The textile and clothing industry is one of the worst affected sectors of the economy due to the deadly coronavirus responsible for COVID-19, one of the worst pandemics of our living memory, creating havoc across the world. The impact of the Covid-19 pandemic is nearly impossible to gauge when 90% of the world is under the un/declared lockdown.
Due to the labour intensive nature of the textile and clothing industry, tens of millions of workers have either lost their jobs or have not got any money because of no work during the lockdown. Their lives have been turned upside down in a matter of a couple of weeks. Small and medium businesses are in no way less affected due the total closure of their economic activities. We are facing the biggest and global humanitarian crisis in the modern history which would have far reaching impact on the way we live and conduct our business.
A survey coordinated by the Cotton Textiles Export Promotion Council – involving more than three hundred companies with turnover ranging from 50 – 500 crore and beyond – reveals that most companies had lack of clarity on the order position across the value chain. Order cancellations have been reported from Bangladesh, Europe, USA and China. The survey also revealed that most units had nearly exhausted their Working Capital limits and half the units had no cash by the end of April as reported across industry-sub-group & size.
The industry associations and EPCs have urged the government to contribute to the payment of wages and/or provide wage subsidy. They have also asked for expanding working capital limits and waiver of fixed electricity charges etc. They are advising their members to also look for new markets and new products like PPEs etc in the medical and protective textile segments. In fact, hundreds of units have already switched over to producing face-masks and other PPEs depending on their technical and financial resources.
The situation in major garment manufacturing countries like Bangladesh, Cambodia, Myanmar, Indonesia, Vietnam is equally grim with millions of workers in pain. Most garment units having zero cash flow and buyers are not upholding their contractual obligations by cancelling orders and withholding payments. According to some media reports, in Bangladesh alone, some $3 billion worth of contracts have been paused or scrapped and more than 1 million workers have been fired or furloughed.
The crisis created by COVID-19 Pandemic far exceeds anything we have faced before and the worst thing is that no one knows how long it will last!
Take care. Stay safe. Stay healthy…..