In Apparel Industry

CONTENT Vol. 5 ISSUE 4 AUGUST 2016

Cover Story World Wrap Vision 2021: Mission US $ 50 billion seems US Retail Sales Soar: (im) possible? - All eyes are on 2021, the year when Bangladesh will celebrate the Backed by strong golden jubilee of its independence and the year earmarked to achieve a target of US $ 50 billion export earnings from garment. The figure, though appears overwhelming, is not domestic demand p70 impossible to reach! Going by earnings of around US $ 1200 way back in 1978… p14

Exporter Profile Emerging Market Science of Apparel Ethiopia & Myanmar: Manufacturing: The next ‘powerhouse(s)’ Design Thinking p18 of sourcing p50

Buyer Blog FFT Trends 62 The changing dynamics Fall 2017-18: of market, manufacturing Colour Directions - The dominant Tech Management palettes for Fall ’17-18 menswear and and trends… womenswear, all confirm to various themes Value Stream Mapping that place a renewed focus on contemporary sports, archetypes of uniforms, and plenty of and WIP reduction: luxe classics that can translate to city scapes A potent tool for or country scenes... p72 ‘operational excellence’ Bangladesh Canvas in apparel industry - Global macro-economic indicators, competition Strategic shift in product and cost pressures are compelling works for Bengal Jeans, organizations to focus on “Operational Excellence”. Successful manufacturers now M.A.C.K Shirts - excel in operations through the use of Making strategic shifts to remain relevant principles like Value Stream Mapping in business is the essence of a smart and other tools under the aegis of Toyota entrepreneur, and living by this maxim is Production System, which advocate Shawkat-Uz-Zaman, Managing Director, waste elimination from manufacturing M.A.C.K Shirts who till a few months ago processes, resulting in enhanced was the MD of Bengal Jeans, which was efficiency and quality.... manufacturing denim products... p26

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FROM THE EDITOR-IN-CHIEF’s DESK… No country is safe today from the wrath of terrorists’ attacks... Who could EDITORIAL TEAM have ever thought that Europe would become the epicentre of such terror activities…! EDITOR-IN-CHIEF Deepak Mohindra The question is should we let these misguided people dictate the way we want to live our lives and conduct business? Should we hide behind the EDITOR Ila Saxena walls of our homes, thinking we are safe and these attackers will not reach us…, I don’t think so! COPY EDITOR Veereshwar Sobti I strongly advocate that we all should continue to go about doing our routine jobs…, but with a little more caution, not only when we are out of our comfort zone and country, but also when at home… Security ASST. COPY EDITOR Sahil Sehgal is all about being alert and following procedures…; incidences can happen anywhere. ASST. EDITOR Deepankar Shyam The past month has been very trying for the country and the killing of innocent foreigners working in the country, has resulted in an environment CREATIVE TEAM Raj Kumar Chahal of fear with many Governments advising their nationals to avoid travelling Peeush Jauhari to Bangladesh. I have even heard that some meetings with buyers have Satyapal Bisht Deepak Panwar been shifted to ‘safer’ venues like India or Hong Kong… My plea to the buyers and expats working in Bangladesh is to hang on and not think about moving out of the country for fear of terrorists alone. PHOTO EDITOR Himanshu Kumar I must compliment the Government for their quick and sharp crackdown on terrorists and measures to provide security to expats working in the OPERATION DIRECTOR Mayank Mohindra country. The commitment of the country and its leaders to hunt down and expose these anti-social elements causing terror cannot be denied and the PUBLISHER & message is going out loud and clear. MANAGING DIRECTOR Renu Mohindra Though there are reasons to evoke a sense of fear in expats living in the country, years of peaceful co-existence with locals cannot be overlooked HEAD OFFICE by a few incidences. I have heard that many expats are watching the Apparel Resources Private Limited situation very carefully, but many others have shown confidence in B-32, South Extension-1, the enforcement agencies and are not even considering the option of New Delhi-110 049 (India) moving out. Phone: 91-11-47390000 Bangladesh as a country has always been a fighter…, for them the E-mail: [email protected]; ‘Bengali’ pride is bigger than any other tag. I have experienced the [email protected] Web associate: www.apparelresources.com warmth and hospitality of the country and its people and have complete faith in the people and the Government to control the situation. I am impressed with the way even BGMEA has come forward with an initiative to headcount expats and ensure their safety. The Apparel Online team reiterates its commitment to continue meeting the SUBSCRIPTION ADVERTISEMENT GENERAL industry and promoting the country for its worth. Let us altogether defeat ENQUIRY ENQUIRY ENQUIRY the people who are not bothered about the thousands of poor workers +91-11-47390000 +91-11-9811088666 +91-11-47390000 subscribe@ rani@ contact@ dependent on this industry for their livelihood, but only about their own apparelresources.com apparelresources.com apparelresources.com beliefs and faith… Can they really be People of God, if they don’t care!

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MINDTREE

Q-and-A The United Kingdom-EU membership referendum that took place on June 23, 2016, resulted in an overall vote for UK to leave the EU, as opposed to remaining an EU member, by 51.9% to 48.1%, respectively. According to you, what would be the impact of UK opting out of the EU on Bangladesh’s apparel sector since UK is the third largest importer of Bangladeshi garments globally.

Mohammad Nurul Alam, Amer Salim, Director, Senior Merchandiser, Knit Asia Limited/ Asmara (BD) Private Limited Aurum Sweater Limited By withdrawing from Europe, the UK frees itself from European Union’s I think Brexit will certainly have an impact on the British economy rules and regulations but there will be no change in terms of market which we can already see it happening. The garment industry will facilities in the next two years for Bangladesh’s export because the have the follow-up impact due to the dampened British economy. We decision of leaving the EU will come into effect after 2018. This is have seen BHS, Austeen Reed and other big names collapsing even actually something that increases the chance of the Bangladesh before the Brexit, so Brexit will only elongate the economic dip in the Government securing a free trade agreement with the UK. But if the United Kingdom. value of British Pound falls, and if the post-Brexit economy suffers losses As suppliers here in Bangladesh, we might have to bear with it for on the back of weaker trade and investment, there will be a negative some time, but I believe it will start improving by the end of this year impact on Bangladesh’s export. So there will be a period of uncertainty after everything settles down. Regarding the GSP issue, I don’t think and adjustment following this. there will be any problem as the Bangladesh Foreign Ministry already ensured of renegotiation with the UK Government since it is out of the EU now. I find no reason for not having the renewed GSP facility for Bangladesh. Adnan Peerzada, Manager Commercial, IHPL The Asian sub-continental community in the UK seemed to have benefited more due to the Brexit and it seems it might as well open We may see temporary recession and drop in order flow because of up new opportunities for Bangladesh if we really want to look out for Euro devaluation but it will resume along with the passage of time. At positives out of this referendum. this stage, it is difficult to foresee how this separation will impact the economy of that region. Customers will be optimistic in placement of orders to avoid any business deficiency. Bangladesh still being the preferred location for EU and UK, business will not have substantial effect in the long run.

Sunil Kumar, General Manager, Nipun Nawaz, CEO, Bengal Hurricane Group Nahid Trade International

I think Brexit will certainly have an impact but only for a short duration, I think the issue of UK not staying in the European Union will not affect may be. The panic is already here to see; the British Pound has had a our garment sector at all because the benefit that we have in Europe substantial fall which is going to have an impact on the prices as well export is duty facilities, which means Duty-Free Access that has kept as order volumes. We will get a clearer picture only with the passage us one step forward from our competitors. Now after “Brexit”, UK has of time. still kept this Duty Facility with us, so nothing yet changed post-“Brexit” However the only silver lining for us in these worrying times is practically. However, I don’t think garment exports will be affected due to the possibility of a temporary shift of business from Turkey where “Brexit”. But yes if UK cancels Duty Facility (GSP) for us, this will cause Emergency has been imposed for 3 months. We are expecting certain a major problem to our exports. In such a scenario, it will enable our volume of business for Spring Summer 2017 to come to us as the competitors to be better than us in price and in that case we will face a country is under a virtual lockdown now. huge downfall in garments import by the UK.

12 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com MINDTREE

POST YOUR COMMENTS www.apparelresources.com [email protected] Sultan Ahmed, Managing Director, RASA Fashion International/ S&S Fashions International NEXT MINDTREE QUESTION We, as exporters of garments to UK, are really worried about the impact of the Companies are looking at Ethiopia United Kingdom-EU membership Referendum that took place on June 23, 2016, resulting in majority opting to leave the EU. as the next destination for expansion. As one amongst the Third World countries, Bangladesh gets facility to avail Is it to mitigate the business losses Generalised System of Preference (GSP) Certificate of Origin: FORMA from due to growing unrest in the country EU countries, of which UK has been a part. Besides, UK is the second largest importer amongst EU countries and third largest importer of garments items from or take advantage of the Ethiopian Bangladesh globally. So, if now UK refuses to give this GSP FORM A Certificate trade pact with US and other facility for Bangladesh, then obviously Bangladesh exports to UK will decrease significantly which will affect our total garments export volume. countries? Moreover, is it not better But we hope that our Government will take serious initiative to talk with the present for companies to go to Myanmar to UK Government and be able to convince them to continue our GSP facility even take advantage of its proximity to as they cease to be a member of EU due to the recent referendum result to leave the EU. Also, our garment exporters’ associations – BGMEA and BKMEA, should Bangladesh for easy management? take initiatives to cooperate with Bangladesh Government in providing information regarding the impact on our garment sector due to the changed situation after the Please share your views... referendum, and our Government should take this issue rather seriously.

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 13 COVER STORY

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Will it be enough to take exports to US $ 50 billion…? Wait till 2021 to know!

Vision 2021: Mission US $ 50 billion seems (im)possible?

All eyes are on 2021, the year when Bangladesh will celebrate e need to do 13 per cent “ every year and in the last the golden jubilee of its independence and the year earmarked 3 monthsW we have achieved 10.6 per cent, so we are closer to it. I to achieve a target of US $ 50 billion export earnings from still strongly believe that we will be able to achieve the target as a lot garment. The figure, though appears overwhelming, is not of investment is happening, we are upgrading our value-added garments; impossible to reach! Going by earnings of around US $ 1200 we have gone for diversification of way back in 1978, the country emerged as the second largest markets and products. There are good factories coming up. Though the exporter of RMG globally, second only to China. It made RMG last two years were difficult for us but we have got our confidence back. export of US $ 26 billion in 2015 making an average year- Positivity is there and we are working hard,” underlined Faruque Hassan, on-year growth of 13.05 per cent between 1996 and 2015 Senior VP of BGMEA and Managing which helped Bangladesh account for 5 per cent share in the Director of Giant Apparels Ltd. The tragic Tazreen Fashions fire on US $ 450 billion global garment market and well-positioned to November 24, 2012 and Rana Plaza building collapse on April 24, 2013, reach the magical mark of US $ 50 billion. had indeed made serious dents on

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“…there have been challenges but a lot of good things also have happened. A lot of young talented Join more than 10,000 people who are already fans of Apparel hardworking graduates are joining the textiles and apparel business as a serious career option, which is Resources on facebook. Search for Apparel Resources at improving the crop of professionals in the industry.” https://www.facebook.com/apparelresources.everythingsourcing/ – Syed Ishtiaq Alam, Director of Ananta Group p16

ESSENTIALS In order to reach the target, the industry needs to achieve 13 per cent growth every year. It also has to attract substantial investments, upgrade to more value-added offerings, diversify Faruque Hassan, Senior VP, BGMEA and Paul Forman, Chief Executive Officer, Managing Director, Giant Apparels Ltd. markets and Coats plc products and come up with good factories. The things the country’s image. If the Tazreen The sense of positivity as underlined buying new products, Syed is certain incident witnessed growth rate by Paul and Hassan, as well as the that are working in that Vision 2021 is well within the dropping from 29 per cent of 2011 to prospects that the future holds for its favour are the reach. “It is only a matter of how we mere 3 per cent in 2012, the impact of the sector as an able ally to China entrepreneurial spirit get there,” Syed underlines. the Rana Plaza accident manifested (under the China Plus One concept of the Bangladeshi Syed’s sentiments find resonance in itself in lower growth rate of 5 per that is building up strongly), has led Dr. Karthik ND, Country Managing cent in 2014. This is what perhaps a good number of manufacturers to companies looking Director, Intertek Bangladesh, who prompted McKinsey’s global survey come up with sustainable garmenting to become an maintains that the proactive attitude of leading apparel producers in units to impress the growing tribe of alternative to China of the business leaders in terms of 2015, predicting 7-9 per cent annual eco-minded international retailers and the availability bringing new avenues in the form growth for the sector over the next while also grabbing more work of labour. of export destinations, shows and five years. orders and increase the market product categories, and establishing share. Today, there are 26 LEED- Known for resilience and inherent Bangladesh’s USP by moving towards certified green garment factories fighting spirit, the sector not a higher value production chain are operating in Bangladesh out of only bounced back with grit and just a few indicators of the growth in which five are platinum-rated green determination but was also able to store, which he feels would only drive regain its lost glory and image by factories, and of these two are the highest rated green factories in the the industry closer to the US $ 50 setting an example of safety reforms billion apparel export target. with able support from buyers’ whole world. forums, the Government and other “…There have been challenges So, at a time when Bangladesh stakeholders. “The things working but a lot of good things have also seems well-poised to work its way in favour are the entrepreneurial happened. A lot of young talented towards the goal, comes the double spirit of the Bangladeshi companies hardworking graduates are joining whammy in form of Brexit and the looking to become an alternative the textiles and apparel business as a Dhaka terror attack! Like many to China and the availability of serious career option, as compared to other countries, economists and labour, but few improvements like 5 years back which is improving the analysts in Dhaka are apprehensive infrastructure and also the work crop of professionals in the industry,” of adverse impact of UK’s exit from done by Alliance and the Accord observes Syed Ishtiaq Alam, the the EU, among which are losing duty should be strengthened and carried young and dynamic Director of benefits on Bangladesh’s exports, forward,” says Paul Forman, the Ananta Group, who has recently decline in remittance inflow and current Chief Executive Officer of added a LEED Gold-certified factory volatility in the foreign exchange Coats plc. Nonetheless the positive to the list of garmenting units. And market… “It seems that our export environment and the changing as buyers continue to pour in and to Bangladesh’s big market – the scenarios are providing further scope consider Bangladesh as a de facto UK – will be under pressure. We for the country to move towards its option not only for products which seek Government support so that set target. Bangladesh is known for, but also for we can maintain smooth export to

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THE LATEST NEWS HAVE YOUR SAY For the latest news on apparel Write to Apparel Resources, B-32, and textile, make sure that you visit South Extension-1, New Delhi (110049), India or email: http://news.apparelresources.com [email protected]

FACTS • The country exported RMG worth US $ 26 billion in 2015.

• The apparel sector made an average year-on-year growth of 13.05 per cent, between 1996 and 2015.

• Bangladesh’s share in the US $ 450 billion global Syed Ishtiaq Alam, Director, Dr. Karthik ND, Country Managing Director, Md Siddiqur Rahman, President, BGMEA and garment market is Ananta Group Intertek Bangladesh Chairman of Sterling Group 5 per cent.

• After the Tazreen the region,” maintains BGMEA resentment is getting audible once The silver lining, however, is Fashions fire Vice President (Finance) and more. Fast Retailing Co, the Japanese that Bangladesh industry has incident, growth Managing Director of Evergreen owner of the Uniqlo casualwear smartly put into action to move rate dropped from 29 per cent (in Sweaters Ltd., Mohammed Nasir, brand, has already suspended all to other developing destinations 2011) to a mere 3 to a news agency. In response, the but critical travel to Bangladesh and to mitigate the loss of business per cent (in 2012). Government has reportedly decided has asked its staff to stay indoors, back home. A case in point is the to form a committee to fix the next while six countries – Australia, leading Bangladeshi garment • McKinsey’s global course of action; after all UK is the Canada, Germany, Spain, the UK and manufacturer and exporter DBL survey of leading third largest garment importer from the US – have reportedly instructed Group which, encouraged by the apparel producers Bangladesh. Add to it is Bangladesh’s their citizens, currently residing in duty benefits enjoyed by certain in 2015 predicted inability to win back the trade benefit Bangladesh, to stay vigilant. Any African nations to the US markets, 7-9 per cent from USA, which it withdrew in the further worsening of the existing is reportedly planning to set up a annual growth for aftermath of the Rana Plaza incident, scenario may very well prompt them US $ 100 million integrated textile Bangladesh over which could have been of some help to issue advisories against travelling and garment factory in the Tigray the next five years. to keep the growth momentum going. to Bangladesh. region of Ethiopia that would go • Today, there are Hardly had the industry been able “Bangladesh has never seen such a into production by February next 26 LEED-certified to fathom the implications of Brexit, horrific incident… It is a strong slap year. “We are going to Ethiopia as green garment came terror calling at the Holey to our image. It will put pressure this African nation enjoys zero-duty factories operating Artisan Bakery located in the upscale on our business, but we cannot benefits from the United States on in Bangladesh…; diplomatic enclave of Gulshan 2 in say to what extent at the moment,” exports. The benefits will continue for around 100 more Dhaka that claimed at least 20 lives, reportedly maintained BGMEA a long time as Ethiopia is a member are registered. including nine Italians who were President Md Siddiqur Rahman, of the Least Developed Countries involved with the garment sector, and who is also the Chairman of Sterling (LDCs),” stated a senior official • Out of the existing soon followed by Sholakia Eidgah Group. The present scenario brings of DBL Group, adding, “We aim to 26 LEED-certified attack in Kishorganj on the occasion back the memories of 2015 when after export to the US and European, green garment of Eid, resulting in three more deaths. a foreigner’s killing many overseas African and Middle-Eastern countries factories, five are from Ethiopia.” platinum-rated The country, where isolated but companies had pared back travel to green factories, continuing cases of targeted killings the country and asked for meetings Already challenged by energy crisis, and of these two had already put its internal security to be held overseas. Industry analysts lack of skilled human resources, are the highest scenario under the scanner, never have suggested many clothing higher cost of production, high rated green expected something like this. The brands may now consider shifting bank interest rates and poor factories in the mindless carnages brought back the out of Bangladesh to less unsettled infrastructure, the two recent whole world. world’s attention to Dhaka again. countries such as Cambodia, developments are sure to test Smarting under embargo imposed Vietnam, Sri Lanka and the likes. the country’s famed ‘resilience’, on direct air shipment by UK, There are also fears that major a factor, which eventually might Australia and Germany on security retailers could rethink their sourcing prove to be the key to achieve the grounds, the muffled voices of buyers’ plans after the latest attack. US $ 50 billion target!

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TO ADVERTISE GOING TO A GOOD EVENT? Contact Rani Mahendru Send your industry gossip, +91-11-47390000 (512) photos and news to [email protected] [email protected]

SCIENCE OF APPAREL MANUFACTURING DESIGN THINKING

Rahman Hasibur, MD, Solstice (a US $ 70 million Dhaka-based apparel export house), is championing a radical shift in the problem solving paradigms. The framework proposed by him derives from the ‘Design Thinking’ ideology by David Kelley – a Stanford University Design Post Graduate, and Tom Kelley – a Management Post Graduate from University of California, Berkeley. The essence of Design Thinking is extremely simple – when you commence your journey, you should keep every odd in mind, and based on that you should be prepared for every eventuality. One segment Rahman is targeting is training, which he believes is more about repetition than skills... Exclusively for Apparel Online, Rahman discusses his training methodology, which aims to de-stress workers in apparel manufacturing…

Rahman Hasibur, MD, Solstice

18 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com EXPORTER PROFILE

“The bigger and compliant factories are only getting business while the smaller ones are slowly fading out. If smaller entities don’t develop and flourish, where is the growth…?” – Nipun Nawaz, CEO of Nahid Trade International p24

he success of training lies in the methodology. In the garment industry,T most training schedules have a very short span – of one day, so it is important to make a lasting impact through proper methodology. In the course of research, it was found that religion is very powerful in teaching a certain perception and the only thing which has made religion so powerful today is repetition. You say the same thing so many times that you start believing it. In industrial behaviour, it would imply observation, imitation and repetition. In garment manufacturing, nobody is doing a new thing everyday, yet Every factory feels they have a different solution, however it is not so. At the end of the day, everybody is performing the same thing whenever we go to the shopfloor we see work piling up and operators continuously shunting around. Humans by nature are divergent, arduous work for survival. There is Religion is because the machine has the guide and no human being is the same. The lot of pressure to perform. Not many very powerful to stop the edges and the needle is objective of education is to put them realize that there are many ways and routinely piercing right after one in a convergent situation. Role of the processes to ease their efforts. This in teaching centimetre and this is one single education is to bring in conformity, can be done by simply shifting their the certain process. The operator is stitching so that all of them can do the same mindset or providing them with proper perceptions and dot by dot and only adding dots set of knowledge tools. Then they will thing. In the industrial production the foremost is per inches, nothing more. So even environment, conformity is the key, be happy to work and also give you the if stitching an armhole, he/she is but with shifting thought processes, best stress-free productivity. the value driven attaching 100 stitches – one after brought on by overdrive of knowledge, from repetitions, another. So this is basically like a Changing the worker’s getting conformity is a challenge. Every doing the same process of making a garland, one day, labour is exposed to new beliefs, mindset to enjoy the flower added one after the other thing over and changes and thinking. In such case, if work they unanimously without any change in action. We there is no correct methodology to keep over again. find stressful... are not giving them this silly lesson. them in the workplace, or motivate In industrial Everybody is asking them to hit the them correctly to work in the garment Most of the workers in our industry behaviour, it target and stitch as a whole process, industry, then it will be very difficult are uneducated and if you give them a putting strain on them. for Bangladesh to retain the low-cost set of lectures and sheets to fill up and would imply environment that it thrives on. practice, they won’t do it. There is only observation, Breaking down Also, the migration and worker one single methodology that can work imitation and the process into for them...: Teaching them to do the attrition rate is very high in repetition..., an small fragments… Bangladesh and India. Even after work rightly. They are only doing one almost 36 years, since Bangladesh task – stitching, and they are taking it ideal tool to teach In our society, we have a wrong way got into garment manufacturing, you as a marathon, which is not the case; sewing operation. of judging things. We say, ‘Practice will not find any elder person in the it is a series of sprints. So you only makes a man perfect’. I don’t buy system. They move out very fast, as stitch one single perforation at a time that... perfect practice brings in the work is at the cost of their lives. It and this is the change in mindset that’s perfection, but we have never taught is very difficult to put your attention what they need to have. The philosophy them the way of doing things correctly, at the needle for 8 hours a day, it is is simple, stitching involves one single how work is broken down to elements very stressful. Women always feel needle and it never shifts, and it is only to make it easier. We are always giddy. They have children to feed, the way of handling which is shifting. If teaching them the wrong way. There is malnutrition and a lot of social issues. you have a set of guides, even if you try, no ‘correct book’ or ‘master’ to teach They cannot sleep properly at night you will not be able to push the fabric them this work. My job is for a day and there is no proper environment in any other way. only and the process they go through for dwelling. There are so many things Even when turning the fabric in a is focused on – ‘how to go through one that are not taken care of. On the circular dimension, the operator need single perforation correctly’ and rest other hand, they are bound to do this not care about the circular motion, they will be able to do by themselves.

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I also introduce workaids, if needed. In garment that there is such a thing called conduction between neurons upon The basic thing is knowledge to manufacturing, ‘eye massage’ and that the garment more repetition. Soon electricity understand the ‘kinesthetic’ between workers should compulsorily have passes through the neurons so rapidly left hand, right hand and right leg. nobody is this activity after every 2-3 hours to that the process/action is picked up They are not given a proper training doing a new de-stress themselves. autonomously by limbs. So you have for such things and thus it becomes thing everyday, We have a research library where we to have your neurons fired together. stressful for them. Whenever a good Instead, right at the beginning the yet whenever are creating these modules with the driver is driving his car, he is driving help of animators. We are making operators are pushed for speed and it effortlessly. But, car driving is we go to the visual presentations. We just show thus they are unable to actually learn stressful if you do not know your shopfloor we see them a 15-minute video on how and internalize the lessons they controls properly. work piling up they have to do these things. And should be taking. Every factory owner feels they have and operators afterwards we will give them a little You basically tell the operators that a different solution; however, it is speech on what food they should eat they are in a stressful environment, not so. Every worker will have the continuously and how to lead a better life.That is all and that these are the small same solution because the process shunting around. part of a one-day training schedule... interventions which if followed will is same. At the end of the day, it is They must be put Nobody is going to give you 3 days’ help them de-stress. It doesn’t cost the stitching and everybody is performing time... Nobody is caring about the management anything but by doing the same thing. As mentioned before, in a convergent amount of energy they are putting this, entrepreneurs are doing a service no needles are shifting; it is only the situation to bring in, and at the end of the day this is for themselves, and by communicating fabric which is shifting and done by in conformity, energy business. The human system is that you have struck the right chord an operator with the help of his two all about energy. You are taking their with the workers, you are addressing hands. So they have to know how to so that all of energy, building the nation, talking big them directly. things, but not caring for our people..., use their hands. We are trying to teach them can do There are lots of IEs in the system, which is sad. them how to see carefully and in a the same thing. but they do not actually understand proper way so that they need not put With overdrive of the human potential. They cannot a lot of stress. Garment workers are Start slow to build knowledge from empathize. They are very robotic. always concentrating at the needle, perfection and speed... The efficiency in driving lies in how as such putting huge stress on their different heads To de-stress the job, we advocate the slow you can go; it is never how fast eyes. Contrary to a popular belief, it and consultants sequence of Observation, Imitation you can go. There may be a better is not your brain or any limb of your and Repetition. In the era of ‘pace’, the approach by re-engineering than the body, but the human eye which ‘eats hired to do the ‘Observation’ and ‘Imitation’ portion traditional SMV system. To balance a up’ the maximum energy of your job, getting is foregone for speedy ‘Repetition’, line, the production manager is pulling body, around 20%. Human eyes can conformity is a which has a neurological cost. The all the good workers to the critical process 57 GB of data in one second. challenge. operators only know that they need lines and the other lines are suffering. A critical question to ask is when the to work faster and faster. But one The owner is very happy that a workers go back home, are they really must start slow in order to be a fast certain line is efficient, so is the buyer. replenishing the food they need for processor – just as when one learns But overall they are not achieving their eyes? No...! Because they do not to drive a car. When operators start efficiency. We teach them process know that it is their eyes which need slow, they must observe and imitate techniques. People are using rollers, replenishment. the process and handling methodology, jigs, pulleys, but there are better ways Everyday, their visual cortex is being slowly, and then repeat. With the of managing things. In most of the sapped; on the top of it, malnutrition accurate imitation, the operators cases, efficiencies plummet suddenly. is a major concern today. So if you will now be in a position to practice Mostly, every factory has a customized need to improve the garment worker’s the perfect material handling. The system. The owners don’t know much health, serve him food which helps repetition will take the excellence about the production process – they him deal with eye strain. You have to to the next level, because there is depend on the line chiefs whose give them some ‘brain food’. I don’t a neurological angle to it. Neural performance depends on where he think people are aware of this, or are connectivity is popularly explained found his first job. Without operator thinking in this way. Your eyes are with the phrase – neurons that fire training, if we just re-engineer the always in action, they are giving you together, wire together. Each neuron layouts and systems, then 15 per cent directions. Every calculation that you is connected to the other through efficiency could be achieved; but with are making is with the help of your electrical conductivity between operators training (7 days) – 30 per eyes. You are not giving any break these dendrites, which are the nerve cent efficiency enhancement can be to your eyes… In China, they teach endings. Every time a certain action achieved, and this is proven. We have children how to massage their eyes. is repeated, the connection between taken the daily output of 45 machines There are six steps to eye massage, the two neurons grows thicker. from 900 pieces to 1,200 pieces but in our system nobody knows This thickening facilitates faster through interventions.

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THE CHANGING DYNAMICS OF MARKET, MANUFACTURING AND TRENDS…

DIRECTOR OF SYNERGIES SOURCING BANGLADESH LTD. SHARES HIS OBSERVATIONS WITH CONTEXT TO BANGLADESH AND GLOBAL PERSPECTIVE

s the global supply chain in internationally sourced expats to guide bigger programmes and they don’t garments gets more competitive, the predominantly local talents… “And sell, this means the retailers lose Ait is not only the vendors who are it has worked out pretty well for us,” confidence in our ability to provide the facing the heat. Buying agencies too says Atif. right product/price and the liability are working out new strategies to The global supply chain managing builds up on our shoulders to be more service their clients and ensure that company, which provides low-cost competitive. The impact is higher in business remains with them. Synergies sourcing solutions in apparel, fashion a country like Bangladesh which has Sourcing Bangladesh Ltd. – the local accessories, footwear, home textiles, certain financial constraints and is sourcing arm of Synergies Worldwide decorative accessories and other already working on thin margins,” with global headquarters in Bangkok, goods for retailers/brands in the elucidates the Director of Bangladesh realizing that the country is not strong fashion and hospitality industries, arm of Synergies worldwide. enough in product development, and is sourcing different products from Arif shares that the global denim which often can be a differentiator as different manufacturing centres based market is now moving towards all manufacturing bases make effort on their core strength. In February this cleaner looks in contrast to last year’s to reduce price, is now working on a year Synergies Worldwide appointed ripped, teared and rugged approach, full package model. “We are not just former Li & Fung executive Guido though different markets are reacting into sourcing but operate as what we Schlossmann as its new President and differently to this change with one call a ‘virtual’ manufacturing company. CEO, as founder Munir Mashooqullah aspect remaining constant for end- We design our own collections and sell of Pakistan retired after 28 years. users as well as the retailers worldwide, it to our customers as if we are the Schlossmann takes over the reins of and which is ‘affordability’. “We are manufacturers,” shares Atif Ahmed, Synergies as the company hailed 2015 basically a very Europe-focused Director of Synergies Sourcing as its ‘best year’. Adding its might to company but in the last couple of years Bangladesh Limited. The company the company, Bangladesh operations US is increasingly becoming easier for maintains a development cell and today account for 50 per cent of total us to penetrate as they too have started design studio supervised by few sourcing. “The Bangladesh operation is following the trends in Europe, but in worth around US $ 150 million; 60 per cheaper raw material,” underlines Atif. cent of business is in T-shirts, 25 per He continues that by and large Europe cent in denims and 15 per cent we do is still seeking fashion and high quality, sweaters,” underlines Atif, adding that though Germany is an exception to in denims they cater mainly to Inditex this pattern. “In Germany there are Group, Mango, French retailers, different levels; some discounters offer Italian retailers, Brazillian retailers, the basic and the most fashionable German discounters and US-based in the cheapest price bracket, while apparel importers. there are brands who despite the hard Though the company is working hard times are very quality-conscious and to increase denim sourcing from don’t want to compromise on it…, they Bangladesh, of late Atif is witnessing want to be in the league of their own. change in the global denim landscape, The European trendy look in denim fuelled primarily by increasing number is going to continue because, though of players in the market, due to which there is price reduction, there is also there is an oversupply in the market simultaneously a marked improvement affecting margins of manufacturers in ‘looks’ though quality-wise offerings and ticket prices of retailers. This has may not always be the best,” underlines impacted global markets, emerging Atif, who also doesn’t foresee a major trends and the overall denim business. shift in manufacturing and sourcing “When the retailers are struggling pattern with respect to Asia, where to attract customers in a crowded the size of the Chinese business will marketplace, we too are not spared… remain despite its increasing wages If the front end comes in for fire, back and whatever shuffling happens will be Atif Ahmed, Director, Synergies Sourcing end too has to bear the brunt. The in the basics and it will keep rotating Bangladesh Limited risk increases even more when we do within the region.

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DELIVERY DEFAULT & FACTORY CLOSURES, MAJOR CHALLENGES FOR THE INDUSTRY TODAY…

A buying entity with years of these contentious issues and has experience in servicing overseas to be content now with a handful buyers from USA, Europe, of European and Israeli clients, amongst which are names like Castro, Australia, South Africa and Honigman and Fox. “If consignments Israel, Nahid Trade International don’t reach the buyers on time, we not (NTI) feels achieving the target only have to dole out discounts but of US $ 50 billion by 2021 also are penalized in form of order is a daunting task, more so cancellations at times,” adds Nipun, with ever-increasing cases of according to whom sweater and denim defaults and factory closures. though are the emerging product In an exclusive interview with categories in Bangladesh, but are failing to woo the prospective buyers, Apparel Online, Nipun Nawaz, evident from the 30-35 per cent decline CEO of NTI, shares his in order volumes in the recent times. contentions about the small- Non-availability of funds and high and medium-sized factories interest rates to carry out compliance failing to deliver on time work is another major reason behind (some exceptions being Atashi the large-scale closure of factories, Fashions Ltd., JFK Fashion Ltd., maintains Nipun, who underlines that Trade Sweaters Ltd., Showan garment manufacturers – already Knitwear Ltd., Dalas Fashions challenged by diminishing profit Ltd. and Donglian Fashion margins, increasing labour costs, Ltd., with whom NTI is working infrastructural drawbacks and allied problems – prefer to call it currently), their closing down quits rather than continuing with a due to compliance issues, its nonviable venture. “The bigger and implications on the industry compliant factories are only getting and the need to have a robust business while the smaller ones are Nipun Nawaz, CEO, Nahid Trade International (NTI) mechanism to address the same. slowly fading out… If smaller entities don’t develop and flourish, where is the growth then,” asks Nipun. According to him the only solution unning a flourishing sourcing and larger factories and explaining to this is Government intervention, business for many years now and them the whole situation is not a and bringing all the factories under a cateringR to a wide range of clients problem, but those factories require single regulatory authority, who apart from all over the world, Nipun is a large quantity orders. Also, some of from handholding and providing for worried man today. Hit by multiple them have their capacities booked small garment manufacturers to carry problems, Nipun’s business has taken even till 2020,” maintains Nipun who, out corrective action plans can also nosedive that may well ring alarm dealing in smaller volumes, is primarily keep tab on defaulters and corrupt bells for the other buying houses as dependent on the small and medium- entrepreneurs and take punitive well, whose numbers in the country sized players for his requirements. actions. Failing this, Nipun does not are quite substantial. He shares Adding to his woes are factories failing foresee a very promising future for his personal experiences to caution to stick to delivery deadlines, and some the apparel industry – the country’s others who might have to face the even resorting to dishonest ways to largest foreign currency earner and same consequences if things are not make fast money. employment provider to around four taken care of right now. “Sometime back I placed an order million people. “Recently, six factories that I have of 89,000 pieces with a knit factory. “This is the wakeup call for the been placing orders with have shut The owner took the money, used it exporters, the BGMEA and the down…,” laments the CEO of NTI, for some other purpose and after Government… If the present scenario underlining those six factories, as a two-and-a-half months refused to do continues buyers might start pulling matter of fact, are amongst a large the order. The advance amount was out of Bangladesh in bulk, which chunk of small- and medium-sized ones also not returned…,” rues Nipun, definitely is not going to augur well that had to wind up operations due to who consequently had to lose out for the industry,” cautions Nipun on a compliance issues. “Approaching new on 10 of his existing buyers due to concluding note.

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BANGLADESH CANVAS

Strategic shift in product works for Bengal Jeans, now M.A.C.K Shirts Making strategic shifts to remain relevant in business is the essence of a smart entrepreneur, and living by this maxim is Shawkat-Uz-Zaman, Managing Director, M.A.C.K Shirts who till a few months ago was the MD of Bengal Jeans, which was manufacturing denim products for buyers like Topshop, Debenhams and Next. As these brands slowly pulled business out of Bangladesh or consolidated with the bigger exporters on compliance issues, Zaman took the bold decision to pull out of the jeans business and instead shifted focus to ‘shirts’ which was a small but meaningful business for the company at that point of time. “There are external challenges that we have to face if we want to continue to be in the business. This is not only with us; I am sure all other companies are having such issues too… Earlier on I was driving the business, now the business is driving me,” admits Zaman honestly.

he restructuring of the business was a well thought out strategy, whichT has borne fruit for the company. “With many of our core “There are clients no longer working with us external post-Rana Plaza, the seven-line challenges that trouser factory which was making we have to face denim bottoms for around US $ 8, became inefficient and the only if we want to solution was to expand and work in continue to be volumes for which we would have in the business. needed to move to another premise. We felt that making that kind of This is not only investment was not viable and with us; I am instead decided to concentrate on sure all other the shirts business,” says Zaman. The M.A.C.K Shirts unit was initiated companies about four years ago and is currently too are having doing business worth US $ 6 million. such issues… There are plans to further invest in Earlier on I the unit to take the export turnover to US $ 10 million in the next two was driving the years. The company is in talks with business, now many new buyers and as of now the business is Australia is an important market and so is India, as M.A.C.K Shirts driving me.” is one of the core suppliers for Reliance India. Though the general perception is Shawkat-Uz-Zaman, Managing Director, M.A.C.K Shirts that Bangladesh has many shirt

26 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com BANGLADESH CANVAS

“I still strongly believe that we will be able to achieve the target as a lot of investment is happening and we Join more than 10,000 people who are already fans of Apparel are upgrading our value-added garments; we have also gone for diversification of markets and products. Resources on facebook. Search for Apparel Resources at Though last two years were difficult for us, but we have got our confidence back. Positivity is there and we are https://www.facebook.com/apparelresources.everythingsourcing/ working hard.” – Faruque Hassan, Senior VP, BGMEA & Managing Director, Giant Apparels Ltd. p15

and responsiveness of the factory that satisfies a customer and brings them back for more business. The ESSENTIALS company invests in both technology and worker training to cut down on In today’s attrition. “In this trade the migration competitive level is very high but I am happy to say that from as high as 15- environment where 20%, we have come down to about price is a challenge 4-5%. I feel that I have been able to and compliance impress upon them that if you stay a concern, it is the with somebody, they can have some quality of service kind of controlling interest as well,” says Zaman. The company has put and responsiveness in place a system whereby a helper of the factory that is trained to become an operator satisfies a customer Quality at the core: Shirts being thoroughly checked for defects in three months and the middle- and brings them management is given authority in back for more its working area. “I am trying to build the middle-management and business. As such take this factory to a level where M.A.C.K Shirts invests it can function without me. I have both in technology taken it upon myself to train them and worker personally,” adds Zaman. training to cut With focus on both technology and down attrition. The worker skills, the company has an Executive Director who is an IE company has put expert and his job is to set up lines in place a system for best results. “We normally have whereby a helper is 42 machines in a line for a casual trained to become shirt, but sometimes the number an operator in can go up to 60 machines if the style is complicated,” says Zaman. three months He gives the example of a shirt and the middle- being done for Reliance which has management is Production Floor: Workers busy stitching shirts a double pocket, double flap for a given authority in its design element that is using a 60-line working area. set up for manufacturing. “We are doing many interesting variations in shirts, which is one of the reasons for manufacturers, Zaman presented wear like for the Metropolitan Police attracting business,” adds Zaman. a contrary view. “Since shirt is a through an importer in the UK. Most of the fabric is being imported relatively easy product to make, The company is now looking to from China and India, though some almost every factory in Bangladesh double the capacity, as buyers have was initially working in the denim shirts are being manufactured responded positively to the products category. But with quality issues using fabric from parent company being offered by M.A.C.K Shirts. and other regulations coming in, Bengal Denim Mills. “I keep talking to my people, telling many companies have stopped An avid golfer and believer in the manufacturing shirts and only those them that we are not a manufacturing good things in life, Zaman is however companies that have specialized in unit but a service industry, so we very rooted in his commitment to the category are surviving,” claims have representatives from our buyers the trade, and though he is not as Zaman. With a capacity of 1,50,000 working 24x7 with our operators to confident about his son’s joining the pieces of shirts per month of which get better products,” shares Zaman. business, Zaman is determined to 1,30,000 is in basic casual shirts and He goes on to reiterate that in today’s keep the family business running and 10-12,000 are of formal shirts, the competitive environment though price eventually let it become an entity that unit also does some products like is a challenge and compliance is a can function on its own so he can nightwear, sleep suits and corporate concern, it is the quality of service spend more time on his passions.

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DENIM MARKET THROUGH A VETERAN’s EYE MD of Bengal Indigo Ltd. talks about shaping up of the denim sector in Bangladesh and his own endeavours

ioneer of denim fabric production in come-up in the last decade,” says Nasir. adding that outsourcing yarns also has its Bangladesh, Nasir Md. Khan – who The disillusion with how the industry advantages as it gives a lot more scope of helmsP the Indigo Alliance Group as the was moving led to an almost 10-year experimenting, which otherwise remains Chairman, and is also the Managing sabbatical to enjoy the finer things in life, restricted to one’s own range of yarns. Director of Bengal Indigo Limited, to come back with renewed vigour. The overcrowding of the denim scene in is undisputedly the first person to Today the business, inherited from his Bangladesh, resulting in stiff competition introduce denim manufacturing to the father late Fazle Huq Khan, who founded and declining profit margins, had Nasir country, followed by Beximco, a year the Group in 1930 and was responsible divert his attention to other fabrics like later. “I started Bengal Indigo in 1999, for introducing ground-breaking twills, oxford and poplin alongside denim. when the industry was mostly making technology in paper board making and “We are perhaps the largest supplier shirts,” shares Nasir. Even today his textile manufacturing processes in the of pocketing in Bangladesh… We make basic indigo denim is considered the best country in pre-independence days, is a pocketing fabrics like sheeting for all in quality among all players, yet Nasir US $ 42 million group, employing over the leading export-oriented denim jeans is not enthusiastic about expanding in 3,800 employees. With its headquarter in manufacturers,” says Nasir, whose the segment and feels that the industry Dhaka, the company has diversified into mainstay still is denim fabrics that he has created a situation of oversupply readymade garments – workwear trousers manufactures keeping with the needs leading to cut-throat competition. “Arvind (produced by Basic Apparels Limited), and requirements of his clients. “We Mills has come into Bangladesh and so denim jeans and trousers (produced by are basically in the middle of the road. have many big Pakistani companies… Bengal Jeans) and formal and casual We neither do very cheap fabrics nor Many others are testing the water before shirts (produced by M.A.C.K Shirts). The the extremely high-end ones. High-end taking the leap, besides the numerous Group’s other business interests are fabrics require sophisticated machineries Bangladeshi companies that have luxury ladies fashion accessories, exotic which I am not willing to put in right arts and crafts, fine dining and beauty now,” says Nasir. After a couple of care services. bad experiences with Russian buyers A true global citizen, Nasir did his pertaining to payment issues, Nasir has schooling from Saint Edmunds School shifted his attention on the domestic in Shillong (Meghalaya, India) before market predominantly now, preferring to completing his Bachelors in Business have 13,000 yards as the minimum order Administration from Dover College, UK. quantity for denim fabrics. “30,000 yards Back home, Nasir set up the country’s is more suited to us, as it constitutes one first warp knitting (fully integrated) batch of dyeing. But if a regular client plant in BSCIC Industrial Estate in asks for 5,000 yards also we do it, but it’s Dhaka, followed by a dyeing and finishing not a very viable option,” avers Nasir. factory named Syntex Finishing Mills Now that his son has joined the business, (1979), a washing plant (with capacity Nasir is keen to invest; however, plans of of almost 10,000 pieces per day) in 1987 further expansion has been stay put by and subsequently graduating into RMG the poor gas supply in Bangladesh. “So in 2005 with Bengal Jeans Ltd., which what we have done is we have taken over specializes in all types of denim wear. a portion of a big factory where we do But considering the political instability the weaving; in another six months we existing in the country then, Nasir may rent another factory for increasing desisted from trying his hands in yarn the dyeing capacity,” avers Nasir, not production. “If I did a proper yarn mill, it an advocate of taking big loans in the would have taken around 10 years, which name of expansion, which is increasingly would not have been wise at that point becoming the norm in the Bangladesh of time,” Nasir maintains. He, however, garment industry, according to him. “It’s states that having one’s own yarn facility better than taking BDT 200 crore loan and has its advantages. “People who have get stuck with it after a few years when their own mill can make specialized yarns denim is out of flavour,” maintains Nasir Nasir Md. Khan that cannot be reproduced,” says Nasir, about his capacity-expansion model.

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BANGLADESH CANVAS

‘Japanese AFWA levels allegations on businesses Walmart's Bangladesh suppliers assessing work A report, ‘Precarious Work in the Col. KAB Mainuddin (Retd.), ED, Earlier, in a separate report on Walmart Global Value Chain’ by Dird Group (Savar Zone) strongly the Indian garment industry, prospects in Asia Floor Wage Alliance (AFWA) denied all the allegations. He told AFWA levelled similar charges has claimed serious workers’ rights Apparel Online, “It is completely a against about 24 Indian apparel Bangladesh' violation in the garment factories of false statement for our organization. exporters of Tirupur, Vapi and Bangladesh working for Walmart. We are truly surprised to see such Noida including few big names like The July 1 terror attack on Some of the allegations claim that types of allegations being made Eastman Exports, Opera Clothing, Dhaka’s Holey Artisan Bakery employers expel workers without against us. We always treat workers and Parmeshwar Creations. The seems to have adversely prior notice and dismiss them with humanity and the workers are report underlined that in India, impacted many foreign without paying due wages and provided with leave following the some workers were made to companies operating out of benefits. Besides, workers did not law of the land. We have an active work on Sundays and national the country, including those get any casual leave, sick leave or elected Participation Committee holidays ‘in sweltering heat, involved in apparel business annual leave(s). The report says and Anti-harassment Committee in without adequate supply of clean with many Japanese entities that 62 per cent of workers do our factory, we do have freedom of drinking water or any breaks’. reportedly assessing the work overtime beyond the legal limit and association policy and our workers Workers have been cited saying prospects in Bangladesh in 29 per cent do at least 4 to 5 hours of are free to join in any trade unions that at times they were made to the aftermath of the attack, as overtime per day – more than twice at their will.” work 24 hours at a stretch. They per media reports. the legal overtime limit. 66 per cent The report is based upon research also complained about being “Bangladesh is an important of workers reported that overtime is on violations of international labour inadequately compensated for base for us, both in mandatory at their factories. standards in Walmart garment overtime work – a practice very manufacturing and sales. We There are many top companies production factories conducted common in the garment industry. are not considering making mentioned in the report, like Ananta between December 2012 and However, on reaching out to the big changes to our business Garments Ltd., Nassa Apparels May 2016. It also claims that the concerned garment manufacturers, plan, but our priority is the Ltd., Dird Group and many more. survey of 121 workers selected both in India and Bangladesh, safety of our employees This is the third report in the randomly from 47 factories from the Apparel Online found the reports and customers,” reportedly series. Earlier two reports were list of 280 factories discovered to be are rather lopsided. It has not maintained a spokesperson focused on Indian, Indonesian, and Walmart suppliers after extensive only failed to cover the number of of Fast Retailing Co., which Cambodian companies engaged in field investigations. Respondents factories as the report claims but runs Uniqlo clothing brand. manufacturing for GAP and H&M. were from Dhaka (50 per cent) and neither did cover a substantial The media reports also claim Bangladesh Nari Progati Sangha other major districts in Bangladesh number of respondents or get the that the company has asked (BNPS), an activist women’s where readymade garments are factory management’s perspective its employees to restrict organization is also associated produced, including Gazipur on the so-called malpractices, to business trips to the country with AFWA for preparing this (42 per cent), and Narayanganj present a balanced and neutral until the end of July. It has report. While reacting on the report (8 per cent). view on the issues. 40 employees, including six Japanese, overseeing manufacturing of clothing by local factories in Bangladesh. The global apparel chain also runs nine shops in Bangladesh, employing 100 clerks, including four Japanese. Besides, some of the 240 Japanese companies with offices or factories in Bangladesh, have reportedly suspended business trips to the country and grounded local employees in the wake of the attack which claimed lives of seven Japanese nationals who were reportedly involved in development projects with the Government- run Japan International Cooperation Agency.

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Cafe attack to 72 Bangladesh adversely impact processing houses economy: Moody's in Inditex's

The US-based global credit agency as the one last week is rising, global list Moody’s in its latest analysis signalling rising political risks released recently stated that the that could further distract the Inditex, world’s leading fashion group which operates over recent terror attack at the Holey authorities from their economic 7,000 stores in 88 markets and owns brands like Zara, Artisan Bakery in Bangladesh may and institutional goals. Besides, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara erode investors’ confidence, which prolonged political or geopolitical Home and Uterqüe, has published its list of global 404 direct could cast an adverse impact on instability could erode investor and indirect suppliers of wet processing services (dyeing, Bangladesh’s ability to attract confidence and a worsening of washing, tanning and printing), recently. Foreign Direct Investment (FDI) the external payments position. The Bangladesh list of the companies features 72 processing besides impacting the flourishing The most direct impact would be readymade garment sector of the houses, like Ananta Denim Technology Ltd., Islam Garments on Bangladesh’s ability to attract Ltd. (Textile Division), Jamuna Denims, Shasha Denims Ltd., country. “It was the most damaging foreign investment.” of a series of attacks targeting etc. As demand of transparency is increasing in the supply foreigners and minorities over the Moody's also pointed out that chain of brands, Inditex’s decision is being appreciated in the past year, and highlighted political adverse trends in foreign industry. The companies have such suppliers in Turkey (106), risks that are factored into our investment would be particularly China (81), India (43), Spain (25), Portugal (44), Morocco Government bond rating, through detrimental to garment exports, (15), Italy (7), France (3), Cambodia (3), Tunisia (2), along our assessment that Bangladesh’s a predominant growth driver. with Argentina, Pakistan and Germany having one each. The vulnerability to political event Exports incidentally comprise risks is moderate,” the Moody’s 16.3 per cent of Bangladesh’s GDP, Investors Service said in its latest and sustaining foreign investment analysis, adding, “However, the in the textile sector, is crucial for the frequency of violent attacks such country’s growth.

‘Terror attack may hinder workplace safety improvements'

The Dhaka terror attack has reliance on the country, that they posed a serious question mark don’t focus so much on working on the improvements in garment standards there, which would workers’ rights and workplace be a setback for the industry,” list names those suppliers with whom Inditex holds a direct safety in the country, underlined reportedly stated Sarah Labowitz, sourcing relationship. labour right groups, which voiced the Co-Director of the Centre for Many of the responsible businesses in the last few years apprehensions that the initiatives Business and Human Rights at the have made a conscious decision to disclose the name of the taken up by the Bangladesh NYU Stern School of Business, New companies that they work with to maintain transparency as Government and the Western York, while Gopinath Parakuni, well as abide by the codes of business conduct and ethics by retailers to improve the same, General Secretary of Cividep India making public relevant information and practices pertaining might get stymied with the focus (Labour Rights Campaign Group) to the businesses. reportedly maintained, “It took a now shifting towards tackling The list also include mills which have been contracted tragedy like Rana Plaza to prompt the pressing issue of terrorism by Inditex’s direct suppliers to carry out manufacturing the Government to take action, and buyers looking at prospects operations (wet processes like dyeing, tanning, printing and and while that effort won’t stop, it of exploring other potential washing), which the main suppliers are not capable of doing at may be stalled as the Government destinations. their own facilities. has other priorities now,” adding, “It’s a tipping point for the country “Buyers too, may be weighing the The accuracy of indirect suppliers list is dependent on the and the garment industry… The risks of putting all their eggs in disclosure provided to Inditex by its direct suppliers, who have risk is that buyers will cut their one basket.” direct business relationships with these wet processing mills.

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Dhaka Terror Mothercare's Annual Report Attack: underlines workplace safety and Garment industry faces training programme in B'desh

the brunt! British retailer Mothercare plc, which specializes in products for The July 1 terrorist attack on expectant mothers and in general Dhaka’s Holey Artisan Bakery, merchandise for children up to which claimed 20 lives, 8 years old, in its Annual Report including nine Italians, seven and Accounts 2016, highlighted Japanese and one Indian, its commitment towards safer figured some names who were workplace in Bangladesh directly or indirectly related RMG sector. to the country’s flourishing readymade garment (RMG) Even though not involved in the sector, amongst which are Rana Plaza tragedy, the company Ishrat Akhond (45), Human signed the Bangladesh Accord on Resources (HR) Director of Building and Fire Safety in 2013 one of Bangladesh’s largest to ensure safe and better work garments manufacturing environment for the garment company – ZXY International workers. This report also explains FZCO, and 52-year-old Nadia the commitment of the company Benedetti from Italy, who to ensuring that not only safety many factories across the entire great jobs for their workers by was the Managing Director of but social and environmental Accord factory base are taking developing skilled, well-paid, safe Studiotex Ltd., whom Team standards are constantly longer to make progress than was and loyal workforce, according Apparel Online incidentally monitored and improved. “We previously hoped, our factories to the company. “Many of our interviewed and featured in continue to make efforts to ensure are showing progress which is factories in India and Bangladesh their September 2014 issue of that factories in our supply above the average and some have have already benefited from this Apparel Online Bangladesh chain meet building, fire and received recognition letters for training. In FY 2015-16, two key magazine. Out on dinner electrical safety standards, as completing initial remediation.” factories in Bangladesh started with two Italian designers, well as other labour standards the training, and one of which Benedetti was one amongst as part of our Code of Practice,” To ensure employee engagement and has already graduated. This factory the nine Italians slaughtered stated the company in its report, skill development, Mothercare has made very encouraging progress, by the terrorists on the fateful adding, “All of our suppliers’ also initiated a training programme with workers’ absenteeism reducing night of July 1, during a siege factories in Bangladesh have named Benefits for Business from 9% to 3%, worker turnover that continued for 12 long been inspected by independent and Workers (BBW). An HR and reducing by 60% and average pay hours before commandos experts for structural, fire and Productivity training programme, entered the bakery to electrical safety and are working BBW helps transform factories increasing by 19%,” Mothercare take control. towards remediation. Although into good businesses providing maintained in its report. Accompanied by her father, Benedetti reportedly came to Bangladesh at a young age and made it her home, to carry forward the business. Ishrat Akhond (a Bangladeshi national), fondly called “Nila” Lukewarm response to ‘hotline' by her family and friends, besides being the Human for RMG workers Resources Director of ZXY International FZCO, was also Established on March 15, 2015 by the with alleged damp squib to respond have been recorded, of which 387 a member of the Bangladesh- Bangladesh Government to address timely to complaints made through were deemed irrelevant, which German Chamber of Commerce readymade garment (RMG) workers’ the channel, resulted in making this further underlined that out of (a bilateral business issues, keeping in mind the action initiative not so successful. 718 relevant complaints only 176 organisation promoting trade plan provided by the USA to regain have been settled in the last 14 According to the data provided by between the two countries), the GSP facility, the ‘hotline facility’ months. This has led labour rights reportedly went on to become has reportedly failed to evoke much the Department of Inspection for groups alleging that the hotline a member of its election response from the workers. It has the Factories and Establishments was ‘only on papers’ and has not committee, thanks to her been said that authorities’ failure (DIFE), since the inauguration been ‘effective at all as workers business acumen and exploits. to create awareness about the of the service till May 31 this do not get remedy’ after lodging initiative amongst workers, coupled year, a total of 1,105 complaints complaints through the hotline.

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GAP's June sales on growth path

GAP Inc., a leading global retailer 1 per cent last year; Old Navy offering clothing, accessories, and Global: positive 5 per cent against personal care products for men, positive 1 per cent last year. women, and children, has reported Commenting on the results, Sabrina that its net sales for the five-week Simmons, Chief Financial Officer, period ended July 2, 2016 increased GAP said, “We are pleased to see by 2 per cent to US $ 1.57 billion better performance across the compared with net sales of US portfolio this month, partly driven $ 1.54 billion for the five-week period ended July 4, 2015. by an improvement in June traffic trends, particularly at Old Navy.” As per the company release, GAP’s comparable sales for the month GAP Inc. owns brands like GAP, of June 2016 were up 2 per cent Banana Republic, Old Navy, against a 1 per cent drop last year. Athleta and Intermix brands. The Comparable sales by global brand company’s products are available for June 2016 were as follows: for purchase in more than 90 GAP Global: negative 1 per cent countries across the globe through versus negative 5 per cent last year; about 3,300 company-operated Banana Republic Global: negative stores, about 450 franchise stores, 4 per cent compared with positive and e-Commerce sites.

Denim label True Religion Target expanding footprint names

American denim label True new EVP Religion seems to be concentrating on increasing its physical presence. Target Corporation, the second- The brand has just launched a new largest discount retailer in the ‘concept store’ in New Orleans. The United States, has announced national chain already has around Don Liu as the new Executive Vice 128 stores in the United States. President, Chief Legal Officer and The New Orleans location is the General Counsel, effective August first to amalgamate True Religion’s 22, 2016. Liu will be replacing traditional retail displays, such Tim Baer, who is to retire in July as Denim Bar, with all new next year after his 23 years of technological innovations, reports a venture with the company. Baer will fashion site. serve in an advisory role for the John Ermatinger, Chief Executive next 12 months, supporting Liu’s Officer – True Religion said, transition to Target. “This is really our launch pad Commenting on the appointment, to showcase products in a new Brian Cornell, Chairman and Chief way – starting with the Denim Executive Officer of the company Bar – along with the digital into the brick and mortar store. customer’s history of purchases, said, “I look forward to having technology that complements the The kiosk is actually a part to better assist the buyers in on board Don with our team. His physical space, like digital runway of the denim brand’s ‘Endless making selections. extensive legal expertise as well screens. Our motto is ‘There Aisle’ tech initiative, which offers “True Religion has always enjoyed as his deep business acumen will are many religions in the world, real-time access to the retailer’s and continues to celebrate a help us continue to navigate the but everybody wears jeans’.” An full inventory. high level of diversity. We are increasingly complex business electronic 42-inch kiosk is also Adding more ‘tech factor’ to adventuresome and have a environment with the highest there, allowing customers to the store, the new location is tendency to push the norms, and we standards of ethics and integrity.” explore more options, including enabled with the brand’s ‘Black are enlightened and progressive. I Liu will oversee all the legal brand’s products available online, Book’ technology, which allows feel New Orleans shares those same matters, corporate governance and and thus driving e-Commerce the store staff to access the traits,” said optimistic Ermatinger. Government affairs of the company.

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M&S' clothing sales dip MANGO expands its reach

Spanish fashion retailer MANGO is expanding its reach in the Middle East and Asia regions. The brand is opening four new megastores in Saudi Arabia and the Philippines. An 851 sq. m.-wide store has already been launched in Saudi Arabia’s Riad, while another 630 sq. m.-wide shop, which will sell the brand’s kids’ wear and women’s wear, has also been declared open in Yanbu. In the Philippines, MANGO has opened a new store in Marks & Spencer, a major British reducing promotions. As a result, referendum. While it is too early Davao and also upsized one multinational retailer, has we ran fewer price promotions to quantify the implications of in Angeles. The former now revealed its financial report for 13 while continuing to lower prices ‘Brexit’, the retailer is confident spreads across 800 sq. m., weeks to 2 July 2016. In the period to deliver real value to our that the strategic priorities and offering the women’s wear, under consideration, its clothing customers, and moved the summer actions it is taking remain the men’s wear and children’s and home sales were down by 8.3 sale to July. We knew our actions right ones to deliver results for its wear assortments. Both per cent with LFL sales down by would reduce total sales but we customers and business. of these stores have been 8.9 per cent. are seeing some encouraging Founded in 1884 and constructed on the brand’s Steve Rowe, Chief Executive early signs. headquartered in London, M&S ‘megastore concept’, launched of M&S said, “A key part of our The CEO of the company also specializes in the selling of in 2013, under which MANGO recovery plan for Clothing & added that consumer confidence clothing, home products and has opened 164 large-format Home is lowering prices and weakened in the run up to the EU luxury food products. stores across the globe.

Forever 21 reconsiders stores in UK

Forever 21, the Los Angeles fast fashion retailer, which has launched a small fleet of stores in the UK in the last six years, is reconsidering downsizing its retail footprint in the region, depending on sales performance of the stores, which has been on the decline in the recent past. The retailer has appointed Harper Dennis Hobbs, the property agents, to take a look at the remaining four stores in England and assist in taking a call about either reducing their size or closing them down, as reported by a leading English daily. and around London, including the closed down in Glasgow, Scotland, by increasing its presence. With The properties under evaluation one on Oxford Street, which was Stratford, Essex and East London, nearly 300 stores in the UK, H&M are the outlets in Liverpool, doubled in size four years ago. where H&M, the Swedish fashion is expanding its reach across Birmingham, and other two in Forever 21 stores have already retailer is expected to take over the globe.

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New Chairman for Nike Macy's new Sportswear retailer Nike has CEO to appointed its current President and CEO Mark Parker as the new Chairman, post the retirement take charge of Phil Knight from the Board of Directors (BoD), with immediate Fashion retailer Macy’s Inc. has announced that Terry J. effect. The company states that Lundgren, the company’s CEO since 2003 and Chairman since this move is the result of the 2004, will transfer the title to Jeff Gennette early next year planned transition initiated a under the Board of Directors’ succession plan that includes year back. Gennette’s election as President of Macy’s. Meanwhile, the Board has Beyond the first quarter of 2017, Lundgren will continue appointed Knight to the position The President and CEO, and now the as Executive Chairman and work along with Gennette as of Chairman Emeritus, with a Chairman of Nike, Mark said, “Phil’s President and CEO of the company. He will also assume standing invitation to attend the impact on Nike is immeasurable additional management responsibilities during the transition brand’s board meetings and share and his entrepreneurial drive is period, including supervision of the retailer’s stores his experience. and always will be part of our organization. “This is the time for us to be laser-focused on DNA,” adding, “Along with Nike’s what is most important to our customers, and how we can “I intend to continue to work to exceptional management team, I am best deliver the shopping experience that will secure our promote the company’s business committed to leading our next era of in my new role for as long as I innovation and growth as we serve can contribute to Nike’s success and inspire athletes throughout and long-term growth. I could the world.” not be more pleased with the Board’s thoughtful execution of the In another development, Apple CEO succession plan, and I’m thrilled that Tim Cook has also been appointed an outstanding leader like Mark will as Nike’s Independent Director of head the Board,” Knight averred. the Board.

HanesBrands completes acquisition of Pacific Brands

HanesBrands, a leading worldwide spanning the Americas, Europe marketer of underwear, intimate and Asia-Pacific, supported by a apparel and activewear, has world-class company-owned global completed acquisition of Pacific supply chain,” said Hanes Chief Brands, the leading intimate Operating Officer and CEO Elect apparel company based Gerald W. Evans Jr., adding, “We in Australia. are adding a top-notch management The acquisition of Pacific Brands and marketing team led by CEO for approximately US $ 800 million David Bortolussi that will help position as the premier omni-channel retailer of the future,” on an enterprise-value basis, serve as a catalyst for continued Gennette said. adds top brands like Bonds and growth and value creation into the Lundgren and Gennette will continue to work very closely Berlei in department stores, to foreseeable future.” together on improving current business trends and setting the HanesBrands’ worldwide portfolio Hanes, with its six acquisitions in stage for changes that will take the company to new heights. of leading innerwear brands the past three years, now holds the “I have been honoured to lead this enterprise through a period supported by the company’s top market position for underwear, of unprecedented reinvention. Now is the time to reset our global low-cost supply chain and intimate apparel or hosiery in business model to thrive in a future that is being driven by manufacturing network. around 12 countries, including the rapid evolution in consumer preferences and shopping habits. “Pacific Brands with its iconic United States, Australia, France, Jeff Gennette is an unwonted leader. Together we have worked century-old and fast-growing Bonds Japan, Canada, Germany, Italy, over the past two years as President of Macy’s, and we are brand is a great addition to our Mexico, Spain, Brazil, South Africa, closely aligned to create a compelling and sustainable path strong market-leading portfolio and New Zealand. forward,” Lundgren said.

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‘Sri Lanka not to be majorly affected by Brexit'

Throughout contemplation of the Kankanamge stated that since impending effect of ‘Brexit’ on clothing is a basic human necessity, Sri Lanka’s economy, especially for a large number of countries the garment sector which counts around the world produce and UK as one of its major export buy apparels. And hence, it is destinations, experts believe decisive to develop a second market there won’t be any major impact place for the products so that in of the ‘Brexit’ over the country’s case of crisis in the main market, apparel sector. goods could be sold through The observation was made by this alternative market until the Dr. Amila Kankanamge, President situation is resolved. of Colombo Chamber of Commerce He further said that Sri Lanka as he expressed his views on should have a proper methodology Britain’s exit from the European to monitor the behaviour of the Union stating that Sri Lanka international marketplace so needs to develop a strong local that the country could issue local economy which is unaffected by products for sale accordingly in the international incidents. “However regional as well as international this does not imply that our markets. Kankanamge concluded by national economic model should stating that if Sri Lanka maintains be created based on European good quality in the apparels political and economic factors,” produced locally, it would not lose its he adds. position in the global market.

Myanmar garment Chinese textile industry is out with its manufacturer to start 10-year Plan production in Vietnam

The Myanmar garment industry The garment industry of Myanmar Luthai Textile, a Chinese textile secondly, to take advantage of is out with their 10-year Strategy is growing at a rapid pace with and garment manufacturer, is lower local labour costs in Vietnam, (2015-2024) which states that the exports growing from US $ 349 reportedly setting up its spinning, leading to reduction in overall cost industry will start exporting cut- million in 2010 to an MGMA weaving, dyeing and garmenting of production. make-pack (CMP) products to the estimate of approximately US $ 1.6 operations in Vietnam. The The company is also exploring markets in the US, Canada and billion in 2014. Now with 10-year company is investing around other emerging markets of Russia, and the EU (except United Strategy (2015-2024) in place, the US $ 0.18 billion for the project Southeast Asia, like Myanmar and Kingdom, Germany and Spain sector aims to reach US $ 10 billion (inclusive of 60,000 spindles) in the Cambodia. It started expanding where it is already exporting). mark in garment exports from country, reports ccfgroup.com. in the regions around three years It may be mentioned here that the country. The project, which will introduce back with an investment of around Myanmar has been exporting However, Myint Soe, Chairman of high-end and intelligent equipment US $ 30 million. Its production units majorly to Japan since 2010. In Myanmar Garment Manufacturers and enrich the industrial chain of in both the countries are already the year 2013, Japan accounted Association (MGMA) is of the Luthai in Vietnam, will soon start operational. While in Cambodia, for 38 per cent of the country’s opinion that the country needs to production. Under the venture, the Luthai is targeting production of total garment exports, with Korea change the way it works to achieve yet-to-be-operational unit will have 3 million pieces of shirt this year, a close second at 31 per cent, this vision. He said, “Currently, the capacity of dyeing three million in Myanmar it aims to produce one EU at 14 per cent and all others the garment industry is operating metres of fabric while producing six million pieces. at 18 per cent. The MGMA also under the CMP system, but we million pieces of shirts. Luthai Group is a vertically mentions that during 2014 exports want to shift from the CMP to the The manufacturer reportedly integrated company, which is to the EU are estimated to have FOB (free-on-board) production decided to invest in the country engaged in spinning, dyeing, doubled and exports to the US system,” adding, “The country – firstly, to expand its garment weaving, finishing and shirts risen from US $ 1 million in 2013 plans to operate 1,500 garment production base, which in turn will manufacturing. It sells its products to approximately US $ 20 million factories by 2025 and employ increase and improve investment both within the domestic market in 2014. one million staffers.” returns for the company; and and to overseas markets.

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Vietnam likely to India: New set up large T&C Textiles Minister production zones takes charge

Vietnam’s Ministry of Industry and reduce transportation cost and In a significant but surprising turn of events, the high profile, Trade (MoIT) has proposed the time. Vietnam Textile and Apparel vocal and former HRD Minister Smriti Irani has replaced development of large textile and Association (VITAS) is supporting Santosh Kumar Gangwar as the new Textiles Minister of India. garment industrial zones (IZs) in the IZs plan and has also suggested While the industry rejoices, the media has branded the move the country. the Government to provide credit as a ‘demotion’, underplaying the importance of the Ministry The 500-1000 hectare zones will help facility for enterprises to build and the need for having a strong Minister at the helm. The attract local and foreign investment waste water treatment centres at headline of one of India’s leading daily Hindustan Times read, in dyeing, fabric and yarn those industrial zones. ‘Smriti Irani’s shift from the high-profile HRD Ministry to the production, and high-end products. It may be mentioned here that distinctly unglamorous Textiles Ministry’, which came as a “Full support will be provided for textile and garment exports from clear indication that Prime Minister Narendra Modi wants his the building of textile and garment Vietnam noted a 6 per cent surge to Ministers to keep a low-profile. The daily also writes, ‘Smriti industrial zones located in provinces US $ 12.8 billion in the first half of Irani moved to low-profile Textiles Ministry’. Another daily and cities experiencing socio- the year, but local firms are facing The Times of India, while reacting on the appointment writes, economic difficulties in order to issues in obtaining production and create conditions for the success export contracts for the second half of small and medium startup of the current year, mentions MoIT. enterprises,” said the Ministry. It has been said that the proposed The proposal is also targeted IZs plan will further boost the towards the development of country’s textile and garment transport and infrastructure to exports which are expected to connect large industrial zones to reach a total value of US $ 31 billion ports and logistics centres and in 2016.

China's share in EU imports declines

As per the EURATEX Report, and economic dynamism to grow China’s share in the European its share of textile and clothing Union imports has decreased over imports, from over 6 per cent in 2010 the years. In 2010, its market share to 8.6 per cent in 2015. In full year of EU textiles and clothing imports 2015, these four zones accounted for stood at 40.8 per cent, which 86 per cent of total extra-EU textile plunged to 35 per cent in 2015. and clothing imports. Clothing Besides Mediterranean countries, products represented 80 per cent of ‘Stunning rise and a sudden demotion’; its lead news too reads, which having long enjoyed the total imports, a +10.5 per cent gain ‘Shocker: Smriti shunted from HRD to Textiles…’ advantage of their proximity to the in value terms. Products-wise, China Smriti Irani, known for her aggression and quick actions, is EU-28, and still a major supplier, triumphed as the top supplier of just what the Indian Textiles Industry needed after Santosh have also experienced the same woven garments’ imports. However, Kumar Gangwar, who was soft spoken and submissive in scenario as China, though its its share continued to decline at public domain. Ashok Rajani, Chairman, Apparel Export share contracted from more than 37.6 per cent. The Mediterranean Promotion Council (AEPC) while expressing his delight 20 per cent in 2009 to 18 per cent countries also witnessed decline on the appointment told Apparel Online, “The mainstream in 2015. This has benefited the in this segment, ending up with a media projected the Textiles Ministry in a very ‘wrong way’, SAARC zone, whose market share 16.5 per cent share. For imports which is indeed sad and only shows their ‘ignorance’. We are of textiles and clothing imports of knitted garments, as the main pleased with the appointment as she is intelligent, young and went up from 19 per cent in 2010 supplier to this market with a will surely be able to help the Textiles Industry which is one of to 24.6 per cent in 2015. The report 34 per cent share, China was faced the most important pillars of the Indian economy. The recently also mentions that the ASEAN with the intense vigour of its direct announced package of Rs. 6,000 crore (US $ 923 million) for the zone, which is smaller than the competitors in the SAARC zone, apparel export industry, indeed shows that the Prime Minister SAARC area, showed enough drive especially the ASEAN areas. is concerned about the Textiles and Apparel Industry.”

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Indian textile exports to increase by 6% in FY '17: ICRA

As per the latest report by recent financial package for the ICRA, an Indian independent textile industry.” and professional investment However, it may be mentioned information and credit rating here that on a year-on-year basis, agency, induced by the expectations textile exports have continued to of higher fibre prices and growth decline by 6 per cent and stood in apparel sector, Indian textile at US $ 5.7 billion in the first two exports are likely to witness a months of fiscal 2017 as against surge of 6 per cent to US $ 40 billion US $ 6.1 billion in the comparable in FY 2017 despite the de-growth of period last year and US $ 6.4 2 per cent in the fiscal year 2016. billion in the same period of FY According to some other estimates 2015 due to lower fibre prices… by ICRA, volume growth is also Polyester and cotton prices stood expected in segments like textile lower by 10 per cent and 4 per made-ups and home furnishings, cent, respectively till May this year, which will support the overall rise which is reflected in the decline in in value of textile exports from the value of exports from India. country. Nonetheless, the growth in value Anil Gupta, VP, Corporate Sector terms is expected to be back Ratings, ICRA averred, “Despite was driven by lower fibre prices segments, especially apparels, on track in the near future as volume growth in most of the (cotton as well as polyester). For shall see positive volume growth, higher input costs will partially segments, de-growth in the value FY 2017, while raw-cotton export especially due to improved export be required to be passed on to the of textile exports during FY 2016 is expected to decline, other competitiveness supported by the buyers, maintains ICRA.

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Ethiopia to train 30,000 workers for Hawassa Industrial Park

A major pact – to source, recruit between the new recruits and and train 30,000 textile and the factories. “The project poses garment workers for the newly an admirable example of public- inaugurated Hawassa Industrial private partnership which ensures Park in Ethiopia – has been inked smooth integration of new textile by Enterprise Partners, Trade and apparel investments into and Industry Bureau of Southern Hawassa Industrial Park,” states Nations, Nationalities and Peoples Tadesse Haile, Industry State Region (SNNPR), Ethiopian Textile Minister of Ethiopia, adding, Industry Development Institute, “The industries in Hawassa will and the Tenants’ Association. have to roll up their sleeves to The project will also reportedly become efficient and competitive undertake sourcing process- by shortening the learning curb to informing, registering, orienting and be successful in the global market pre-selecting a total of 60,000 job and the best practice achieved seekers (80 per cent women) over foundation in a system that can be The agreement, which will through this program will be the next two-and-a-half years from scaled up across the country. To commence training from the simulated to other pipelined potential recruitment areas within increase employees’ productivity, month of September this year, industrial parks. All signatories SNNPR. “Hawassa Industrial Park identifying, developing and training aims to control current high and stakeholders endeavour for is about Ethiopia’s industrialization them is vital,” avers Nebil Kellow, labour turnover through effective the successful implementation of drive that is creating a prototype MD, Enterprise Partners. synchronization of expectation the project.”

Rising wages in China to create Cambodia's jobs in South Asia: WB Report garment

As per the latest World Bank while the Southeast Asian export markets like the US and export report titled ‘Stitches to Riches: countries would fare even better, EU that are already scouting for Apparel Employment, Trade with a 37-51 per cent increase. alternatives. It may be mentioned soars and Economic Development’, in Although China still dominates here that among the South Asian view of rising wages in China, the global apparel market with countries, Bangladesh, Sri Lanka As per latest reports from Ministry the global garment industry will a share of 41 per cent to that and Pakistan are considered of Industry (Cambodia), exports shift for cheaper production of 12 per cent of South Asia, big winners in terms of garment of garment and footwear from alternatives in South Asia. sourcing in China is becoming exports to the US, states the World Cambodia have noted an increase This move is expected to create increasingly costly for important Bank report. of 13 per cent year-on-year to 1.50 million new jobs in the US $ 1.55 billion in the first South Asian countries. quarter of current year. In the The report further mentions that year 2015, the Southeast Asian the Southeast Asian countries country’s exports of garment – Cambodia, Indonesia and and footwear generated US $ 7.1 Vietnam are outperforming the billion in revenues, up 14.5 per cent South Asian ones – Bangladesh, compared with 2014 when apparel India, Pakistan and Sri Lanka, in and footwear export value stood terms of overall apparel export at around US $ 6 billion. Western performance, product diversity markets, particularly the US, and non-cost related factors Canada and European countries important to global buyers. are the key export destinations Furthermore, if the labour costs for Cambodia. The country has in China surge by just 10 per cent, performed well in the first three South Asia’s exports to key months of the year despite the wage markets like the US and EU issue that has been creating hurdles would increase by 13-25 per cent in the clothing sector of the country.

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ADVERTORIAL

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he sourcing options for apparel the country’s business case; top it than that of Bangladesh and thus FACTS retailers have never been so up with vast land ripe for cultivation wins over the buyers. Producing high- • Ethiopia is said to diverse.T Even as the fraternity makes of cotton which will serve as a tech sportswear, shirts, and formal be a place where peace with China’s mounting wages, source of raw material. The biggest suits, Myanmar exports 75 per cent one can go for the pace at which Bangladesh has challenges that remain however are of its produce mainly to Japan and fibre to factory and developed and Vietnam is being the production inefficiencies and lack Korea as the US and EU withdrew cheap plentiful developed is enthralling. The wage of a competent local sourcing network the trade benefits when Myanmar labour at US $ 52 a bomb is ticking anyway at these rather than the widespread perception was gripped by military regime. month along with locations as well, and since the of being a corrupt nation and not Thus, a country that has worked inexpensive power. economy in both the countries being as dexterous as Asians. slowly and steadily to build a sizable is improving, the opportunities US $ 1.4 billion export turnover for Though the export is a mere US $ 60 • Myanmar’s in other sectors will soon start the last year relying significantly million at present, the companies minimum wage weaning away the workforce from on these markets, is potentially an that have established their presence is lower than that apparel factories to other emerging apparel manufacturing powerhouse. in Ethiopia are building capacities of Bangladesh. It sectors. Simultaneously, Ethiopia If the ongoing talks with the EU which will translate to exponential exports 75 per cent and Myanmar have emerged as the and the US manifest in Myanmar’s growth. Despite the fact that there of its produce to next two hot and actively pursued favour, the status quo will be altered is no comparison between Ethiopia manufacturing destinations. significantly for even higher export Japan and Korea. and Myanmar, Ethiopia is considered Ethiopia is said to be a place where figures. The challenge that must not the first choice destination to set up one can go for fibre to factory, and be ignored is the lacklustre banking cheap plentiful labour at US $ 52 a a factory. infrastructure which restricts the month, inexpensive power, and a Free Myanmar, on the other hand, starts loan sanctioning authorities of Trade Agreement with US augment with a minimum wage which is lower foreign banks in the country.

Even as existing hubs become expensive, the sourcing options for buyers have never been so diverse

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Apparel imports by USA witnessed downturn in first 5 months of 2016; ladies dresses from Bangladesh showed growth between Jan.-May while undergarments is the growth category from India. p68

ETHIOPIA: A MAGNET FOR TEXTILE INVESTMENT ESSENTIALS AND GARMENT SOURCING Following the initial Foreign Direct Investments in 2014 The transformation of a small, obsolete and uncompetitive garment industry into a strong export and 2015, a group industry may seem a madman’s dream to most people, but not to sector observers who in the past of foreign investors witnessed the steep rise of the garment industry in countries like Bangladesh and Cambodia. Until (mainly from Turkey, recently, the Ethiopian Government and a couple of pioneering Turkish textile companies stood nearly India and China) alone predicting that Ethiopia would become the next big garment sourcing hub. However, 2015 was and some Western the year of Ethiopia’s take-off, writes Jozef De Coster, an analyst from Belgium. buyers joined Ethiopia in its growth journey which has upscaled the pace n 2014 and 2015, the early birds of the total export). Half of Ethiopian group in Ethiopia, is eagerly working of Foreign Direct Investment and textile and apparel companies are on a plan to relocate some 20 Turkish of developments Igarment sourcing in Ethiopia were SMEs of 500-1,000 workers who are textile and garment companies to and prompted joined by a group of foreign investors able to handle small-run orders for Ethiopia. Saygin Dima seems bullish the Government (mainly from Turkey, India and China) European mid-segmented fashion about its future in Ethiopia. The and the textile and and of Western buyers, which has management thinks that within two retailers. Sweden’s H&M was a garment sector of upscaled the pace of developments, sourcing pioneer in Ethiopia. years a turnover of US $ 150 million prompting the Government and the per annum is within reach. Saygin the country to set textile and garment sector in Ethiopia Dima wants to extend its activities up very ambitious to setup very ambitious targets to EARLY BIRDS towards garment manufacturing targets to continue continue expanding rapidly. The vertically integrated Turkish which will increase the current expanding rapidly. employment of 1,200 people to around In 2014-15, Ethiopian exports of yarns, textile companies Ayka Addis and Turkish textile grey fabric, garments and traditional Saygin Dima, both of which entered 3,000 people. companies Ayka handloom products together totalled Ethiopia in 2008, are the two key Clothing retailers and brands from a modest export amount of just over FDI pioneers in the sector. Ayka Europe and the US moved in slowly Addis and Saygin US $ 65 million. The target for 2020 Addis, currently the biggest textile and cautiously. H&M started test Dima are two key is to export US $ 1 billion of textiles FDI pioneers in and garments. The sector, which now the sector. represents 6 per cent of the country’s Area-wise Distribution of International Apparel total export value, wants to achieve a Manufacturers in Ethiopia share of 22 per cent by 2020. The Ethiopian Textile Industry Company Name Location Country (from) Development Institute (ETIDI) was PVH Corp. Hawassa USA embarrassed when it had to announce Raymond Group Hawassa India that textile exports for the first Hirdaramani Group Hawassa Sri Lanka six months of Ethiopian fiscal year Arvind Limited Hawassa India 2015-16 were lagging behind the DBL Group Tigray Bangladesh planned target. The target was to Jiangsu Sunshine Adama China obtain US $ 60 million exports, while only US $ 41.1 million was achieved, Kanoria Africa Textiles Bishoftu (Debre Zeit) India meeting less than 70 per cent of Shaoxing Mina Textile Sebeta, Oromia China the plan. Calzedonia Tigray Italy However, optimism continues to Velocity Apparel Plc Tigray UAE reign since companies such as H&M, Ayka Addis Textile and Investment Group Bole Kefle Ketema Kebele Turkey Tesco, Gap, Belk, and Walmart, among C&H Garments Bole Lemi Industrial Zone China others, are now sourcing textile Korea Zinc Bole Lemi Industrial Zone Korea products from Ethiopia. Europe is Shints ETP Garment Plc Bole Lemi Industrial Zone N/A Ethiopia’s main export market for garments (with around 60 per cent Vanity Fair Hawassa N/A

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runs in three Ethiopian factories in 2012, and then relied partially on the FACTORS WORKING IN Swedish taxpayers to upgrade its FACTS Ethiopian suppliers via a partnership with Swedfund which reportedly • Ethiopia is currently FAVOUR OF ETHIOPIA injected US $ 8.6 million in “the the number one development of a responsible textile sourcing location Cheap Labour & Educated Workforce: Abundant availability of labour industry in Ethiopia”. The American according to at US $ 45 per month for a skilled labour as well as significant number clothing group Phillips-Van Heusen apparel sourcing of educated youth for mid-management positions, which presents an (PVH), which owns brands such as company Duty Free ideal opportunity for labour-intensive garment manufacturing. Calvin Klein and Tommy Hilfiger, Sourcing Inc. strategically helped in building an Bulk interest rate: The minimum capital required for a foreign investment East African supply chain by bringing • Europe is Ethiopia’s is US $ 200,000 per project; the same is US $ 150,000 per project if the in some experienced Asian investors main export market project is in partnership with domestic investor. Up to 70 per cent of the in Kenya and Ethiopia. for garment, total project cost may be funded by banks @ 8.5 per cent interest rate accounting for and balance is expected to be invested by the investor. 60 per cent of the Customs Benefits: THE PLACE TO BE total exports.  100 per cent exemption from the payment of customs duties and In spite of some striking flaws other taxes levied on imports of all capital goods. in Ethiopia’s politics, economy • Half of Ethiopian  Exemption from the payment of customs duties on import of spare and infrastructure, as far as the textile and apparel parts worth up to 15 per cent of the total value of the imported production of garments for the companies investment capital goods, provided that the goods are also Western markets is concerned, there’s are SMEs. exempted from the custom duty. a feeling that the country has a great • Ethiopia targets future. Many sourcing specialists who  Investor granted with a customs duty exemption allowed importing to export US $ 1 have explored the global opportunities spare parts duty-free for five years from the date of commissioning agree that today Ethiopia is the place billion of textiles of a project. and garments by to be. The country is currently the  Investor can also buy capital goods or construction materials tax No. 1 sourcing location, according to year 2020. free from local manufacturing industries. the apparel sourcing company Duty • In 2014-15,  Investment in capital goods imported without the payment of Free Sourcing Inc. Also the Indian Ethiopian exports custom duties and other taxes can be transferred to another entrepreneur Sidarth Sinha, the of yarns, grey investor enjoying similar privileges. Founder and Owner of Vogue and fabric, garments Velocity Group, who is in process Income Tax Exemptions: and traditional to create a ‘garment township’ in  All investments in textiles and textile products sector are exempted handloom products Ethiopia, believes that no other from income tax for a period of 6 years depending on the country can presently beat Ethiopia. totalled just over US geographical region of the setup. $ 65 million. The principal arguments to move into  Investment in designated regions attracts special exemption of Ethiopia are well known: the abundant • Textiles and 30 per cent in income tax for three consecutive years even after the availability (at least theoretically) garments represent expiry of the income tax exemption. of cotton and hydro-energy, the 6 per cent of  Income tax exemption of 50 per cent is also given in case of factory free entrance of Ethiopian textile Ethiopia’s total expansion in volume or adding new product or introducing a new products to the US-market under export value service, provided that it is 100 per cent of an existing enterprise. AGOA and to the EU-market under currently.  Investor, who exports 60 per cent of his products, or services, or the Everything But Arms System, the supplies to an exporter, is exempted from income tax for additional strong engagement of the Ethiopian 2 years. Government as formulated in the Second Growth and Transformation Export Incentives: Plan (2015-16 to 2019-20) and  No export tax is levied on textile and garment export products demonstrated by the establishment of Ethiopia. of the Ethiopian Textile Industry  To safeguard domestic textiles industry, Government has Development Institute (ETIDI) and imposed 35 per cent duties on imported fabric used for the industrial area Bole Lemi, both in domestic consumption. Addis Ababa, and of course the very competitive labour cost.  Duty drawback schemes offer 100 per cent exemption (drawn back at the time of exports) from the payment of customs duties and The low Ethiopian labour cost other taxes levied on imported and locally purchased raw materials (average monthly wages for operators used in the production of export goods. reportedly vary from US $ 45 to 60/ month) are however, significantly  Provisions for Bonded Warehouses whereby exporters are licensed offset by low labour productivity and to operate such warehouses in importing of raw materials duty-free. high personnel rotation. The extension  Exporters who don’t enjoy facility of bonded warehouse are given of AGOA for 10 years, in June 2015, vouchers with monetary values. Such vouchers can be used in lieu was of course of crucial importance of duties and taxes payable on imported raw materials.

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BRIEF CASE: ETHIOPIA Strengths Weaknesses INDUSTRY  Abundant availability (at least  Being landlocked, the theoretically) of cotton and country is dependent on its COMMITMENT hydro-energy neighbouring country Djibouti Ethiopia  Free entrance of Ethiopian for its sea imports and exports H&M partially textile products to the US  Missing raw material suppliers through Swedish market under AGOA and  Lack of technical know-how to the EU market under the Addis Ababa (16) might limit the expansions Bishoftu (1) taxpayers is trying Everything But Arms System and productivity  Competitive labour cost to upgrade its Oromia (1)  Efforts being made by regional Ethiopian suppliers Governments to expedite via a partnership foreign investments with Swede fund, which reportedly injected Areas with major presence US $ 8.6 million in the of apparel manufacturers development of a (figures in brackets indicate the number of factories in responsible textile that region) Source: Data extracted from industry in Ethiopia. Ethiopian Textile and Garment Manufacturers Association

American brand Phillips-Van Heusen (which owns brands such as Calvin Klein and Tommy Hilfiger) strategically helped as well for foreign textile and MOSTLY ASIAN has plans to extend activities to in building an East garment manufacturing groups as for INVESTMENTS jeans manufacturing. Kanoria African supply chain American buyers to bet on Ethiopia will ultimately employ some 2,000 for the long-term. In October 2015, the Indorama people in Ethiopia. According to by bringing in some Group, the world's largest integrated Ethiopian media, India’s Raymond Ethiopia is one of the few countries experienced Asian manufacturer of polyester, was said Ltd., the world’s largest integrated which is utilizing the duty-free and to be discussing with the Ethiopian manufacturer of worsted fabric, has investors in Kenya quota-free export benefits under Government the setting up of a concluded an agreement with the and Ethiopia. AGOA to the fullest, and where polyester plant in the country. This Ethiopian Investment Commission 95 per cent of the garment imports rumour has not yet been confirmed. to invest US $ 100 million in are open to the ‘third country’ fabric In March 2015, the Indian denim giant Ethiopia. The East African rule of origin, which allows garment Arvind started manufacturing denim country hopes that Raymond’s manufacturers to utilize raw materials bottoms, 12,000 pcs/day in the textile engagement in Ethiopia will attract from any origin for export purpose. industrial zone of Bole Lemi (near other investors. In addition to this, preferential tariff the airport of Addis Ababa). Exports The vertically integrated Taiwanese rates have provided Ethiopia the were initially destined to the US, group New Wide Garments, which freedom to export to the Common but at the end of 2015 negotiations is already employing more than Market for Eastern and Southern were underway with potential 1,000 people in a knitwear factory Africa (COMESA) agreement, European customers like H&M and in Addis, plans to ultimately employ indicating that majority of ‘Made in Benetton. Besides, Arvind was said 5,000 people in three factories in Ethiopia’ products are eligible to enter to be working on an integrated Ethiopia. The Dubai-based Atraco into these markets which are quota- supply chain in Ethiopia, starting Group started manufacturing and duty-free. from cotton cultivation to spinning woven and knitted clothing in the Besides, availability of land on a and weaving. Bole Lemi Industrial Park in Addis leasehold basis of up to 99 years However, beating Arvind to the in October 2014. In the course of depending on the geographical pole, Kanoria Africa Textiles, a 2016, employment is planned to region, type of investment and class subsidiary of the Indian group increase from 400 to more than of land, is also aiding the country’s Kanoria Chemicals & Industries, on 2,500 workers. Also Shin Textile growth in the apparel sector. In order 24 October 2015 inaugurated a brand Solutions of South Korea moved to expedite foreign investments, new denim fabric factory – the first into the factory park at Bole Lemi regional Governments are putting in Ethiopia – with an annual capacity in October 2014, with the intention efforts and are able to allocate land to of 12 million metres in Bishoftu, to gradually employ 3,000 people. investors within 60 days of receiving 37 kms from Addis. The factory, Foundation Garment Pvt. Ltd. their applications. started with less than 500 workers, (Jinadasa Group), from Sri Lanka,

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is currently investing in Kenya where exporter, is investing about US it will reportedly put 6,600 workers $ 100 million in a factory (garments, on the payroll (3,600 in Nairobi and knitting, dyeing) in Mekele. 3,000 in Mombasa). However, it The factory was supposed to be also has firm intention to invest in operational in the second half of 2016. Ethiopia, where a factory employing Initial employment is estimated at 3,000 workers is scheduled to start in 5,000-6,000 workers. Among DBL’s January 2018. The Ethiopian factory customers are H&M, Esprit, Puma, should produce 1.75 million pieces and Walmart. of clothing per month, for companies The most ambitious investment like H&M, PVH and Victoria’s Secret. project in Mekele is that of the Indian The Turkish garment manufacturer entrepreneur Sidarth Sinha. His Ayka has also set up a branch in company Velocity intends to keep Ethiopia, in which it has invested its existing five factories in Egypt at US $ 160 million. It employs around work, with around 4,000 employees, 7,000 people and plans to scale The low Ethiopian labour cost (average monthly wages for operators reportedly vary from US $ 45 to but it will expand forcefully in 60/month) is, however, significantly offset by low labour productivity and high personnel rotation up to 10,000. Ethiopia. A new garment factory in Several important investments are Mekele with 3,000 workers will mainly taking place in Mekele, in the north manufacture knits and denim articles. of Ethiopia. This is the case for Velocity plans to ultimately employ “There Vis no other country that investments by DBL and Velocity, some 10,000 people in Ethiopia. can presently bcis no other country among others. DBL Group, from Customers of Velocity are brands that can presently bis no other Bangladesh, a vertically integrated like Levi's, Vanity Fair, Target, Zara, country that can presently beat Ethiopia.” knit garments manufacturer and and H&M.

CAN MYANMAR CARVE A NICHE FOR ITSELF?

Since the industry began, cheap labour has been the apparel manufacturing industry’s North Star guiding the search for new sourcing hubs. While quite a few locations make the cut based on this single criterion, the list shrivels as various other internal and external factors start playing their influence. Myanmar (Burma), although freshly out of a national turmoil, is one such country that has caught the fancy of apparel retail giants such as Gap, H&M, Marks & Spencer, Primark, and N Brown Group plc – a convincing list that ensures the country, if mentored right, will be a serious apparel business contender.

ccording to the Myanmar Garment Permitted Garment Manufacturing Enterprises by Myanmar Manufacturers Association Investment Commission in 2016 (till June) A(MGMA), Burmese garment exports Name of Company Location Country of jumped to US $ 1.46 billion in 2015, Origin accounting for 10 per cent of the Glamour Garment Yangon Region, Hlaing Thar Yar Myanmar country’s export revenues, and the Company Limited Township, Industrial Zone - 5 country is now heading to an ambitious Panda Textile Company Limited Mandalay Region, Sintkaing Myanmar target of US $ 12 billion by 2020. On Township, Paleik Town the other hand Ethiopia, in FY 2014- Roo Hsing Garment Manufacturing Yangon Region, Hlaing Thar Yar Taiwan Company Limited* Township, Industrial Zone 15, exports of yarns, grey fabric, garments and traditional handloom Toya Myanmar Co. Ltd. * Yangon Region, Hmawbi Township ------products together generated US $ 60 *Fully Foreign Funded Investments million, which is merely a fraction of Myanmar’s earnings from the sector. with developments that must be sectors highlighted by the authorities The flurry of orders and investments taken note of. as a key area of focus and the focus however has been undoubtedly has only grown sharper with time. stronger for the latter. The significance of the garment On the surface of it, the scales appear THE INTENT TO PAVE manufacturing sector grew more to be tilted in favour of Ethiopia THE PATH prominent when the Myanmar and few other African Nations. But Almost immediately after the military Government launched its first before any conclusions are drawn, rule concluded in Myanmar, garment National Export Strategy (NES) in Myanmar’s landscape is bubbling manufacturing was amongst the March 2015, outlining a five-year plan

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BRIEF CASE: MYANMAR Strengths Weaknesses TRAINING  The latest National Export Strategy (NES) identifies  Missing raw material suppliers textiles and garment sector as a key sector  Under-developed banking INITIATIVE which will drive economic development and sector employment generation   No management workforce In the wake of Myanmar is also a WTO member and its Most capacity building exercise Favoured Nation (MFN) status allows it to export underway launching of first at low tariff rates to other member countries. Besides the country has duty-free access to the National Export Japanese market Strategy (NES),  Talks are on to revive preferential trade Myanmar Garment agreements with the EU and US Myanmar  Massive interest shown by Chinese factories in the Manufacturers form of relocations and investments Association (MGMA) has arranged workshops to help Bago (15) factories learn Pathein (8) to handle FOB Yangon (288) operations with topics including Areas with major production presence of apparel manufacturers planning, (figures in brackets merchandising, indicate the number of factories in that logistics, region) Source: Data extracted communications from Myanmar Garment Manufacturers and audits. Association

that aimed to improve the country’s BURMESE FOREIGN At the same time, Myanmar is also a export capacity. Under the NES, seven WTO member and its Most Favoured key sectors were identified to have RELATIONS, BURMESE Nation (MFN) status allows it to great potential to drive economic ADVANTAGES… export at low tariff rates to other development and employment Its 2014 exports were majorly member countries. Another factor generation, which included the textiles destined to locations such as Japan that is being designed to play to and garment industries. (38%) and Korea (31%), out of Myanmar’s advantage is the position which Japan offers GSP privileges it enjoys in the ASEAN. Myanmar to Myanmar. The exports to EU is part of the China-ASEAN Free contributed to the total, a 23% share. Trade Area (CAFTA), which was What could possibly cost Myanmar by formally established in 2010, a huge fraction is a lack of formidable removing import duties on a great trade arrangements with key market number of tariff lines between China as compared to its competitors. and ASEAN countries – a magnificent Ethiopia enjoys AGOA extension for opportunity for Myanmar to become the coming decade, and Vietnamese a new manufacturing powerhouse. TPP and EU-FTA is a genuine threat. The CAFTA Agreement went into The Union of Myanmar Federation upgradation in 2015 to raise bilateral of Chambers of Commerce however trade to US $ 1,000 billion (from about is hopeful that Myanmar and the US US $ 480 billion in 2014) and ASEAN- will resume discussion on GSP Plus bound FDI to some US $ 150 billion status in the coming months. With by 2020. Such an increase in trade of enhanced prospects of the US further goods and services as well as economic Myanmar has actively taken notes from the global apparel manufacturing scene and worked relaxing sanctions and even granting and technological cooperation (i.e. proactively on giving greater rights to workers GSP benefits, the MGMA anticipates technology transfer) is expected to give that Myanmar’s garment sector will an extra push to Myanmar’s garment Significance of the garment experience exponential growth in industry in the mid-to-long term, manufacturing sector grew years ahead, creating around 1.5 including relocation of China-based more prominent when the million new jobs from its current garment manufacturers to the country. Myanmar Government launched its first level of approximately 250,000 and The Chinese relocations can have National Export Strategy in March 2015. generating US $ 12 billion in export interesting manifestations because value by 2020. while Ethiopia has received interest

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Comparison of investment-related costs in from Indian and Sri Lankan planning, merchandising, logistics, Ethiopia vis-à-vis Myanmar manufacturers predominantly, and communications and audits. Vietnamese market witnessed few Reducing trade barriers for Attribute/Country Ethiopia Myanmar Chinese relocations, Myanmar can traders and manufacturers based Average Wage 52 85 be expected to receive the product in Myanmar, the Government (US $ per month) prowess from China (The Myanmar introduced a new, fully online Industrial Estate (Land) NA Foreign companies are not Investment Commission (MIC) purchase rate permitted to purchase land export and import licensing system (US $ per sq. m.) allows 100 per cent FDI in setting up in early June 2016. Companies Industrial estate rent (US 4 0.39 textile and garment factories in the can now print out an export $ per sq. m. per month) country). Vietnam is working towards and import licenses through the Electricity rate for Rate per Rate per reinforcing its niche in product Myanmar TradeNet website after business use kWh: 0.04 kWh: 0.12 categories like outerwear, and (US $ per kWh) filling out the application form and Ethiopia, and similar to Bangladesh, paying the licensing fee through an Basic monthly charge Nil Nil for electricity (US $) will build its basics expertise. e-payment system. Water rate for business Rate per Rate per use (US $ per cu. m.) cu.m: 0.31 cu.m. 0.88 Basic monthly charge 17.82 Nil SIMPLIFYING PROACTIVELY for water (US $) PROCEDURES ADDRESSING THE Gas rate for business use NA Rate per 1,000 cu. (US $) ft. : 8.61 & DEVELOPING LABOUR CONCERNS Basic monthly charge NA Nil INFRASTRUCTURE Myanmar has actively taken for gas (US $) Myanmar has announced plans notes from the global apparel Corporate income tax 35 26 rate (%) to introduce an electronic import/ manufacturing scene and worked proactively on giving greater Personal income tax 0-35 1-20 export clearance system named rate (highest rate, in %) Myanmar Automatic Cargo rights to workers. Country’s first Value-added tax (VAT) 15 5 Clearance System (MACCS) and Labour Organisation Law was (standard rate in %) Myanmar Customs Intelligence brought out in 2011. MGMA also Currency Exchange Ethiopian Birr (ETB) Kyat 1165 System (MCIS) by November 2016 in ratified a Code of Conduct for its Rate (vs US $ 1) 21.92 Yangon area, including international member companies as a guide GDP 61.54 64.87 ports, Yangon Airport International and framework for responsible (US $ billion) Cargo Terminal and Thilawa Special business practices in the country’s Population 54.3 101.8 garment sector. (in million) Economic Zone. Literacy Rate (in %) 49.1 95.13 Under the recently announced NES, the agenda of development of export No. of apparel and 300 >200 THE DAMPENERS textiles units infrastructure (e.g. deep sea ports), Like most of the existing and production locations (e.g. sector- Employment in apparel 10,000 20,000 upcoming hubs, even Myanmar and textile units specific economic zones), country is yet to build a vertically Total exports (RMG, in 0.4 1.4 quality standards in compliance with integrated ecosystem locally. US $ billion) international standards, as well as Given the ambitious target of Number of 0 (landlocked) 9 upgrading of the existing regulatory major ports US $ 12 billion by 2020, it will and legal framework to better take a major effort for Myanmar Trade tie-ups China, Sudan, ASEAN (AFTA), ASEAN protect the rights of both producers Common Market JAPAN Comprehensive to overcome this barrier within for Eastern and Economic Partnership and workers have gained traction. such a short period of time. At Southern Africa (AJCEP), ASEAN Korea, Highlight activities in this strain will (COMESA), Africa ASEAN-Australia-New the same time, lack of funding free trade zone, Zealand FTA, ASEAN-China, be two road sections on the Yangon- channels is a gnawing concern. In AGOA ASEAN-India Mandalay highway being upgraded as Myanmar, the garment industry a pilot project. The new Construction consists mostly of SMEs that do Ministry has also undertaken a Area-Wise Distribution of International not have the necessary financial project to build low-cost housing Apparel Manufacturers In Myanmar resources or knowledge to secure units that cost less than K10 million a loan from the financial sector (US $ 8395) in Naypyidaw, the capital S. Name of companies Location Country of and the country’s banking sector No. Origin of Myanmar. is vastly under-developed. As of 1 Chai Moon Garment Pathein Township of Malaysia Ayeyawady region and In particular, the NES acknowledged May 2016, only 13 foreign banks Dagon Myothit (East) the need for the garment industry were permitted to operate in Industrial Zone to move up the value chain, advising Myanmar. These banks are allowed 2 Honeys Garment Yangon Industrial Zone, Japan Industry Ltd. Mingalardon, Yangon it to move towards operations on a to offer a narrow range of services “Free-On-Board” (FOB) basis from 3 World Jin Garment Thardukan Industrial Zone, Korea and although they are allowed to Shwe Pyi Thar, Yangon its current CMP system as a longer- provide credit to local banks and 4 Shin Sung Garments Bago Korea term development goal. In the wake financial institutions as well as 5 Myanmar Solamoda Shwe Than Lwin Industrial China of the NES launch, the MGMA has foreign companies, they are not Garments Group Zone, Hlaing Tha Yar arranged workshops to help factories allowed to participate in retail 6 PT. Sungintex Shwe Than Lwin Industrial Indonesia learn to handle “FOB” operations, banking operations or engage in Zone, Hlaing Tha Yar with topics including production direct lending in local currency.

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VALUE STREAM MAPPING AND WIP REDUCTION A potent tool for ‘operational excellence’ in apparel industry

Global macro-economic indicators, competition and cost pressures are compelling organizations to focus on “Operational Excellence”. Successful manufacturers excel in operations through the use of principles like Value Stream Mapping and other tools under the aegis of Toyota Production System, which advocate waste elimination from manufacturing processes, resulting in enhanced efficiency and quality.

• Poor first time through opportunities. Managing inventory Current scenario at per cent (FTT%). across the path of production can apparel manufacturing • Process delays due to lack also address the first five issues shopfloor of synchronization between highlighted above. Apparel manufacturing involves raw preparatory sections. Using the Value Stream Map material (fabric) cutting, sewing, • Lack of uniform understanding of also helps us understand the impact finishing and finished goods storage. what constitutes a good product. of reducing inventory on the organization. We shall discuss briefly If we summarize typical issues that • Capacity constraints induced surface in the factories today, the list the rationale behind every inventory- by skill variability and reduction action point… would be something like this: individual variability. • Piles of pieces waiting to Anand Deshpande, • Longer set-up times between Value Stream Mapping be reworked. Founder & CEO, product changeovers. The steps used in Value Stream • Lot of delay due to larger lots. Admaa Consulting, • Challenges of multi-skilling. Mapping are: • No standard WIP (Work in illustrates how • Machine breakdown/repair delay. • Identify the product family. Progress) maintained on the floor. Value Stream These issues can be addressed • Draw the current state map. • Stocks misplaced in stores Mapping, one such by implementing Lean in a very • Draw the desired state map. and shopfloor. tool for attaining systematic and coherent manner. • Overproduction (goods made Operational One basic tool that can be used • Identify projects and chalk out a too early or excess of what Excellence, and which I am afraid many garment project plan to eliminate waste. is required). can be used to factories fail to implement is Value In this case study, we will draw • High retrieval time experienced in eliminate excess Stream Mapping (VSM). It is a a current state VSM for a typical raw material and finished goods inventory and build very powerful tool used to identify jacket product family with the daily stores. efficient systems. waste in the entire value stream, customer demand of 500 pieces and defined as a set of activities required shipment occurring once a week. The • High turnaround time (order to convert raw materials into factory works for 6 days in a week placement to payment finished goods. A simple Material and one container ships 3,000 pieces. cycle is long). and Information Flow Analysis Daily working hours are 8 hours • Seven types of wastes seen in Diagram traces the path of production (480 minutes) excluding lunch and all departments. and identifies key waste elimination tea breaks.

62 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com Figure A: Jacket line VSM – ‘as is’ Map

Figure B: Jacket line VSM – To Be Map Tech Talk

Before we analyse the current state Value StreamValue Map, we Stream compute the FigureFigure A: Jacket A: Jacket line VSM line – ‘as VSMis’ Map – ‘as is’ Map ‘Takt Time’ wherein: Mapping Production Control Takt Time = (Available time in minutes per The steps used in Value Stream Mill SSAL Customer day)/dailyMapping customer are: demand MRP demand = 500 jackets/day = 480• mins/500Identify pcsthe product family. Daily = 0.96• minsDraw = the 57.6 current secs state map. Weekly Schedule Schedule 4x We complete• theDraw VSM the by desired state map. Monthly computing the overall value • Identify projects and Sewing Sewing Final add time, production lead time Fabric Cutting Finishing Warehouse chalk out a project plan to Stores Parts Assembly and also identifying waste and Inv Inv Inv Inv Inv Inv eliminate waste. 1000 2500 2500 500 1500 500 bottleneck operations. 13000 1500 1000 500 1000 3500 In this case study, we will draw Inv Inv Inv Inv Inv Inv The current state VSM as shown a current state VSM for a typical C/T – NA C/T – NA C/T – 50 s C/T – 48 s C/T– 56 s C/T – NA in Figure A generates some Rej% – 2% Rej% – 3% Rej% – 3% Rej% – 3% Rej % – 2% Rej % – NA jacket product family with the interesting insights: C/O – NA C/O – NA C/O – 3 hrs C/O – 2 hrs C/O – NA C/O – NA daily customer demand of 500 M Rel – 95% M Rel – 60% M Rel – 95% M Rel – 90% M – Rel 96% M – Rel – NA • The productionpieces and lead shipment time from occurring P/T 28.3 m P/T 24.4 m P/T 24.9 m P/T 26 m P/T 9.2 m P/T – 3.5 m Opr – 20 Opr – 45 Opr – 84 Opr – 42 Opr – 21 Opr – 12 Production the beginningonce aof week. the store The factory to the works Lead TIme: In days 2 26 5 3 5 2 1 1 3 2 1 7 58 days shipping forof the6 days container in a week for and one one Value Add Time: lot of 500container jackets is ships 58 days. 3,000 pieces. In mins. 28.3 24.4 24.9 26 9.2 3.5 116.30 mins. • The activitiesDaily workingare categorized hours are 8 hours (480 minutes) excluding Note: into Value Add (VA), Essential Customer Demand = 500 Jackets/day lunch and tea breaks. Takt Time = 28800/500 = 57.6 secs Non Value Add (ENVA), and Non Value Add % = 116.3/58 x 8 hrs x 60 = 0.41% Value AddBefore (NVA) we activities. analyse the The current The fabric stores and the cutting department work in batch production and the rest all in single piece flow. state Value Stream Map, P/T represents the Processing Time in each section, i.e. the time it takes for the lot or the piece to move from beginning to the end of the section. Value Add Time was found as C/O indicates the Changeover Time from one product to another. only 116.3we minutes, compute this the is‘Takt only Time’ C/T indicates the Cycle Time of the constraint operation in seconds. wherein: MRel indicates Mean Reliability. 0.41% of total time (58 days x 8 Opr indicates number of Operators Required per shift. hours x 480Takt minutes).Time = (Available time in minutes per day)/daily customer demand • The reason for longer lead time FigureFigure B: Jacket B: Jacket line VSM line – To VSMBe Map – ‘to be’ Map = 480 mins/500 pcs = 0.96 mins = 57.6 is due to secsthe Work in Progress between sections, within Production Control We complete the VSM by Mill sections and inventory in raw SSAL Customer computing the overall value MRP demand = 500 material (fabric stores) and jackets/day add time, production lead time finished goods. Daily and also identifying waste and Weekly Schedule • There is no capacity constraint Schedule bottleneck operations. 4x as the Cycle Time is lower than Monthly The current state VSM as the Takt Time in all sections. shown in Figure A generates Fabric Sewing Sewing Final Stores Cutting Parts Assembly Finishing Warehouse • Four shipmentssome interesting are effected insights: in Inv Inv Inv a month. • The production lead time 1000 500 500 100 100 500 • Machine reliabilityfrom the is beginning only 90% of in the Inv 6500 Inv 500 Inv 1000 Inv 500 Inv 1000 Inv 3500 the sewing finalstore toassembly the shipping section. of the C/T - NA C/T – NA C/T - 50 s C/T – 48 s C/T – 56 s C/T – NA • Inventory incontainer the fabric for stores one lot is of 500 Rej% – 2% Rej% – 3% Rej% – 3% Rej% – 3% Rej % – 2% Rej % – NA jackets is 58 days. C/O – NA C/O – NA C/O – 3 hrs C/O – 2 hrs C/O – NA C/O – NA very high: one month (26 days). M Rel – 95% M Rel – 96% M Rel – 95% M Rel – 90% M Rel – 96% M Rel – NA • The activities are P/T – 28.3 m P/T – 24.4 m P/T – 24.9 m P/T – 26 m P/T – 9.2 m P/T – 3.5 m • In sewing and cutting, the Opr – 20 Opr – 45 Opr – 84 Opr – 42 Opr – 21 Opr – 12 Production categorized into Value Add Lead TIme: alteration (rejection) rate is 31.4 days (VA), Essential Non Value In days 2 13 1 1 1 2 0.2 1 0.2 2 1 7 very high. Value Add Add (ENVA), and Non Value In mins. 28.3 24.4 24.9 26 9.2 3.5 Time: 116.30 mins. • The changeoverAdd (NVA)time isactivities. high in The sewing: 3 hours.Value Add Time was found Note: Customer Demand = 500 jackets/day The managementas only organizes 116.3 minutes, a this Takt Time = 28800/500 = 57.6 secs brainstorming issession only 0.41% to create of total time Value Add % = (116.3/31.4 x 8 hrs x 60 = 0.77% The fabric stores and the cutting department work, in batch production and the rest all in single piece flow. a Future State (58Value days Stream x 8 hours Map x 480 P/T represents the Processing Time in each section, i.e. the time it takes for the lot or the piece to move from beginning to the end of the section. as shown in Figureminutes). B. They take C/O indicates the Changeover Time from one product to another. C/T indicates the Cycle Time of the constraint operation in seconds. a decision to• improveThe reason delivery for longer MRel indicates Mean Reliability. times on an immediate basis by Opr indicates number of Operators Required per shift.

www.apparelresources.com  FEBRUARY 2016  StitchWorld 25

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 63 HAVE YOUR SAY BREAKING NEWS Tell us your news by emailing at To read the latest sustainability news, go to [email protected] http://news.apparelresources.com/sustainability-news/ Tech Talk

VA – Activity that brings about change in the fit, form and function of a rationalizing the WIP and reducing product;VA – Activity for thatexample, brings about in cutting change in– VAthe fit,could form mean and function actual of a cutting by the cutter. • Fourinventory shipments across are effected the entire in a path ENVAproduct; – Activity for example, that in doescutting not – VA add could any mean value, actual butcutting is currently by the cutter. required by the month.of production. Kaizen bursts with system;ENVA – Activityfor example, that does in not cutting add any – value, ENVA but is is the currently dry haul require ofd the by the cutting machine. • Machinecross-functional reliability is teams only 90% organized on themes like: NVAsystem; – Activity for example, that in does cutting not – ENVA add isany the dryvalue haul at of allthe –c uttinglike machine. in the sewing final assembly unnecessaryNVA – Activity thattransportation. does not add any value at all – like unnecessary transportation. section.1. Improving supply chain efficiency. • Inventory2. Creating in the supermarkets fabric stores is between very high:major one departments month (26 days). or wherever a Table 1: 1:Inventory Inventory reduction reduction within departments within departments • In sewinghandoff and takescutting, place the and installs a alterationpull system.(rejection) rate is very Department Processing Processing Strategies high. Time Time 3. Define standard WIP time from 58 days to 31.4 Current Future State • The changeoverbetween departments. time is high in State (days) (days) days (an improvement of sewing: 3 hours. • Review purchase policy and reduce stock of locally stored The Future State VSM as 46%). items in the store. The managementshown in Figure B throws some • Improvement in Value Add • Improve supply chain efficiency. interesting observations: Fabric Stores 26 13 organizes a brainstorming session to (VA) Time from 0.41% to • Define SLA’s with supplier. create1. a ProductionFuture State leadValue time Stream has reduced0.77% (an improvement • Single source supplier. Map as shown in Figure B. They of 92.5%). • Order just in time with a view to keep stock low. from 58 days to 31.4 days only by take a decision to improve delivery • Reduce interim storage in laying, numbering, fusing and reducing the inventory between• andReduced NVA by reducing times on an immediate basis by relaying by taking a policy decision. within the departments. the stock by 26.6 days. • Eliminate unnecessary storage trolleys and tables. rationalizing the WIP and reducing 2. The inventory within departments • Keep a WIP of only two lays ready for cutting. inventory across the entire path • Faster response to problems Cutting 3 1 has been reduced from 41 days to • Maintain a WIP of only one trolley between fusing and numbering. of production. Kaizen bursts with as there is no inventory to 26 days by proposing strategies as • Enhance skill versatility, especially in the fusing section. cross-functional teams organized fall back upon (like reducing • Create designated and restricted storage spaces in cutting room. on themessummarized like: in Table 1. mean time to repair a Sewing Parts 2 2 3. The inventory between machine). • WIP was not reduced by considering the Little’s Law. It states that 1. Improving supply chain Sewing Final 1 1 WIP = Throughput Time x Processing Time. Considering the variability departments has been reduced• Assembly efficiency. Reduction in quality issues. experienced by the department the current WIP was left alone. from 17 days to 5.4 days Finishing 2 2 2. Creating supermarkets between • Better visual management by proposing strategies as Warehouse 7 7 • Cannot change WIP as products are “Made to Order”. major departments or wherever as there is no confusion in summarized in Table 2. Total 41 26 a handoff takes place and installs locations of WIP on the floor a pullThe system. overall benefits of reducing for any order. inventory in the case study are: Table 2: 2:Inventory Inventory reduction reduction between departments between departments 3. Define standard WIP between • Utilizing capacity only departments.• Reduction of production lead timeto produce orders that Between Processing Processing Strategies from 58 days to 31.4 days (an are to be shipped and the following Time Time The Future State VSM as shown in departments improvement of 46%). not producing orders Current State Future State Figure B throws some interesting (days) (days) that are required far into observations:• Improvement in Value Add (VA) • The WIP was left untouched after considering the variability Raw Material and the future. 2 2 experienced in clearing containers. An overflow area was created to Time from 0.41% to 0.77% (an Fabric Stores 1. Production lead time has accommodate the irregular stock inflow. improvement of 92.5%). • Reduced overproduction reduced from 58 days to 31.4 • Eliminate excessive storage racks. (reducing goods that are days• onlyReduced by reducing NVA by the reducing the stock • Hold inventory in racks for only one day. This requires raising material produced too early and by 26.6 days. Fabric Stores requisition every day instead of once in five days. inventory between and within 5 1 those that are not required). and Cutting • Reduce storage spaces. the• departments.Faster response to problems as • Faster response to machine failures is natural when stock is reduced in 2. The inventorythere is nowithin inventory to fall back the supermarket to one day. departmentsupon (like has reducing been reduced mean time to • Create supermarket between sewing and cutting to hold one day ready-to-sew stock. from repair41 days a to machine). 26 days Cutting and 5 1 Sewing Parts • Kanban introduced between sections to prevent overproduction. by• proposing Reduction strategies in quality as issues. • Less rework in case defects found in supermarket. summarized Table 1. • Better visual management as there • Reduce storage space between parts section and assembly section. 3. The inventory between Sewing Parts is no confusion in locations of WIP • Less stock means easier pairing and lesser searching time. departments has been reduced and Sewing 1 0.2 on the floor for any order. Assembly • Less stock at pairing also ensures faster response to machine failures from 17 days to 5.4 days in sewing parts, therefore maintenance becomes agile. by• proposing Utilizing strategies capacity as only to produce • Reduce storage space between sewing assembly and finishing sections. orders that are to be shipped Sewing summarized in Table 2. • Less stock means easier pairing and lesser searching time. Assembly and 1 0.2 and not producing orders that The overall benefits of Finishing • Less stock at pairing also ensures faster response to machine failures are required far into the future. in sewing parts, therefore maintenance becomes agile. reducing inventory in the case study Finishing and 1 1 • Cannot change WIP as products are “Made to Order”. are: • Reduced overproduction (reducing Warehouse goods that are produced too early • Reduction of production lead Total 17 5.4 and those that are not required).

26 StitchWorld  FEBRUARY 2016  www.apparelresources.com 64 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com In a follow-up to the first part of the series,Evolution of Technology: Fabric Cutting, an article tracing the evolutionary improvements from time to time in cutting machinery, published in the Apparel Online Bangladesh edition of April 2016, here we present the second, and concluding, part of the series on Fabric Spreader.

Evolution of Technology FABRIC SPREADER

The ‘machines’ as we see them today use certain level of technology which is contemporary to today’s standards. In garment manufacturing, activities have been mechanized over a period of time, and mechatronics and electronics are added to enable better productivity, repeatability of output and consistency of quality. In the last one-and-a-half decade, the integration of computer and information technology made the machines capable of generating, storing and transmitting data automatically with added ease of diagnostics and quick repair. The future will likely see these machines support sustainable practices while becoming energy-efficient and caring for the environment. In this new series, Dr. Prabir Jana, NIFT Delhi will trace the evolution of technology for different garment manufacturing machinery and equipment, and how the gradual improvement of features has supported the users.

abric spreading is the first irreversible process of garment Fmanufacturing where fabric package is converted into layers of fabric. The first step of mechanizing the spreading process was the use of roll stand which was kept at one end of the table and two operators pulled the fabric along two selvedges. Although this process of spreading is the most economical and universally used for all types of fabrics, Cloth roll stand Mechanical spreader this is not the quickest one.

BASIC ROLL STAND table thus unwinding and spreading the manually with alignment of selvedge Although the roll stand is still used fabric in the process. The fabric trolley done by the operator; hence the fabric today, it has several disadvantages, or the mechanical spreader used to run tension varied across the length of like use of meter-fold fabric package on a single rail fixed along the length of spread as fabric roll was unwounded and use of zig-zag spreading (nap table (by manual push) thus allowing by moving of the trolley. But the trolley either way face to face) method. In variable fabric width to be spread by made the zig-zag spreading possible pursuit of increasing productivity of the same trolley. using large fabric roll. spreading for solid colour or symmetric The next generation trolley came motif, the concept of fabric trolley was EVOLUTION OF with motorized movement and introduced. The trolley used to travel MECHANICAL several mechatronic features were along the spreading table carrying the introduced to deskill the spreading fabric package on it. The lose end of SPREADING MACHINES process. This spreader used to have the fabric is held by catcher and the The first generation trolley simply two synchronized drive motors; one machine carries the rolls along the carried the fabric roll, pushed for liner motion along the table and

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 65 The minor another for rotating the fabric roll problem of the gap between the operator, from his earlier role of for unwinding fabric. To align one belts. The same can be achieved pushing the carriage now rides the distortion and side of fabric selvedge along the table through positively-driven belts carriage and evens out the fabric misalignment of automatically, mechanical sensors and a roll shaft passing through with a stick as required. Threading checks was a big were used. Although these spreaders the cardboard of the roller; the of fabric from cradle to catcher solved lot of labour-related issues, roll is gently laid on the motorised was a tedious and time-consuming reason for not certain quality-related problems like belts that unwind the roll. Speed process in earlier machines, now using automatic asynchronous and varying tension regulation is necessary to manage automatic threading system is part of spreader for along the spread and inability to use the acceleration/de-acceleration of every spreader. the meter-fold fabric package. The the spreader and non uniformity of The semi-automatic spreader check fabrics. asynchronous tension was due to deformed fabric roll packages. The was able to automate most of the Now there are gradual reduction of amount of fabric further advantage of this system is stereotyped processes and is the unwounded due to reducing diameter cutting machines that one can choose the pressure on most used across the industry. In of roll. (not spreading the roll and also the fact that one the meanwhile varying needs of is supporting the weight of the roll machine) consumers, has driven further round SEMI-AUTOMATIC from the centre. of developments to the next level equipped with SPREADER The fabric edge aligning system of automats. video camera Mechanical spreader gradually gave was improved to use photo sensor Due to growing use of fashion fabrics to scan the way to semi-automatic spreader with and 180-degree roll turning device (dimensionally unstable fabrics) fabric image perimete-based cradle feed system (called turntable) was introduced spreading machine developers for uniform fabric unwinding and the to accommodate more specialized and correct the continually added features. During possibility of using meter-fold fabric spreading mode like face-to-face late ’90s Kawakami introduced misalignment, if package. The evolution of the cradle nap one way. spreader Xn460 LMS with weft any, by adjusting correcting mechanism, which the X-Y direction automatically corrects the twisted grain or bowing effects of fabrics. movement to Another problem with woven superimpose on fabrics like crepes and georgettes previous layer, were twisted or wavy grain, where thus matching ‘on grain’ spreading was difficult and at the end of every layer hand- the check tearing was advisable instead perfectly, after of cutting by round knife cutter. which automatic Danish cloth spreading machinery manufacturer Niebuhr Maskinfabric cutting starts. in collaboration with S R Gent, a UK-based ladieswear manufacturer Stacking of deformed roll in a V-shaped cradle Cradle with two shafts during mid ’90s, developed a device with ‘snip and rip’ as opposed to conventional cutting at the end of the system to what we see today has SPREADERS OF TODAY lay to ensure spreading takes place been painstaking and is one of the ‘on grain’. Later Gerber Technology Ensuring even tension in fabric most popular systems that have been acquired Niebuhr, and this feature layer during spreading is the most adopted by most of the companies. is now available with Gerber. For important quality decider; nowadays First generation V-shaped cradle some unknown reasons these most advanced machines have 4 system had only 1 shaft and 1 motor, useful features like weft correcting feeding controls: [1] main feeding; the front and the back part of the mechanism from Kawakami and snip [2] pre-feeding, controlled by a cradle had the same speed. There was and rip spreading device from Gerber dancer bar; [3] back part of the a big gap between the belts and in are not popular amongst users today. cradle independent with differential case of heavy rolls and/or soft fabric, speed; and [4] nip rollers close to Another nagging problem of these can stack inside the cradle and the table to control the tension of spreader was during the use of affect the quality of the feeding. In a fabric. Generally unwinding is faster check fabric, as the minor distortion warehouse with many other heavy than linear speed to ensure no undue and misalignment of checks was a rolls on the top, the fabric roll no more tension is exercised on the fabric big reason for not using automatic remains a perfect circular shape, and positive feeding is happening. spreader for check fabrics. Now there but oval. The spreading machine accelerates are cutting machines (not spreading The next generation cradle system during start of a lay, reaches the top machine) equipped with video camera has two shafts, one each for front and speed at the middle section of the lay to scan the fabric image and correct back cradle, driven by independent and decelerates during the end of the mis-alignment, if any, by adjusting motors to facilitate differential speed the lay. All these feeding controls are the X-Y direction movement to for unwinding of fabric (overfeeding synchronized by a main computer, superimpose on previous layer, thus or otherwise, as needed). This resulting in a perfect tension-free matching the check perfectly, after arrangement also helps to solve the laying operation. The spreading which automatic cutting starts.

66 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com Nowadays most advanced machines have 4 feeding controls: [1] main feeding; [2] pre-feeding, controlled by a dancer bar; [3] back part Kawakami spreader Xn460 LMS with weft correcting mechanism Gerber Paragon Cutter of the cradle independent with differential speed; UNCOMMON WAYS rolls are hanging from top instead of cushion and reduce friction between carried by a trolley over table surface. table surface and fabric layer, most and [4] nip rollers TO SPREAD THE FABRIC light-to-medium weight fabrics can be Apart from actual spreading process, close to the table Apart from these commonly used transported by this. There are also there are pre- and post-spreading to control the spreading systems there are some conveyorized tables where moving processes that have also gone uncommon ways to spread the fabric conveyor is used to transport lay of tension of fabric. through various evolutions. Loading followed by very limited manufacturers. heavy weight fabric. While both of There were moving horizontal surface and doffing of fabric rolls into the these consume energy, there are also spreaders, vertical surface spreading spreader can be fully automatic from tables made out of roller surface which table (very effective for fabrics with the rack reducing time and avoiding are effectively used for dragging fabric twisted grains) which straightens the occupational injuries. Transport lays of stiff fabrics without distorting. fabric grain by use of gravity and the of fabric lay after spreading to Storing of fabric lays in vertical table surface is pivoted to horizontal cutting is another area where lot of storage rack is also another feature position before cutting. The Veith pin improvements happened. There are which is gaining popularity due to low table offers gantry loader where fabric air-flotation tables which create air volume, multi-style operations.

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 67 EXPORT STATISTICS

Apparel imports by the US see downturn in first five months January-May 2016

The US import of apparel has been slow since the starting of the year, but post-March the imports have moved into the negative zone. This downward movement has impact on exports from all major centres, and India could register only 2.57% growth in volumes and 1.97% gains in value in the period Jan.-May 2016. The average UVR for India was US $ 3.52, which was higher than US average of US $ 3.02, during the review period.

Global Apparel Imports by the US: 8 Percentage Jan.-May 2016 7 decrease in UVR 6 2.58% Value Decrease 5 2.13% 4 US $ US $ 3.10 3.02 3

Volume Increase Average UVR 2

0.49% (per kg of fabric equivalent) 1 0 Change in Values 2015 2016 Year 5.65% 5.25% Cotton Wool Total global apparel imports by the US — Jan.-May ’16

Type of Apparel Jan.-May ’15 Jan.-May ’16 % Change

Qty Value Qty Value Qty Value 1.83% 4.07% Cotton 4847.01 16262.30 4712.231 15342.914 -2.78 -5.65 MMF Silk & Veg Wool 42.75 835.94 42.392 792.097 -0.84 -5.25

MMF 5181.39 13879.49 5358.927 14134.109 3.43 1.83

Silk & Veg 165.99 780.36 173.534 812.092 4.54 4.07 Change in Volumes Total 10237.14 31758.09 10287.08 31081.21 0.49 -2.13 Qty & value in mn M2 & US $

2.78% 0.84% Total apparel exports to the US by India and its competitors — Jan.-May ’16 Cotton Wool Countries Jan.-May ’15 Jan.-May ’16 % Change Qty Value Qty Value Qty Value

India 479.45 1698.28 491.774 1731.764 2.57 1.97

Bangladesh 771.87 2222.65 804.167 2264.161 4.18 1.87 3.43% 4.54% China 3734.39 9967.86 MMF Silk & Veg 3761.067 9575.184 0.71 -3.94 Pakistan 243.53 568.59 222.421 499.887 -8.67 -12.08

Sri Lanka 205.08 849.45 205.289 861.994 0.10 1.48 [The information has been extracted Vietnam 1264.37 4024.28 1327.541 4188.045 5.00 4.07 from US custom site and further analyzed.] Qty & value in mn M2 & US $

68 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com EXPORT STATISTICS

MMF products preferred in Vietnam registers growth in US imports exports of trousers to MMF seems to be a favoured material, as cotton- US in first five months based apparel imports to the US witnessed decrease A strong product category from Vietnam, trousers of (-) 2.78% in quantity terms with decline of(-) 5.65% witnessed 8.66% increase in quantities and 12.20% in value terms in the first five months of 2016. MMF- gains in value. In the same period Bangladesh noticed based apparel on the other hand registered 3.43% gains of 4.04% in quantities and 2.79% in value increase in quantities and 1.83% gains in value terms of trousers. 1 during the same period. 2

India records decline in Undergarments, growth exports of ladies skirts category for India to US Even as the import of undergarment, considered a very basic category saw a downfall in the total imports by In the first five months of 2016, import of ladies skirts the US in the first five months of the year with values by the US witnessed a big fall of (-) 17.19% in quantity declining (-) 4.00% and volumes falling (-) 4.60%, and (-) 16.54% in value. India too registered negative India’s export of undergarments to the US noticed growth in value as well as in quantity terms. While increase in quantity of 3.03% and value increase of there was decline of (-) 22.32% in regards to quantity, 3 4 1.43%. In foundation garments, India grew substantially the values fell (-) 21.19% during the period. by 24.46% in quantity and 30.99% in value term.

Suits/ensembles show good Ladies dresses from growth from Vietnam Bangladesh show growth in In suits/ensembles, export to the US by Vietnam first five months saw positive growth of 29.42% in value terms while In the first five months of 2016, while the US quantity growth was 11.60%. While Bangladesh saw witnessed growth of 0.58% in value and 4.84% gains decline of (-) 27.53% in quantity, the value of exports in quantity in the import of ladies dresses, Bangladesh decreased (-) 32.69%. registered massive increase of 56.87% in terms of 5 6 value, and 61.87% gains in volumes.

Item wise percentage increase in total apparel imports by US from India, Bangladesh and Vietnam: Jan.-May. 2016 as against Jan.-May. 2015

Exports to US Total Imports by US India Bangladesh Vietnam APPAREL TYPE Qty % Value % Qty Value Qty % Value % Qty Value Qty % Value % Qty Value Qty % Value % Change Change Actual Actual Change Change Actual Actual Change Change Actual Actual Change Change Babies Wear -6.82 -9.33 3,532,615 80.11 23.98 15.91 4,325,237 75.26 -9.93 -7.16 3,041,011 75.17 -11.90 -6.96 Foundation Garments 1.96 7.37 752,579 54.97 24.46 30.99 1,624,488 33.40 -0.23 -9.57 870,026 44.69 111.55 114.34 Jackets & Blazers -4.70 -7.09 175,796 28.73 -5.90 -9.13 560,938 82.80 -10.32 -8.85 1,723,954 301.59 -6.20 -1.94 Ladies Blouses 8.23 5.03 4,046,000 301.00 5.53 4.81 1,411,230 78.71 31.18 31.48 3,472,336 186.79 3.95 7.00 Ladies Dresses 4.84 0.58 2,510,950 222.17 3.22 5.08 1,000,979 36.04 61.87 56.87 5,066,378 362.11 4.42 1.27 Ladies Skirts -17.19 -16.54 440,055 35.56 -22.32 -21.19 623,873 27.09 8.34 15.07 1,608,372 92.68 -1.69 -6.89 Legwear -7.59 -10.10 1,069,193 7.02 -9.71 1.27 61622 0.674 – – 1120425 6.318 42.31 20.11 Men's Shirts -0.41 -2.64 1,278,978 100.09 18.63 7.63 4,554,391 262.06 -5.44 -7.15 1,939,411 155.77 20.11 16.95 Nightwear 0.95 -0.88 1,284,240 40.68 -7.49 -1.00 558,990 16.15 -11.28 -7.54 1,622,232 74.57 20.95 9.27 Suits/Ensembles 2.85 -16.63 296,117 28.92 28.41 -10.98 148,174 9.15 -27.53 -32.69 1,006,720 77.14 11.60 29.42 Sweaters -13.94 -22.29 11,104 0.86 -48.27 -51.00 209,823 10.86 6.88 21.63 66,387 1.96 15.99 -55.57 Trousers 1.03 -0.59 2,648,558 190.96 0.46 0.85 20,421,521 1,144.02 4.04 2.79 18,867,889 1,117.12 8.66 12.20 T-Shirts 2.18 -2.35 10,746,014 423.534 0.72 133.56 9,115,584 230.16 2.68 119.47 32,673,013 1,235.91 3.20 -0.84 Undergarments -4.60 -4.00 7,609,580 126.36 3.03 1.43 11,277,710 125.43 -1.80 2.25 16,362,549 208.14 -7.96 -7.12

Value in mn Euro and qty. in mn kg

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 69 WORLD WRAP

US Retail Sales Soar Backed by strong domestic demand

RETAILERS EYE US DUE TO ECONOMIC RECOVERY

Despite a slowdown in job creation and rising gasoline prices, US retail sales are constantly on an increase as Americans are spending more money, spurring economic growth. As growth in various other markets continue to remain slow, all eyes are back on the US as it rises to the top of the fashion industry’s list of happening markets.

n contrast to various markets such largest increase in just over four prices and moderate job growth. The Ias China, Japan or Europe that are years in May as a push from a strong positive growth is showcased as 11 out showing stagnant growth, the US is ESSENTIALS dollar and lower oil prices fades. of 13 major retail categories showed re-emerging from the global financial Also, another report by the Labour increase, including automobile, crisis it faced a few years ago and US economy is on Department reveals that the import grocery stores, online merchant, etc. getting on its feet faster and stronger. its road to recovery. prices have increased 1.4 per cent, whose sale rose most in almost two the largest rise since March 2012, This positive change is being seen in As per Commerce years. Also core sales, i.e. the figures retail sales, and in April 2016 the sales after advancing 0.7 per cent in April. that are used to calculate gross at most retailers jumped more than Department’s Michael Feroli, an Economist at JP domestic product and which exclude anticipated, clearly indicating that the figures, purchases Morgan reveals, “As has been the case categories such as autos, gasoline US economy is on its road to recovery. climbed 1.3 in the prior two years, the modest first and building materials, advanced to As per Commerce Department figures, per cent, the quarter disappointment in consumer 0.9 per cent, the most since March spending now appears to be a short- purchases climbed 1.3 per cent, the biggest gain 2014 after a revised 0.2 per cent biggest gain since March 2015, whereas lived soft patch.” increase in March. The household since March 2015. the median forecast of 82 economists This increase is led by healthier spending that makes up 70 per cent of surveyed by Bloomberg predicted a household finances that reflect the economy is projected to advance 0.8 per cent gain. Data further hints reduced borrowing and increased at a 2.6 per cent annualized pace in at steady build-up inflation pressures, saving which in turn is helping the three years ending in June after a with import prices recording their consumers to withstand rising gas 1.9 per cent gain in the first quarter.

70 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com WORLD WRAP

The economists further reveal that experts a strong US dollar will allow impact on tourist sales. Still, last based on May’s broad increase in European luxury goods companies year’s 1.8 million Chinese tourists retail sales, consumer spending in the to export more into America and the ESSENTIALS alone spent US $ 21.2 billion while second quarter was growing between translation effect will create a positive in the US, a lot of which was 3-4 per cent annualized rate. boost for revenues, domestic demand This increase in from shopping. Many brands are As a result, the Atlanta Fed raised its and margins. Many brands are domestic sales is either opening more stores or are second quarter GDP growth estimate reacting to this strong US market by led by healthier establishing a stronger presence in reallocating some of the investments US, such as Uniqlo that now operates by three-tenths of a percentage point household finances to a 2.8 per cent rate as the economy that they made in the past years to an e-Commerce platform and nearly was growing at a 0.8 per cent rate build up their network of stores in that reflect reduced 40 stores in the US and plans to open in the first quarter. Strong domestic Asia, where there is no more need to borrowing and more, while Inditex owned Zara has demand and sales is helping expand aggressively, and moving part increased saving invested in a 4,400 sq. ft. flagship store businesses reduce an inventory of that investment to the US. which in turn is in New York’s Soho, and plans to open projection, which though is a deterrent more stores in Las Vegas, San Diego, Nonetheless in terms of luxury, US is helping consumers to GDP growth in the short-term but still an under-penetrated market as New Jersey, Los Angeles, Boston, nonetheless would give businesses it has 30 per cent of the world’s high to withstand Houston, Dallas, Chicago, Seattle and room to order more goods from net worth individuals, people having rising gas prices the US territory of Puerto Rico. factories in the future, leading to a more than US $ 1 million in liquid and moderate Meanwhile, even as US sales boost in production. In May, the retail assets and nearly a quarter of global job growth. soar, riding on economic recovery, sales buoyed by 0.5 per cent increase GDP but consumes less than a fifth consumers are still looking at value in auto sales, even as Americans of the world’s personal luxury goods. for money and brands that they can also bought clothing and spent on Also, due to its appeal as a tourist connect with. As US retail sales rise online purchases. destination with hubs such as New more than the forecast, focusing on Increasingly as the economic growth York, Las Vegas, Miami, LA, etc. the consumer spending that is helping the in China continues to slow, a resurgent US has a strong impact around the economic growth, brands and retailers America is expected to grow by world. Though a strong US dollar is are seeing US as the land of the best 6 per cent in the five-year period from helping to boost domestic consumption opportunities for growth, but it still 2013 to 2018, finding favour amongst of imported luxury goods but this remains to be seen who will be able to many retailers. According to industry may on the contrary have a negative tap it to its full potential.

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 71 DIRECTIONS BY

Fall 2017-18 colour

directionsThe dominant palettes for Fall ’17-18 menswear and womenswear, all confirm to various themes that place a renewed focus on contemporary sports, archetypes of uniforms, and plenty of luxe classics that can translate to city scapes or country scenes. The colour stories for next Fall/Winter are dependable indicators of palette shifts to come in seasons ahead. The desire for tranquility, strength, and optimism has inspired a Fall 2016 colour palette that is led by the blue family. Along with anchoring earth tones, exuberant pops of vibrant colours also appear throughout the collections. Transcending gender, these unexpectedly vivacious colours in the Fall 2016 palette act as playful but structured departures from more typical Fall shades. Blue skies represent constancy as they are always above us. Greys give a feeling of stability; red tones invite confidence and warmth, while the hot pinkish purples and mustard yellows suggest a touch of the exotic.

Rusted Copper arm mid-tones are as Winspired by the changing autumnal landscape as the time-honoured industrial terrain of the city. Red- cast browns continue to be important to the contemporary menswear and womenswear market, nicely pairing with saturated shades of olive and gold. In addition, a decidedly orange base for rusted copper and ginger emphasizes the rugged impact of these new neutrals. Slightly weathered shades of orange and copper become a must-have “new neutral”, especially for woollen outerwear and cosy tailored clothing. Elements of rusted orange in its undertones resemble a neutral earth tone; expected for Fall and Winter palettes. This is a shade with real substance and a strong foundation.

72 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 73 DIRECTIONS BY

Lush Meadow he majestic undertones of Fall/Winter once again add Ta romantic emphasis to plush fabrics and dramatic layers. Much brighter than the jewel tones of last Winter, it’s the shades of peacock and spruce green that really are influential. Green is one of the richest tones for next season, which come in a less saturated look than the cobalt blue found in the grouping of bright shades. Often shown in head-to-toe ways, it looks refreshing for fabrics like cotton sateen and even wool flannel for oversized overcoats. The shade is rich, elegant, vibrant and sophisticated. It displays a brightness, panache and depth of colour that elevates it from more natural greens, while elevating the overall elegance woven through this season’s collections.

Warm Taupe he large group of neutrals is probably the strongest Tgroup of colours for Fall ’17-18, easily crossing across all markets and fabrics or patterns. These “new neutrals” are sellable, seasonless options, and all have a certain, subtle masculine undercurrent running through them. Folk stone and bounty become the new khaki and camel for the season, with slight pink and green casts. Like other groups, this becomes one of the most essential colours for outerwear and knits. The new taupe for the season is a cooler version of khaki with a bit of a pink cast. Adding dimension to basic silhouettes and classic jackets or outerwear, it’s a neutral to watch for coming seasons. The shade suggests reassurance and stability; it is trusted, organic, grounded and timeless in nature.

74 Apparel Online Bangladesh | AUGUST 2016 | www.apparelresources.com DIRECTIONS BY

Grey Matter lack-and-white combinations are making a strong Bstatement for Fall, but we also have our eyes on the hue that comes between them. A chilly purple-based charcoal grey is a beautiful extension of the many neutrals for Fall/Winter. With tactile-heavy fabrics, one can see the added dimension from such a rich and moody shade. It is a leading shade because it has the advantage of being paired with almost any Fall colour, bright or muted. It is a colour that the rest of the palette can literally and theoretically rest on. It showcases practicality through a dependable, but contemporary viewpoint. The softer palette – and especially the blue-green hues – will help create a more relaxing environment for busy, hyper-connected lives.

Ceramic Blue elicate tones of power blue are a surprising Doption for Fall/Winter assortments. With a clean surface with the perfect amount of white, it emphasizes lightweight layers and techno materials. Designers seeking weightlessness in a world heavy with conflict, this shade is the perfect pick. Blue tones appear in nearly half of the designs with ceramic blue giving a nod to the serenity theme. Pair this colour with lush meadow, warm taupe or copper for a fresh approach. This colour of blue is considered calm, serene and can encourage the feeling of tranquility into your sanctuary where there is a wide range of soothing blues to pick from. Blue and white wares designate white pottery and porcelain decorated under the glaze with a blue pigment, generally cobalt, gives us a lot of ideas to use this colour trend.

www.apparelresources.com | AUGUST 2016 | Apparel Online Bangladesh 75