Apparel work orders drop by 40 per cent

Mahfuz Emran: Garment export factories are forced to reduce production due to various reasons including the ongoing energy crisis. On the other hand, their export orders have decreased by 30 to 40 percent. At this time, their production cost increases from 20 to 33 percent, but global buyers are offering prices up to 20 percent lower than that. As a result, many are unable to take orders.
Meanwhile, traders from Bangladesh’s garment competitors such as India, Pakistan and Sri Lanka are willing to accept work orders at lower rates due to favorable exchange rates of their local currencies and the ability to send shipments quickly. As a result, buyers are giving export orders to these countries instead of Bangladesh.
Bangladesh’s main market for garment exports is in western countries. Where winter is the peak season for sales. The country’s largest export sector fears a 7 percent collapse in sales to western markets this peak season. And doing so at a time when the government has reduced the incentive rate significantly. Moreover, the revised export data also shows that exports have increased by nearly $11 billion in the previous 10 months.
From this year’s highest export trophy winners to pioneers in setting up eco-friendly factories and pioneers in denim production are among those who are reeling from the uncertainty over this year’s August-September order bookings.
Mesbah Uddin Khan, managing director of Windy Group, said that buyers are offering 15 to 20 percent lower prices than the production cost. He is not able to take the work orders. As a result, his business is in a negative trend.
Windy Group could not confirm even 20 percent of work order for August-September period of this year. Meanwhile, the time to get orders for the fall holiday season is over – said Mesbah, who received the gold medal from the Prime Minister for the highest export from the garment sector on Sunday.
Envoy Textiles is the world’s first LEED Platinum certified denim factory. Qutubuddin Ahmed, chairman of the organization, said that the textile mills are in a disadvantageous situation while producing according to the buyers’ prices. Sometimes we have to adjust prices, employing spinning units to manage costs.
His factory had a full order booking for the month of April, but he didn’t know what would happen next.
Syed M Tanveer, managing director of Pacific Jeans, a pioneering denim export company from Bangladesh, said, “We are also facing challenges in competing with buyers’ prices.” Exporters from Pakistan and Turkey are in an advantageous position in terms of taking orders at lower rates as their local currencies are more depreciated than in Bangladesh.
Talked to more than two dozen garment exporters. They reported a drop of up to 40 percent in export orders during August-September this year compared to last year. As the main reason, it was not possible for most of them to take orders as international fashion brands and retailers offered low prices to garment exporters. Some exporters have also experienced that the prices they are willing to pay do not cover the cost of production.
Mohammad Hatim, the owner of Narayanganj-based MK Knit Fashion, said that despite the increase in production costs, almost all buyers are reducing the price of clothes by 12 to 15 percent. In some cases, they are bidding less than a year ago, so we are in a corner.
He said that a polo t-shirt sold for $4 a year ago, the same buyer who bought the same product is now asking $3.50. In this situation, it is better to keep the factory running at low capacity than to take orders below cost of production.
TAD Group Managing Director Ashiqur Rahman Tuhin said buyers are offering rates as low as 15 percent. Citing lower demand in the western market, they are citing lower margins.
Exporters are blaming the decrease in export orders due to the decrease in sales margin in other European countries including the United Kingdom and the United States of America and at the same time having more inventory with the buyers.
According to Eurostat data, apparel imports in all major markets fell by 2 percent in 2024. On the other hand, apparel retail sales in major markets of the Western world also declined. According to the US Bureau of Statistics, compared to the same month in 2023 – in May of this year it fell by 1 percent in the United States and by 3 percent in the United Kingdom.
Shobhan Islam, managing director of Sparrow Group, said that order placement is slow due to low demand in major markets, and buyers are also willing to pay lower prices.
Explaining further, he said, due to the geopolitical tensions in the Red Sea, the cost of transporting goods by ship has increased, while the prices of gas and electricity have also increased, the wages of workers have increased, and overall production costs have also increased. But, buyers are not bidding accordingly, so most of the factories are not able to take orders according to their capacity. He added that small and medium-sized factories are facing more problems in booking orders.
According to Shovan, exporters from India and Sri Lanka are ahead of us in terms of offering lower prices due to better incentive facilities and favorable currency exchange rates, which is why buyers are also moving there.
Shobhan Islam is also a director of BGMEA, the apex organization of Bangladesh’s ready-made garment manufacturers and exporters. He also mentioned the apprehension among buyers about getting export shipments from Bangladesh on time. That is why some top buyers are taking their orders to Vietnam, India and Sri Lanka.