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Adversities cause several apparel units to close down
28
Dec '10
Factors like lack of efficiency, weak economic fundamentals and penalty imposed on delayed delivery, have lead to the closure of around 40 percent of the apparel units in Pakistan all the way through 2008 till now.

Only those units, functioning under the direct supervision of their owners have managed to survive during the trying period.
Owners of only those units who exercised a good hold over their units and production activities managed to survive by bringing down the wastage ratio, while ensuring compliance of the necessary system controls. Also, only those exporters who had booked orders as per their capacity have been able to timely deliver their orders.

However, closure of the apparel units had no effect on the overall knitwear and garment exports of the country either in terms of value or volume, as the competent units succeeded in covering the loss that occurred due to closure of other weak units.

Experts say that it is the high mark-ups which has caused the garment and knitwear units to shut down over the last three years.

Furthermore, the units that had managed to survive in spite of the rising financial cost, failed owing to the sudden rise in the yarn prices as they had booked their orders at a lesser price. It was not possible for the manufacturers to continue further as the situation was beyond their control.

Majority of the entrepreneurs made no efforts to improve their efficiency, but these inefficiencies got adjusted against a swift fall in the rupee value. The industry collapsed during the recession because of the raw material prices and energy costs which soared to touch new heights.

The units, which worked on improving their efficiencies to match the best global standards, had substantial savings in good times and they took apposite decision regarding conservation of the energy so as to minimize the effects of rising costs of energy.

A number of units were required to close down after they booked orders which they were not able to fulfil. Delay in production forced the exporters to ship the goods through air cargo to meet the delivery deadlines. Where air cargo costs 15 times more than delivery by sea route and it even causes the exporter to incur a net loss of up to 60 percent.

Fibre2fashion News Desk - India

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