About a year ago we published an open letter by Mostafiz Uddin addressing how the pandemic affects the supply chain, Bangladesh’s textile sector and especially its workers’ battle to survive. Uddin, who is the founder and head of denim textile show Bangladesh Denim Expo and owner of jeans manufacturing company Denim Expert Ltd, back then has warned that a whole industry segment is in danger to be wiped out. Now we talked to him again to see how the situation has evolved and if supply chains are more resilient towards a global crisis.
What has happened since you wrote this open letter a year ago? How would you describe the situation today?
Today the situation is slightly different although in many ways just as bad. Brands have stopped cancelling large orders and the reason is that they are no longer making them. There has been a switch to smaller orders and many suppliers are fighting for the same orders as a result. This is inevitably placing downward pressure on prices. The other thing we are seeing is, firstly, discounting. Brands are demanding larger discounts as they can see suppliers are desperate. Secondly, we are seeing longer delays for payment. Payment terms of 90 days are becoming common. It is an incredibly difficult trading environment.
If the lockdowns in Europe continue (i.e., non-essential retail stays closed) how will this further affect the producing countries such as Bangladesh? What will happen to the sector?
The sector is already shrinking and it will keep shrinking. This is just basic business. If you close our markets then how can we continue in business? Larger operators with cash in the bank may be able to keep going for a while but small and medium sized operators will disappear. They will run out of money, as many of them already are doing. These lockdowns have been going on for a year now. From a business perspective, they are killing our industry.
What kind of support does Bangladesh need right now? What’s the most urgent? And who needs to take care of that?
Our suppliers need money, pure and simple. They have cash flow problems. The underlying businesses are sound but without access to finance, how can they operate? Without orders, how can they pay their bills?
Who needs to take care of this? Governments? The ILO? The World Bank and global development agencies? And also why not brands? Brands have talked about being partners with their suppliers for years. Now is the time for them to show us that they are serious.
In general, how does the fashion industry need to change to make supply chains more resilient to a worldwide crisis?
This crisis is unprecedented. We are all learning as we go along so I really don’t think there is a simple answer to this. But on a practical level, brands could help by being fair on price and not demanding huge discounts; by offering fair payment terms to help with cash flow; and by being open and honest with us as their suppliers. As suppliers we can’t get through this on our own. Twelve months of lockdowns have decimated supply chains. As an industry we need to start pulling in the same direction.