Archive for August, 2006
Vietnam’s Garment Makers May Face Bankruptcies, Viettien Says
By Linus Chua and Stephen Engle
Bloomberg
Aug. 30 (Bloomberg) — Vietnam’s $3 billion garment industry, which supplies Nike Inc. and Limited Brands Inc., may see a surge in bankruptcies because of rising labor costs and competition from China, the nation’s biggest apparel maker said.
Half of Vietnam’s 2,000 garment factories could file for bankruptcy in the next two years, said Le Viet Toa, vice general director at Viettien. That may offer acquisition opportunities for the state-owned company and help increase its market share ahead of a planned share sale next year, he said.
“Only the big companies will survive,” Toa said in an Aug. 25 interview at his office in Ho Chi Minh City.
Vietnamese workers are leaving garment factories for better-paying office jobs, hurting an industry that’s facing increased competition from Chinese rivals who have moved production to the mainland’s western provinces where costs are lower than in Ho Chi Minh City. The apparel industry is Vietnam’s second-biggest foreign-exchange earner after crude oil, and its decline may curb growth in an economy the government projects will expand 8 percent each year in the next decade.
“Vietnam has done very well through very good workmanship and lower labor costs, but the lower labor cost is a thing of the past,” said Horst F. Geicke, chairman of VinaCapital in Ho Chi Minh City, which manages about $600 million of investments in Vietnam. “It’s a sunset industry.”
Vietnam’s 1 million apparel-factory workers make about $100 a month, almost twice the $55 minimum wage. More are turning to higher-paying jobs in banks and hotels, Toa, 59, said.
Cost Comparison
VinaCapital estimates labor costs in Vietnam are about 20 percent lower than coastal cities in China. Wages in China’s rural areas, though, are about 10 percent to 15 percent lower than in Ho Chi Minh City.
To cut costs, Viettien said the company and other garment manufacturers are expanding into rural provinces, where labor costs are about 70 percent of those in Ho Chi Minh City, the country’s biggest city.
Viettien, which makes shirts and other apparel for American Eagle Outfitters Inc. and Nike, said it has bought two failed Vietnamese factories this year, adding to its 36 manufacturing sites in the country. The new sites will help increase its factories in the provinces to 70 percent of its manufacturing locations in three years, from about half now, Toa said.
“Our intention is to buy cheap, get the good management, skilled workers, and get more orders,” he said.
Sales Forecast
Viettien expects sales to increase 19 percent this year to $250 million. Exports make up 90 percent of the company’s revenue. Vietnam’s apparel shipments to the U.S. rose 31 percent to $1.51 billion in the first half.
Still, gains from efforts to cut costs and from consolidation may not be enough to boost the competitiveness of an industry that lacks a domestic textile manufacturing base. Vietnamese apparel makers have to import most of their fabric, paying more than rivals in China who can source materials locally. Viettien said it imports 70 percent of its fabric.
“Frankly, the textile in Vietnam is still very weak, weak in quality and quantity,” Toa said. “My big worry is the textile problem.”
Apparel buyers such as Limited Brands, which owns Bath & Body Works, Victoria’s Secret and Express chains, say not having the raw materials produced in Vietnam is a disadvantage. The Columbus, Ohio-based company farms out contracts to factories in Vietnam and other Asian countries.
“Everybody would give you a good price, everybody would give you good quality,” said Jocelyn Tran, Ho Chi Minh City- based country manager at Limited Brands’ unit, MAST Industries Inc. “There’s nothing that Vietnam makes that China or India cannot make. It’s going to be tough.”
The lack of competitive advantage makes Vietnam’s garment industry unattractive to investors such as Dominic Scriven, who says he won’t buy the shares Viettien plans to offer next year.
“It’s a sector, where as an investor, it’s rather difficult to catch the value,” said Scriven, director of Ho Chi Minh City-based Dragon Capital, whose portfolio of $800 million of investments in Vietnam makes it the country’s biggest non- state stock market investor.
To contact the reporter on this story: Linus Chua in Singapore at lchua@bloomberg.net .
August 31st, 2006
UAE : Tough times for garment exports
August 29, 2006/Fibre2fashion.com, India
Mounting competitive pressure from countries like China, Pakistan, Bangladesh and India has adversely affected the country’s garment export markets.
However, Emirates Industrial Bank (EIB) studies assure that even with a significant drop in garment exports, the industry has the means to not only survive but also to prosper.
Tarek Abdullah, Manager, Transgulf explained, “Garment exporters cannot compete with companies in China, India, Pakistan and Bangladesh where cost of production is lower. They should focus on high-end products for which foreign buyers will be willing to pay a good price.”
Meanwhile, there is a rising demand in the local markets that could make up for some part of loss from exports.
Global garment trade amounts US $800 billion, with the UAE’s share being just 0.1 percent. At its zenith in 1997, garment exports were $250 million.
August 30th, 2006
Philips brightens up textile tech
August 28, 2006 9:44 AM PDT
CNET News.com, CA
At this week’s IFA trade show in Berlin, Philips Research plans to showcase a jacket integrated with Lumalive, a textile that lets fabrics display changing colors and dynamic graphics.
Lumalive textiles are filled with colored LEDs that, according to Philips, are undetectable to the touch and have electronic components that are too small to be seen by the naked eye.
When lit up, however, the fabric can display patterns, text or even animation, depending on how it’s wired. The company says Lumalive is designed for convenience: The batteries and control unit can be removed when a garment needs to be washed and reconnected afterward.
Credit: Royal Philips Electronics
August 29th, 2006
Association worried about garment smuggling
Antara, Indonesia
Jakarta (ANTARA News) - An association`s leader voiced concern here on Monday over the increasing smuggling of garments from several Asian countries into Indonesia.
The executive secretary of the Indonesian Textile Association (API), Ernovian G Ismy, said the smuggling of garmnets from ten Asian countries including China, Singapore, South Korea and India had increased in the past year as a result of lenient law enforcement.
“The trend has been on the rise for the past three years. In 2003 it reached 29 percent and in 2004 increased to 22 percent and reached 59 percent in 2005,” he said.
He said the figures were the outcome of a calculation of the difference between consumption, production and imports.
“Our garment production and imports are low, while consumption remains high. So how could the consumers cover the shortage. This means that the smuggling activities continued,” he said.
He said the government had been half-hearted and rather slow in dealing with smuggling in spite of the fact that the means for smuggling eradication were already available.
He said smuggling could be stopped among other things by checking imported garments through the “red tape” and by strictly enforcing port to port manifest regulations and imposing a harsher sentence on smugglers.
“So far smugglers have only received administrative sanctions and never been jailed, while their smuggled products remain in circulating in the market,” he said.
He said due to increasing smuggling activities, small-and medium-scale businesses in the country had suffered losses as their products are unable to compete with imported products.
According to API data, the number of small-and medium-scale textile and garment companies in the country reached 5,569 in 2004 mostly in Bandung, West Java. In 2005 the number dropped to 4,700 and their workers to 30,000 from 668,000.
“The loss suffered by the state and the public is big because the garment industry is labor-intensive,” he said.
He said the companies were domestic market oriented so that the impact of smuggling was significant to them.
He called on the government to help them by improving law enforcement and more consistent policies.
“I ask the director general of taxation to inspect import tax, value-added tax and income tax statements of retail businessmen, agents and producers,” he said.
Ernovian suspected that smugglers had used a new method in their operation namely by mixing other products with garment products in the same export container.(*)
COPYRIGHT © 2006 ANTARA
August 29th, 2006
INTERVIEW - Banswara Syntex to raise garment capacity
Reuters India, India
MUMBAI (Reuters) - Textile maker Banswara Syntex Ltd. plans to raise garment capacity to four times in two years, hoping to cash in on India’s booming retail sector that has seen a flurry of private labels, a senior official said.Banswara, which has begun supplying to brands owned by Lifestyle and Westside, expects sales to private labels to grow to a fifth of revenue in two years from 5 percent now, Joint Managing Director Ravi Toshniwal said on Monday
“We want to say we will be available for private labels in India,” he told Reuters in an interview. “There is a retail explosion in India and margins for private labels are better than exports.
Banswara would raise capacity to 400,000 pieces each month in two years, he said adding it hoped to have a revenue of 4 billion rupees in the year to March 2007, compared with 3.2 billion rupees last year.
The garment capacity expansion is part of a 500-million-rupee plan to also raise weaving and yarn making capacity.
August 29th, 2006
UAE’s share of global garment market shrinks
By Shakir Husain, Staff Reporter
Gulf News, United Arab Emirates
Dubai: The UAE’s garment industry is feeling the pinch as local manufacturers lose their meagre market share to exporters from low-production centres like China, India, Pakistan and Bangladesh.The rising cost of doing business in the UAE is also taking a toll on the industry as the labour-intensive sector employs about 180 staff per establishment.
Most of the current garment manufacturing business is concentrated in Ajman. Several units have gone out of business elsewhere due to rising production costs and low demand for UAE-made garments within the country, industry sources say.
An Emirates Industrial Bank (EIB) research report early this year said although the UAE garment industry had significantly declined “it is far from being wiped out”.
People in the industry say UAE manufacturers need to focus on high-end products for their exports in order to survive.
High-end products
“UAE garment exporters cannot compete with companies in China, India, Pakistan and Bangladesh where cost of production is lower. They should focus on high-end products for which foreign buyers will be willing to pay a good price,” said Tarek Abdullah, manager of machine and accessory supplier Transgulf.
He said domestic demand for garments has also grown significantly and UAE manufacturers could produce more to supply to the local market.
The EIB report estimated the number of garment units in the UAE at 100. In 2004, there were 151 units employing about 27,000 people.
The global garment trade is put at $800 billion, with the UAE’s share being just 0.1 per cent. At its peak in 1997, UAE garment exports were $250 million.
Producing high-end items can help local manufacturers stem the decline as has been seen in the case of Italy, which has a significant high value-added garment production despite a general decline in garment manufacturing in the West and a rise in Asian exports.
Competition: India and China surge ahead
India and China have been experiencing a rise in garment exports since the dismantling of textile quotas in 2005.
In 2004-05, India’s total textile exports reached $13 billion. Of this, garment exports accounted for $6 billion. By 2010, the figure is expected reach $50 billion.
China’s total garment exports were $61.6 billion in 2004, up 19 per cent from 2003. By 2008, its exports are forecast to reach $124 billion.
August 28th, 2006
Minimum wage for garment sector by 1st week of Oct
By BSS, Dhaka
Thu, 24 Aug 2006, 10:44:00
The New Nation, Bangladesh
The long awaiting national minimum wage structure as well as the minimum wage for the Ready Made Garments (RMG) sector are expected to be declared by the first week of October.
Labour and Employment secretary Syed Shujauddin Ahmed on Thursday said this while speaking at a roundtable on ‘National Minimum Wage: Poverty Reduction and Social Justices for Workers’ here
Shujauddin said the declaration of the minimum wage would not bring any benefit of the labours unless it is implemented properly by the owners of the organizations.
The roundtable was organized by Bangladesh Institute of Labour Studies (BILS) under its national campaign on safety net for worker project at the CIRDAP auditorium here.
Acting chairman, BILS and Whip of the Jatiya Sangshad Ashraf Hossain, MP, chaired the roundtable while the editor of the ‘Daily Arthonity’ Zahiduzzaman Faruque moderated the discussion.
Secretary general of BILS Nazrul Islam Khan deliberated the welcome speech and member-secretary of Unnayan Onneshan Jakir Hossain presented the keynote paper.
Member of Minimum Wage Board (MWB)Zafrul Hasan, President of Bangladesh Jatiya Sramik Jote Shirin Akhter, professor of economics of Dhaka University Dr, Nasreen Khundker, Executive Director of SUPRO Rezaul Karim Chowdhury, Executive Director of Nari Uddug Kendra Masuda Khatun Shefali and coordinator of SKOP Dr. Wazedul Islam Khan also participated in the discussion.
Zafrul said, so far, the MWB has brought only 25 percent of the labour from 38 sectors of the country’s labour force under the minimum wage but 75 percent are still out of any wage structure.
The upcoming minimum wage would cover almost all sectors of the labour force except few sectors including agriculture and domestic labours.
The government declared Taka 1250 as the minimum wage on July 8 in 2001 last though that could not be implemented due to strong resistance of the owners community.
After that the government send the declared minimum wage to the MWB for re-evaluating the amount of minimum wage, as taka 1250 minimum wage is unlikely to meet the workers’ basic demand.
Later, Zafrul told BSS that the upcoming minimum wage is expected to be around Taka 1500, which was 1250 in the last minimum wage.
Jakir Hossain showed in his keynote paper that due to the money inflation and price hike of the commodities the minimum wage should be taka 4286 to meet the basic demand of the labours.
Shirin urged all political parties to take effective steps by making an integrated effort with strong political commitment to implement the accurate minimum wage of the labour forces.
Shefali demanded to enact law to force the owners to implement the minimum wage structure.
© Copyright 2003 by The New Nation
August 25th, 2006
Firms agree to higher Bangladesh garment prices
NDTV.com, India
August 23, 2006
DHAKA (Reuters) - Most large foreign companies have agreed to higher prices for ready-made garments imported from Bangladesh in a bid to help the industry pay better wages to its restive workforce, business officials said on Wednesday.
Factory owners agreed in June to raise salaries to 1,300 taka ($18.60) within three months after angry workers forced dozens of factories to shut for weeks, they said. Garment workers earn a minimum monthly wage of 950 taka - a third of a farm labourer.
Disgruntled workers demanding higher wages and benefits had burned factories, battled police and attacked vehicles. One worker was killed and more than 150 injured.
Garment industry leaders had said they could pay higher wages only if importers paid more for their products.
“Most of the big firms are willing to raise prices but the bottom line is whether the factories are ensuring social compliances or not,” said Qayum Reza Chowdhury, president of Bangladesh Garments Buying Association (BGBA).
U.S. retailers Wal-Mart Stores Inc. and JC Penny have agreed to raise prices on this condition, Chowdhury said.
Garments are Bangladesh’s biggest export, bringing in more than $7.9 billion in the year to June 2006. The country has about 4,000 garment factories, employing about two million workers, many of whom toil in dismal and dangerous conditions.
Most of the country’s textile factories are poorly built and maintained, many with no emergency exits. Over 100 garment workers were killed in a series of factory accidents last year.
Qayum said the International Labour Organisation had also asked that workers’ wages be raised.
The BGBA represents more than 70 liaison offices of foreign firms and some 2,000 local buying houses, which together account for up to 80 per cent of ready-made exports from Bangladesh.
The deal struck in June between the government, factory owners and textile workers provides for higher wages, better job security, trade union membership, weekly holiday, payment for extra work and paid maternity leave.
The workers, however, are asking for a minimum monthly wage of 4,300 taka due to higher cost of essential commodities.
“We have requested the buyers to increase our products’ price, without which we cannot raise wages,” said S.M. Fazlul Hoque, president of Bangladesh Garment Manufacturers and Exporters Association. “But in a free market we cannot force them. If we try to, they may shift to China or elsewhere.”
“We have proposed to our principals (to raise prices) and they have agreed,” said Mahboob Kawsar, a director of Ottoconnection Limited.
Complices Sports and Jeans, a French firm that buys up to $12 million worth of textiles yearly through Ottoconnection has agreed to increase prices by up to 10 percent, Mahboob said.
(US$1 = 69.7 taka)
August 24th, 2006
More labour unrest at garment sector feared
By Staff Reporter
Tue, 22 Aug 2006, 10:43:00
The New Nation, Bangladesh
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More unrest is in store for the garments sector, if the labourers do not accept the minimum wage for them said speakers at a roundtable in the city yesterday.
The tripartite accord among the government, labour representatives and the factory owners has not yet been implemented fully though the time for the same has already lapsed the speakers also said at the roundtable on: Progress of the Implementation of the Tripartite Agreement organised by Nari Uddug Kendro (NUK) at the BRAC Center Inn.
“We have taken some effective steps to fulfill the demands of the labourers. Many of the arrested workers had been released, no one was terminated and as demanded the trade union will work as per law”. Lutfor Rahman Matin the Vice President of BGMEA said while answering questions about the progress of the accord.
“The process of giving appointment letters and ID cards is on, but it will take some time and a wage board had been formed to fix a minimum wage for the workers”, he added.
Wajedul Islam Khan the convener of Sramik Karmachari Oikya Parishad (SKOP) said, “If the minimum wage is enough for a decent living of the labourers and they accept it then I have nothing to say, but if they do not something untoward would happen the responsibility of which would fall on the owners’ shoulder.”
© Copyright 2003 by The New Nation
August 23rd, 2006
India : Birla VXL extends Digjam in readymade garment
August 22, 2006/Fibre2fashion.com, India
Leading manufacturer of fabrics for suiting, Birla VXL has planned to launch men’s readymade garment line under Digjam label, informed S K Birla, Chariman Birla VXL.
Digjam has good brand value and recognition across the country and company wants to take advantage of it.
There is also possibilities that former readymade brand Jack Barclay will be discontinued, Chairman stated.
Birla VXL, which was selling men’s clothing under brand name of Jack Barclay, has also planned to raise Rs250 million through rights issues to reintroduce Digjam as readymade garment brand.
August 23rd, 2006
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