As per WorldBank's latest report "global recession this yearwill be deeper than it predicted in March and warned that a flight of capitalfrom developing nations will swell the ranks of the poor and the unemployed.The world economy will contract 2.9 percent, compared with a previous forecastof a 1.7 percent decline". All the world's major apparel manufacturing andexporting countries belong to this category of "Developing Countries".Current recession prevailing in the world will have many and deep implicationsfor the International Apparel trade especially for Apparel manufacturers andexporters.


"MANY" as in small/ medium apparel manufacturersand exporters across the world have been forced to shut leaving thousands ofpeople jobless... even big players due to ever falling profits have had tostreamline and cut costs to be able to survive through this rough time whichhas lead to direct as well as indirect job losses.


"DEEP" as in due to recession customer was notbuying much, few orders were available which resulted in manufacturers reducingtheir CM's to approximately half of what they were getting earlier, so as tograb those few orders available and keep their lines running. Even though thelines were running manufacturers made very little profit and in some cases theymade no profit, as the orders were acquired at very low CM's. Manufacturers hadto try and make money on fabric and trims that too was possible only if theywere doing FOB programs. Throughout the world apparel manufactures focused onshort term strategy in hope that soon recession will be over and things will beback to normal.


Eventually whenever slow and painful process of economicrecovery starts will it bring back the golden old day?? The answerunfortunately is no because of two main reasons:


1. During this long recessionary time customers have tasted blood;with apparel manufacturers having quoted very low CM's to remain afloat. Tobring the CM's back to same profitability level as before recession will be avery difficult task and will take long time (if that ever does happen). Apartfrom talking time, this all will depend on factors like-


Past history and relationship with customer being mostimportant, apart from that other factors like development turnaround time andservice offered. Not to forget on time shipment performance and lead times. Butthe bottom line is and will always be the price.


Post quota pressure on CMs was already high and CMs hadgone down as the customers were free to place order where ever they got bestCMs across the world. Due to recession again CMs have come under pressure andapparel manufacturers really need to go back and work on their strategies asthings will get tougher and tougher. The only silver lining here is that itwill be very difficult for new manufacturers to enter the trade.


2. Protectionism is another huge factor which apparelmanufacturers would have to keep watching. Protectionist voices have increasedin number and intensity over the last one year, fortunately till now in the Appareltrade we have not seen any protectionist policies being implemented by any ofmajor importing countries but just because it has not been done till now doesnot guarantee it will not be done.


The key for survival lies in Supply Chain management. Onlythose apparel manufacturers and exporters will survive who have the mosteffective and efficient supply chain. Keeping pace with end customers who arewilling to place orders anywhere in world depending on where ever they get bestquality at the best price at the required time, apparel manufacturers andexporters will have to adopt same strategy while sourcing their raw materialsespecially fabrics as fabric constitutes approximately 55% to 65% of apparelcost and has longest lead time.


Apparel manufacturers and suppliers will have to overhaulboth front and back end of their supply chain.


CM's inapparel trade refers to the cutting and apparel making price charged bymanufacturers and exporters to Customers.