Financial Times

Dial Tex turns 25
Of jewellery, Singer products and a free meal
Katunayake – Female garment factory workers with experience can make a minimum Rs 10,000 intake home pay at factories in the Katunayake Free Trade Zone. But invariably they bust their money on clothes, jewellery or electronic items.

The town jeweller or the sales representatives from Singer are much looked forward to by the girls. “They go for ear rings or other forms of jewellery. The hire purchase schemes offered by Singer entice them to buy all kinds of stuff,” says Neil Umagiliya, Jt Managing Director of Dial Textile Industries Ltd who has had a vantage position of the zone and is probably one of its oldest employees around.

On Wednesday, Dial Tex, a German-funded garments factory, celebrated its 25th anniversary with a gala dinner for its 600-odd staff at a five-star hotel and provision of long-service certificates for 12 employees who joined the firm when it started in 1980.

“We have got lean and mean and now we want to get stronger,” says Umagiliya, an accountant working formerly for Union Carbide who was handpicked in 1981 to turn around the one-year old factory which was then facing a major crisis.

The factory’s parent company is Adolf Ahlers AG Germany’s biggest garment industry producer and retailer. In the late 1970s, the organization was looking for new production centres after factories started moving out of Europe. A visit to Sri Lanka by Jan Ahlers (son of the founder, Adolf) convinced him that this was a good location for a production facility for menswear.

The Katunayake zone was just starting and it was filled with coconut trees. Dial Tex is a pioneering garments industry for it was the only other garment factory in the zone at the time other than Smart Shirts which was later acquired by MAS Holdings.

The company produces jackets and jeans for labels like Pierre Cardin, etc and caters mainly to the European market. The end of the Multi Fibre Agreement earlier this year saw Dial Tex lose its share of jacket sales with production falling to 500 pieces a day against 1,500- 1,600 in the pre-MFA period. “We lost out to the Chinese and Vietnam,” he said.

Umagiliya said they sold their Kuliyapitiya factory set up under the 200 garment factories’ project of the late President Ranasinghe Premadasa to MAS Holdings last year.

At the peak of its operations, Dial Tex had 2,500 employees. Now it manages with 600 after a restructuring exercise based on higher productivity, mechanization, improved salaries & perks. “We are still short of staff (100-200) while I reckon the zone would be short by a couple of thousands,” Umagiliya said. There is a huge labour migration mostly in the FTZ’s due to lack of proper transportation and housing accommodation for women who mostly come from far away villages.

Except for the ports, airport and telecommunication, infrastructure hasn’t kept pace with economic development. The Dial Tex local chief, who says his German-based board of directors are extremely happy with progress at the Sri Lankan unit and hasn’t stepped into the factory for the past 20 years, believes his company created the standards for the garments industry in many areas including technology.

“We were setting standards – and others were following – in quality, productivity and the like,” said Umagiliya, who joined as chief of finance and went on to be joint managing director. Staff is given a free lunch. Dial Tex didn’t suffer too much from the end of the MFA as the company had prepared for this day. Umagiliya believes Sri Lankan companies can be more competitive in global markets if state costs like power, telecommunication or water costs are brought down drastically.

He says the company has a bright future but laments that the labour shortage is a problem. Young girls are also reluctant to join factories due to the “Juki” operator culture where women in the FTZs are unfortunately labelled as “Juki girls” and subject to snide remarks from outsiders. “These girls earn valuable foreign exchange and should be treated with respect. The same respect should be given to migrant workers,” he added.

Net foreign exchange earned by the company is Rs 6.5 billion over the past 25 years while capital expenditure has been Rs 600 million. Dial Tex has produced 9.5 million jackets 1.7 million jeans and 500,000 overcoats during this period.
One of the workers rose to be an Assistant Stores Manager from being a mere labourer while another Juki machine operator is now Assistant Technical Manager in charge of jacket production.

“This was a good investment. There’s no doubt about it,” says Adolf Schmidt, a consultant to the parent company and a retired technical director overseeing the Sri Lanka operation from Germany. Schmidt was in Sri Lanka for the anniversary celebration.

He said the Sri Lanka unit has done so well that the number of expatriates have dropped to just one from 25 at the beginning. “You have good workers here. They know the culture of the company.”

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