EXCLUSIVE – Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has sought to provide some much-needed clarity around the recent news that Bangladeshi denim manufacturer SF Denim has let go of around 700 garment workers.
Some online outlets had suggested that the workers were unceremoniously fired and that one of the reasons for this was that SF Denim Apparels had been obstructing efforts to form a union.
However, Huq has pointed out clearly and explicitly that this is not the case, and that the challenges faced by SF Denim are part of a wider picture in the Bangladesh RMG sector of declining unit prices amid the demand for ever-cheaper clothing from consumers.
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She says that, like many garment manufacturers in Bangladesh, SF Denim has faced huge challenges in the past six months, including a lack of orders as well as low and declining unit prices for apparel. The factory has been operating at less than 50 per cent of its capacity, a situation which, as any business owner will tell you, is not sustainable.
Huq says: “With this in mind, the business took the very difficult decision to let go of around 700 workers; given the state of its order book, the company had little choice but to do anything else.
“Workers were not laid off because of union links, they werelaid off for no other reason than a lack or orders. To remain in business and continue providing employment for its remaining workers, SF Denim had to reduce its cost base and cut its cloth accordingly.”
Huq has also clarified that there was no altercation between workers/unions and SF Denim. She explained that thecomplete lay-off process has been handled properly and transparently.
Added Huq: “Workers who were laid off were provided with full benefits, in accordance with national employment laws in Bangladesh. In addition, brands sourcing from SF Denim have been duly informed about this situation.
“We also need to remember that brands in the West regularly have store closures and make redundancies. Where is the censure for them? It cannot be one rule for brands, another for their suppliers. Apparel suppliers are just like brands – if there is a lack of business, they must take action.”
She adds: “In summary, the ‘story’ here is not one of negligent management or uncaring factory owner. It is one of a business operating in an extremely competitive and tough economic environment and taking the only option left available to it.”
So what now? It has become quite clear that SF Denim is not the only garment manufacturer in Bangladesh which has been facing challenges in recent months. We all know there are concerns about the current state of the global economy, and the fashion industry is not immune to this. To remain in business, apparel brands are offering cheaper and cheaper clothing items to consumers. It is obvious that the easiest waythey can do this is by placing pressure on their suppliers – suppliers like SF Denim – to produce clothing at ever slimmer margins.
Says Huq: “In Bangladesh, thousands of factories are competing for orders, which means that if one factory cannot meet an order at the right price, another will. Many of us are already aware of this picture, however, there has undoubtedly been a sharp deterioration of prices in the past twelve months.
“One must also couple this with the increase in the national minimum wage in Bangladesh for garment workers, by around 50 per cent at the end of 2018. While we are all supportive of higher wages for garment workers, it would be naïve to think this would not have an operational impact on garment suppliers. Some suppliers have managed to absorb these costs but others have not been so well prepared.”
Huq points out that brands have been generally unwilling (or unable) to increase their unit prices to account for this large one-off increase in costs for suppliers.
She concludes: “All we can ask for at the current time is support and understanding from brands. Bangladeshi RMG suppliers have shown such loyalty to them in the past few decades. If we want a fair, compliant industry which adheres to high levels of environmental and social compliance, our factories need regular, consistent orders at a fair unit price from apparel brands and retailers.”