They said during the last few days workers, in most of the factories, either leave their workplace at will or come out of work after punching their ID cards. Managing Director of Mohammadi Group, Rubana Huq, said it is unfortunate when factories close down. "But if the workers start agitating, there is nothing much to do except opting for closure from the manufacturers' end," she added. "No work, no pay" can come under criticism, but the reality is manufacturers can't pay when they are not producing and exporting," she said. "If we fail to run our production, how we will pay wages to the workers," Syed Qamrul Huda, owner of the Arunima Sportsware at Ashulia wondered. Md Siddiqur Rahman, chairman of Sterling Group, said about 25-30 per cent of the total export orders are met by the Ashulia belt, which accommodate more than 300 factories and most of them are large units. The manufacturers said vested interest groups were creating chaos in the sector and had instigated the workers. They called on the government to take necessary action against them for the sake of the industry and the country. The government announced forming a new minimum wage board to increase wages of garment workers, and the manufacturers will follow it despite the factories' shutdown due to unrest, which is unexpected, they said.