Apparel industry facing factory closures
Sri Lanka’s apparel industry is facing tough times as the sector’s biggest players are operating at half the capacity and at the same time some of their factories are closing down operations while banking their hopes on the second half of this year.
Some of the bigger players speaking with the Business Times noted that they too were running at half capacity which is the case with all other businesses in the apparel sector as orders have dropped considerably. In this respect, the industry has dropped in orders from 20-25 per cent.
However, the industry continues to pay their staff full salary and continues with the COVID allowance as well. The industry is facing a crisis more so due to the fact that international buyers had opted to purchase more in 2022 under the notion that there would be more retail sales following the opening up of the economies post COVID-19.
However, with the current inflationary pressures on the economies in these markets the people are purchasing less and retailers have more than what they can sell; so orders have dropped considerably.
Sri Lanka’s total exports in apparel for February this year was worth US$397.76 million compared to $468.13 million last year, $419.69 million in 2021 and prior to COVID $441.53 million in 2019.
Exports have dropped in the last four months it was asserted and it has impacted on certain categories of the apparel industry like underwear. In fact, some plants are operating on a single shift, while some plants have completely shut down staff and have been offered a voluntary retirement scheme to ensure that they will either receive compensation or move to jobs in other plants.
Manufacturers Association Secretary Dhammika Fernando said that the apparel industry’s situation does not seem to be improving and so far there are no encouraging signs either.
He pointed out that globally the impact of retrenchment occurring in some global organisations like Amazon is also a sign of things to come.
With retail shopping reducing in Europe and the US the impact is severe in countries like Sri Lanka that export garments to these economies.
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