Pneumonia epidemic makes Asian garment manufacturing difficult
"If our workers don't die of the new crown virus, they will also die of starvation." Vijay Mahtaney, the owner of an Indian garment factory, described the impact of the new crown virus on the garment industry.
Vijay is chairman of Indian apparel manufacturing company Ambattur Fashion. Together, Vijay and his partners Amit Mahtaney and Shawn Islam employ 18,000 workers in Bangladesh, India and Jordan. But the Covid-19 outbreak has halted most of their operations, with only one factory in Dhaka, Bangladesh, partially operating.
The coronavirus lockdown isn't the only factor affecting how they pay workers. The main problem, they said, was some unreasonable demands from big customers, most of whom came from the US and the UK, after the outbreak.
Amit is also the CEO of Jordanian garment company Tusker Apparel. He told the BBC that some brands had shown a real sense of collaboration and ethics in their efforts to ensure staff were paid.
But he said there were also companies asking to cancel orders that were in place or being followed up, or asking for discounts on unpaid and in-transit shipments. They also asked for an extension of 30 to 120 days in accordance with previously agreed payment terms.
An email obtained by the BBC shows a US retailer has asked its manufacturers to give a 30 per cent discount on all payments due. Their reason: "Getting through these unusual times."
According to Vijay, these companies only protect the interests of shareholders and ignore garment workers. He pointed out that these companies can apply for the US government's economic relief program grants, but also ask them to help.
And that comes as apparel makers have been hit twice as hard by the coronavirus outbreak.
In February, many factories could not get raw materials from China. China is the world's largest exporter of textiles, with an export value of approximately US$118 billion in 2018.
Chinese textile mills have reopened in recent weeks, and apparel makers had hoped operations could get back on track. But governments around the world have imposed lockdowns, retailers have been forced to close their doors, and demand has plummeted.
China may have been called the "factory of the world", but when it comes to clothing, Bangladesh, Indonesia, Cambodia, Vietnam and Myanmar are playing a growing role.
Clothing manufacturing has shifted from China to other regions over the past decade or so due to higher costs in China, said Stanley Szeto, executive chairman of apparel maker Lever Style. Lever Style supplies a number of premium brands, including Hugo Boss, Coach, and more.
This means that garment manufacturing is a vital industry for many developing Asian countries. According to World Trade Organization data, Bangladesh and Vietnam are among the top four garment exporters in the world. Bangladesh currently holds 6.7% of the market, followed by Vietnam with 5.7%.
Bangladesh has more than 4 million garment workers, and textile and apparel products accounted for more than 90 percent of the country's exports last year.
More than 60 percent of Cambodia and Sri Lanka's exports also come from apparel manufacturing, said Lu Sheng, an associate professor at the Department of Fashion and Apparel Studies at the University of Tranhua.
The industry accounts for more than half of all manufacturing jobs in Bangladesh and 60 percent in Cambodia.
Lu Sheng believes that the spread of the new coronavirus epidemic may lead to a reduction of 4% to 9% of jobs in the garment industry in countries such as Bangladesh, Vietnam, Cambodia and India.
This is one of the reasons why Bangladesh is trying to help the industry.
“It offers a generous stimulus package: subsidized wages, turning loans into long-term debt, and offering very reasonable interest rates,” said Islam, general manager of Bangladeshi garment manufacturer Sparrow Apparel. helped."
The Cambodian government has also announced tax holidays for garment factories and proposed a wage subsidy scheme for workers.
Lu Sheng pointed out that the government's move is because the epidemic may cause some long-term effects, such as labor shortages, rising raw material prices and insufficient production capacity.
Following mounting criticism and pressure, some companies, including H&M and Zara parent Inditex, have pledged to fully pay the clothing maker for existing orders.
Dominique Muller, policy director at Labour Behind the Label: "For years, brands have been making money in low-wage countries that don't have social security systems. They've built a business model that Huge business empire. Now have to pay back decades of exploitation to take care of their workers." Behind the logo, the Labor Union focuses on labor rights in the garment industry.
Amit also agrees. "Retailers have to help, and the emergency bailout of the industry by wealthy governments is also important," he said.
Without that, the industry could be completely destroyed, he said.