Don't accept work orders below production cost: BGMEA

The leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) today urged the apparel makers not to take work order of any item below their production cost.

"Please do not negotiate the prices of apparel items below the production cost anymore as we are receiving adequate number of work orders but there is a fear of the return of a crisis in the supply chain," said Faruque Hassan, president of BGMEA.

The local garment makers have been receiving higher prices and work orders with the gradual reopening of the advanced economies, he said at a press conference at Amari Hotel in Dhaka.

But they are struggling to make any profit because of the rising cost of production, he said.

At the same time, the apparel manufacturers have been fearing the return of a crisis situation in the global apparel supply chain as the rate of Covid-19 infections has started spiking in different countries in the Europe, Hassan said.

The international retailers and brands have been paying higher prices because of a hike in raw material prices and freight charges, he said.

But the increased rates for work orders are still not enough for the garment makers to make any profit thanks to the exponential rise in raw material prices and freight charges, the BGMEA president said.

For instance, yarn price increased by 60 per cent, container freight charge by 350 per cent to 500 per cent, dye chemical by 40 per cent and electricity by 13 per cent in the last one year when gas also became costlier, Hassan said.

The overall cost of production increased which has been affecting the profitability, he said.

Many of the local suppliers received the work orders last year at below production price mainly to keep continuation of their business during the pandemic time even with losses, he said.

However, the time has turned around and it is a better time to make the business, the higher cost of production is affecting the business, the BGMEA chief also said.