So, in your view, is this vital industry performing well in current circumstances? If yes what policies have been the benefactors behind? And if otherwise, what policies have been undertaken to boost the industry?
Sri Lanka’s apparel industry is dependent on two major markets, the United States and the European Union and currently the share of exports to these two regions is about even. Both of these markets have been hit very badly by the crisis and the clothing retailers based in the US and EU are struggling to survive with many filing for bankruptcy and others consolidating, cutting costs and downsizing. The low market sentiment and the consumer spending in clothing reducing drastically, the net sales turnover of the majority of clothing retailers has a negative growth.
Low sales turnover naturally indicates that the retailers are buying less at cheaper prices making the producer nations compete for these reduced volumes by dropping price and Sri Lanka has to compete with low-cost nations such as Bangladesh, China, and Vietnam for their piece of the pie.
Unfortunately for Sri Lanka’s apparel industry, despite efforts to improve productivity and adopting lean manufacturing methods, the cost per unit still remains higher than its top competitors such as China and Bangladesh due to several factors; the increased cost of utilities and general inflation etc due to escalation in the war (at the time), cost of sustaining high levels of social and environmental compliance which made it difficult to compete with these low cost countries.
Many firms are struggling due to above impact and other macro-economic issues peculiar to Sri Lanka which makes the industry less competitive in comparison.
At industry level, through the Joint Apparel Association Forum (JAAF), the industry lobbied to obtain concessionary rates on utilities and tariffs as well as obtaining the Export Development Reward Scheme which would offset some of these extra costs incurred by exporters to successfully compete.
In addition, Sri Lanka Apparel realized that it cannot simply compete on price alone and aggressively marketed its ethical positioning under its ‘Garments Without Guilt’ campaign to its customers to either obtain a fairer share of orders or a better price.
At firm level, various companies took various steps to mitigate the impact by consolidating their businesses, streamlining processes and adopting lean manufacturing practices and increased contact with customers etc.
True. Just pricing cannot help compete. Infact, Srilanka’s GWG campaign has been complimented greatly by industry partners. Can you help us understand about GWG in depth? How is JAAF associated with this move? Is GWG all about child labor only?
Sri Lanka’s Apparel Industry can proudly claim that it has been at the forefront of social responsibility in Asia, having conformed and complied with the norms of ethical sourcing which is backed by strong legislation. Sri Lanka is in fact the only outsourced manufacturing country in Asia which has ratified all 27 International Labor Organization (ILO) Core Conventions covering areas such as prohibition of forced labour and prohibition of child labor. In addition, the country’s strong legislation demands safe and healthy working conditions, governed hours of work, social and security fund contributions and environmental protection standards.
Also, long term relationships with large, reputed retailers who have established standards of manufacture and compliance have also reinstated this focus on ethical manufacture and an approach to Corporate Social Responsibility that responds and caters to the needs and concerns of a diverse set of stakeholders. The association with global brands of international repute has not been a mere business transaction but more an exercise in maximizing value of wealth creation for society.
On the environmental aspects too Sri Lanka Apparel supports many initiatives focused on minimizing its impact on nature. Every effort is being made to create sustainable growth by protecting the environment, both at the workplace and in the community. International standards of recycling, effluent treatment and waste management practices are followed to run the operations at optimum environmental efficiency.
The realization of the value of industry’s inherent best practices and strong ethical thinking positioned the industry on an ethical sourcing platform under the theme ‘Garments Without Guilt’. And with the growing global interest focused on how, where and by whom products were made, launched a self initiated industry-wide examination and certification program conducted by Swiss based SGS Group. The GWG Charter assures our product to be free of child labor, free of forced labor, free of discrimination of any kind and free of sweatshop practices.
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.