Coronavirus impact on apparel industry

Impacts of Coronavirus on Global Apparel Industry

Coronavirus on Global Apparel Industry

Wherever you look, the effects of the COVID-19 or coronavirus affect almost all areas of work and life. Also the badly impacts of coronavirus on global apparel industry and worldwide. A look at Southeast Asia also shows the existential threats that the spread of the virus poses for workers in the clothing industry.

Even though there are only a few proven cases of viral disease in a number of countries, the first closings can already be observed there. One reason for this is the raw material shortages from China – there is a lack of cotton and fabrics. This is particularly severe in Myanmar, where the virus had not been detected until mid-March, but many companies rely heavily on primary products (cotton, fabrics) from China. There is also a noticeable decline not only in Chinese demand. This can be exacerbated if European brands begin to reduce their production orders, because Germany, for example, is the most important destination country for textile and clothing exports from Myanmar after Japan (data for 2018).

Impacts of Coronavirus in Bangladesh Apparel Industry:

Fashion retail brands have canceled or put on hold more than $3 billion worth of orders due to the coronavirus outbreak, according to textile manufacturers in Bangladesh, although a few agreed to pay anyway. Data released Monday by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) included formalized, on-going and planned orders in the country, which is the second largest clothing exporter after China. The canceled orders included tens of millions of dollars in purchases from major brands such as the Dutch C&A, the Spanish Inditex, the British Marks & Spencer and Tesco and the American Walmart and Target, according to reports from the manufacturers to the Bangladeshi association.

Bangladesh is beginning to feel the direct impact of the pandemic, and its government has ordered the closure of most businesses to help combat it. But the effects on the country’s export market have been hitting its economy for weeks. Bangladesh is also just like other country’s getting day by day because of negative impacts of coronavirus on global apparel industry very fast attacking all over the world.

 impact of coronavirus on global apparel industry
Fig: Coronavirus impact on apparel industry

A poll of factory owners in Bangladesh released on Friday indicated that millions of factory workers had been sent home without the wages or compensation due to them. The BGMEA reported pending orders of $1.8 billion and cancellations of $ 1.4 billion. Planned order cancellations between April and December totaled nearly $1.7 billion. The figures were conservative because they excluded orders for multiple buyers.

The new data was incorporated into a report from the Center for Global Labor Rights at Pennsylvania State University and the Workers’ Rights Consortium, a labor organization based in Washington DC. Manufacturers and union groups in Bangladesh called on large firms to honor their commitments to suppliers. Sweden Company H&M said that it will pays manufacturers for the orders that was already in production. PVH, there owns these Tommy Hilfiger, Calvin Klein, and Heritage brands shown that its suppliers that it would issue the receipts withheld since March 18. Running receipts would be processed gradually.

More than a million of the more than 4 million textile workers in Bangladesh have lost and their jobs or have been temporarily laid off due to order cancellations and lack of payment for canceled orders.

Export stop in emerging countries: (Pakistan, India, Bangladesh)

We know Coronavirus on Global Apparel Industry and taking very tough situation. All this is generating an export break in emerging countries. The pandemic is so global that it does not leave potential markets to go to compensate for the losses in those most damaged by the coronavirus.

Most of them – although at first they thought they would have a good opportunity to compensate for the drop in production in China – suffer their own. Shipments from Pakistan to Europe and the United States are being canceled or postponed due to the market blockade.

Bangladesh is also being severely affected. European customers are canceling scheduled orders and stopping already agreed shipments. Consequently, factories must maintain much larger stocks than usual and face cash flow difficulties. Some customers, especially Italian and Spanish, have already canceled their orders or have at least substantially reduced their size.

India fears a 40% drop in its exports, especially of cotton products to Spain, Portugal and Italy. Many of the workers in these countries – especially immigrants – can lose their job and their regular family income. In Europe, after all, it has some social protection; much less in those countries.

Another example of the effects of coronavirus in Cambodia:

According to reports by the GMA (Garment Manufacturers Association) there, there are already 30 factory closures that affect more than 20,000 workers.

It is important to understand what it means for the seamstresses when their factory shuts down production. Their already precarious living situation is getting worse! Many factories respond with layoffs, but not always adequate or even legally binding compensation is paid. As a rule, the dismissed are not compensated by state social benefits. The government in Cambodia has announced that it will give the company’s financial support to continue paying the suspended workers a portion of their wages. However, it should be borne in mind that given the very low wages for regular working hours, workers can only get a living wage with regular overtime. How to feed themselves and their families with the announced 60% of their previous income remains questionable. In addition, due to the low wages, many of them had little opportunity to build up reserves for such emergency situations.

The situation is made more difficult by the fact that many workers do not receive wages on sick days. This forces them to go to work with symptoms of illness, which means that if the pandemic also affects their countries, if this has not already happened, they endanger their own health and that of the other workers.

An additional complication for Cambodian workers is that the EU has withdrawn the country’s tariff benefits from the “Everything but Arms” initiative from the middle of the year. If the coronavirus crisis will hopefully be over in the second half of the year, it is completely open as to whether Cambodia can build on the export figures of last year. A fifth of Cambodian exports to the EU then have to be cleared and become more expensive. The GMA protested this competitive disadvantage compared to Bangladesh, for example.

Support for employees needed:

In view of the increasingly difficult situation of the employees in the Asian textile and clothing factories, responsible action by the suppliers, but also the customers of the clothing, is necessary: ​​The international campaign for clean clothing (CCC – Clean Clothes Campaign) calls on brand companies and clothing retailers to ensure that Wages are paid on sick days and in times of leave. Closures should be done for medically necessary reasons – but without wage cuts. In addition, virus containment measures must not be used to inappropriately restrict the free movement and freedom of association of employees.

The Global Business Initiative on Human Rights (GBIHR – Global Business Initiative on Human Rights) also points out that after the crisis, there is an increased risk of forced labor in the form of forced, extreme overtime to catch up after losses.

In the long term, the economist Dalia Marin believes that the coronavirus will help companies to shift their production back to their home market. Although this trend has been observed since the financial crisis, the researcher suspects that the coronavirus will continue to drive it. The reason for this is the increasing uncertainty in world trade – companies increasingly see a risk in the failure of their supply chains. The  Supply Chain Act initiative  warns that companies that are now taking a closer look at their supply chains due to the crisis are not only looking at business risks, but also at human rights and environmental protection. Especially in these challenging times, all people involved in the supply chain have to be protected, layoffs and lack of continued wage payments have to be prevented.

The women’s rights association FEMNET e.V. also formulates a clear appeal to companies in the clothing industry and calls for solidarity with the seamstresses.

How Global Apparel Industry get Recovery?

The situation is truly complex because coronavirus badly impacts on on global apparel industry. Factories in Bangladesh, India, Pakistan and Myanmar are reeling. Workers are on strike and protests over payment. Meanwhile, the owners, who are trying to manage the cancellation of products, wonder how they will get the necessary wages to pay for them. How long is it going to last? We do not know. When one is immersed in a health crisis of these characteristics, it is difficult to see the light at the end of the tunnel.

But I’m sure it exists. The clearest evidence is China, which is already emerging from the pandemic and reviving its economy. For negative impacts of coronavirus on global apparel industry, H&M has already reopened 500 of its 516 stores in that country and Inditex only has 11 stores closed out of 577. Hopefully the rest of the industry can recover soon.

In addition, the main retailers (H&M, Inditex, Kiabi, Target, PVH, and Marks & Spencer) are already ensuring the payment of the orders that were standing. This has been a severe blow to the industry and the people who work in it. If there has been a good side to the problem, it has been the respite we have given the planet for a little while.

The crisis has also led China to completely ban wildlife trade and limit the exploitation of endangered animals and wildlife as well as the spread of viruses that threaten all of humanity.

Hopefully this is one of the good lessons to come out of this crisis, in addition to the necessary reflection on the vulnerability of the business in the face of events that are already on the map of international organizations (climate change, scarcity of natural resources, water crisis, social revolts and loss of biodiversity).

We need to make the fashion industry sustainable by finding a new economic model that is more resilient to global impacts. Because coronavirus badly impacts on on global apparel industry and the risk is getting bigger for exporter countries. Risks must be taken seriously by the industry. There is nothing more unsustainable than being late and poorly prepared for crises and, worst of all, not being prepared for the new context.

If you want new ideas or guidance for this change that you are needing, reserve an hour of sustainable fashion online coaching and I will help you introduce yourself in the new context.

References:

  1. https://www.nytimes.com/2020/03/31/fashion/coronavirus-bangladesh.html
  2. https://www.textiletoday.com.bd/topics/coronavirus-impact/
  3. https://cleanclothes.org/news/2020/live-blog-on-how-the-coronavirus-influences-workers-in-supply-chains
  4. https://economictimes.indiatimes.com/topic/Coronavirus-Impact-on-Textile-Industries
  5. https://www.ukft.org/coronavirus/
  6. https://www.thehindubusinessline.com/economy/coronavirus-pushes-textile-industry-into-a-corner/article31096885.ece
  7. https://www.forbes.com/sites/rebeccasuhrawardi/2020/03/30/collapse-of-bangladeshs-garment-industry-leaves-its-workers-more-vulnerable-than-ever-during–coronavirus/
  8. https://www.aljazeera.com/news/2020/04/coronavirus-pandemic-threatens-bangladesh-garment-industry-200401105602704.html
  9. https://cleanclothes.org/news/2020/live-blog-on-how-the-coronavirus-influences-workers-in-supply-chains
  10. http://unb.com.bd/category/Bangladesh/coronavirus-bgmea-recommends-closure-of-factories/48022

Author of this Article:
Md. Raisul Islam Rifat
Dept. of Textile Engineering
Daffodil International University, Dhaka
Email: ririfat750@gmail.com

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