We are adopting safe distancing; staff communications are happening via virtual meeting with customers, suppliers and fellow workers. We are not conducting design and order placement meetings via video conferences. We foresee that there will be lesser contact and less frequent trips to US to maintain social distancing.
The virus is here to stay. What steps have you taken to mitigate its impact - be it at the supply chain level or sourcing of raw material etc?
Ghim Li is a vertically integrated global supply chain manufacturer which was established in Singapore more than 45 years ago. Our fabric mill and production facilities are located across countries in Southeast Asia. The proximity of the production facilities and the direct control of the fabric mill enables us to mobilise the production team and shorten the response time according to the demand of the masks. With country flexibility and diversified yarn sources, we are adequately protected from the adversities of any supply chain disruption. We are also working closely with our customers to ensure that they continue to maintain healthy levels of inventories and offering flexibility for changes in style or quantity so that we can remain resilient to changes in the global retail market.
Technology is in a sense leading the fightback. What steps has Ghimli taken or is taking to move into a more digitalised work culture?
Tech is the way forward and with rising costs of labour everywhere, we do need to embrace tech to try to automate manufacturing processes. One note of caution on automation is to focus on the value which your customer will appreciate. Some tech may be too expensive and not suitable for implementation until your customers can see that value. Someone has to pay for the tech.
3D design and prototyping is another way which our industry can use to reduce the amount of samples and lead time in prototyping. Many industry leaders are embracing 3D and this is a good way forward for our industry to upgrade the way we design and sample.
Automation of the garment manufacturing and digitalisation of the ordering process is what we are working at.
Staff communication is happening via virtual meeting with customers, suppliers and fellow workers. With Covid-19, we can see our staff embracing video conferencing as they have the flexibility to work from home.
By when are you expecting the revival process to commence?
The revival process is commencing now with the resumption of our customers' orders in US and Europe. We can see positive signs of returning back to normalcy but this are still shaky due to the risk of 2nd wave of Covid during the colder months. We will have to continue to stay vigilant and prepare for any impact should there be a 2nd wave.
How have budgets been impacted in this Covid phase?
We have to work very closely with our customers on sales plan and also on our factory capacity plan, maintain some buffer and fluidity to cushion any impact of Covid19
Implication on financial statement
GLG Corp has advised that the postponement of the existing orders and transition to manufacturing of fabric face covers have impacted the company's cash flow in the short run. This is because the company had to incur additional financial costs in extending the credit lines arising from the postponement of receivables from the customers and the collections from the new face cover sales will only be recognised after delivery of the products. But the payments for the factories' overheads, raw materials and workers' wages were still incurred.
GLG Corp is working with several financial institutions to increase the cCompany's existing revolving credit lines to mitigate its short term financial burden. The company is collaborating with customers to make payment for those goods that were delivered or arranging with the banks to finance receivables from the customers in transit. Moreover, the company has proactively reached out to the suppliers and landlords to discuss additional mitigating measures during this difficult time. Other preventive measures to conserve cash and reduce costs will be taken. For example, general recruitment freeze will be implemented for all ground positions, and non-essential travels will also be suspended. Selected capital expenditure has been deferred and Ghimli will be tightening discretionary operating expenditure.
The overseas factories are also reviewing the support from the local governments which is featured in the regional news:
The Malaysian government announced the RM250 billion (US$58 billion) stimulus package on March 27, 2020 and additional SME stimulus package to help the economy.
Cambodia has the budget $8.2 billion in which US$2 billion was earmarked to save the economy in case of the outbreak of the acute respiratory disease caused by Covid-19, according to Prime Minister Samdech Techo Hun Sen's statement on March 10, 2020.
Indonesia will issue a government regulation in lieu of law (Perppu) that will boost state spending by up to Rp 405.1 trillion (US$24.6 billion) as the budget to fight against Covid-19, according to President Joko "Jokowi" Widodo's statement on March 31, 2020.
In the local context, the company is obtaining financial assistance from the Singapore government to alleviate its financial burden with relief packages amounting to S$160 billion (US$113 billion), namely (a) Unity Budget, (b) Resilience Budget and (c) Solidarity Budget which have been rolled out on April 6, 2020.
The company is also working with the banks to tap on the S$5 million temporary bridging loan which the Singapore government co-shared amounting to 90 per cent default risk.
Globally, there is more focus on sustainability today, more so after the Covid-19 episode. What are your commitments towards sustainability and reducing carbon footprints?
As part of fabric innovation, we are always looking at sustainable methods to produce fabric. For example, we are exploring innovations like using organic yarn, recycled cotton / polyester and even bamboo fibres yarn. Ghim Li as a fabric mill is continuously doing research and development in its labs to look for new sustainable fabrications and fabric innovations.
Our masks are designed with a focus on ensuring that it is a sustainable innovation. The mask is made of organic cotton - it is biodegradable and fully disintegrates. The naturally occurring anti-bacterial fluid is extracted from discarded seeds (natural agri-waste) and applied on the mask, which is a non-toxic, bio-organic chemical.
There continues to be a change of mindset not only with our production team but also with rewriting our fabric manufacturing process. For example, we are learning how to deal with the bio-organic fluid to apply on textiles. The process is relatively arduous, but we have very well-trained technicians and staff that work together in making things work.
What are your future plans?
We do have a 3 years plan and are currently revising it due to some disruption as a result of Covid-19. (PC)
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