Date: Thursday, July 22, 2021
Source: Sourcing Journal
It’s a shifting scale when sourcing from Asia.
The Bangladesh government announced Thursday that factories will be closed from July 23 through Aug. 5, leaving manufacturers scrambling to plan how to fill their orders.
Though the country went into lockdown July 1 to prevent the spread of Covid-19, factories in most areas were allowed to continue functioning.
Bangladesh has been a draw for shifting business from global brands and retailers as Myanmar underwent a military coup and India faced a severe wave of the coronavirus.
As the second biggest apparel manufacturer in the world, after China, with more than 4.5 million workers in the industry, the mandated lockdown will be a setback at a busy time as global orders continue to surge to meet growing consumer demand.
“This lockdown is to be stricter than the ones imposed earlier, garment factories will remain closed,” Farhad Hossain, Bangladesh State Minister for Public Administration said on Thursday, adding that no one will be allowed to go outside except for trips of absolute necessity, medical treatment or attending burials and funerals. He said that legal action would be taken against any violators.
Starting Friday morning, ferries are to be suspended, along with other public transport services, putting an end to the brief lifting of the countrywide lockdown for celebrations of Eid al-Adha from July 15-23.
It also puts an end to the special exemption for garment factories to continue to operate.
Given the spread of the Delta variant of Covid-19 in Bangladesh, concerns have been mounting. On Thursday, total Covid cases crossed 1.14 million, with 3,697 new cases and 187 deaths reported over the last 24 hours according to the Directorate General of Health Services of Bangladesh.
Some industry analysts believe that the imminent lockdown will not have a major impact on business as it follows the holiday period during which many workers return to their hometowns, others, however, are less sanguine. A complete lockdown in March of 2020 had migrant workers in flux, causing disarray in production. In addition, the sweeping pandemic in Europe and the U.S saw order cancellations of approximately $3.18 billion, according to figures from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
This time around however, the situation is different as Europe and the U.S. are expecting an upswing in sales for the holiday season. Delays in production will impact factory owners, who have already been working under difficult conditions with limited resources as many migrant workers made their way toward their home provinces, concerned for their safety.
Although labor and factory owners have been voicing concerns, the financial results of 2020-21 have shown an unexpected resilience.
The Bangladesh financial year which ended June 30 showed a 13 percent increase in apparel exports, to $31.5 billion. That is lower than the $34.12 billion in financial year 2018-19, but up from the $27.94 billion in 2019-20.
As demand for knitwear has grown, Bangladesh has seen a surge in orders, and June was a promising month, with a 31 percent increase in exports over the previous-year period, to $3.58 billion.
Factory owners have been lobbying to stay open, citing a loss of $119.38 million each day that factories remained closed, as well as the high catch-up costs to make production deadlines, including air freight of shipments.
As Faruque Hassan, president, BGMEA, said speaking about the timing of the lockdown, “Saving lives is critical with the lockdown; but saving livelihoods is essential as well.”