Factories are bearing the brunt of unrest by having to bear shipping costs and counting losses on price discounts
Each time there is any issue over worker rights or remuneration in the country’s apparel sector, why is it resolved on a collision course? Businesses bleed when worker movements get violent and it takes lots of time and effort to recoup the losses the sector suffers.
Take the last one week’s unrest in some of the readymade garment (RMG) industrial zones for example. It caused great financial losses to many of the RMG factories. They suffered production losses either because of workers joining protracted street demonstrations or due to shut down of RMG units owing to violence and workers vs. law enforcement skirmishes.
By the time a government-formed body with RMG workers and owners represented, which apparently succeeded in addressing some of the workers’ wage-related grievances, much damage had already been done to an industry that fetches over 83 percent of the country’s yearly export earnings.
The production losses have delayed shipment of finished goods, compelling exporters to send goods by air to meet their shipment deadlines.
While many are on the verge of order cancellation, others have to pay discounts on prices as penalty for missing delivery deadlines, several apparel makers told the Dhaka Tribune.
“I have a shipment of one lakh pieces of apparel goods on January 19. But, I will not be able to ship the goods on time as my factory was vandalized, production was suspended,” Md. Iqbal Hossain, Managing Director of Patriot Eco Apparel Limited told the Dhaka Tribune.
On an average, Patriot Eco Apparel produces about 20,000 pieces of apparel a day. But it did not make a single piece as the factory was shut due to worker unrest and vandalism over the new wage structure.
Iqbal said, the buyer has asked him to dispatch the goods by air, which would cost him nearly $150,000. And, he added, some other buyers are asking for discounts on prices.
“I would not have to pay a single penny for shipment, if goods could be delivered on time as the buyers would have borne the shipment cost then,” he explained.
He alleged that “outsider workers” vandalized his fully compliant certified green factory, and he suffered a huge financial loss.
Unit Head of Standard Group in Savar, Md Abdur Razzak, told the Dhaka Tribune: “Besides the air shipment or price discount issues, there is another challenge to overcome : regaining an image that has been tarnished and confidence that has been dampened due to such unrest.”
With 6,000 workers on its pay roll, a factory of the group located in Savar suffered a production loss of 24,000 pieces a day.
Losses recoverable, not lost image
Like these RMG units, there are a good number of other factories who are bearing the brunt of unrest by having to bear shipping costs and counting losses on price discounts.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA), however, could not offer any ready statistics on lost production and other financial losses the well-oiled industry suffered due to weeklong violent protests and clashes.
“Financial losses can be managed by any means. But the biggest loss that labour unrest causes is the image crisis before the global buyers, which is irreparable and not manageable. It takes two to three years to rebuild and restore confidence,” BGMEA President Md Siddiqur Rahman said.
He said people start realizing the losses after two to three months, when the export earnings show a downward trend.
Business leaders claim every time the RMG sector shows growth momentum, one obstacle or another causes damage.
“As a business, I am strongly demanding security for our lives and property to continue business for economic development,” the BGMEA President added.
What it takes to revive
Meanwhile, factory owners have to enter a hectic production mode with massive overtime to recover the lost production and to avert the cancellation of orders as buyers refuse to extend deadlines.
“We have witnessed losses of 50,000 pieces of production a day. And there is no other option but to go for massive production, even on Fridays, and extra overtime to recover losses and avert order cancellations,” manager of a Savar-based factory told the Dhaka Tribune.
The official, speaking on condition of anonymity said, even if a factory owner survives bearing the air shipment costs or price discounts, s/he ends up bankrupt once big orders get cancelled.
Not only owners but also workers are suffering financial losses as they will not get salaries for the days when the factories had to keep their units shut.
“I will get less salary compared to the previous month as the factory was closed for three days and the owners will not pay for those lost days,” Yasmin, an operator in a factory located in Dhaka’s Mirpur, told this correspondent.