Financial Times

Garment factory closures points to unviable industry-report

By Dilshani Samaraweera

A report on the closure of three garment factories under the Jaqalanka Group, says that the garment industry is becoming “increasingly financially unviable” in Sri Lanka. Although the industry initially flourished on the basis of low cost labour, increasing domestic costs have now made the industry unviable.

The ‘Jaqalanka Closure Report’ was commissioned by the Fair Labour Association, an international NGO trying to end sweatshop labour, in May this year, to find out the causes for the closure of 3 factories of the Jaqalanka Group. The fact finding was conducted by T- Group Solutions of New Delhi, with assistance from CSR International of Colombo.

Although many reasons are identified as causes specifically for the Jaqalanka factories having to shut down, the report indicates that garment factories are becoming uncompetitive and unviable, in general. This is mainly due to increasing labour and other costs.

Increasing labour costs are linked to shortages of skilled labour. The report says there is an acute shortage of garment industry related skilled labour in Sri Lanka, especially in the Katunayake Export Processing Zone. This shortage has added to financial unsustainability of garment factories by putting up wages and by forcing factories to provide extra benefits to retain workers.

Other reasons, cited by the report, for the closure of the Jaqalanka factories, include increasing costs of raw materials, fuel, electricity and transportation, in the country. However, although manufacturing costs increased, the report notes that garment buyers actually ‘tightened’ prices.

The report said there was no evidence to suggest that demands or pressures emanating from the trade union contributed in any way to the closure of the Jaqalanka facilities. This was confirmed by the owner of Jaqalanka, it said..

According to industry estimates Sri Lanka’s garment sector has by now shrunk to about 300 factories from about 800 factories at one time.

Top to the page  |  E-mail  |  views[1]
Other Financial Times Articles
LMSL-land clearly belonged to SLPA
Sampath says capital adequacy enough
EU probe begins on Lanka’s GSP+
JKH share falls on rumours, foreign selling
Best times still ahead for investors in capital markets
Crude oil hits lowest in two years
Hard times for coir workers
Garment crisis, JKH on the hop
Revival: “We can do it”- Meegoda
Global crisis will take a minimum of 12 to 15 months to stabilise
PBJ affidavit to be accepted once all letters are filed-Court
Adverse comments against judiciary may be to stifle its independence
Cargills using Jayasuriya to woo public support for its products
Brandix takes Gold at National Cleaner Production Awards
Domestic workers in local households push for rights
Regional business leaders to meet at BPA AGM
Chairman and CEO must be two separate posts
Sri Lankan psychologists come together to form asssociation
Commercial Bank in world’s top 1000 banks
BOI promoting regional development
Sri Lanka takes historic step in evidence through video conferencing
Seylan Merchant Leasing’s deposit base tops Rs 1.5 billion
Lower consumption of lubricants-Chevron Lanka
Voice-based phone directory from Suntel
Colombo, Gampaha and Kalutara most competitive Sri Lankan cities
58% of low grown teas unsold at auctions this week
HSBC unveils world’s longest golf cart
Garment factory closures points to unviable industry-report
Arab airlines urged to focus on efficiency
Abdul Rahims – 136 years of trading
Dave Ulrich’s ‘Future Proof Your HR’ draws crowds to Water’s Edge
Sparks fly at SPAACS launch
Harry J-controlled parties restricted to 10% on ComBank voting
Veteran insurance consultant urges Code of Conduct for insurance
Onus on defendant to begin case under Debt Recovery laws
Renton to spearhead World Bank tourism project
Lankan banker wins ‘Woman of the Year in Finance’
Minimum wage for workers under consideration – outgoing EFC Chairman
Financial scandals : Who takes responsibility?
ADB, Sri Lanka agree on partnership strategy
JKH: Treatment of LMSL Land
Sri Lankan Actuaries form professional body
US$150 mln rescue package to tackle loss of GSP+ benefit
Interest rates to come down
Security experts stress importance of private security agencies


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2008 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution