Development of Apparel Industry in Bangladesh

Garment Industry Large-scale production of readymade garments (RMG) in organised factories is a relatively new phenomenon in Bangladesh. Until early sixties, individual tailors made garments as per specifications provided by individual customers who supplied the fabrics. The domestic market for readymade garment, excepting children wears and men's knit underwear (genji) was virtually non-existent in Bangladesh until the sixties. Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although, the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female. With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded. In addition, demand for services like transportation, banking, shipping and insurance has increased. All these have created additional employment. The total indirect employment created by the RMG industry in Bangladesh is estimated to be some 200,000 workers. In addition to its economic contribution, the expansion of the RMG industry has caused noticeable social changes by bringing more than 1.12 million women into labour force. The economic empowerment of these working girls/women has changed their status in the family. The attractive opportunity of employment has changed the traditional patriarchal hegemony of the fathers, brothers and husbands. Most working women/girls can now chose when to get married or become mothers. The number of early MARRIAGEs is decreasing; so is the birth rate; and the working girls tend to send their little bothers and sisters to school, as a result, the literacy rate is increasing. They can participate in family decision-making. Most importantly, the growth of RMG sector produced a group of entrepreneurs who have created a strong private sector. Of these entrepreneurs, a sizeable number is female. A woman entrepreneur established one of the oldest export-oriented garment factories, the Baishakhi Garment in 1977. Many women hold top executive positions in RMG industry. The RMG industry is highly dependent on imported raw materials and accessories because Bangladesh does not have enough capacity to produce export quality fabrics and accessories. About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export. The industry is based primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-contractors of foreign buyers. It has grown by responding to orders placed by foreign buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the fabrics and accessories or recommended the sources of supply from which Bangladeshi sub-contractors were required to import the fabrics. However, situation has improved. At present, there are many large firms, which do their own sourcing. The hundred percent export-oriented RMG industry experienced phenomenal growth during the last 15 or so years. In 1978, there were only 9 export-oriented garment manufacturing units, which generated export earnings of hardly one million dollar. Some of these units were very small and produced garments for both domestic and export markets. Four such small and old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments. Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named Reaz

Store in DHAKA. It served only domestic markets for about 15 years. In 1973 it changed its name to M/s Reaz Garments Ltd. and expanded its operations into export market by selling 10,000 pieces of men's shirts worth French Franc 13 million to a Paris-based firm in 1978. It was the first direct exporter of garments from Bangladesh. Desh Garments Ltd, the first nonequity joint-venture in the garment industry was established in 1979. Desh had technical and marketing collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent export-oriented company. It had about 120 operators including 3 women trained in South Korea, and with these trained workers it started its production in early 1980. Another South Korean Firm, Youngones Corporation formed the first equity joint-venture garment factory with a Bangladeshi firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of thee new firm, named Youngones Bangladesh. It exported its first consignment of padded and non-padded jackets to Sweden in December 1980. Within a short period, Bangladeshi entrepreneurs got familiar with the world apparel markets and marketing. They acquired the expertise of mobilising resources to export-oriented RMG industries. Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source, foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks provided part of the equity capital. The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which also facilitated import of quality fabric, the basic raw material of the industry. The government assigned high priority to the development of RMG industry. Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough occurred in 1984-85, when the number of garment factories increased to 587. The number of RMG factories shot up to around 2,900 in 1999. Bangladesh is now one of the 12 largest apparel exporters of the world, the sixth largest supplier in the US market and the fifth largest supplier of T-shirts in the EU market. The industry has grown during the 1990s roughly at the rate of 22%. In the past, until 1980, JUTE and jute goods topped the list of merchandises exported from Bangladesh and contributed more than 50% of the total export earnings. By late 1980s, RMG exports replaced jute and jute goods and became the number one in terms of exports. In 1983-84, RMG exports earned only $0.9 billion, which was 3.89% of the total export earnings of Bangladesh. In 1998-99, the export earnings of the RMG sector were $5.51 billion, which was 75.67% of the total export earnings of the country. The net foreign exchange earnings were, however, only about 30% of the figures quoted above because approximately 70% of foreign exchanges earned were spent in importing the raw materials and accessories to produce the garments exported. Both external and internal factors contributed to the phenomenal growth of RMG sector. One external factor was the application of the GATT-approved Multifibre Arrangement (MFA) which accelerated international relocation of garment production. Under MFA, large importers of RMG like USA and Canada imposed quota restrictions, which limited export of apparels from countries like Hong Kong, South Korea, Singapore, Taiwan, Thailand, Malaysia, Indonesia, Sri Lanka and India to USA and Canada. On the other hand, application of MFA worked as a blessing for Bangladesh. As a least developed country, Bangladesh received preferential treatment from the USA and European Union (EU). Initially Bangladesh was granted quota-free status. To maintain competitive edge in the world markets, the traditionally large suppliers/producers of apparels followed a strategy of relocating RMG factories in countries, which were free from quota restrictions and at the same time had

enough trainable cheap labour. They found Bangladesh as a promising country. So RMG industry grew in Bangladesh. By 1985, Bangladesh emerged as a strong apparel supplier and became a powerful competitor for traditional suppliers in the US, Canadian and European markets. Since 1986, Bangladesh has been increasingly subjected to quota restrictions by USA and Canada. RMG industry suffered setback in a number of countries in the 1980s. Some countries had internal problems, for example, Sri Lanka; and some other countries of Southeast Asia experienced rapid increase in labour cost. Buyers looked for alternative sources. Bangladesh was an ideal one as it had both cheap labour and large export quotas. The EU continued to grant Bangladesh quota-free status and GSP privileges. In addition, USA and Canada allocated substantially large quotas to Bangladesh. These privileges guaranteed Bangladesh assured markets for its garments in USA, Canada and EU. The domestic factor that contributed to the growth of RMG industry was the comparative advantage Bangladesh enjoyed in garment production because of low labour cost and availability of almost unlimited number of trainable cheap labour. The domestic policies of the government contributed to the rapid growth of this sector. The government provided various kinds of incentives such as duty-free import of fabrics under back-to-back L/C, bonded warehouse facilities, concessionary rates of interest, cash export incentive, EXPORT PROCESSING ZONE facilities, etc. The government also took a number of pragmatic steps to streamline export-import formalities. There are several weaknesses of the RMG industry of Bangladesh. Labour productivity in the RMG sector of Bangladesh is lower than many of its competitors. Bangladeshi workers are not as efficient as those of Hong Kong, South Korea and some other countries and in most factories, technologies used are not the latest. In addition to the fact that the industry is vulnerable because it is highly dependent on the imported raw materials, the infrastructure in the country is deplorably underdeveloped. Problems in power supply, transportation and communication create serious bottlenecks. Inadequate port facilities result in frequent port congestion, which delays shipment. All these increase the lead-time to process an order, i.e. the time from the date of receiving an order to the date of shipment. The application of MFA had negative impact on many garments exporting countries. The countries, which were adversely affected by quotas under MFA, created pressure to discontinue MFA by integrating textile and clothing industries into GATT system. As a result, the Uruguay Round negotiations envisaged the phasing out of MFA by the end of 2004. With the phasing out of MFA, the position of Bangladesh in the world market will change as all countries including those under quota restrictions, will enjoy quota free status. Bangladesh will have to compete with a larger number of established and powerful suppliers of readymade garments. Bangladesh has taken some steps to face the new challenges. Such steps include removing infrastuctural bottlenecks, building additional supply capacity, use of cost reduction strategy, and increase in value-addition through backward integration. For RMG sector, the backward linkages are weaving the fabric, spinning the yarn, and dyeing, printing and finishing operations. These operations can be combined into one composite mill or they can be established as separate units. Currently, Bangladeshi apparel exporters import fabrics at international prices using back-to-back letter of credit. While procuring through back-to-back L/C, the importers (Bangladeshi exporters of apparels) pay high interest and other charges, commissions, fees for the services of the middlemen

involved. The establishment of composite mills or individual units of weaving, spinning and processing will reduce lead time and increase value addition and employment, in addition to improving the cost advantages. In the Fifth Five-Year Plan (1997-2002), the government of Bangladesh envisages the attainment of self-sufficiency in yarn production by establishing new spinning capacities. The production capacity of this sector increased substantially though not as much as was required. There are 1,126 weaving and spinning mills including 142 ring spinning mills and 15 openend spinning units in Bangladesh. These units produce mostly for the domestic markets. Of the total production of fabric, only 25% are supplied by the modern mills, the rest of the domestically produced fabrics are supplied by the specialised units, power looms and handloom sub-sectors. The RMG industry uses a small quantity of fabric woven in the handloom sub-sector. The domestic capacity meets less than 8% of the demand for woven fabrics of the export-oriented RMG industry. The domestic production can meet about 40% of the demand for export quality knit fabrics. The current requirement of yarn for both domestic and export-oriented RMG industry is about 590 million kg and this will increase to about 818 million kg by the year 2005. The current requirement for fabrics is 4,400 million meters and by 2005 it will increase to 6,000 million metres. It is estimated that by 2005 Bangladesh will need 156 spinning mills each with 25,000 spindles, 371 weaving mills each with 125 looms, and 371 dyeing and finishing units each with capacity of processing 10 million meters of fabrics per annum. The government of Bangladesh has specified some goals in the latest national development plan for backward linkage industries. To achieve the goals set in the Fifth Five-Year Plan, Bangladesh offers attractive incentives to attract both local and foreign direct investment in RMG sector. The Export Promotion Bureau, in collaboration with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), undertakes various activities to promote Bangladeshi garments in foreign markets. They also organise annual Exhibition in Dhaka in which hundreds of foreign buyers participate. Bangladesh exports a very limited categories of products. The factories in Bangladesh produce shirts, jackets, trousers, and other garments, with high concentration (about 60% of the total apparel exports) in the export of shirts of low price. Bangladesh is the largest exporter of men's and boys' cotton shirts in the US market. In this market, it competes with India, Sri Lanka, Mexico and other Central American countries in the lower price segment. The average price of Bangladesh-made shirts was $62.74 per dozen in 1998. This price was the second lowest. The Dominican Republic sold the lowest priced shirts of the same category at $54.79 per dozen. Prices of Indian, Mexican and Sri Lankan shirts were $81.04, $76.26 and $74.77 respectively. Against this, the prices of Hong Kong and Malaysia shirts were $107.34 and $134.08 respectively. Exporters from Bangladesh produce mostly those items on which quotas are available. However, there are a few exceptions. Some South Korean firms operating from Export Processing Zones of Dhaka and CHITTAGONG export padded jacket and trousers of higher value. Many firms now export some non-quota items as well. The share of such items in the total quantity, however, is very small. Recently, export of knitwear and sweaters has increased faster than that of woven wears. These indicate that Bangladesh is actively engaged in the process of product diversification. Although Bangladesh exports garments to some 30 countries, its exports are highly concentrated in two major markets, the USA and EU. The USA as the largest importer

country imported 43.24% of total garments exported from Bangladesh in 1998-99. Bangladesh was the sixth largest supplier of apparels in the US markets in the same year. However, if European Union is considered as a single market, the US market becomes the second largest. Bangladesh exported 52.38% of its apparel exports to the EU in 1998-99. The EU is the single most important destination of knitwear export from Bangladesh. Of the individual members of the EU, Germany is the largest importer of both woven RMG (15.6%) and knitwears (14.8%) from Bangladesh and it is followed by the UK and France. The EU as a bloc has been importing from Bangladesh an increasing quantity of apparels. In the last five years Bangladesh's exports to the EU have grown by 174%. The main reason for this phenomenal growth is the almost duty free (due to GSP privileges) and quota-free access to this market. Other export markets are small. Japan and ASEAN countries are potentially large markets. Bangladesh has not yet been able to export sizeable quantity of apparels to Japan, although it imports about 90% of the machinery from Japan to run the apparel industry. Similarly, Bangladesh has not been able to have market access to ASEAN, or Indian markets although it imports a huge quantity of fabrics and yarn from these countries. The main reasons for this are the tariff and non-tariff barriers Bangladesh faces in these markets. Recently, Bangladesh has started exporting to India, South Korea and other new markets. As a member of South Asian Association of Regional Cooperation (SAARC), Bangladesh has undertaken an elaborate programme to increase apparel exports to India and other member countries of SAARC. Bangladesh responded positively to the international requirement of elimination of child labour from the garments sector. Under the Memorandum of Understanding jointly signed by BGMEA, ILO, UNICEF and US Embassy, Dhaka on 4 July 1994, Bangladesh pledged to eliminate child labour by November 1996. Accordingly, it took necessary measures to do so. The laid-off children were provided financial support so that they could attend schools until they attain the age of 15. BGMEA and some NGOs jointly operate a number of schools for these children. The factory owners are required to abide by the laws that regulate minimum wages, working conditions, eco-labeling, etc of the garment factory workers. The workers are allowed to form and/or join trade unions. There are many active trade unions with CBAs in the garment industry. But factories located in the Export Processing Zones do not have trade unions. However, the workers of those factories receive higher remuneration and better benefit packages. To meet the international standard, the industry with the help of BGMEA makes sure that the factories do not use any dyes including Azu dye that are hazardous to health. Bangladesh recognises the fact that its economic security depends on the future of its RMG industry. Therefore, it has undertaken an elaborate programme to meet the challenges it is likely to face in the post-MFA world market.

Post MFA scenario of Bangladesh apparel sector

Apparel is a labour-intensive sector that provides an access for labour abundant developing countries to global market. Though forty years ago, industrialised countries dominated worldwide exports, today developing countries produce more than half of the global exported RMG. Apparel industry in Bangladesh has been expanding and contributing to national development significantly. It comprises of about 16% of GDP (FY 2010-11), providing employment to 10.72% of national labour force, in which 6.83% are directly employed (BBS & BGMEA).

Though it started its venture in the late 1970s, it evolved into the main exporting industry of Bangladesh by the late 1980s. Nearly 79% of the total exports of the country comprised of RMG products in FY 2010 11(EPB). The country's foreign exchange reserve depends largely on RMG export earnings. The central bank's foreign exchange reserve has fallen to an average of $9,460.05 million (lower than the $10,000 million required to pay for at least three months' import expenditure) because of a slowdown in apparel export during November to December 2011(BB). The rise of the apparel industry in Bangladesh was mainly due to MFA (an international trade agreement on textile and clothing that imposed quotas on the amount that developing countries could export in the form of yarn, fabric and clothing to developed countries) quotas, which came into force between 1974 and 2004. Based on the decisions in the Uruguay Round negotiations in the 1990s, it was declared that MFA would be phased out by December31, 2004. The declaration caused panic in the countries that were beneficiaries from the quota system, and vice versa. Researchers and apparel experts have conducted many research studies, most of which were more or less consistent regarding anticipated adverse effect of MFA phase out on developing countries' RMG sector. The fear was that Bangladesh would suffer job losses, plant closures and export revenue losses during post MFA era (ILO). Using a global general equilibrium modeling system and database (GTAP model), Mlachila and Yang (2004) showed that Bangladesh's export of RMG could fall by 20%, resulting in a contraction of employment by 5-13%. This is the time (after 7 years of MFA elimination) to assess the consistency of researchers' projections regarding Bangladesh apparel. A research study conducted by Institute of Apparel Research & Technology (iART), found that after the MFA era (i.e. 2005 to 2011), RMG export, employment and number of factories had changed significantly and positively.During the MFA period (from 1981 to 2004), the average export value from Bangladesh was about $4.54 billion, with 1.43 million workers in 2,812 factories. But in the post MFA era, export value has gone up by 176.5%. Likewise employment and number of factories have increased by 118.38% and 70.75%, respectively. The average apparel export reached to about $12.56 billion, and the number of workers increased to 3.12 million and 4,802, respectively. In the post-MFA era, both productivity and factory performance rose notably. Though instability in apparel sector of Bangladesh is common, the sector is currently more stable. This astonishing performance can be attributed to a number of factors, of which production technique is considered as most important. During the MFA era, traditional manufacturing system was followed in apparel factories. It was a simple method, where production decision was made based on entrepreneurs' experience or learning by doing process. After that period, global competition increased. In order to cope with the increased competition, entrepreneurs introduced "Lean Manufacturing System." The implementation of the new system brought tremendous success in the apparel sector. To measure the success, some Key Performance Indicators (KPI), e.g. Line Balancing (LB), Work in Process Inventory (WIP), Labour Productivity (LP), Alter, Reject and Spot were fixed to evaluate the outcome of the new system. It is found that LB

and LP rose by about 11% and 24.5% respectively. Along with LB and LP, the WIP, Alter, Reject and Spot reduced by about 85.4%, 10.67%, 33.34% and 75% respectively. Moreover, to ensure sustainability in the market, maintain previous profit margin and repeat business, internal shocks should be neutralised or minimised. Realising this fact, political parties and garments owners are now more aware. There have been few political strikes recently. Garment owners revised basic wages of workers and provided other facilities to them. The government has formed Industrial Police Force to maintain security and stability in the industrial zones. In addition, the government has set up new captive power plants and encourages private entrepreneurs to invest more in power sector to reduce the frequent power-cut problem. These initiatives resulted in reduced instability in the sector. The surprising and overwhelming performance of the apparel sector can be attributed to adoption of Lean Manufacturing Technique, formation of Industrial Police Force, political stability, setting-up of captive power plants and getting GSP facilities after elimination of quota facilities.
Garments Industry Outlook The garment industry has been acting as the backbone of the countrys economy as it earns about 80% of the total export revenue. The export value of the readymade garments grew three folds in just ten years and expected to touch 22 billion USD this fiscal year. In the fiscal year 2010-2011 countrys apparel export was 17.9 billion USD. Over the next three years, it can establish itself as the second biggest sourcing destination for overseas buyers, next to China, according to experts. The main factors acting behind this robust growth are the cheap labour cost, cheap resources compared to the competitive countries, falling attractiveness of China as a garment maker and supporting measures taken by the Bangladesh government. The preferential advantage to export in the EU is also helping the industry. The EU and the USA has been the main exporting destination accounting more than 50% of the total export. Total value of RMG exports to European countries rose to $10.5 billion in 2010-11 from $7.1 billion in 2009-10. RMG exports to the USA reached $4.6 billion in FY 2010-11, about 27 percent growth over the total RMG exports worth $3.6 billion in FY 2009-10. Germany alone has become a rising market for Bangladeshs readymade garments (RMG) in recent years, next to the largest market in USA show more than US$3.1 billion apparel exports to the largest economy of Europe last fiscal year, a sharp rise with 56 percent growth over $2 billion exports a year earlier (FY 2009-10). Market share is also growing in the new emerging markets. The chart shows the value of the total exports in last fiscal (2010-2011) countrywide. All values are in million USD. UK Turkey 518 1700 Japan France Australia India 247 1400 192 36 Canada Mexico Chile 894 81 12 China Russia 52 51 Korean South Brazil Republic Africa 47 48 94

Bangladeshs export target for FY 2011-12 is $26.5 billion. The market is forecasted to be developed at an annual rate of 7 to 9 percent resulting in ten years time to an export value of approximately US D 36 to 42 billion, thus the market will double by 2016 and nearly triple by 2020. Self-sufficiency in Garments Accessories Bangladesh is no longer dependent on other countries for its readymade garment (RMG) accessories like buttons, zippers, hooks, elastic bands, etc. as these are now being produced in sufficient quantities in the country. It was completely import dependent in the past years but now it has the capacity to meet local demand Mr. Safiullah Chowdhury, Chief Advisor to

Bangladesh Corrugated Carton & Accessories Manufacturers and Exporters Association (BCCAMEA), said, Almost 96-97 percent garment accessories are now manufactured locally, and this is supporting the RMG industry of our country. Several international buying houses like JC Penny, H&M, Wal-Mart, Pierre Cardin, etc. are nominating the local accessories manufacturers for their products. So, it can be said that Bangladesh has become self sufficient in production of RMG accessories. Bangladesh Corrugated Carton & Accessories Manufacturers and Exporters Association (BCCAMEA), has now 1000 members who represent a US$ 2 billion industry. About 80 percent of our turnover is related to the garment industry. The RMG accessories sector contributes about 12-15 percent to the countrys garment sector and has a target of about US$ 12 billion by 2018 for RMG accessories sector.

Important issues related to the Bangladesh ready-made garment industry: Years 1977-1980 1982-1985 1985 1990s 1993-1995 2003 2005 2007 Issues Early period of growth Boom days Imposition of quota restrictions Knitwear sector developed significantly Child labour issue and its solution Withdrawal of Canadian quota restriction Phase-out of export-quota system Post MFA & new market

How Can an Apparel Industry Develop as a Group Of Industries

If any company wants to establish as a group of industries then firstly they have deal with many buyers. On that time if they can able to satisfy buyer, buyer will give them much order. Most of buyers require that manufacturing company follow the rules of ISO, WRAP and social compliance. They also comfort to give order to these companies which companies follow the social compliance and rules and regulations of them. When buyer gives much order to manufacturing company, they calculate their capacity. If company feels that they need to set up another factory to handle much quantity orders of the buyer. Then they establish another factory and shipment quality product to the buyer. Buyer orders much quantity season to season and company set up factory one by one and establish as a group of industries. All the employees have to work together and leadership also has to be good. Otherwise group of industries cannot be successful.

Global Manufacturing
Globalization today means that economic activity is not only international in scope but also global in organization. The garment sector is emblematic of the global manufacturing system: production is dispersed geographically to an unprecedented number of locations across and within countries. From a developed country perspective, this system of production is associated with outsourcing: as much production is shifted offshore from developed to developing countries. From a developing country perspective, this system of production is associated with resourcing: as production also shifts within and between developing countries. One notable shift has been to China, which has become the worlds factory in many sectors, including garments. Another major shift, to meet just-in-time delivery orders especially for the highend fashion industry, has been to the periphery of Europe (Albania, Morocco, Turkey) and the USA (Mexico and Central America). The global manufacturing system is also distinguished by the fact that global production and trade are controlled by relatively few core corporations: both transnational manufacturing companies and, especially in the garment sector, foreign buyers (large retailers and branded merchandisers). Global manufacturing today has been promoted by industrial and commercial firms alike, which have established two distinct types of international economic networks that have been called producer-driven and buyer-driven global commodity chains, respectively.

Producer-driven commodity chains are those in which large, usually transnational manufacturers play the central roles in coordinating production networks. This is characteristic of capital and technology-intensive industries such as automobiles, aircraft, computers, semiconductors, and heavy machinery. Buyer-driven commodity chains refer to those industries in which large retailers, marketers, and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically

located in the developing world. This pattern of trade-led industrialization has become common in labour-intensive, consumer goods industries such as garments, footwear, toys, handicrafts, and consumer electronics. Tiered networks of contractors that make finished goods for foreign buyers. Large retailers or marketers that order the goods supply the specifications. The buyer-driven system of production in the garment sector is fuelled in large part by new information technologies that make it possible for transnational manufacturing companies to send designs and other production specifications around the world with just a click. New technologies make it possible for retailers and branded merchandisers to track their inventories using bar codes, and use email and computer graphics to place orders for the precise type and volume of goods required. This has led to just-in-time delivery requirements. There have also been fundamental changes in the structure of the retail industry: notably, the rise of massive chains including the giant discounters (low price, high volume) such as Walmart. With their increased size and power, and having streamlined their operations to minimize their inventory, the big retailers can place even greater demands on manufacturers to lower costs and to produce and ship goods quickly. In sum, the garments sector is not just prototypical of global manufacturing but in particular of buyer-driven global production chains. The relative ease of setting up apparel firms, coupled with the prevalence of developed country protectionism in this sector, has led to the unparalleled worldwide dispersal of production and exporting in this sector. In the majority of cases, start-up success or failure is all about knowing the both the how and the why of taking action, and always being clear about which steps to take next. To help this process, here are 10 essential things you need to know about running a successful business. Use it as a checklist to make sure your thinking and your business plan are on the right track, or if you need to get more information, strategic education or clarity for yourself on your overall vision, your market, or your product or service. 1. Offer what people want to buy, not just what you want to sell. Too often, people jump into a business built around a product or service they think will be successful, rather than one that is already proven to have a market.

2. Get cash flowing. Cash flow is the lifeblood of business, and is absolutely essential to feed bottom-line profits. So you need to find ways to jump start cash flow immediately. How do you do that? In a professional services business, you can ask for deposits on work up-front, with balances due on delivery. You can do the same in retail, especially on high-ticket or specialty item and position it as an added value and a way to insure delivery by a specific date. You can also add value to generic items by creating private labels, and develop continuity programs where customers pay an up-front monthly fee to insure delivery or availability of items they will buy on a repeat basis. Of course, the key is to make sure there is little or no gap between when you pay for labor, stock inventory and

when you actually get paid. Ideally, you'll find ways to get money up front, and your cash gap will never be an issue. 3. Always find new ways to keep costs low. All the cash flow in the world is worthless if it's not positive cash flow, which means you have to bring in more cash than you pay out. To do this, you need to keep your costs and expenses low. We've touched on this before, especially in terms of outfitting a startup. The main idea is to never pay retail , and look for used or gently used items to furnish your office or your retail space. Paying vendors up front also gives you leverage for negotiating better prices. Especially in this economic environment, where credit is at a premium, vendors are more willing than ever to find creative ways to finance transactions, and that is a trend will likely continue over time. So do some extra work and research now to discover how owners and vendors are finding ways to work out deals, and you just may hit on whole new ways of doing business. 4. When planning, always overestimate expenses and underestimate revenues. I was trained as an accountant, so the numbers side of business is part of my entrepreneurial DNA, and was also a big part of my early business education. That said, I've never seen a startup business where expenses were at least 30 percent more than initially planned or anticipated, and revenues are at least that much less. Being conservative in your numbers doesn't mean you are willing to accept those numbers, it just means you are arming yourself with information you can work with and work over. It means you can gauge the kinds of efforts and activities you will need to put into sales and marketing. 5. Focus on sales and marketing manically. In business, nothing happens until a sale is made. From the jump, you'll need to find a good way to get leads, convert leads into sales, and make sure you keep getting repeat sales from your customers. The way to do this is to find or create a marketing and sales funnel system that you can work, test, measure; one that anyone in your company can utilize. Too many entrepreneurs focus on getting their brand right before they start to generate leads. That is exactly the wrong way to go about business. Leads are always more important than your brand, so don't waste money getting your brand right at the expense of spending that same money to buy new customers. Soon, you'll discover you can build your brand from the ground up, versus spending years and hundreds of thousands of dollars building it from the top down. Don't presume you'll even survive that long, because without leads, you won't! 6. Find ways to exponentially increase profits. In business, there are five drivers that impact profits. If you can master them while keeping your costs in check, you will run a successful business. It's as simple as getting more leads, converting more leads into customers, increasing

the number of times those customers buy from you, increasing the average price point of your sales and increasing your profit margins. Do any one of those, while also keeping costs down, you will see more profits. Do all of them and you will see your business really take off. 7. Test and measure everything. You can't change what you don't measure, and you can't tell if a program or strategy is working if you are not faithfully testing, measuring and tracking your results. Another way to look at this is to think in terms of doctors. Most like to get baseline stats of your heart rate, blood pressure and breathing before they delve into identifying symptoms or recommending corrective courses of action. The same is true in your business. Why keep literally throwing money away on an ad campaign that costs thousands of dollars but doesn't bring any people through the door? 8. Accept that learning more equals earning more. If you've never run a million dollar business, you don't know how to start a business--simple as that. But you can learn to run one, even if it is your million dollar business you are building from the ground up. However, you need to accept right now that learning always comes before "earning" (except in the dictionary). You'll need to be committed to learning as much as you can about sales and marketing and operations if you want to have a truly success business. Once you do that, however, the sky is the limit. Knowing and applying those simple fundamentals in a highly leveraged way is one of the reasons many top executives and entrepreneurs earn so much. Identify those areas and you then can decide to learn it yourself or hire an expert and learn as much as you can from that person--because you never know when you can run across a distinction in thinking or a strategy that can really take you and your business to a new level of success. 9. Don't discount, add value. Whenever you discount, you are taking money directly out of your pocket and directly from your bottom-line profit. So don't do it. Instead, create added value propositions all the way up and down your product or service line. Whatever the industry is, look to hold your price points, increase your margins with the low-cost or no-cost extras and any kind of freemium offerings. In the end, those little things won't cost you a lot, but will build up tremendous goodwill and word-of-mouth with your customers and customer base. 10. Get a coach. Even if you don't get a business coach at first to help you and guide you in your planning and operation, get someone who is objective and outside of your business you can rely on for nitty gritty business advice and to hold you accountable to getting results.

Too often, we think we have all the answers and are the only people who can really get things done. The reality is that another set of eyes can work wonders for how you operate both on and in your business. An outsider can also make sure you are getting the numbers you need both on the top line and the bottom line to survive. I hope this initial checklist will be valuable in helping you clarify your thinking and helping you prioritize some activities in your planning and start up mode. I like to say there are no mysteries in business or in life, there's just information you don't know yet. So prepare as well as you can, knowing you will need to make changes and corrections. But armed with the right strategies up front, you can cut the time it will take you successfully get to your ultimate destination--wherever it is that may be for you and your business.

Some ways to run a business successfully

Plan for success. Analyze every area of your business, from service or product development through to after-sales care. Document precisely how you propose to make your money, what it will cost you to produce and deliver the product or service and how much profit you expect to achieve. Produce operational plans and financial forecasts. Put together a formal business plan. This should include a statement of your business objectives, a brief history if you are already trading, a description of your product or service, the names, roles and credentials of your management team, a market analysis and details of your resource and finance needs. Also include sales and profit projections, a cash-flow forecast and a projected balance sheet. Control your finances. Set budgets and monitor performance against plan. Keep tight reins on expenditure and reconcile your bank account on a weekly or even daily basis. Optimize your cash flow. Pay bills on time, but pay early only when doing so obtains you discounts. Chase any late payments from your customer with timely reminder letters and, if necessary, follow-up telephone calls. Implement a procedure for handling delinquent accounts, making sure you conform to prevailing legislation. Bank all income straight away. Monitor sales revenues and margins. If sales or margins fall short of expectations, take remedial action and review your profit forecasts. Regularly reassess your break-even point and determine the impact of falling sales or reduced prices. Beware of chasing business by engaging in price wars, because large volumes of low-margin business can have a devastating effect on your bottom line. Evaluate your market. Keep up to date with changes in your market sector and assess how these impact your business. Watch your competitors and monitor developments in products and technology. Be ready to adapt to market changes. Manage and motivate your employees. If you own a small business, avoid becoming "best buddies" with members of your team. Retain -- and get the best out of -- your staff by providing realistic remuneration packages, appropriate training and development opportunities, and a safe and comfortable environment.

Comply with all relevant legislation governing your premises, employees, financial reporting and contracts. Keep up with emerging legislation and regulations, particularly those specific to the product or service you provide. Conduct ongoing risk assessments and identify areas of vulnerability. Consider political, economic, social and environmental factors that may threaten your business success, and take steps to minimize their impact. Examine operational risks -- such as product obsolescence or over-reliance on a single sector, supplier or customer -- and take the required remedial action. Care for your customers. A satisfied customer is an asset to your business, but a dissatisfied client can immeasurably damage your reputation. Implement first-class after-sales care policies to achieve both repeat business and client recommendations. Avoid complacency. Your sales and profits are on target, your workforce is happy and your bank manager loves you -- but things can change. Maintain a marketing effort and remain constantly alert to changing opportunities. Be prepared to push your business forward or move it in another direction should the need or opportunity arise. Delegate when necessary, and know your limitations. As a business owner, you may be tempted to handle too much of the detail. Focus on your strengths, and either delegate or subcontract matters that others could perform. For example, if finance takes too much of your time and energy, recruit or engage an accountant and call for regular progress reports.

Strength
. Considerable Qualified/keen to learn workforce available at low labour charges. The recommended minimum average wages (which include Travelling Allowance, House Rent, Medical Allowance, Maternity Benefit, Festival Bonus and Overtime Benefit) in the units within the Bangladesh Export Processing Zones (BEPZ) are given as below; on the other hand, outside the BEPZ the wages are about 40% lower: . Energy at low price . Easily accessible infrastructure like sea road, railroad, river and air communication . Accessibility of fundamental infrastructure, which is about 3 decade old, mainly established by the Korean, Taiwanese and Hong Kong Chinese industrialists. . FDI is legally permitted . Moderately open Economy, particularly in the Export Promotion Zones . GSP under EBA (Everything But Arms) for Least Developed Country applicable (Duty free to EU) . Improved GSP advantages under Regional Cumulative . Looking forward to Duty Free Excess to US, talks are on, and appear to be on hopeful track

. Investment assured under Foreign Private Investment (Promotion and Protection) Act, 1980 which secures all foreign investments in Bangladesh . OPIC's (Overseas Private Investment Corporation, USA) insurance and finance agendas operable . Bangladesh is a member of Multilateral Investment Guarantee Agency (MIGA) under which protection and safety measures are available . Adjudication service of the International Centre for the Settlement of Investment Dispute (ICSID) offered . Excellent Tele-communications network of E-mail, Internet, Fax, ISD, NWD & Cellular services . Weakness of currency against dollar and the condition will persist to help exporters . Bank interest@ 7% for financing exports . Convenience of duty free custom bonded w/house . Readiness of new units to enhance systems and create infrastructure accordant with product growth and fast reactions to circumstances

Weakness
. Lack of marketing tactics . The country is deficient in creativity . Absence of easily on-hand middle management . A small number of manufacturing methods . Low acquiescence: there is an international pressure group to compel the local producers and the government to implement social acquiescence. The US GSP may be cancelled and purchasing from US & EU may decrease significantly . M/c advancement is necessary. The machinery required to assess add on a garment or increase competence are missing in most industries. . Lack of training organizations for industrial workers, supervisors and managers. . Autocratic approach of nearly all the investors . Fewer process units for textiles and garments . Sluggish backward or forward blending procedure . Incompetent ports, entry/exit complicated and loading/unloading takes much time

. Speed money culture . Time-consuming custom clearance . Unreliable dependability regarding Delivery/QA/Product knowledge . Communication gap created by incomplete knowledge of English . Subject to natural calamities

Opportunity
. EU is willing to establish industry in a big way as an option to china particularly for knits, including sweaters . Bangladesh is included in the Least Developed Countries with which US is committed to enhance export trade . Sweaters are very economical even with china and is the prospect for Bangladesh . If skilled technicians are available to instruct, prearranged garment is an option because labour and energy cost are inexpensive. . Foundation garments for Ladies for the FDI promise is significant because both, the technicians and highly developed machinery are essential for better competence and output . Japan to be observed, as conventionally they purchase handloom textiles, home furniture and garments. This section can be encouraged and expanded with continued progress in quality

Example of a Group of Industries- Mohammadi Group

Our History Mohammadi Group was started by 4 friend in 1986 with a 2 line factory in Lalbagh Dhaka. The factory had 52 workers and since then we have grown into one of the largest garments manufacturing group in Bangladesh. Over the years the company was slowly divided into 4 different groups as each partner seperated the management of the business. The 4 friends today own their own garments manufacturing companies which originated from the original Mohammadi Group.

Today we produce over 500,000 pcs of woven garments and 250,000 pcs of sweaters a month. Current Business Areas Besides woven garment and sweater manufacturing, Mohammadi Group is involved in the real estate business. We also own one of the the largest software and IT services companies in Bangladesh. In the near future we will be starting a Digital Cable TV operation in Dhaka. We have also invested in the Power Generation sector with our own 10 MW power plant in Kumargaon Sylhet. Management Mohammadi Group is a family based company. The companies founder Mr. Annisul Huq is one of the most well known business entrepreneurs in Bangladesh. He has served in the board of Bangladesh Garment Manufacturers Association (BGMEA) for over a dedace. He also served as the President and Vice-President of BGMEA over different terms. Currently Mr. Annisul Huq is the President of Federation of Bangladesh Chamber of Commerce and Industries (FBCCI). This is the apex trade body in Bangladesh. Mr. Huq is a key business personality in the coiuntry and helps the government in forming many of its business and economic policies. The Managing Director of the group is Mrs. Rubana Huq. Besides running the day to day operations of the group Mrs. Huq is well known for her contribution in the literary and cultural circle in Bangladesh.

Some Companies
MG SHIRTEX LIMITED Number of Line: 04 (Four) Lines. Product Range: Mens & Boys Dress and Casual Shirts, Ladies Blouses. Production capacity: 1,10,000 pcs per month Major Buyers: Sears, Wal-Mart, Costco, H&M, Tesco, Oxford, Yves Dorsey, Li & Fung. Special Features : Vacuum ironing table, Feed of the Arm, Placket, Fusing machine, Collar forming machine, Cuff , Forming machine, Kansai Special, Fabric Inspection machine, Collar notcher, Button pull test Machine, Shaddle Stitch machine, Pintect machine, Bottom cutting, maximum sewing machines are auto-trimming and vertical trimmer. THE MOHAMMADI LIMITED Number of Line: 04 (Four) Lines.

Annual Export: 5.0 Million US Dollar Product Range: Mens Dress and Casual Shirts.. Production capacity: 1,10,000 pcs per month Major Buyers: Sears, Wal-Mart, Costco, H&M, Tesco, Oxford, Yves Dorsey, Li & Fung. Special Features : Vacuum ironing table, Feed of the Arm, Placket, Fusing machine, Collar forming machine, Cuff , Forming machine, Kansai Special, Fabric Inspection machine, Collar notcher, Button pull test Machine, Shaddle Stitch machine, Pintect machine, Bottom cutting, maximum sewing machines are auto-trimming and vertical trimmer. ARROW APPARELS LTD Number of Line: 08 (Four) Lines. Annual Export: 5.0 Million US Dollar Product Range: Mens Dress and Casual Shirts.. Production capacity: 1,10,000 pcs per month Major Buyers: Sears, Wal-Mart, Costco, H&M, Tesco, Oxford, Yves Dorsey, Li & Fung. Special Features : Vacuum ironing table, Feed of the Arm, Placket, Fusing machine, Collar forming machine, Cuff , Forming machine, Kansai Special, Fabric Inspection machine, Collar notcher, Button pull test Machine, Shaddle Stitch machine, Pintect machine, Bottom cutting, maximum sewing machines are auto-trimming and vertical trimmer

MOHAMMADI GROUP LIMITED Number of Line: 04 (Four) Lines. Annual Export: 5.0 Million US Dollar Product Range: Mens Dress and Casual Shirts.. Production capacity: 1,10,000 pcs per month Major Buyers: Sears, Wal-Mart, Costco, H&M, Tesco, Oxford, Yves Dorsey, Li & Fung. Special Features : Vacuum ironing table, Feed of the Arm, Placket, Fusing machine, Collar forming machine, Cuff , Forming machine, Kansai Special, Fabric Inspection machine, Collar notcher, Button pull test Machine, Shaddle Stitch machine, Pintect machine, Bottom cutting, maximum sewing machines are auto-trimming and vertical trimmer. Mohammadi Fashion Sweaters Limited Logistic Support & Factory Specification Factory floor space 93,000 square feet Employee 1600 Products: All Kind of Sweater, cardigan & pullover for Men/Ladies/Children Minimum Order Quantity

1,000 Dozen per style / 250 Dozen per Color Lead Time: 60-90 Days after the approval of Lab-dip & Sample. MG Knit Flair Limited Logistic Support & Factory Specification Factory Floor Space 45,000 sq.ft. Employee 950 Production Capacity: 12 g 6,000 dz/month Products: All Kind of Sweater, cardigan & pullover for Men/Ladies/Children Minimum Order Quantity 1,000 Dozen per style / 250 Dozen per Color Lead Time: 60-90 Days after the approval of Lab-dip & Sample.

Relation between the worker and management

After all employees who are constantly working under unfavourable circumstances have to bear the brunt. Work is under-control across the Bangladesh garment sector. Appalling working atmosphere has been brought to light in the Bangladesh garment industry. A research reveals that 90 percent of the garment employees went through illness or disease during the month before the interviews. Headache, anaemia, fever, chest, stomach, eye and ear pain, cough and cold, diarrhoea, dysentery, urinary tract infection and reproductive health problems were more common diseases. The garment factories gave bonus of different diseases to the employees for working. With a view to finding out a link between these diseases and industrial threats, health status of employees has been examined before and after coming in the garment work. At the end of examination, it was come out that about 75 percent of the garment workforce had sound health before they entered the garment factory. The reasons of health declines were industrial threats, unfavourable working environment, and want of staff facilities, inflexible terms and conditions of garment employment, workplace pressure, and low wages. Different work-related threats and their influence on health forced employees to leave the job after few months of joining the factory; the average length of service was only 4 years. The garment sector is disreputable for fires, which are said to have claimed over 200 lives in the past two years, though exact figures are tough to find. A shocking instance of absence of workplace safety was the fire in November 2000, in which almost 50 workers lost their lives in Narsingdi as exist doors were closed. From the above analysis of working atmosphere of garment sector, we can state that the working environment of most of the Third World nations, particularly Bangladesh remind us of earlier development of garment industries in the First World nations. The state of

employment in many (not necessarily) textiles and clothing units in the developing nations take us back to those set up in the nineteenth century in Europe and North America. The mistreatment of garment employees in the birth period of the development of US garment factories reviewed above is more or less same as it seen now in the Bangladesh garment industry. Can we state that garment employees of the Third World nations living in the 21st century? Is it a return of the Sweatshop? In a way, the Western companies are guilty of pitiable working atmosphere in the garment sector. The developed nations want to make more profit and therefore, force the developing nations to cut down the manufacturing cost. In order to survive in the competition, most of the developing nations select immoral practices. By introducing inflexible terms and conditions in the business, the global economy has left few alternatives for the developing nations. Right Time to Make a Decision There are two alternatives to tackle the challenge of the competitive world initiated by the continuous pressure of global garment chain. One can continue to exist in the competition by adopting time-honoured work systems or immoral practices. But it is uncertain how long they can continue to exist. In connection with the garment industry of Bangladesh, we can say that this is the right time to follow a competitive policy, which improves quality. If the MFA opportunities are eliminated, will it be feasible to keep the competitiveness through lowwage-female labour or through further drop in female wages? Possibly not. Since the labour charges are so minimal that with such wage, a worker is not able to maintain even a family of two members. Enhancing the efficiency of female workers is the only solution to increased competition. Proper education and thorough training can help achieve these positive results. To rule the global market, Bangladesh has to come out of low wage and low output complex in the garment industry. Bangladesh can enhance labour output through constant training, use of upgraded technology and better working environment. Bangladesh should plan a strategy intended for promoting skill development, speeding up technology transfer and improving productivity height of the workers. Another method is to adopt best system or ethical course. Those companies, which react to heightened competition by stressing quality, speedy answer of the customers, fair practices for labourers should have the most innovative practices. We think that we are now living in the age of competition in producing improved quality over cost-reduction policy. The objective of change efforts at the workplace has been modified over the time - from making the job humane in the 1960s, to job satisfaction and output in 1970s, to quality and competitiveness in the 1980s. It is necessary for a company to pursue a competitive policy that improves quality, flexibility, innovation and customer care. If they rely on low costs by dropping labourers' wages and other services, they will be bereaved of labourers' dedication to work. Understandably the factory management is shocked, because it is not used to seeing labour unrest turn so violent. It did not expect such an outburst from a docile, expendable labour force. Another reason given is that the factories where the trouble occurred were relatively well run, model factories where workers were fairly well paid. The comparative advantage of some factories is of course no guarantee that workers will not agitate against glowing disparities between management and labour. On the contrary increasing awareness of inequalities is a direct provocation. We should remember how a few years ago, well paid workers in South Korea launched a massive protest against their company bosses.

For the industry it is more important to come to terms with its systemic problems of which there are many. For the moment it has weathered the international competition and in fact received a glut of knitwear and sweater orders which it finds difficult to deal with. Many of the problems such as delays caused by lead time delays, late deliveries of imported raw materials, licencing or production, due to outage failures, port obstruction, etc. are caused by government inefficiency and poor planning. These may appear intractable, but are not beyond solution. But what is of the industrys own making is its refusal to reconcile its commercial success with poor labour relations, and its tendency to dismiss labour demands with unkept promises. For several years now workers have repeated vital demands pertaining to their terms of work and their conditions of work. Their major points of discontent have included the lack of an employment letter or contractual agreements, a stagnant minimum wage set in 1994 at Tk 930.00, arbitrary fixing of overtime payments, delayed payments, absence of weekly holidays, and non-enforcement of safety and health protection. Conditions are even harder in the sweater and knitwear components because seasonal demand makes for insecurity of employment, to long hours of work without leave, which practically leads to compulsory overtime; piece rated work leads to uncertainties as to how much each worker will receive, since the rates are not fixed until the completion of the consignment. When the owners proudly say that piece rate payment brings in higher returns at an average of Tk 7,000.00, the highest range being Tk 18,000.00, this conceals considerable disparity in payments between one worker and another, with a few reaching the ceiling but many more falling way below a living wage. Workers earnings have failed to keep pace with the index of prices, and most live in a state of continuous debt, in order to support their families. Media attention on the recent episode has led to much breast beating interspersed with some rational debate on the state of the industry. Newspaper reports and statements by business leaders suggest that they may now be willing to recognise genuine labour problems: for example at a sitting with the commerce ministry and workers representatives last week, BGMEA and BKMEA are reported to have conceded the need to revise pay scales, to issue employment letters, not to enforce overtime. The question of safety conditions was also raised. A few leaders have also admitted the logic of introducing negotiating mechanisms, whether through trade unions or some other arrangement is not clear. The absence of a grievance redress mechanism is precisely what allows the fuse to blow. If these concessions are to be more than a reflex to shock therapy, serious attention has to be paid right away to setting up a Wage Board to assess living wage in each sector, contractual terms for overtime, hours of work, maternity leave. Safety has become an important consideration particularly after the disasters of Spectrum and KTS, and it is no longer sufficient for BGMEA or BKMEA to make vague promises without introducing strict regulatory mechanisms. They must make their reports on defaulting industries public, for both the workers and the public have a right to know the risks they take. The government regulatory agencies have been even more culpable because time and again they have defaulted on their responsibilities to supervise and regulate violations of the laws. This has happened in spite of directions by the Appellate Division. Garment manufacturers claim they are now compliant with buyers conditions. This may go some way towards improving working conditions, but only to the extent that it satisfies buyers. Last year, at a UNDP sponsored meeting two task forces were set up by the

government, the first to ensure proper labour conditions and the second to ensure safety conditions. What has become of the decisions taken by these task forces? Workers have a right to know the time line for their implementation. Rather than piece meal measures it is important at this stage to move towards a more effective industrial management based on progressive labour relations and labour participation in management. The culture of military management, where security guards have little hesitation at drawing their guns on workers (as happened in Chowdhury Garments, or in Opex Garments a year or two ago), or managers have no compunction at slapping their workers in full public view is now passe. It will not lead to a healthy industry, on the contrary it will provoke spontaneous, unorganised and, therefore, chaotic protests. Many experts suggest that the time is right for the garments to institutionalise a corporate structure with corporate social responsibility that can allow for a grievance redress mechanism. Suggestions have also been made for workers to be given a stake in the industry, in its management, through participation in trade unions. Perhaps this shock therapy will enable the garment owners to sit across with industrial economists, with lawyers, with workers and other experts to recommend reform of archaic laws or revise policies and practices that belong to a past world. It is time we stopped our detective search for who done it to a rational appraisal of how we can establish acceptable labour standards in the industry.

Management needs change in labor perspective

Unless the apparel industry can build a rational relationship between organised labour and management, buyers will take their business elsewhere. The conflict between management and organized labour first appeared some time ago, when Pharaoh blamed the ten plagues on the Brotherhood of Israelite Stone Cutters and Tomb Builders (Local XIV). From that time to the present, we have been blaming the unions for just about everything. Even now, reasonable, educated and otherwise sane garment professionals will tell you that the unions were responsible for the demise of the US (or UK, or Europe, depending where you live) domestic garment industry. I am not saying that the unions did not play at least a supporting role in the real-life version of "Death of a Salesman"; but the truth is the domestic garment industry was destroyed the same reason why any industry dies - poor management making bad decisions. Factory owners and workers at war The truth notwithstanding, the internecine war between garment factory owners and their workers seems to be universal. Many of the same events now being played out in China, Bangladesh, Cambodia and India are close copies of events that occurred many years ago in the UK, the US and most countries in Europe. In the opening stages, industry manages to avoid the need for formal labour relations altogether. With the assistance of business-friendly governments, independent unions are kept out of the system - often using tactics better suited to a battlefield than a factory. The list of

past leaders in the fight against organised labor includes such illustrious names as Vladimir Lenin, Mao Zedong, Winston Churchill, President Calvin Coolidge - the places are different; the names are different; but the events are very much the same. Later some governments - particularly in Asia and Latin America - create national unions which exist solely to keep workers demands to a minimum. When that fails, company management makes financial arrangements with union leaders to maintain the status quo while avoiding industrial action. Eventually the situation does change. Just as US and European attitudes changed in the 1930s, so too are attitudes in the garment exporting countries changing, albeit 80 years later. The large transnational garment factory groups are finally about to come to terms with the reality of the 21st century. As we have seen from the recent strikes in China, Cambodia and Bangladesh, the era of independent industrial unions has arrived. The business-friendly governments, do-nothing national unions, and union-leader bribes of the past have simply forced the workers to organise independently and, it would appear, most effectively. Management stuck in a rut The problem is that existing factory management cannot move forward. They lack the skills, the experience and, most importantly, the vision to negotiate with the unions as equals. The fundamental difficulty is that senior factory management invariably perceives organised labour with the same visceral animosity as did their fathers and grandfathers. This problem will not go away by resorting to the time-honoured tactics of previous generations. Management can no longer force a resolution by yelling and screaming, nor can they rely on a supine local police force to bring on the riot-gas and guns. On the other hand, the problem cannot be solved simply by giving in to unreasonable worker demands, just to get the goods out. It grieves me to say this, but the responsibility lies more with management than with the unions. All too often senior management has failed to understand there is a difference between sound management and ego. As with the late unlamented Sewell Avery, our factory management fails to recognise they are in business to make money, which can be accomplished only by meeting the needs of their customers. And right now, their customers need factories with a highly trained, well motivated and stable workforce. I must also say that neither the NGOs nor the ILO (International Labor Organization) have served the industry or its workers. Too often, rather setting up a structure where management and labour can resolve issues effectively, they have worked only to perpetuate and exacerbate the animosities of the dead past. They must learn that the era of class conflict is over. Winning the war will simply result in driving the industry to move elsewhere, leaving the workers with nothing.

The immediate and most important step is for our industry to build a rational relationship between organised labour and management. This will not be an easy task. Both sides will have to overcome years of animosity. In this regard, both sides must develop professionals educated to deal with one another on an equal footing without rancour. Industry and union leaders must work out a modus vivendi which will allow for future negotiations. First and foremost, this must include two principles

Collective Bargaining: Where workers in each factory empower a single union to negotiate on their behalf; Compulsory Arbitration: Where disputes which cannot be settled amicably, be brought before an independent body for settlement and both workers and management agree in advance to accept the decision as binding.

There is much that the developing world can learn from the experiences of the countries of the industrialised west. This is one instance where by learning they can avoid the mistakes made by the US and Europe. Garment workers engage in violent clashes at times on rumours or slightest instigations for lack of proper counselling and poor relations with the management, industry insiders say. Except for the massive labour unrest for wage hike in 2010, most other incidents of unrest in the sector happened either following rumours of death of fellow workers or on instigation, they add. At present, about 3.5 million workers, 80 percent of them women, are employed in garment sector. Most of the workers come from rural areas and have no education and formal training. The management depends on on-the-job training of the workers for lack of training institutes in the country. We don't go to factories for counselling, but we do that at training sessions, said Syed Sultan Uddin Ahmed, assistant executive director of Bangladesh Institute of Labour Studies, country's lone public labour institute at Dhanmondi in the capital. But the workers should have neutral platforms at factories where they can lodge their complaints or express their opinions. Any kind of unrest can be averted or the damage minimised if factories have such platforms, he said. Nazma Akter, president of Sammilito Garment Sramik Federation, a platform for garment workers, said her organisation trains workers on their rights and responsibilities. But such short motivational training programmes for two or three days are not enough, she said. More than 3.5 million workers are employed in the sector but the federation can train on average 5,000 people a year, she added. Factories themselves can also train workers on workplace behaviour and crisis management, she said.

AKM Nasim, a senior legal counsellor at the American Centre for International Labour Solidarity, terms it "difficult" to train so many workers, but says incidents of unrest can be reduced through formation of workers' union or committee at factories. If the workers have any complaints, they can raise those before the committee. Such committees can also contribute to improve the worker-management relations," he added. Referring to the latest unrest at the Ha-Meem Group factory at Ashulia, Director General of Industrial Police Abdus Salam said, The issue in itself was small, but it became a big one for lack of proper communication between workers and officials." On May 12 and 13, Ashulia industrial belt near the capital turned violent as workers of the group took to the streets following a rumour that one of their fellow workers was tortured to death by officials and security guards of the company. The rumour later turned out to be false, but the agitating workers by the time damaged more than 150 vehicles while more than 100 people were injured as the workers clashed with police over the two days. A decision on counselling of the workers by the industrial police was awaiting home ministry's approval, the industrial police DG said, adding that his force would start largescale counselling programmes on the ministry's nod. We've failed to build good relations between workers and mid-level management as the garment industry has not developed in a planned way. But these days, maintaining good relations between workers and the management is very important in garment industry, said Shafiul Islam Mohiuddin, president of Bangladesh Garment Manufacturers and Exporters Association.

Some Recent Posts

BGMEA shuts all units in Ashulia
Garment factories in Ashulia will remain closed for an indefinite period from today due to the ongoing labour unrest there, owners announced yesterday. The leaders of Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association, two apex platforms of the garment sector, jointly took the decision at a meeting at the BGMEA office in the capital. After the meeting, BGMEA President Shafiul Islam Mohiuddin told a press briefing that they had decided to keep closed more than 300 factories in Ashulia, on the outskirts of the capital, due to the labour unrest. We have become victims to a conspiracy. It is not possible to run factories without adequate security. Nevertheless, we have decided to shut down the units in Ashulia only, not in the whole country, said Mohiuddin. He urged the government to ensure security for garment factories as it is provided for key point installations. The BGMEA president believes this unrest did not stem from the demand for salary hike. He said the unrest and vandalism in the factories were not the acts of regular workers. A few vested groups were trying to destroy the garment sector, as perhaps they were benefiting from

the unrest, he alleged. We can hardly bear it any longer, said Mohiuddin, urging all not to be confused by any propaganda. He said it was the government's responsibility to find out the real culprits involved in vandalising the factories. He demanded the government punish the culprits to save the sector. Most of the factories in Ashulia have kept their production suspended for the last six days due to the labour unrest.

Budget Reactions - BGMEA, BKMEA oppose hike in tax at source

Garment manufacturers are worried over the proposed hike in tax at source for export-oriented industries in the budget proposal for financial year (FY) 2012-2013, saying that it will have a negative impact on the sector. They said the proposal has come at a time when the country's highest foreign currency earning sector has been facing a tough time in recent years on labour related issues have put Bangladesh's apparel export to her single largest shipment destination at risk. According to the budget proposal for the next fiscal (2012-2013), which was placed by Finance Minister AMA Muhith on Thursday last at the parliament, the government proposed 1.20 per cent tax at source on all types of export for the coming FY. Apparel makers are now paying 0.60 per cent tax at source in the current FY (2011-2012). Leaders of the Bangladesh Garment Manufacturers and Exporters (BGMEA) also requested the government to pay serious attention to the matter and reconsider the proposal to help the US$ 19 billion industry maintain growth amid the economic meltdown in the EU (European Union) region. "Cent per cent tax hike at source on export-oriented industries like us is completely detrimental to the industry. The normal progress of the textile industry will seriously be hampered if such increase is imposed," BGMEA president M Shafiul Islam Mohiuddin told reporters in a post-budget reaction at a press conference in city. The press conference was organised at BGMEA headquarters Friday where they made request to the Prime Minister revise the proposed tax downward. The BGMEA president said the export of Bangladeshi garments to the global market marked a fall due to financial downturn during the last fiscal year. Bangladesh's garment export to the EU markets has gone down by nearly 15.40 per cent while shipment to the USA has recorded a 28.40 per cent fall in the current year, the president of the country's apex apparel body said. He has expressed his fear that the country's readymade garment (RMG) export would face difficulties in the coming months from its single largest export destination as the recent labour situation in the sector had started worrying the major American buyers. The USA accounts for around 26 per cent of the US$ 19 billion that the industry fetched in the FY 2010-2011 out of the country's overall export earnings of US$ 23 billion. US ambassador in Dhaka Dan Mozena in a meeting with the apparel producers last week expressed the same apprehension, saying that the present labour situation in the country's garment sector could undercut Bangladeshi RMG (readymade garment) export to the US. Hinting at the murder of garment labour union activist Aminul Islam, he said in the meeting that six major US retailers recently shared with him the same concerns about exposing their companies' reputation to negative perceptions of developments in Bangladesh. The BGMEA president said people think that the export-oriented industry earns 12 per cent profit. According to the budget, the industry will have to pay 10 per cent tax and 1.20 per cent tax at source. But, garments industries and factories make 0.50 to 1.0 per cent profit on its export price. "So, apparel makers will be able to bear such a high tax burden," he added. President of Exporters Association of Bangladesh (BAE) Abdus Salam Murshedy told the FE that the government should reconsider the proposal as it would create another hurdle for garment industry, which accounted for about 80 per cent of the country's total export earnings. "The move also contradicts the government projection of achieving 7.2 per cent GDP (gross domestic product) growth in the proposed budget," he said. They, however, hailed some of the government's proposed measures in the new budget to encourage industrialisation in

the country. They have hailed the government for proposing to introduce zero duty instead of the existing 1.0 per cent for importing capital machinery in an effort to boost industries. The Bangladesh Knit Manufacturers and Exporters Association (BKMEA) Friday gave mixed reactions to the proposed budget for the next fiscal year (FY), 2012-13. In a press release, the BKMEA leaders hailed the government for proposing zero duty instead of the existing 1.0 per cent on import of industrial equipments, and allocation of Tk 0.5 billion for skill development. They also hailed the government for taking different initiatives, like -- raising allocation for industrialisation, education and poverty alleviation. However, they strongly opposed the proposal of increasing deduction of tax at source from 0.6 per cent to 1.20 per cent. They said the tax hike would hamper growth of the ready-made garment (RMG) sector, which has long been struggling due to the Eurozone crisis and other problems. The BKMEA leaders also opposed the proposal of imposing 5.0 per cent tax on cash support the government provides to the RMG producers and exporters, saying that the cash support can never be treated as profit. They pointed out that the finance minister in 2009 had exempted deduction of such tax, and urged him to reconsider the proposal. They also urged the government to fix the highest 5.0 per cent interest against import of raw materials for the export-oriented factories, and bring down bank interest rate to single digit for the knit sector. The BKMEA leaders expressed their dismay over non-allocation of incentive for the small and medium industries.

Apparel makers exploring market and investment potentiality in China

Country's apparel manufacturers have set their eyes on China to explore both the market and investment potentiality. A memorandum of understanding (MoU) to develop bilateral trade was signed between BGMEA and Ningbo Yinzhou Textile and Garment International Chamber of Commerce when a ten-member delegation headed by the President of Bangladesh Garment Manufacturers and Exporters Association Shafiul Islam Mohiuddin visited China during June 9-11. The MoU focuses on development of networking among businessmen, entrepreneurs and investors of both countries, steps to remove trade barriers, assistance to transfer technology and raise human skill. The entrepreneurs in Ningbo -- the fifth largest city of China -- showed interest to shift their production in Bangladesh following the high production cost there due to wage hike, a statement issued by BGMEA said Wednesday. Both the countries' entrepreneurs focused on investment in apparel industry including suit and oven textile, it added. The Asian giant is the single largest apparel exporter in the world contributing about 36 per cent to the global market. Bangladesh's export will get a big boost if it gets the production share of the big market, the statement added. Manufacturers said China has concentrated more on high-tech industrialisation and is gradually withdrawing from the manufacture of apparels that involves high cost. The move has forced China to look for sources that can offer apparels for its domestic consumption at cheap and competitive prices and Bangladesh remains a potential source, they said. China is a lucrative destination for Bangladesh's garment as apparel exports to that country saw an extraordinary 179 per cent growth in the fiscal year (FY) 2010-11 over that of FY 2009-10, they said. Bangladesh exported apparel products, both knit and woven items, worth $52.81 million during the July-June of FY 2010-11 which was $18.95 million in FY 2009-10. Country's export to China was only $9.49 million in FY 2008-09. During JulyDecember of current fiscal year, apparel export to China stood at $132.26 million.

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