More than 37 per cent of readymade garment factories have unused production capacity due to a lack of orders and declining global demand, a recent survey has found.
The study, conducted last month on 100 factories with 66 responding, shows that on average, factories had 27.5 per cent of their capacity idle throughout 2023.
In the first quarter of 2024, around 62.21 per cent of the surveyed factories' capacity has already been booked for January-April.
The findings were shared at a press conference in Dhaka Club on Tuesday by Faisal Samad, panel leader of 'Forum' -- a group contesting the upcoming Bangladesh Garment Manufacturers and Exporters Association (BGMEA) election.
He said respondents in December last year were asked about product price declines.
Some 47.10 per cent experienced price falls exceeding 5 per cent, with the average FOB (free on board) price for Bangladeshi garments dropping by 3.90 per cent, said the readymade garment leader.
He also said that 79.1 per cent of respondents said their buyers did not raise product prices despite the new minimum wage structure implemented in December.
Mr Samad also noted a 20-25 per cent decrease in RMG cutting and making (CM) costs after the Covid pandemic.
The survey also found a 47.85 per cent increase in entrepreneurs' costs related to customs and bonds compared to 2022.
The industry has been going through a tough time, commented Mr Samad, citing difficulties following the energy price hikes. At the programme, Kazi Mizanur Rahman, managing director of Adeeba Apparels Ltd, said small and medium factories are suffering the most as banks are unwilling to finance them, while big factories with established brand and retail partnerships are better able to handle the new wage increase.
Referring to an "unhealthy competition" among factories vying for work orders at low rates, Mr Rahman said small factories become the worst victims of this practice.
He alleged that garment makers at Chittagong port face a range of hurdles and inconveniences.
On competition for orders at low rates, Mr Faisal Samad, a director of the BGMEA, said manufacturers often accept work orders below production costs simply to keep their businesses running and ensure timely wages and other obligations.
"And buyers take advantage of it," he added.
Mr Samad said apparel makers raised 30 major issues, including SME development, compliance, fair pricing and an exit policy for struggling businesses, at recent meetings in Dhaka and Chittagong. If elected, he said his panel 'Forum' would address these issues, including developing an exit policy for non-viable factories.
According to him, small ventures are facing numerous challenges, including buyer non-payment, order cancellations, discounts and difficulties securing bank financing.
He promised to address these concerns while also working to secure fair prices, build local brands and implement a unified code of conduct. Two panels, 'Sammilita Parishad' and 'Forum', are contesting the upcoming BGMEA board elections for the 2024-2026 term. The election will be held on March 9 to fill 35 director positions.
The previous BGMEA board elections were held in April 2021, with officebearers elected in April of the same year.
The incumbent board's term was originally due to end in April 2023, but the government extended it twice for one year.
On December 4, 2023, the BGMEA board established an election committee to conduct the upcoming elections.
munni_fe@yahoo.com