Clothes are piling up in Bangladeshi warehouses as the West cuts imports | Popgen Tech

Clothes are piling up in warehouses in Bangladesh as consumers tighten their belts in the United States, Europe and other major markets, according to manufacturers and government officials.

Manufacturers said orders from the world’s biggest apparel exporter after China have been slowing since July due to the war in Ukraine and sanctions against Russia, and their impact on inflation, interest rates and mortgages around the world.

“Everything has become more expensive, so the clothing budget has been reduced,” Farooq Hasan, president of the Bangladesh Garment Manufacturers and Exporters Association, told the Financial Times. “That’s why some brands, some importers have slowed down their orders.”

Hassan said some retailers have asked Bangladeshi suppliers to stop making clothes or delay deliveries for up to three months.

“It has a big impact because all our factories. . . bought fabric to make clothes, and now they have a serious crisis.’

The fall in global demand for clothes comes as Bangladesh’s government of Sheikh Hasina Wazed, which faces elections next year, is grappling with rising imported gas prices that have led to power cuts that have hit some garment makers.

The opposition Bangladesh Nationalist Party has staged large rallies in recent weeks to capitalize on discontent over the weakening economy ahead of elections.

This month, Bangladesh turned to the IMF for help and received a $2.3 billion loan and another $1.3 billion from its Resilience and Sustainable Development Fund, designed to help poor countries deal with climate change and other long-term challenges .

Unlike its regional neighbors Sri Lanka and Pakistan, Bangladesh has not faced a full-blown liquidity crisis. But its foreign reserves have fallen this year amid a strengthening dollar and pressure on prices and consumer demand.

Apparel and textiles are by far the biggest industry in Bangladesh, which has benefited from a sharp rise in sales as the Covid-19 lockdown eased and consumers indulged in ‘rebound shopping’.

The South Asian nation exported $42.6 billion worth of apparel and $2.6 billion worth of textiles in the 12 months to the end of June, accounting for about 85 percent of total exports, according to the BGMEA exporters association.

Making clothes for Walmart, Primark, H&M, Target and other global chains is a cornerstone industry that has helped many of its more than 160 million people, mostly women, out of poverty.

According to Ranjan Mahtani, chief executive of Epic Group, which has a factory in Bangladesh and a large business in the US, apparel sales “really picked up after COVID-19 because there were so many stimulus checks,” but now they have fallen again, leading to ” huge” stock at retailers.

In the early months of the pandemic, garment manufacturers in Bangladesh were hit hard, with many sellers canceling orders. Some responded by turning to making masks and personal protective equipment as demand for these products quickly increased.

“In a country that looks chaotic from the outside, everyone was really focused,” says Vidya Amrit Khan, director of family-controlled Desh Garments, which supplies brands such as Calvin Klein and Tommy Hilfiger in the US and Crew Clothing in the UK.

“It’s because we had to survive.”

Hasan, president of BGMEA, said that during the latest slowdown, retailers did not immediately cancel orders. Instead, they asked for discounts or factored warehouse costs into what they paid manufacturers whose clothes they couldn’t sell right away.

He added that the industry has asked Bangladesh Bank, the country’s central bank, to require lenders to defer payments on supplier loans so factories can prioritize paying wages and utility bills.

The power outage caused additional problems for producers. “Energy is a problem and because of that, a very large part of the industry is going through terrible months,” said Syed Naved Hussain, chief executive of Beximco, one of Bangladesh’s biggest companies, whose clients include Target and Zara owner Inditex.

Hussain said he thinks the industry should “buy energy at the price it’s affordable”, even if that means the cost of clothing will jump.

With fierce competition and low margins, garment manufacturers in Bangladesh are particularly vulnerable to changes in global consumer tastes and demand.

As clothing retailers respond to pressure from buyers and shareholders to improve their sustainability practices, clothing manufacturers have invested in machinery and equipment aimed at reducing the use of water, energy and other resources.

“There’s an attack on fashion now,” said Hussain, whose company has installed solar panels, new denim washing machines and other equipment.

Tipu Munshi, Bangladesh’s commerce minister, confirmed the slowdown in clothing exports, but noted that people “will still have to wear clothes” even in economic times.

“Maybe you buy two out of four [garments], but you still have to buy,” he said. “And no one can beat our price.”