COVID-19 or Novel coronavirus soon after being firstly traced in the human body on 31, December 2019 in Wuhan-Hubei in China, spread all over the world. This epidemic disease destroyed everything wherever it headed to. Due to this novel coronavirus pandemic, the entire world has been bound to be stopped. Everything including education, business, politics and even war has to be stopped. Everyone is running after discovering the way to get relief from COVID-19. Researchers across the world are trying rigorously to find out a solution, while all the other sectors are trying to adapt themselves to this new normal situation. Everything has been converted into the virtual format.
Introduction
COVID-19 has affected every sector across the entire world; no matter whether it is the rich or poor countries. The economic giant countries like the USA, UK, Germany, Canada, Italy and so on are also the severe victims of this pandemic. These developed countries also have to suffer a lot despite having a developed medical system equipped with modern technology. They cannot even accommodate all the patients in the hospital and finally having no other alternatives left the old people at home helplessly. Everything has to be shut down to prevent the mutual transmission but in return, the entire world is facing a crucial situation. Almost every sector has been affected by this disease.
Textile Industry
Among all the manufacturing industry affected, the textile and apparel industry is facing a severe crisis. Most of the factories of this industry are export-oriented and the remaining are for supporting the local markets. Due to the coronavirus, all the business across the world has been kept on hold. The factories cannot produce the goods properly due to lack of the necessary raw materials coming from the outside or the absenteeism of the workers. Workers are afraid to come out of the house for fear of being affected by Covid-19. As a consequence of this situation, the textile manufacturing factories like the spinning mill, knitting mill, weaving mill, dyeing mill, printing mill and others are facing an unanticipated result. At the very beginning, they could successfully handle the situation as they got sufficient raw materials at hand and the smooth WIP (work-in-progress). But after a couple of months, the raw materials supply especially fibres, dyes, chemicals, fabrics has been hampered which has become the big issue to think about. It has been found from intensive research that in April all types of textile factories suffered the maximum production drops and then gradually they could minimize the production drop. Still, the textile industry is trying to reduce the production drop and bring back the normal production situation. But in fact, they are literally struggling to do so.
There is no more a balanced demand-supply situation right now. The demand from the customer or fashion buyer has been reduced remarkably. Buyers are not ordering for new garments or existing garment orders are being kept on hold. Due to the lack of fibres, spinners cannot produce yarns and accordingly knitting or weaving industry cannot be supported by the sufficient yarns or the spinners are producing the normal amount of yarns from the fibres already booked and in-housed in the necessary quantities but the knitting or weaving industry does not consume as before due to less production, the factory shut down, etc. Dyeing and all the other subsequent manufacturing factories are facing the same as mentioned for the spinning and knitting/weaving industry.
Apparel Industry
This is the most severely affected part of the textile and apparel industry. Because the textile and apparel industry is the most populated sector, where millions of people are working. But due to the lockdown period imposed by the government, people cannot go out home to the workstation. So, workers’ absenteeism has been increased and consequently, production has been hampered significantly. Another big reason is that fashion buyers are not taking any products during the pandemic period because all of their outlets are closed due to this current situation. That is why buyers are requesting the manufacturing factories to keep the goods in the factory which causes a huge amount of inventory management cost for the suppliers and of course, there is the risk of product damage, loss, etc. In addition, factory owners are seriously struggling to maintain everything particularly the salary and/or wages of the workforces, as they are not getting any promised payments from the buyers. Thousands of workers are losing their jobs every day or employees -both workers and engineers are suffering from the pay-cuts up to a maximum of 60% found the research done. As a result, they cannot lead a simple regular life as before. They cannot afford buying their regular commodities with the wages/salary they are getting during the pandemic.
Figure. Production status during novel coronavirus pandemic.
Another critical issue in the apparel sector is maintaining proper hygiene. Workers have no other alternatives and they know they must go for work; otherwise, they cannot survive. Business owners are also trying hard to survive in critical moments. This is the somewhat lose-lose-lose situation for all the parties -buyers, manufacturing business owners and the workers. The factories are offering hygiene measures like soap, facial mask, sanitizer, soapy water spray, head-cover, etc. to ensure their workers. But this is the scenario of the big company. Think about small and medium factories. They are miserably struggling and about to be shut down. This coronavirus has killed so many dreams, with so many lives. Yesterday’s potential entrepreneurs are bankrupt today.
Garment Order and Export Status
As almost all the fashion outlets are closed during the pandemic situation, buyers are bound not to bring the garment items to their warehouses. That is why they are not ordering for new goods or postponing the existing orders (work-in-progress) or even cancelling the orders. Although receiving no new orders, is threatening the textile and apparel industry but more loss is from order cancellation. Most of the order cancellation occurs in the middle of the order that means a huge loss for the manufacturing company. Garment orders and exports are also being hampered due to the closure of international flights. Supply cannot ship the goods or buyers cannot receive the items timely.
Adapting to the new normal situation
Surprisingly, this disease has been around for a long time. We should find a way out to adapt to this situation. Education, business, manufacturing industry, everything should reform their structures. Accordingly, the textile and apparel industry must make some changes to sustain. Currently, there are very few fashion item orders in the factory. Buyers are ordering for medical items especially facial mask, body gown, surgical gown, head-cover, foot-cover, hand gloves, and other protective equipment. There is a huge demand of advanced textile materials like virus-protected fabrics with anti-virus finishes. More and more researches are utmost to face crisis moments. Depending merely on the basic fashion items at this age is nothing but foolishness. Another most important thing is to strengthen the backward linkage industry and ultimately reducing the dependence on other countries for raw materials. Look at the current situation, manufacturing factories cannot run their production due to the raw materials crisis as because they cannot come as all the international flights are stopped. One industry can be strong but can never be the strongest with only one part of the supply chain no matter whether it is yarn or fabric manufacturing or garments manufacturing. If you depend on others, that means your navigation is on others hand. You can collapse at any time. So we have to focus on each and every chain of the entire textile supply chain.
Conclusion
The effect of coronavirus on the textile and apparel industry found from research, does not actually present the real scenario of the future of this industry. It can at best predict the probable scene in future, though there is no such research so far. Research done so far is on the current scenario and this current scenario is actually the reflection of the previous season for which industry already got the garment orders and could order & in-house all the necessary raw materials. Business status is being affected due to production drop caused by the employee absenteeism and shipment problems. The existing system is already obsolete and to protect this business, policy-makers should rethink about the business strategy, production tools & techniques, produced items.
PhD fellow, Huazhong University of Science and Technology(HUST), Wuhan, China, and Assistant Professor, Bangladesh University of Textiles.
COVID 19 or Novel coronavirus was firstly traced in the human body on 31, December 2019 in Wuhan, Hubei, China. Now, this novel coronavirus spread all over the world. Almost 206 countries and regions were affected by this novel coronavirus. On behalf of the World Health Organization (WHO) Director-General, Dr Tedros Adhanom Ghebreyesus declared coronavirus disease (COVID-19) Pandemic on March 11. The number of affected countries and regions is increasing day by day. According to the World Health Organization, Institute of Epidemiology, Disease Control and Research dated 23 July 2020, Bangladesh has 216,110 confirmed infections and 2801 people have died from the coronavirus. Many people have recovered from this disease. The total healing number is 119,208.
On 1 April 2020, the government cancelled all public programs marking Pahela Baishakh, the Bengali New Year, to avoid mass gatherings as part of its efforts to contain the spread of the novel coronavirus. However, Our governments are trying best and I would like to congratulate Our Honorable Prime Minister for her imperative and assertive decisions regarding control, supervision, and practical initiative. The government requested the people to stay at home and enjoy the programs online at the live telecast.
The performance of the RMG sector is more critical for an economy like Bangladesh, since textile & apparel industry contributes 84% of the country’s export, employing close to 4.1 million people. As the textile is the backbone of our economy. While gauging the possible impact of the pandemic on the apparel sector, it is imperative to look into the demand side scenario by analyzing the European, US, and emerging markets for apparel export. The picture that is emerging is devastating. Social distancing measures are taken in countries currently most affected by COVID-19 are driving wholesale closure of thousands of garment factories with millions of workers being laid off without a social safety net.
As the virus spreads within the garment-producing countries, more factories are almost closed down and some will be forced to close, putting potentially millions of more workers out of work. This leaves factories holding the goods, unable to sell them to the customer that ordered them, and in many cases unable to pay the wages of the workers who made them. For many of the 4.1 million workers in Bangladesh’s garment industry can be critical to survival. But more than a million have already been fired as global fashion companies have cancelled or suspended orders in Bangladesh due to the coronavirus crisis, according to a report of Penn State University’s Center for Global Workers’ Rights and the Worker Rights Consortium (WRC). The numbers only look set to rise and don’t count workers in Cambodia, India, Myanmar, Vietnam, and other countries facing similar situations. There are fears that job losses could lead to hunger among the unemployed and their families. Most of the garments workers live below the poverty line. The minimum wage for Bangladeshi garment workers is about $96 a month, which activists say is below a living wage.
In these circumstances, it is also found that 98% of buyers many of the big global clients refused to contribute to the cost of partial wages for the employees. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that more than one thousand RMG factories had received order cancellation or shipment delay notices from the buyers for export orders worth almost US$3 billion. It is affecting more than 1.44 million workers. Global buyers are not only cancelling and suspending orders but also, they are not taking ready goods. The current state makes us clear that the textile and RMG industry is vulnerable now. Fazlee Shamim Ehsan, Director of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the prices of basic raw materials, including sewing thread and level yarns used in production, are high due to the virus outbreak. Considering the real scenario BGMEA President Rubana Huq said that everyone related to the RMG sector we have to be patient and not be afraid. Every manufacturer should contact their buyer and should try to convince them not to cancel their order fully and to take the ready goods through this employee can get their salaries.
According to the industry people, about 46 per cent of raw materials for the local RMG industry is sourced from China. Orders for nearly 650 million garments, worth a total of US$2.04 billion have been cancelled, impacting on 738 factories and about 1.42 million workers, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). This loss cannot be recovered soon or ever. The unemployment rate is increasing but we have a place for expectation. Our government is very imperative and assertive, as soon as the situation is deteriorating then comes a motivational as well as a blooming package for the textile firms and industries. On 25 March, Prime Minister Sheikh Hasina announced a stimulus package of Tk 5,000 crore taka for export-oriented industries to mitigate the impact of the coronavirus. Again not only for textile industries but also for small & medium business organizations.
On April 5, New Incentive Package Was declared by the Honorable Prime Minister, Peoples Republic of Bangladesh, 72,750 thousand crore taka for the help of the industries and factories. This incentive package will help to revive and boost up our textile economy sector. The incentive packages include 1. Working Capital Financing (BDT 30,000 crore) Interest 9%; 4.5% will be subsidized, 2. CMSME Working Capital (BDT 20,000 crore) -Interest Rate: 9%; 5% will be subsidized 3. EDF Fund Expansion – Increase from USD3.5BN to USD5BN (New Addition 12750 crore); Rate: 2% rate. 4. Pre-shipment credit finance by BB – Rate: 7%; Amount: BDT 3000 crore. 5. Increase the Incentive Package to BDT 72,750 Crore from Existing BDT 5,000 crore. In these circumstances, different organizations like other government banks, financial and non-financial institutions, leasing companies should come up to help and alleviate these emergencies for saving the economy as well as the country.
The global impact of coronavirus is widespread and huge in the global textile market. The global textile community forecasts that the textile growth will fall by 13% to 32% in 2O2O (WTO). The growth rate will fall gradually. The world trade organizations forecast becoming true day by day. The International Monetary Fund also assumes that the total global growth rate will be falling up to 3% in 2020. The global supply chain network is getting poor and weak. The Transport connective is vulnerable almost stagnant. The textile market of the Bangladeshi garments industry largely depends on the European Union. The market share is almost 62% and other reaming the share contained by the USA and Canada like 21%. Our global market is shrinking and the supplier is not ready to receive the textile goods and services. The number of order cancellations is increasing day by day.
Source:
MDS Transmodal, March 2020
Source:
MDS Transmodal, March 2020
From the figure, we can see that share in global trade and share in total exports are decreasing in this epidemic and global fashion houses are devasted. These circumstances threaten our industry and factory. The government and other concerning bodies of the world are getting more serious about these issues.
However, HSBC Bangladesh announced a set of measures to help it’s textile and garments clients tide over the economic fall out from the coronavirus pandemic. The bank will provide special short- term loans of up to one year, with a principal moratorium for four months, which can be used to support payroll bills and utility payments. The bank will also allow three months’ moratorium against the existing term loans enjoyed by businesses belonging to the textile and garments sector. The Bangladesh Bank has asked banks to extend similar support to businesses. Different Supporting body should come up to support and bloom up our textile and garments sector. By considering this situation, different international financial organizations like the World Bank and IMF, ADB and others should come and looks to support its people, businesses, and industries relieving from the pandemic. Now the different parties are raising voice to get encouragement packages again to support the industry. We hope to see the new sun of the day and start a new journey again with the suppliers and buyers.
