Bangladesh has become a global leader in garment exports and one of the main reasons attributing to this success story is the strong manufacturing base in Chittagong, situated south of the country. Chittagong is the second largest city in Bangladesh and its sea port, also called the lifeline of Bangladeshi economy, handles almost 90% of the country’s international trade. It also has some of the largest export processing zones (EPZ) where Desh Garments and Youngone Corporation, the pioneers of apparel manufacturing in Bangladesh, first setup their factories. However, despite its rich history, Dhaka has long surpassed Chittagong in its growth, becoming not only the main garmenting hub but also the hub of country’s industrialization. “Dhaka has taken, what Chittagong started…”, said some of the leading garment manufacturers of the region to Apparel Online, highlighting the current scenario of the second largest garment and textile hub of the country…
There are around 5000 apparel and textile manufacturing facilities in Bangladesh, out of which only 1000-1500 are situated in Chittagong while more than 70% have grown in and around Dhaka. “If we look at the geographical attributes of both the cities, Dhaka has spread out in all the directions, whereas Chittagong has expanded within the city itself… this is the reason why the apparel and textile industry is more prominent in Dhaka,” points out Nitin Arora, Director, KDS Garments & Textiles who has 4 factories in the region, with more than 3500 sewing machines and a turnover exceeding US $ 100 million. Chittagong still has a town like feel, whereas Dhaka has transformed itself into a ‘city’ being the hub for both the political and business minds.
[bleft] “Chittagong did start earlier an apparel manufacturing hub in the country, but somehow lost out to Dhaka in the longer run due to its advantages of being the capital of the country.” – Nitin Arora Director, KDS Garments & Textiles [/bleft]
Foreign investment
Chittagong made its mark in global apparel exports in the early 80’s, with Youngone Corporation setting up its first manufacturing facility with just 86 sewing machines, they are currently the world’s largest manufacturers of sportswear and footwear, and still have several factories in Chittagong. With the setting up of EPZs, Chittagong has been the first choice of many foreign investors. Regency, Kenpark, Youngone, MAS Intimates, Gokaldas Images and many more, either in the form of a joint venture or 100% foreign ownership, have setup their manufacturing units in the town.
When an international manufacturer looks at Bangladesh as their apparel manufacturing destination, they analyze and compare between Dhaka and Chittagong, the two favoured locations. Dhaka presents them with high real estate costs, high labour wages, scarcity of land, risky connectivity to Chittagong sea port and sensitive labour force. Whereas in Chittagong they have ample spare land (as in new upcoming areas like Kalughat), relatively lower labour wages, healthy labour situation, proximity to the port and a total of 3 EPZs in and around Chittagong. “The reason why foreigners prefer Chittagong is due to its stability. Historically, Chittagong has been more stable, despite Bangladesh being known for its political instability. If the port is close to the factory, the chances of instability affecting the shipment is also less, thus Chittagong makes a viable choice,” opines Mashruf Habib, Deputy Managing Director, Habib Group – one of the biggest apparel and textile conglomerates of Bangladesh with a group turnover of US $ 3000 million, 4400 sewing machines and 9 apparel manufacturing facilities. Catering to buyers like JCPenney, Walmart, VF Asia, M&S and Tommy Hilfiger, producing 2 million pieces per month the company is looking at hitting 3 million pieces per month by the end of 2013.
Sri Lanka based Univogue Garments is also among the first wave of foreign apparel manufacturers that chose Chittagong over Dhaka. “When we first came to the Chittagong EPZ in 1985, there were only two factories here and female workforce was in abundance but they were illiterate. We had to educate the labour to enable them to work in an apparel factory,” shares Jagath Priyantha, Director, Univogue Garments manufacturing outerwear and bottoms for the US market, with a setup of 1000+ machines. Univogue with a present turnover of US $ 40 million, is looking at setting up another facility with 600 sewing machines for increasing their capacities in the existing product range.
[bleft] Bangladesh ventured into apparel manufacturing with setting up of units in Chittagong, Youngone Corporation and Desh Garments being the first ones based out of the city which are among the biggest apparel and textile conglomerates in the country. [/bleft]
The poor state of the Dhaka-Chittagong highway is another reason that makes companies feel that it is risky to operate a volume business from Dhaka. “Chittagong has a port and we being volume manufacturers of outerwear, it would be a high risk for us to operate from Dhaka and even the transit cost will be exorbitant,” explains Jagath. Agreeing with the same, Mohiuddin Chowdhury, Director, Clifton Apparels adds, “Today I buy a lot of fabrics from Dhaka. One truck from Dhaka to Chittagong is supposed to cost anywhere between Tk 8,000 to Tk 10,000, but we are paying Tk. 16,000… and during certain times like Eid festival we have to pay as much as Tk 35,000, which adds to the production cost.” Clifton Group has been a pioneer in developing lingerie manufacturing capabilities in Bangladesh, and presently has a composite setup, manufacturing more than 68,000 dozens of lingerie, men’s innerwear, T-shirts and sleepwear per month. With 7 apparel manufacturing facilities, in-housing more than 3500 sewing machine, all based in and around Chittagong, the group is targeting a turnover of US $ 75 million for the current financial year.
[bleft] Chittagong has always been the choice of foreign investors, due to better management experience, lower labour wages, healthy labour situation and ample availability of land… Many would agree to the fact that manufacturing costs in Chittagong are at least 5-10% lower than that in Dhaka. [/bleft]
Labour situation and cost of manufacturing
With facilities both in Dhaka and Chittagong in-housing 1500 flat knitting machines, Shabbir Mostafa, Managing Director, Raozan Sweaters, opines in favour of Chittagong syaing, “Chittagong has been a better experience, both in terms of management and the workers. One of the major disadvantages of having a manufacturing setup in Dhaka is the presence of very strong labour unions, since majority of the industry is based in that region; they need to be handled sensitively. If a problem arises at one of the factories, the complete labour force of the region turns up and wants to burn the place down; a big example is Ashulia. This kind of thing has never happened in Chittagong as it has a healthy labour situation.” Some buyers place orders in Chittagong to avoid putting all the eggs in one basket vis-à-vis Dhaka.
[bleft] The main concern of Chittagong-based manufacturers is the absence of the buyers’ willingness to go an extra mile and give Chittagong an equal opportunity as compared with Dhaka; they should align their sourcing priorities with the advantages of the city, they opine. [/bleft]
Due to greater unionisation of labour in Dhaka sometimes they can command higher wages. Endorsing the fact, Shabbir adds, “In Chittagong we pay Tk 40,000 to 50,000 to a production manager, whereas in Dhaka one has to pay more than Tk 1,00,000.” This is also due to a higher cost of living in Dhaka, Mashruf points out, “If you go by the national minimum wages, they are same but what further defines the wage-expectation of the workforce is the cost of living, so the conditions in Chittagong gives us an advantage.” Because of this the overall cost of manufacturing burns a deeper hole in the pockets of Dhaka-based apparel manufactures, making Chittagong at least 5 to 10% cheaper than Dhaka.”
Yet, Dhaka is ahead of Chittagong in terms of the presence of all the auxiliary facilities available for value addition. The capabilities are at par with that of the world and can handle most types of prints, embroidery, dyeing and washing.
Post a Comment