Clothing manufacturers in Asia give warning about coronavirus

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Workers work in a garment factory during a government-imposed lockdown as a preventive measure against the spread of the COVID-19 coronavirus.

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“If our workers don’t die from coronavirus, they would starve to death. “

This is a stark assessment of the impact of the pandemic on the clothing industry by the owner of a garment factory, Vijay Mahtaney, president of Ambattur Fashion India.

Vijay Mahtaney and his partners Amit Mahtaney and Shawn Islam normally employ 18,000 workers in three countries – Bangladesh, India and Jordan. But the epidemic forced them to close the majority of the business, with a single factory in Dhaka, which is partially operational.

Coronavirus blockages aren’t the only thing that affects their ability to pay their employees. They say their main problem is the unreasonable demand from large customers – mainly in the United States and the United Kingdom.

“Some brands show a real sense of partnership and a high level of ethics in trying to guarantee at least enough cash to pay workers,” Amit Mahtaney, chief executive officer of Tusker Apparel Jordan, told the BBC. .

“But we have also had cancellation requests for goods ready or being processed, or discounts for pending payments and for goods in transit. They also request an extension of 30 to 120 days under the previously agreed payment conditions. “

In an email obtained by the BBC, an American retailer asked for a 30% discount “for all debts – in progress or on order”, including those already delivered.

The reason they cite is to “get through this extraordinary time”.

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“Their attitude is to protect only shareholder value without regard to the garment worker, behaving hypocritically, showing total disregard for their responsible sourcing ethics,” said Vijay Mahtaney.

“The brand is focused on the share price, which means that some of them have no money for this rainy day and arrive at the weakest link in the supply chain, asking us to help them when they could ask for a bailout of the US government’s stimulus package, “added Vijay.

This is because clothing manufacturers have been hit hard by two major problems related to coronavirus blockages.

Problems started in February when factories were unable to get the raw materials they needed from China, the world’s largest textile exporter, which accounted for some $ 118 billion (£ 67 billion) in 2018 .

Then, as Chinese textile factories reopened in recent weeks – giving clothing manufacturers hope to resume business – demand collapsed as retailers were forced to close after governments around the world have imposed closings.

Crucial industry

China may be known as the factory of the world, but when it comes to clothing, Bangladesh, Indonesia, Cambodia, Vietnam and Myanmar are playing an increasing role.

“Clothing manufacturing has diversified outside of China over the past decade due to high costs in China,” said Stanley Szeto of clothing manufacturer Lever Style, which supplies high-end brands such as Hugo Boss , Theory, Vince and Coach, as well as online names like Bonobos, Stitch Fix and Everlane.

This means that garment manufacturing is a crucial industry for many developing economies in Asia, data from the World Trade Organization showing that Bangladesh and Vietnam are among the top four global exporters of clothing. Bangladesh now represents 6.7% of the market share, followed by Vietnam with 5.7%.

Bangladesh has more than four million garment workers, and textiles and clothing products accounted for more than 90% of the country’s exports last year.

Cambodia and Sri Lanka also depend on industry for more than 60 percent of their exports, according to Sheng Lu of the Department of Fashion and Apparel Studies at the University of Delaware.

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ODD ANDERSEN

Industry accounts for more than half of all manufacturing jobs in Bangladesh and 60% in Cambodia, with production being a particularly important employer for women.

Associate Professor Lu thinks that the coronavirus pandemic could see countries like Bangladesh, Vietnam, Cambodia and India cut between 4% and 9% of jobs in the clothing sector.

This is partly why the government of Bangladesh is trying to help the industry.

“He offered a generous stimulus package to subsidize wages, convert loans into long-term debt and offer very reasonable interest rates,” said Shawn Islam, managing director of Sparrow Apparel Bangladesh. “Even if it is not enough to weather the storm, it will help. “

The Cambodian government has also announced tax exemptions for textile factories and proposed a wage subsidy scheme for workers.

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Indeed, this epidemic could lead to a longer-term impact such as labor shortages, increases in raw material prices and a lack of production capacity, said associate professor Lu.

After increasing criticism and pressure, some brands, including H&M and Zara’s owner, Inditex, have pledged to fully pay for existing orders from clothing manufacturers.

“Brands have benefited for many years from production in low-wage countries without a social security system and in many cases have built huge empires using this business model,” said Dominique Muller of Labor Behind the Label . “Decades of exploitation must now be paid back to take care of their workers. “

The factory owner, Amit Mahtaney, agrees.

“Retailers have to help. The bailouts of the wealthier governments in the industry are also essential, “he said.

Without it, he says, the industry could be completely wiped out.

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