• Wednesday, Aug 10, 2022
  • Last Update : 04:24 pm

European retailers cancelling orders with Bangladeshi garment factories, once again

  • Published at 11:15 pm December 19th, 2020
RMG factory women garment
Female workers at a garment factory REUTERS

Mindful of the bad press the last time, the retailers are handling the situation very diplomatically and are not terming it as order cancellations

As the second wave of coronavirus cases sweeps across Europe, its impact is being felt acutely in Bangladesh: retailers have started to ask their apparel suppliers here to put work orders on hold until January, anticipating fresh lockdowns in their home countries.

In the first phase of Covid-19, apparel buyers had cancelled or held work orders worth about $3.2 billion, as per the data of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). 

Mindful of the bad press the last time, the retailers are handling the situation very diplomatically, this time. They are not terming it as order cancellations, but it is effectively the same as the suppliers would not getting any payment and would not be running their plants in full steam.

“I have all of your collection and also selected 10 styles for purchase quantity of around 350,000 pieces for production in March-April. But unfortunately, at this moment, our situation is quite uncertain. Besides, Germany is going to be in lockdown from December 16 to January 10,” said a German retailer to its Bangladeshi supplier in an email.

Dhaka Tribune has a copy of the email.

“At this moment our management has decided to hold all purchases until unless the situation gets better. And sorry to say that we are not able to issue any pay orders at this moment,” the email added.

The Bangladeshi supplier declined to reveal the German retailer for fear of reprisal.

Fazlee Shamim Ehsan, the proprietor of Fatullah Apparels, said his buyers have asked him to put 35 per cent of his ongoing work orders on hold and also the ones for January.

“This is very close to cancellation as the payment will not be made. And it is not clear whether they will reinstate the orders.” 

This is a double blow for the manufacturers: they have to pay the workers’ wages as well as for the raw materials for the products that were already in production, said Shamim, also a director of the Bangladesh Knitwear Manufacturers and Exporters Association.  

Another apparel maker, who still has dues from previous work orders, has fallen further in trouble as his European buyers have put the orders on hold. 

Subsequently, the exporter called for ethical behaviour from all the buyers and to restore the work orders as soon as possible considering the livelihoods of millions of apparel workers. 

On top of that, sector people are also fearing a shortage of work orders for the months to come in the year 2021.  

The BGMEA ran a survey on 50 out of 350 leading factories and they reported 30 per cent fewer orders than what is needed to run the factory, said its President Rubana Huq. 

“Europe is going to full lockdown even during and post-Christmas holidays. Things are not looking good.”

Huq fears the impact of the second wave could be severe as retail demand is falling.  

Sales of apparel goods registered a 9 per cent negative growth in September in the US and the EU and 13 per cent in October, she added.

Garment, which fetches more than 84 per cent of Bangladesh’s export receipts, brought home about $2.4 billion in November, down about 4 per cent year-on-year.

This takes the receipts from the country’s main export earner to $12.9 billion in the first five months of fiscal 2020-21, down about 1.5 per cent year-on-year, according to data from the Export Promotion Bureau.