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IMPRESSIONS from a Cross-section

Topic

What are your key takeaways from the textile and apparel industry developments in 2021?

Global supply chain collapsed during the pandemic

2021 was not an easy year. Fibre2Fashion spoke to some representatives of various textile bodies from the US, Europe, Bangladesh, India, and Sri Lanka on how they expect the New Year to turn out for the industry, and the challenges in terms of logistics, labour, and other issues.


Stephen E Lamar: In the past two years, the industry has faced some of its greatest challenges in our history, from COVID-19 to the recent supply chain crisis that will likely continue well into 2022. At the same time, it has taught us that we can innovate on a dime and has highlighted areas where improvement is needed to bring the apparel and footwear industry into the future.

Cem Altan: For the textile and garment industry, 2020 was the year in which everything changed. A huge crisis in demand caused a majority of companies to lose money. 2021 showed a hugely diverse picture, marred on the one hand by pandemic related uncertainty but also affected by major supply shortages caused by rapid rebounds of demand. The pandemic has accelerated trends that were already in force before 2020. Primarily it has compounded the demand for all things digital, which in turn has enabled innovation, efficiency, and new ways for business to scale up. But we have also seen a turning point in the relations, on a macro scale to start with, between buyers and suppliers. Following a massive loss of trust in their clients caused by large scale cancellations at the start of the pandemic, a heightened sense of solidarity among manufacturers has created a starting point for a joint effort by groups of brands/retailers and manufacturers to improve the relations in the supply chain.

Faruque Hassan: 2021 was a challenging year for the Bangladesh readymade garment industry indeed. The massive impact of COVID-19 and shutdown measures to curb infections have plunged the global economy as well as our industry into a severe contraction. The first takeaway of 2021 is the learning of how to survive in this time of the pandemic since the virus is continuously unfolding challenges one after another. The global supply chain collapsed during the pandemic, and we witnessed so many unpredicted situations like non-payment, discounts, delayed payments, deferred shipments and so on. The weakness in trade terms and the vulnerability caused by a concentrated raw material supplier base, were some of the harsh realities exposed by the pandemic. The impact was particularly severe for small- and medium-sized factories.


We have also seen how COVID-19 disrupted the global supply chain, particularly the freight management systems all over the world. The container crisis has led to a historic rise in freight cost, as high as 350 per cent to 500 per cent, causing higher input costs as well as provoking global buyers to nearshoring to minimise costs. While all these are matters of concern for us, we have learnt during COVID that supply chain management requires more attention than ever. We need to diversify our raw material sourcing and for that strengthening our backward linkages industry is a must. As we do business based on receivables, there is always a risk of order cancellation, delayed payment, or violation of trading terms of some sort. Therefore, deepening buyer-supplier relationships requires more attention than ever before.

Apart from the challenges, COVID has unveiled new opportunities for us as well. Global online sales have skyrocketed during the pandemic and our footing in the arena of virtual marketplace is an opportunity awaiting us.

Dr A Sakthivel: The year 2021 has been a learning year for the apparel and textile industry. Given the volatilities and changes in the global demand and supply patterns, 2021 was a year of revival and growth. The Indian apparel industry demonstrated its resilience by gradually inching back to the growth path. The month-on-month performance shows that the industry has gradually picked up from a double-digit decline in the first quarter (April-June 2021) to a 20.3 per cent and 13 per cent growth respectively in September and October months. 2021 has taught the industry to work under uncertainties and new challenges. As against the export target of $20 billion for fiscal 2021-22, $9.65 billion exports have been achieved during April-November 2021. During April-November 2021, apparel exports have recorded a growth of 37.8 per cent vis-à-vis the same period of 2020-21. But the exports are lower than the same period of 2019-20 by 3.9 per cent. This decline, as compared to 2019-20 is largely due to the decline during the April-June 2021 quarter. Exports have consistently picked-up from the 2nd quarter (July September). In September, October, and November, exports grew by 20.3 per cent, 13.0 per cent and 1.3 per cent respectively, vis-a-vis Sept 2019. Keeping similar rate of growth in mind, exports for FY 2021-22 are expected to be $16-17.5 billion. Industry is striving hard towards achieving the balance by the end of this financial year.

A Sukumaran: My key takeaway is that the industry’s resilience stemmed from our capacity to adapt and innovate our supply chains and products. Sri Lankan manufacturers adapted to the challenges of virtual work by leveraging 3D and digital product development technology to ensure that product cycles were not affected. Our strategic partnerships with clients, our reputation and the trust among buyers were critical this year. The impact of the pandemic on the industry could have been significantly worse if our relationships with buyers were transactional and the country’s offering was commodity-driven. One challenge that continues even today however is the impact on shipping. We have seen drastic increase in sailing times, coupled with steep hikes in freight rates adding both time and cost to an industry where these are two key drivers. That situation continues today, and we see no signs of a return to pre-pandemic levels anytime soon.

Dr. Christian Schindler: In crises like the pandemic, it is key to act quickly and with determination. Pro-active adaptation to new economic, social, or environmental circumstances can turn a challenge into an opportunity. The pandemic has also shown how important it is to have a sound balance sheet that does not only provide a company with the financial resources to overcome a crisis but that allows a company to emerge stronger by being capable to invest during and after coming out of a crisis.

Mohammad Ali Khokon: Bangladesh has come a long way since its inception and now it is considered as a miracle economy among the South Asian economies. The textiles and clothing industry is a mainstay of this economic success—84 per cent of the total export earnings comes from the textile & clothing sector where the contribution of primary textile sector is 64 per cent. However, COVID-19 pandemic has put a heavy toll on the sector’s progress and RMG export earnings declined to $27.83 billion in FY 2019-20 from $34.13 billion in FY 2018-19. But the government’s timely stimulus packages, ensuring the utility facilities for the sector, and keeping the textile and clothing factories open during the lockdown have helped the textile and clothing industry combat the challenges and regain its export growth which can be seen from the current increased export growth trend.

Frédéric Van Houte: 2021 showed a challenging business scenario. We saw global stress on supply chains through logistics issues and a surge in energy prices affecting all supply chains, resulting in raw materials and component shortages and price hikes, creating hurdles for global exports/imports. Mid-2021 business appeared to improve. Vaccination was a gamechanger in some countries.


This interview was first published in the Januray 2022 edition of the print magazine.

Published on: 03/01/2022

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.