Apparel industry faced a grueling 2009, bitten hardly by the pangs of recession. Apparel industry is one of the important sectors in manipulating the countrys economy, revenue, trade and employment generation. The industry has short life cycle, volatile and unpredictable demand, and tremendous product variety with long and inflexible supply process. With the New Year giving new hopes to people all around the world, there are a few concerns for the apparel industry owners to watch out.
Eclipse of Recession:
Green shoots of recovery follow the twinge of recession. While the apparel industry is seeing silver linings around the clouds of the global turmoil, the industry will also have to prepare themselves to face the hangover of recession.
Textile merchants comment that, they were not feeling confident about their business during the past year, but are hoping for the forthcoming weeks. Decreases in the purchasing power of the consumers foretell an unpleasant market condition. Sales figure during the festival season of October was almost 20% lesser as compared with the previous years figures during the same period. Owners involved into export business are facing adverse situation. In the present scenario, those who manufacture only quality goods would manage to make a ransom. Manufacturers who are able to produce high quality of products and are willing to sell them at a competitive price, alone will be able to sustain themselves in the market.
Death of Mega deals in Outsourcing:
2010 will witness the customers eschewing mega deals seeking more flexible approaches to outsourcing. Contracts will be more focused on core processes with short and less expensive transition periods and a reduced ROI on investment timescales.
Rising Labor Costs:
Textile industry generates the maximum number of employment opportunities in India next to agriculture. It is a labor intensive industry, and employs approximately 40 million people. India was able to perform well over its counterparts in the textile sector during the past decades, due to the abundant and cheap availability of labor force. Currently, labor is getting very expensive. This affects the cost advantage of the country. People of the poor masses are also hit badly, as textile industry is more labor intensive, and is the second largest employer of the country. Semi skilled and unskilled rural people, who were not able to get profits in agriculture, have moved from the villages to work in textile industries. Due to the rise in labor cost, several million people in textile industries have lost their jobs. A recent survey states that four million workers in the textile industry have lost their jobs over the past six months, and another four million jobs are estimated to be at stake in the next six months.
Sweatshop Free Business:
Apparel industry is known for its payment on piece rate system, where workers are paid on the basis of the number of garments they complete. This makes it possible for the manufacturers for easy exploitation of wages. Most of the low wage workers are vulnerable to wage theft, where they are made to work more and are paid very less, or they are not paid for their overtime work. In some industries, workers are made to work for even up to 80 hours for a week without proper overtime payments. Female workers are more prone to wage violation comparatively over male workers.
Industry experts believe that this system of wage practice
will encourage wage competition among the suppliers, and stop the retailers in
driving down the pay. Though companies will not suddenly start paying this
wage, it is optimistically expected that positive changes are likely to happen
in the near future.
Competition from Neighboring Countries:
Indian apparel industry is in the global radar, attracting the attention of other international countries. For the apparel industry, cost of the fabric makes almost 60% of its selling price. Increase in the cost of fabrics simultaneously result in an increase in the cost of apparels for Indian garment exporters. Due to this, the industry is facing severe competition from its business counterparts like Sri Lanka, China, and Bangladesh. India will have to struggle hard to prolong the competition, as its cost of production is high.
Indian apparel industry is optimistic for revival and a quick growth. Industry owners positively hope that during 2010, the industry will grow and provide employment to more number of people.