Garment Business News

Garment sector becoming unviable leading to closures – Report

October 29th, 2008

Fibre2fashion.com, India
October 29, 2008 (Sri Lanka)

A report named “Jaqalanka Closure Report” was recently commissioned by the Fair Labour Association an international NGO. The report investigated the causes leading to closure of three garment factories under the management of the Jaqalanka group.

From amongst many reasons that the report mentions, one of the main conclusions that it has arrived at is that the garment industry in Sri Lanka is becoming increasingly unviable.
Though the industry prospered in the initial phases on basis of low costs, increasing costs are making the sector unviable.

The key reason attributed to increased costs is the shortage of skilled workers particularly in the Katunayake Export Processing Zone. This shortage is leading to ever increasing wages and in providing extra benefits to workers to retain them. This has lead to a sharp increase in costs for the garment manufacturers.

From amongst other reasons citied by the report, a rise in prices of key input raw materials, fuels, electricity and transportation have also contributed to the closure of three units of the group. The manufacturers are not able to pass on the increased costs to their buyers and have had to absorb them leading to a financial crisis.

The report concludes by saying that there was no evidence to suggest that the closures were effected by pressures from trade unions in any way which is confirmed by the owner according to the report.

Fair Labour Association, is an international NGO trying to end sweatshop labour. The fact finding was conducted by T-Group Solutions of New Delhi, with assistance from CSR International of Colombo.

Fibre2fashion News Desk - India

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