Internship report On Pearl Prince Apparels LimitedPrepared for: Kazi Shamsur Rahman Assistant Professor Proctor, AMT BIFT. Prepared by: A S M TOWHEED (072-001-045) AMT 072 26.Jun.2011 Kazi Shamsur Rahman Instructor for internship Program BIFT, Uttara, Dhaka Dear Sir, This is the report I made based on my Internship program held on 22.Jun.2011 in Pearl Prince Apparels Limited in Tongi Gazipur. This assignment has five (5) main parts, Objective of the Internship Program, Factory Profile, A Brief history of RGM in Bangladesh, Different Departments and their Functions, and Suggestion to Improve the situation. I am honored to be one of your luckiest AMT students. We all hope long live among us and good wish for your coming days. Yours Sincerely, A S M Towheed BIFT. Acknowledgement A am cordially acknowledging the support of following people have assisted us in preparing this report. Mizanur Rahman 1 Complinace Manager Marks And Spencer 2 Tahare Ferdouse Dewhirst Bangladesh Ltd Saheen Alam 3 Manager Compliance and HR Pearl Price Appeals Limited Abdur Rahman Tutul 4 Sr. Merchandiser Pearl Price Appeals Limited Contents Topic Executive Summery Page No. VI Objective of the Internship Program 1 A Brief of the Organization 4 A Brief History of RMG Sector in Bangladesh 18 Different Departments of the Organization and their Function 49 Merchandising 51 Store 58 cutting 63 Sewing 73 Washing 75 Finishing 77 Human Resource & Compliance 79 Suggestion 81 Executive Summary The aim of the Internship program are as follows: To know how a factory works To know how different departments co-ordinates with each other To know how new orders come to the factory To know how the Product Development is done To know how the Costing and Pricing is done, how the price is fixes To know how suppliers are arranged To know how price negotiated with supplier To know how the team work is done perfectly To know how production execution is done with in deadlines The report discuss about Objective of the Internship Program, Factory Profile, A Brief history of RGM in Bangladesh, Different Departments and their Functions, and Suggestion to Improve the situation. Date : 23.Jun.2011 Pearl Prince Apparels Limited Plot – 14, block – A, Squibb Road, Cherag Ali, Tongi Industrial Area, Gazipur. TO WHOM IT MAY CONCERN This is to certify that Mr. A S M TOWHEED so of Md. Abdul Manman and Aisha Khanam was a internee of Pearl Prince Apparels Limited for 22.Jun.2011 to 23.Jun.2011. During his attending the Internship program he was found him very honest, hard working, intelligent and his responsive is quite impressive. We wish him success in all his endeavors. Manager Human Resource and Compliance Saheen Alam
[email protected] Pearl Prince Apparels Limited Objective of the Internship Program Objective of the Internship Program: The objective of the Internship program is to learn how a factory works, watching different departments closely. How different departments co-ordinates with each other, how the team work happens. The main focus is on the Merchandising division. How new orders come to the factory, how the Product Development is done, How the Costing and Pricing is done, how the price is fixes, how to arrange suppliers, how to price negotiate with supplier and at last and the most important thing is to know how the production execution is done with in deadlines. A Brief of the Organization A Brief of the Organization: Name of the Organization Address : Pearl Prince Apparels Limited Plot – 14, block – A, Squibb Road, Cherag Ali, Tongi Industrial Area, Gazipur – 1711, Bangladesh. Near the Dhaka – Mymenshing highway, 10 Minutes drive from Shahjalal International Airports towards North. Established in May 2007 with a synopsis to establish a best woven bottom garment factory, where buyer will feel real comfort to use the facility for their products. The company is having well experienced and highly professional staffs and workforce, who are the main asset of Pearl Prince. Location : Focus of the Factory : They are in a process of attending ISO 9001:2000, WRAP & SA8000 Certification. They respect ethical and social value of workforce and determined to provide better possible work environment, welfare and safety. They want to be trust worthy to our buyers for Quality, Commitment and Social Ethics. Exim Bank Limited Bank Details : Motijheel Branch, Dhaka. Legal status : Private Company Chairman : Mr. Taslim Akhter Merchandising : Mr. Varun Gambhir Corporate Setup Quality : Md. Mahabubr Rahman Compliance : Saheen Alam Factory Location: Overview of the Factory: Brand Logo Total factory Area Monthly Capacity Market Customers : : : : 114500 Sq . ft 200000 – 250000 Pcs ( Woven Bottom) USA, Europe, Canada. Marks and Spencer Jc Peny, VF Asia, Kohl’s and Macy’s Dress pant, 5 Pocket Demin, Cargo Short, Trouser and Skirts. Production Category : Group Annual Turnover: US$ 80 million Group Annual Capacity: 30 million pcs M&S Turnover: US$ 20 million M&S Supplier since 2007 Mission of Pearl Prince Apparels Limited: Pearl Prince Apparels Limited Are dynamic apparel designing and manufacturing company offering multiple sourcing options, committed to delivering world-class products with the right price, right quality and on-time delivery to their global customers. Values of Pearl Prince Apparels Limited: Integrity Responsibility Teamwork Efficiency Competitiveness Customer service Main Products: Straight Leg Jeans Woven Jogger Pocket Jeans Pleated Skirt Single Pleat Trousers with Belt Jazz Pants Cotton 3/4 Length Jeans 'Dragons' Motif Utility Trousers Distressed Look Jeans Roll Up Trouser Pocket Stitch Detail Jeans Cotton Rich Straight Leg Pure Cotton Roll-Up Combats Cargo Style Zip Off Trousers Beach Life Chino Shorts Palm Tree Print Shorts Cassette Print Swim Short Cotton Chinos Company Organogram: Cutting Production Coordinator Maintennance General Manager (Production) Sewing Finishing Security General Manager Admin & Compliance Store Managing Director HR Washing Production Manager ( Washing) Dry Process Quality Manager Sand Blasting Werehouse Man power Details: Designation Operator Helper Quality Inspector Quality Controller Quality Asst. Manager Production Manager and Asst. Production Manger Supervisor Line chief Cutting in charge Cutter and cutting Assistant Iron man Folding man Packing man Mechanic Electrician Security Guard Checker Sweeper Cleaner Pattern Master Product Development Admin Mechhendiser Store officer Boiler Operator Generetor Operator ETP Total Quantity 750 350 140 25 2 6 60 15 1 67 90 24 28 13 11 17 5 10 30 1 14 34 8 2 2 2 2 1726 Strength of the organization: Good communication Product development Consistent quality & price Can do complicated styles, all kinds of washes, embellishment Multi – product (Outfits) Weaknesses of the organization: Expensive on OPP (Opening Price Point) Poor service quality Low use of mordern equipment Low numbers of fire Extinguisher No incentive program for the workers Business Share % With Different Retailers: 8% 10% 2% M&S VF Aisa 45% 10% Kohl's JcPenny Macy's Other 25% Environment of the Factory: Pearl Prince Apparels limited is committed to maintain a Code of Conduct is work places. Pearl Prince Apparels Limited has sought to ensure that, all garments are manufactured in very good working conditions with meaningful job and providing all customers with high quality of products. Our goal is to create and encourage the creation of model facilities. That not only provide good job at fair rates of pay, but also improve the workers health and safety environment, working hours etc. Pearl Prince Apparels limited must respect and comply with national and international laws and regulations. Pearl Prince Apparels Limited policy is to discourage and not to support the use of child labor. Our as defined by local law and ILO convention. Pearl Prince Apparels limited does not employ any worker below the age of 18 years old. Pearl Prince Apparels Limited does not support the use of forced labor, bonded or involuntary labor. Also Pearl Prince Apparels Limited does not keep any deposits for employment. Harassment& Abuse: Pearl Prince Apparels Limited treats employees with respect and dignity. No employee is subjected to any physical sexual, psychological 01 verbal harassment and abuse. If any such incident takes places it is dealt through existing disciplinary practices. Discrimination: Pearl Prince Apparels Limited protects and promotes the basic human rights of the work force. Pearl Prince Apparels limited does not encourage or support discrimination in hiring, compefl5ati0fl access to training, promotions termination or recruitment, based on race, caste gender sexual orientation nationality, origin, religion disability, pregnancy or marital status. Freedom of Association: Pearl Prince Apparels limited’s employees can form any committee and join a trade union of their own choice. Employee is not subjected to intimidation or harassment for this. Pearl Prince Apparels Limited ensures that, wages are paid for a standard working month, which meets the legal standards. Pearl Prince Apparels Limited follows the legally approved grading wage structure for the employee. Minimum wages is Taka 3000/= maintained. Pearl Prince Apparels Limited is committed to pay all payments regularly in time. Also there is a provision of Ration shop, from where employees can buy their day to day living items in subsidized rate. Pearl Prince Apparels Limited complies with the local law and industry standards on working hours. Workers do not require to work in excess of 48 hours per week. In case of more than 48 hours work Over Time, it is done with the concern of workers and is paid at premium rate as per local law. Pearl Prince Apparels Limited ensures that, over time remains within legal limit. Minimum 01 (One) hour break is given during daily work period. 01 day weekend in every week is mandatory for all employees. Pearl Prince Apparels Limited provides a safe and healthy working environment to prevent occident and injury to health. We contribute all facilities to the health care needs of the workers. Modern water purification system Is in workplace to ensure pure drinking water including the provision of normal and cold water. Sufficient first aid boxes are available. Permanent Nurse and Doctor regularly check-up the health of workers at the premises. Pearl Prince Apparels Limited does the best to have 0dequate ventilation, lighting. toilets, personal protective equipments. fire fighting and safety equipment5. Fire training provided and fire drills carried out in the premises and record maintained as per law. Pearl Prince Apparels Limited committed to the environment to meet all applicable environmental local laws in the company and striving hard for a better environment at the factory. Their factory has set up with complete social & ethical compliance issues such as: Compliances Issues: Full proof fire safety issues. Boards containing the facilities have been posted on the walls at visible places. Prayer room for mole & female workers. In house Clinic consists of 6 sick beds with modern facility run by MBBS doctor. dl Day care centre. Canteen room. Toilets - I : 25 Mineral water drinking facility. Well equipped with sufficient fire fighting instruments. Adequate first old boxes in each section. Monthly fire drill demonstrating. Free medical facility. Life insurance for the workers. A Brief History of RMG Sector in Bangladesh A Brief History of RMG Sector in Bangladesh: RMG contributes 76% of total exports in Bangladesh. Major products of apparels include knit and woven shirts, blouses, trousers, skirts, shorts, jackets, sweaters, sports wears and many more casual and fashion items. The sector currently employs approximately 1.5 million workers, mostly females from underprivileged social classes. Clothing, being the largest industrial sector, has been experiencing phenomenal growth for last 10 years. This is largely due to the simple level of technology needed by the industry. Moreover, relatively inexpensive and easily available machineries, requirement of smaller premises, abundant supply of cheaper work force, low tariffs on imported machineries and, most significantly, benefits of reserved markets by MFA quota have spurred the growth of the garment industry. At present the country exports nearly 5 billion US$ per year to around 90 countries in the world which include USA, Canada, Germany, UK, France, Italy, Netherlands, Spain and Belgium. In fact, Bangladesh is the 6th largest supplier of apparels in the US market. In order to export readymade garments, it is now almost mandatory for the exporters to disclose the quality parameters towards acceptance of the product as per the intended end use as decided by the World’s leading brands. Knowledge in reg ulations pertaining to the area of flammability, care label and fiber products identification act are very important for export oriented garment trade, which is not only to satisfy the requirement of U.S. Federal Trade regulation but also to safeguard the interest of consumers. Performance evaluation of the garments is essential prior to shipment with a view to meet the specific requirement standards of the buyers. Working environment, wherein the garments are to be produced, is equally important to protect human rights and the code of conduct derives the basic objectives of social compliance issues. Thus, Bangladesh has a stiff challenge ahead to meet the demand of world market. For Bangladesh, the Ready Made Garment export industry has been the proverbial goose that lays the golden eggs for over fifteen years now. According to BGMEA, after the Liberation War of Bangladesh, in 1983 the Ready-Made-Garment (RMG) industry emerged to be a most promising sector in the socioeconomic context of Bangladesh. From that point of time till now, this industry has grown and developed so rapidly that currently Bangladesh is exporting RMG products worth 5 billion USD every year to countries like EU, USA, Canada and other countries of the world. Now, Bangladesh enjoys the position of being the 6th largest apparel supplier to the USA and EU countries. 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. 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 labor force. 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. It has also been found that RMG can generate huge employment, (85 % female) with comparatively much less investment. The overall impact of the readymade garment exports is certainly one of the most significant social and economic developments in contemporary Bangladesh. Background 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. 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. 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 non-equity joint-venture in the garment industry was established in 1979. 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 the 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. 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. 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. 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 labor. 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. 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. 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 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. Starting of The Bangladesh Garment Industry: The sector now dominates the modern economy in export earnings, secondary impact and employment generated. The events in 1998 serve to highlight the vulnerability of this industry to both internal and external shocks on the demand and supply side. Given the dominance of the sector in the overall modern economy of Bangladesh, this vulnerability should be a matter of some concern to the policymakers in Bangladesh. Although in gross terms the sector’s contributions to the country’s export earnings is around 74 percent, in net terms the share would be much less partially because the backward linkages in textile have been slow to develop. The dependence on a single sector, no matter how resilient or sturdy that sector is, is a matter of policy concern. We believe the policymakers in Bangladesh should work to reduce this dependence by moving quickly to develop the other export industries using the lessons learned from the success of apparel exports. Support for the apparel sector should not be reduced. In fact, another way to reduce the vulnerability is to diversify the product and the market mix. It is heartening to observe that the knit products are rapidly gaining share in overall garment exports as these products are sold in quota-free markets and reflect the strength of Bangladeshi producers in the fully competitive global apparel markets. Contribution of the RMG Industry RMG business started in the late 70s as a negligible non-traditional sector with a narrow export base and by the year 1983 it emerged as a promising export earning sector; presently it contributes around 75 percent of the total export earnings. Over the past one and half decade, RMG export earnings have increased by more than 8 times with an exceptional growth rate of 16.5 percent per annum. In FY06, earnings reached about 8 billion USD, which was only less than a billion USD in FY91. Excepting FY02, the industry registered significant positive growth throughout this period In terms of GDP, RMG’s contribution is highly remarkable; it reaches 13 percent of GDP which was only about 3 percent in FY91. This is a clear indication of the industry’s contribution to the overall economy. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc. A 1999 study found the industry supporting approximately USD 2.0 billion worth of economic activities (Bhattacharya and Rahman), when the value of exports stood at a little over USD 4.0 billion. One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over its competitors. The sector has created jobs for about two million people of which 70 percent are women who mostly come from rural areas. The sector opened up employment opportunities for many more individuals through direct and indirect economic activities, which eventually helps the country’s social development, woman empowerment and poverty alleviation. Exporting Condition of Garments Industry The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 20 years. By taking advantage of an insulated market under the provision of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. Over the past twenty years, the number of manufacturing units has grown from 180 to over 3600. The sector has also played a significant role in the socio-economic development of the country. The Agreement on Textile and Clothing (ATC) introduced in 1994, aimed at bringing textiles and clothing within the domain of WTO rules by abolishing all quotas by the end of 2004. It provides an adjustment period of 10 years, so that countries affected by the MFA could take the necessary steps to adjust to the new trading environment. Liberalization of trade following the Uruguay Round agreement presents opportunities as well as challenges for a developing country like Bangladesh in RMG sector. In the Post-Uruguay Round period, traditional instruments of trade policy such as tariffs, quotas, and subsidies will become less feasible and less relevant. In a liberalized trade regime, competition among textiles and clothing exporting countries is likely to become intense. The objective of this paper is to identify the prospects of RMG industry after the MFA phase out by analyzing the current scenario along with different policy measures and the available options in order to be more competitive in the new regime. The export made by Garments Industries of Bangladesh is improving year after year except some of the year. Strike, layout, shutdown of company, political problem, economic problem, inflation etc. are the prime cause of decreasing export in this important sector. But above it, Readymade Garments Industries is the leading sector in export sector. Year 1991 – 92 1992 – 93 1993 – 94 1994 – 95 1995 – 96 1996 – 97 1997 – 98 1998 – 99 1999 – 00 2000 – 01 2001 - 02 2002 – 03 2003 – 04 2004 – 05 2005 – 06 Export (in US $ million) 624.16 866.82 1182.57 1445.02 1555.79 2228.35 2547.13 3001.25 3781.94 4019.98 4349.41 4859.83 4583.75 4912.12 5686.09 Percentage change 32.49 38.88 36.43 22.19 7.67 43.47 14.11 17.83 26.01 6.29 8.19 11.74 5.68 7.21 15.83 Figure: Year Export by the garments industries (in US $ million) Average Quota Prices of Selected Garments Items Exported by Bangladesh, 2006 T able: Quota Prices of Selected Garments Items Exported Problems Regarding With RMG The garment industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 25 years. National labor laws do not apply in the EPZs, leaving BEPZA in full control over work conditions, wages and benefits. Garment factories in Bangladesh provide employment to 40 percent of industrial workers. But without the proper laws the worker are demanding their various wants and as a result conflict is began with the industry. Low working salary is another vital fact which makes the labor conflict. Worker made strike, layout to capture their demand. Some time bonus and the overtime salary are the important cause of crisis. Insufficient government policy about this sector is a great problem in Garments Company. There are some other problems which are associated with this sector. Those arelack of marketing tactics, absence of easily on-hand middle management, a small number of manufacturing methods, 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, time-consuming custom clearance etc. Picture: Labor- Management conflict in Garments Industry According to our survey in five leading Company we found some problem which are given in a chart with their percentagePrimary Problems Problems high 3 01.Raw-materials 60% 1 02. Marketing problems 20% 5 03. Machinery problem 04. Inefficient workforce 100% 3 60% 1 05. Licensing problem 20% 4 06. Quota problem 80% medium 2 40% 3 60% 0 2 40% 1 20% 1 20% low 0 1 20% 0 0 3 60% 0 total 5 100% 5 100% 5 100% 5 100% 5 100% 5 100% 3 07. Poor government policy 60% 5 08. Labor unrest/strike 100% 2 40% 0 - 0 0 - 5 100% 5 100% Secondary problems Problems high 1 01.Middle man affect 20% 0 02. Sluggish business linkage 2 03. Unloading(RM) takes time 40% 2 04. Time consuming schedule 40% 1 05. Communication gap 20% 5 06. Dependency on foreign market 100% 0 07. Trade block 2 08. Credit problem 40% medium 3 60% 2 40% 2 40% 3 60% 2 40% 0 2 40% 3 60% low 1 20% 3 60% 1 20% 0 2 40% 0 3 60% 0 total 5 100% 5 100% 5 100% 5 100% 5 100% 5 100% 5 100% 5 100% Safety Problems Safety need for the worker is mandatory to maintain in all the organization. But without the facility of this necessary product a lot of accident is occur incurred every year in most of the company. Some important cause of the accident are given below Routes are blocked by storage materials Machine layout is often staggered Lack of signage for escape route No provision for emergency lightin Doors, opening along escape routes, are not fire resistant. Doors are not self-closing and often do not open along the direction of escape. Adequate doors as well as adequate staircases are not provided to aid quick exit Fire exit or emergency staircase lacks proper maintenance Lack of proper exit route to reach the place of safety Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the open air Fire in a Bangladesh factory is likely to spread quickly because the principle of compartmentalization is practiced Lack of awareness among the workers and the owners But now the situation is much improved and we found, all the surveyed garments are fulfilling the requirement of emergency exit. It is provided in all the cases, signage is present and fire fighting equipments are up to date, a departure from the past. Even fire drill is held once in a month. Bangladesh Faces the Challenge of Globalization Bangladesh faces the challenge of achieving accelerated economic growth and alleviating the massive poverty that afflicts nearly two-fifths of its 135 million people. To meet this challenge, market-oriented liberalizing policy reforms were initiated in the mid-1980s and were pursued much more vigorously in the 1990s. These reforms were particularly aimed at moving towards an open economic regime and integrating with the global economy. During the 1990s, notable progress was made in economic performance. Along with maintaining economic stabilization with a significantly reduced and declining dependence on foreign aid, the economy appeared to begin a transition from stabilization to growth. The average annual growth in per capita income had steadily accelerated from about 1.6 per cent per annum in the first half of the 1980s to 3.6 percent by the latter half of the 1990s. This improved performance owed itself both to a slowdown in population growth and a sustained increase in the rate of GDP growth, which averaged 5.2 percent annually during the second half of the 1990s. During this time, progress in the human development indicators was even more impressive. Bangladesh was in fact among the top performing countries in the 1990s, when measured by its improvement in the Human Development Index (HDI) as estimated by the United Nations Development Project (UNDP). In terms of the increase in the value of HDI between 1990 and 2001, Bangladesh is surpassed only by China and Cape Verde. While most low-income countries depend largely on the export of primary commodities, Bangladesh has made the transition from being primarily a juteexporting country to a garment-exporting one. This transition has been dictated by the country's resource endowment, characterized by extreme land scarcity and a very high population density, making economic growth dependent on the export of labor-intensive manufactures. In the wake of the 2001 global recession, Bangladesh's reliance on foreign countries as a market for exports and as a source of remittances has become obvious. If Bangladesh is to become less vulnerable to the economic fortunes of others, it will need to strengthen its domestic economy, creating jobs and markets at home. A strong domestic sector and an improved overall investment environment will provide a more stable source of income - like what the garment industry has provided so far and will rekindle and sustain Bangladesh's economic growth. Impact of global economic recession The ongoing global economic crisis has been the cause of major concern of export dependent economies. It has been observed major industrial countries is experiencing sharp fall in export demand .Even high exporting countries like China and India recorded sharp decline in export in last few months. Other high performing countries like Indonesia, Malaysia.Phillipine and Thailand are also suffering badly due to the ongoing crisis. On the contrary export from our country so far has remained quite strong. Knitting and woven garment exports have increased by 41% and 36% respectively. In July-December period over the corresponding period last year. This is attributable primarily to low-end textiles product, which has been least affected by the crisis. And they will continue to import this low end product during the crisis period. From Bangladesh. The expert of FOREIGN TRADE INSTITUTE differs in opinion and they rightly points out that garment sector is in deep trouble and the demands for these products will drastically will fall down when income will start improving. The BGMEA must look into it thoroughly and start thinking from now on without wasting time regarding how to tackle the situation and keep our products export on track which accounts for 76& of our foreign exchange. Workers right Since 1990 Bangladesh has experienced a spectacular growth in the area of Clothing and Textile industry. On the basis of applicable Labor law, we could divide the RMG sector in two categories. One is EPZ area (Export Processing Zone) what is under the authority of BEPZA (Bangladesh Export Processing Zone Authority,) where workers rights defend by EPZ law. And the other side we could call outside of EPZ area or Industrial area where workers rights defend by Bangladesh Labor law-2006. Now in Bangladesh, there are 2.2 million workers are toiling in RMG industry where most of them are female workers in order to alive the country’s economy. The labor rights condition at RMG sector in Bangladesh under the major headings. The headings are, 1. 2. 3. 4. Employment status, wages & legally mandated benefits Voluntary overtime Harassments and abuse Freedom of association. Employment status, wages & legally mandated benefits: If we just take a look in few past, we learn that in 1994 the minimum wage of a garments worker was 13.88 $. At 2006 the 2nd wages board fixed a new minimum wage 24.81 $. The garments factory recruits workers by given a notice at the factory gate. At the time of appointing it is rare that a worker gets his appointment letter or employment contract. Only workers personal information and mailing address keep under record by the management. The workers get only ID card or Attendance card. The working day beginning at 7 or 8 am and ending at 8 or 10 pm at evening with one or half hour launch break. Regular working hour is 8 which is ordered by labor law, implemented by too few factories to count and the workers have to work up to 10 to 12 hours, some where it is 9 to 14 hours with 1 hour launch time, sometimes due to emergency shipment the management forced the workers to do night shift work for the whole night. Many factories have found that they always forced the workers by lock the factory main gate to do the excessive overtime. Regular two hors overtime is compulsory, no way to refuse the overtime if any one refuses to do he or she would get dismiss or termination or deducts wages or have to face verbal harassments, sometimes it turn into physical punishment. In addition to, the overtime is never announced in advance. Voluntary Overtime: It has been described that the working day starts at 7 or 8 am in the morning and ends at 8 to 10 pm at the evening including 30 minutes to 1 hour launch break. Regular 2 hours overtime is compulsory. No way to refuses to do the overtime, if any one refuses he or she must be dismissed. In case of medical and when it reaches in critical then he would get unpaid leave, Somewhere management deducts his overtime hour or wages. It is also been found that due to electricity failure workers have to pass lazy hours but when the electricity are available the workers have to do work more then 12 to 16 hours when the electricity are available but consider as a regular working day which is very much common during the Summer. Harassments and abuse: The midlevel management of the RMG sector belief that verbal harassments and abuse is the part of the production and it is proportional into production. When any one made any mistake in his work what is called “alter” he must be treated with bad languages. Female workers treated with inappropriate and sexually exploited languages. It is very much common in every garments means sewing floor. Freedom of Association: No factory have found that the management willing accept the workers associational rights & Collective bargaining rights. The workers have fear to lose the job for practicing any sort of union activities. Mass termination, decrease work force in order to reduce union members, Dismissal, harassment & tortured by muscle man and law forces agencies these are way to vanish any union activities followed by management. Good factory has accept union activities and provide workers associational rights but this is rare to find out. Though outside of EPZ area, workers could practice limited union activities but inside the EPZ area there is another different practice called WA or workers Association. According to EPZ- law it is mandatory but most of the EPZ factories have management sponsored WA what couldn’t gain workers rights. Prospects of the RMG Industry Despite many difficulties faced by the RMG industry over the past years, it continued to show its robust performance and competitive strength. The resilience and bold trend in this MFA phase-out period partly reflects the imposition of ‘safeguard quotas’ by US and similar restrictions by EU administration on China up to 2008, which has been the largest supplier of textiles and apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and product diversification, cheap labor, increased backward integration, high level of investment, and government support are among the key factors that helped the country to continue the momentum in export earnings in the apparel sector. Some of these elements are reviewed below. Market Diversification Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The industry was successful in exploring the opportunities in markets away from EU and US. In FY07, a successful turnaround was observed in exports to third countries, which having a negative growth in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall export growth in the RMG sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the growth momentum of export earnings. At the same time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin (ROO) criteria, the relative stagnation in exports to EU requires further analysis. Product Diversification The growth pattern of RMG exports can be categorized into two distinct phases. During the initial phase it was the woven category, which contributed the most. Second phase is the emergence of knitwear products that powered the recent double digit (year-on-year) growth starting in FY04. In the globalized economy and everchanging fashion world, product diversification is the key to continuous business success. Starting with a few items, the entrepreneurs of the RMG sector have also been able to diversify the product base ranging from ordinary shirts, T-shirts, trousers, shorts, pajamas, ladies and children’s wear to sophisticated high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs can catch on to this trend the brighter be the RMG future. Backward Integration RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a catalyst for further industrialization in the country. However, this vital industry still depends heavily on imported fabrics. After the liberalization of the quota regime some of the major textile suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG exports. Figure: Trend to back-to-back linkage If Bangladesh wants to enjoy increased market access created by the global open market economy it has no alternative but to produce textile items competitively at home through the establishment of backward linkage with the RMG industry. To some extent the industry has foreseen the need and has embarked on its own capacity building. Policy Regime of Government Government of Bangladesh has played an active role in designing policy support to the RMG sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit guarantee scheme, tax holiday and related facilities. At present government operates a cash compensation scheme through which domestic suppliers to export-oriented RMG units receive a cash payment equivalent to 5 percent of the net FOB value of exported garments. At the same time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a positive impact on the RMG sector. Infrastructural Impediments The existence of sound infrastructural facilities is a prerequisite for economic development. In Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong backward linkage in order to reduce the lead time. However, other factors constraining competitiveness of Bangladesh’s RMG exports included the absence of adequate physical infrastructure and utilities. Labor Productivity The productive efficiency of labor is more important determinant for gaining comparative advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly women with little education and training. The employment of an uneven number of unskilled labors by the garment factories results in low productivity and comparatively more expensive apparels. Bangladesh labor productivity is known to be lower when it compared with of Sri Lanka, South Korea and Hong Kong. Bangladesh must look for ways to improve the productivity of its labor force if it wants to compete regionally if not globally. Because of cheap labor if our country makes the labor productivity in the apex position, then we think the future of this sector is highly optimistic. Research and Training The country has no dedicated research institute related to the apparel sector. RMG is highly fashion oriented and constant market research is necessary to become successful in the business. BGMEA has already established an institute which offers bachelor’s degree in fashion designing and BKMEA is planning on setting up a research and training institute. These and related initiatives need encouragement possibly intermediated by donor-assisted technology and knowledge transfer. A facilitating public sector role can be very relevant here. Supportive Government Policy In contrast to the public sector-led import-substituting industrialization strategy pursued during the first few years after independence, the industrialization philosophy of the government changed rather dramatically from the late 1970s when the emphasis was on export-oriented growth to be spearheaded by the private sector. Towards this end, various policy reforms were implemented in the 1980s and 1990s. Some of these reformed policies contributed considerably to the growth of the RMG industry in Bangladesh. During the 1980s, a number of incentives were introduced to encourage export activities. Some of them were new like the Bonded Warehouse Facility (BWF), while others like the Export Performance License (XPL) Scheme 37 were already in operation and were improved upon. Also, rebates were given on import duties and indirect taxes, there were tax reductions on export income, and export financing was arranged. Under the XPL scheme, exporters of non-traditional products received import licenses for specific products over and above their normal percentage allotment based on the f.o.b. value of their exports. Under the Duty Drawback System, exporters of manufactured goods were entitled to get refund of duties and taxes paid on imported inputs used in export production, and also all excise duties paid on exported finished goods. For certain fast-moving items such as RMG, a notional system of duty payments was adopted in 1982-83. Under this system, exporters were exempted from paying duties and taxes on imports used in export production at the time of importation, but were required to keep records of raw and 21packaging materials imported. The duties and taxes payable on the imports were kept in a suspense account. Liabilities to pay the amounts in suspense were removed on proof of exports. The discussion in this section clearly points to the positive contribution made by policy reforms to the growth of the RMG industry in Bangladesh. In particular, two policies– the SBW facility and the back-to-back L/C system- led to significant reduction in cost of producing garments and enhanced competitiveness of Bangladesh’s garments exports. It also allowed garment manufacturers to earn more profit which, when necessary, could be used to overcome difficulties arising from weak governance. Furthermore, poor governance, reflected in the leakage of dutyfree imported fabrics in the domestic market, paradoxically enough also helped the garment manufacturers to earn extra ‘profit’ and thereby enabled them to absorb the ‘high cost of doing businesses – a fall out of bad governance. Recommendation Bangladesh economy at present is more globally integrated than at any time in the past. The MFA phase-out will lead to more efficient global realignments of the Garments and Clothing industry. The phase out was expected to have negative impact on the economy of Bangladesh. Recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports grew significantly both in FY06 and (especially) in FY07. Due to a number of steps taken by the industry, Bangladesh still remains competitive in RMG exports even in this post phase-out period. Our Garments Industries can improve their position in the world map by reducing the overall problems. Such as management labor conflict, proper management policy, efficiency of the manager, maintainable time schedule for the product, proper strategic plan etc. Government also have some responsibility to improve the situation by providingproper policy to protect the garments industries, solve the license problem, quickly loading facility in the port, providing proper environment for the work, keep the industry free from all kind of political problem and the biasness. Credit must be provided when the industry fall in need. To be an upper position holder in the world Garments Sector there is no way except follow the above recommendations. We hope by maintaining proper management and policy strategies our country will take the apex position in future. Suggestions Regarding Fire Safety We need to remember that when there is a fire, the first thing one should do is to run away from it. And this is what everyone does in such a situation. But the situation become dangerous and tragic when the escape doorways and gates are found locked. Precautionary should need to be adopted are given below: Building should be constructed with fire resisting materials Adequate exits and proper escape routes should be designed Protection against fire and smoke should be ensured Electrical wiring must be properly designed, installed and maintained Escape routes should be lighted at all times, kept clear, be indicated by signs Regular fire drills should be held Doors should be protected and should open along the direction of escap Doors should not open on the steps and sufficient space should be provided. Smoke/Fire alarm systems must be installed adequate number of extinguishers should be provided Prior relationship with local Fire services should be established The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 25 years. By taking advantage of an insulated market under the provision of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. To remain competitive in the post-MFA phase, Bangladesh needs to remove all the structural impediments in the transportation facilities, telecommunication network, and power supply, management of seaport, utility services and in the law and order situation. The government and the RMG sector would have to jointly work together to maintain competitiveness in the global RMG market. Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look forward to advancing its share of the global RMG market. Minimum Wage: The RMG industry of Bangladesh has optimized its vision to build a powerful industrial sector in the country over the last thirty years employing millions of workers and providing a strong platform to women empowerment that follows a progressive living standard. Since workers are the life-blood of this industry, retaining the workers and their productivity were the major demanding factors to review the minimum wages. Moreover, in a globalized world firms have to be socially responsible and there is no alternate but to ensure a decent living for the workers. It is true that Tk. 1662.50 minimum wage fixed in 2006 was barely enough for a worker and a family to live with in today’s context. But this is also true that the actual wages paid by the factories were much higher than the minimum wages of 2006. The reasons behind this are - an acute shortage of skilled workers and declining influx of fresh incumbents in the garment sector. Therefore rationalizing the minimum wages was also a desire of the owners. A survey report released by the World Bank in 2010 titled “The Global Apparel Value Chain, Trade and the Crisis (Policy Research Working Paper 5281)” finds that the per hour average wage in garment industry was USD2.44 in Turkey, USD2.17 in Mexico, USD1.44-1.88 in China, USD0.51 in India, USD0.38 in Vietnam, USD0.33 in Cambodia and USD0.31 in Bangladesh. Now with effect of the new minimum wages 2010, per hour average wages of the workers is estimated to be USD 0.39 (BGMEA estimate). The buyers group has also raised their concerns over this matter and sent a letter to the Honorable Prime Minister of Bangladesh. Based on these considerations, the present democratic government took the initiative to review the minimum wages just after 3 years of the last review, though it is mentioned in the Bangladesh Labor Law 2006 that the minimum wages for the workers of a sector has to be reviewed in every five years. Particularly it was a desire of the Honorable Prime Minister to review the wages for the RMG workers. As a matter of fact, the Minimum Wage Board has completed the wage review process at a shortest time ever and submitted the proposed wages. Timeline – Minimum Wages in the RMG sector in Bangladesh The minimum wages for the garment industry was first declared Tk. 627 for the lowest grade in 1985. The wage was reviewed after 9 years to Tk.930 in 1994, 48.33% increase After 12 years in 2006 it was revised to Tk.1662.5, 78.76% increase The third review of the minimum wages have been made after 3 years in 2010 to Tk. 3000, 80.45% increase. The Minimum Wage Review 2010: At a Glance The Board: The Ministry of Labor and Employment instructed the Minimum Wage Board on 14 January 2010 to review the minimum wages. The Minimum Wage Board was a 6 member board headed by Mr. Iktedar Ahmed who is a district judge. There were two representatives from the labor side and two from the owner side. An independent representative was there Mr. Iqbal Ahmed, who is a Professor of the Institute o Business Administration (IBA). Two observers (one from each party) joined the Wage Board at a later stage as per the approval of the government. The Wage Board sat in 14 meetings starting from 15 April 2010 to 27 July 2010 to prepare the draft wage recommendation. The Wage Board submitted the draft proposed wage to the Labor Ministry on 29 July 2010. The Wage Board had further 2 meetings to review the comments/suggestions on the draft wage proposal and finalize the wage recommendation. The Wage Board submitted the final recommendation on 10 October 2010 to the government. The final official Gazette notification was released on 31 October 2010. The implementation of the new wage started from 1 November 2010. Steps Taken by BGMEA and BKMEA: Since the formation of the Wage Board, BGMEA and BKMEA played a vibrant role in the entire process: Two in house committees were formed in BGMEA with the representatives of BKMEA – working and executive committees. Besides an expert committee was also dedicated in the process. 6 General Meetings were organized at Dhaka and Chittagong. BGMEA also organized several meetings with the labor federations including United Federation of Garment Workers, Samiilita Garment Sramik Federation, National Garment Workers Federation, Jatiya Garment Sramik League, Bangladesh Jatiyatabadi Garment Sramik Dol, Garment Sromik o Shilpa Rokhya Jatiya Mancha, SKOP, and others. The Wage Board members visited garment factories as a part of the process. Finalization of the Minimum Wage Gazette 2010 After the release of the proposed wage gazette, 2 weeks time was given to submit any comment, suggestion or grievance on it. The minimum wage board received 343 letters in total with comments, reactions and suggestions on the draft wage gazette, where 321 letters came from the factory owners and the rest 22 letters from the workers side demanding a further increase of wages in Grade 3, 4, 5 and 6. The Wage Board consulted with the Honorable Labor Minister on this issue and had two more meetings, whereby the wages of the Grades 3, 4, 5 and 6 were further enhanced. The Minimum Wages for the Garment Sector - 2010 Break Down of the Minimum Wages 2010 Wage Comparison: Proposed s. Final, and 2006 Vs. 2010 Wage Groth Comparison, in % 1994-2006 and 2006-2010 140 120 100 80 60 40 20 0 Trainee Grade I Grade II Grade III Grade IV Grade V Grade VI Grade VII 2006 2010 Estimated Average Wage of the Workers in a 100 worker RMG Factory *Take Away = Minimum Gross Wage + Overtime Allowance (52 hours per month)+ Attendance Bonus (Tk. 300)+ Festival Bonus (2 Basic Wage per year) + Insurance Premium (Tk. 100 per month) The Bangladesh Labor Law 2006 also stipulates to consider the 9 determining factors for reviewing minimum wages: Cost of Living Standard of Living Inflation Price of the Produced Goods Cost of Production Productivity Nature of Job and Risk Associated Socio-Economic Situation of the Country Capacity of the Industry to Pay The Board went through a tough negotiation where several factors were brought on the discussion table, such as: Price increase of the essential commodities Overall inflation in the economy Living Cost as per the Cost of Basic Needs and the Direct Calorie Intake methods Export Performance During July-December of FY 2010-11 RMG export grew by 42.18% compared to the same period of FY 2009-10. The growth in December 2010 was 73.11%, which is an all time high exports performance of USD 1.53 billion in a single month. During July-December of FY 2010-11 the value of RMG export was USD 7.95 billion. This export performance is 22% more than the strategic export target of the government, which is equivalent to USD 1.43 billion or Tk. 10,032 core. Export from RMG sector contributes 77.55% to national export earnings. BANGLADESH'S RMG EXPORTS TO WORLD Calendar Year: 2009 & 2010 Value in Million US Dollar Woven (MN US$ ) Month January February March April May June July August September October November December 2009 584.24 532.57 542.13 437.79 493.41 522.62 521.78 490.09 364.76 307.76 439.78 458.49 5695.42 2010 570.26 560.46 615.74 505.9 555.98 622.43 671.28 645.39 473.57 559.27 534.87 752.68 7067.83 Growth% -2.39 5.24 13.58 15.56 12.68 19.1 28.65 31.69 29.83 81.72 21.62 64.16 24.1 Woven (MN US$ ) 800 600 400 200 0 Knit (MN US$ ) Month January February March April May June July August September October November December 2009 562.94 466.87 480.61 479.96 578.59 619.66 651.85 552.46 449.63 440.46 487.27 426.27 2010 535.06 481.85 552.81 545.38 632.32 727.93 798.66 790.06 592.56 706.75 644.94 778.95 Growth% -4.95 3.21 15.02 13.63 9.29 17.47 22.52 43.01 31.79 60.46 32.36 82.74 Total 6196.57 7787.27 25.67 Knit (MN US$ ) 800 600 400 200 0 Total (Woven+Knit) Month January February March April May June July August September October November 2009 1147.18 999.44 1022.74 917.75 1072 1142.28 1173.63 1042.55 814.39 748.22 927.05 2010 1105.32 1042.31 1168.55 1051.28 1188.3 1350.36 1469.94 1435.45 1066.13 1266.02 1179.81 Growth% -3.65 4.29 14.26 14.55 10.85 18.22 25.25 37.69 30.91 69.2 27.26 December Total 884.76 11891.99 1531.63 14855.1 73.11 24.92 Total (Woven+Knit) 1600 1400 1200 1000 800 600 400 200 0 Opportunities The review of minimum wages has increased the confidence of the buyers. Minimum wage in China went up by 20% in January 2011 and this will be increased by 100% in next 5 years. So firms are going for a ‘China +’ strategy. Clothing imports and retail store in major markets have increased significantly in recent months. The price level has started to pick up in recent months. During the first half of 2010 US’s clothing import price from Bangladesh has dropped by 4.84%, but during the July-November 2010 period this has increased by 3.05% (Source: OTEXA). European Union simplified the GSP Rules of Origin from ‘2-stage’ to ‘1-stage’ for the LDCs. Implementation started on 1 January 2011. Japan will revise the rules of origin for knitwear items from ‘3-stage’ to ‘2stage’. The new rule is expected to come into effect from 1 May 2011. China granted duty free access for 205 garment items from 1 July 2010 on 30% value addition condition. Malaysia has recently granted duty free access for 197 items including 47 garment items and South Korea allowed duty free access for 251 products including 75 garment items from July 2010. The 8 million pieces duty-free access in India has been fully utilized by August 2010. Duty free access for a number of items in India is expected soon. Government adopted a 3-year stimulus program to encourage RMG exports to markets other than EU, USA and Canada. Challenges The US and EU economies are projected to have a slower growth in 2011. Unemployment is still high, i.e. 9.4% in US (December 2010). The growth of EU economy is projected 1.3% in 2011 where Greece and Ireland are already in trouble and the unemployment in Spain is 20.30% (October-December 2010). Export surge vis-à-vis supply side capacity constraints: I. The Chittagong Port handles countries 92% export-import trade alone, which is increasing by 12%-14% annually. In 2010, the Ctg. Port handled 13,43,448 TEUs container which is 15.67% more than that in 2009 (source: Chittagong Port Authority). On top of it, the Government is keen to develop the power sector of the country and they are allowing solicited and unsolicited tenders to faster the process. Therefore, a huge volume of power plant machineries and Furnace oil will be imported through Chittagong Port. Besides, the Chittagong port transit is also coming as a big challenge as far as the port capacity is concerned. Based on these considerations the question is “Are we ready to handle such import-export volume through Chittagong Port?” There was no major improvement in roads and highways communication over the last decade. In 2001 the area of Bangladesh’s national roads and highways was 20799 KM and in 2010 it is recorded 20948 KM, only 0.72% increase (source: Ministry of Finance, GoB). Particularly this is important to mention that the only highway between Dhaka and Chittagong is a big source of risk for the entire export oriented sector of the country. We have practically realized this truth when the Meghna Bridge was under maintenance and the vehicular movement was suspended. Even if any strike or Hartal is called covering part of the Dhaka-Chittagong highway, it creates blockade as we do not have a second road to the port. Electricity and gas supply situation has worsened in recent times. New factories are not getting gas connection. This is worth mentioning that we have a huge population in our country who are talented and highly adaptable. We can use these human resources to move up to the secondary industry as well. But without electricity, gas and adequate infrastructure this is not possible to draw investment in the country. Garment machinery import LC opening has increased by 41.91% during JulyNovember 2010 period (Source: Bangladesh Bank). Such a high capacity expansion has implication on furthering the skill shortage. II. III. IV. Lack of Skill Development Initiative Though BGMEA is working with the government to develop skills for the garment sector, but these are not enough. With the increase in investment in the industry and lack of fresh incumbents, the gap between installed capacity and required skill is widening. In this circumstance, the government needs to go for a vigorous skill development program. Balancing Between Wages and Skill Since there is no standard method to assess the skill level of the workers, factories often adopt wrong approaches to designate an appropriate Grade or to promote a worker. As a result, a worker with low-grade skill is getting wages of a higher grade. Colliding policies The declared second stimulus package could have created some relief to the manufacturers during this crucial time. But with the increase in source tax and imposition of VAT on commercial rent this benefit has been faded. Inflation General twelve month average inflation has reached 8.12% in October 2010, which was 5.11% in October 2009. Misguiding Workers Some NGOs, which are not allowed to involve in labor related issues, are engaging themselves to provoke/misguide the workers. The Government has already taken strong action against some of them. Cotton market trend should be treated with caution The current tight supply conditions and high prices of cotton in the history of 140 years is a wake-up call for Bangladesh. Having almost no production of cotton Bangladesh is the 6th largest cotton consumer in the world (4 million bales in 2010/2011), and the second largest importer of cotton (source: www.cottoninc.com). China and India were the highest cotton producing countries in the world (30 million bales and 26 million bales of cotton respectively in 2010/2011) (source: www.cottoninc.com). As the consumption of China is higher than its production, it is the highest cotton importer in the world as well. On top of it, China is increasing its cotton stock and even making overseas investment in cotton growing and processing. Among the major cotton exporting country in the world, India exports its surplus cotton which is currently restricted to 5.5 million bales for the year started from October 2010. Apart from that, natural disaster, increasing demand world-wide, panicked buying has also caused the future of our RMG industry highly uncertain. So, given the growth trend of global apparel market and the corresponding growth potential of RMG industry in Bangladesh, this is highly alarming that our entire textile and clothing industry may stuck-up at a stage due to cotton supply shortage. Therefore, the time has come to take the cotton issue seriously. The government should take steps to get into long term agreements with the cotton growing countries, particularly with the African countries, Australia and Brazil (4th and 5th largest cotton exporters in the world respectively). Implication of Preference Erosion and Regional Trading Arrangements (RTAs) With the successful conclusion of NAMA negotiation in the WTO there will be significant reduction in the tariff rates on industrial goods in both the developed and the developing countries. This will erode the preferential margins that we (LDCs) are enjoyed under the various GSP schemes. So, our competitive edge will suffer from this preference erosion. This is a major concern for Bangladesh as the country is pursuing export-led growth strategy. Erosion of preferential margin is likely to undermine our competitive advantage with consequent adverse implications for the economic growth, foreign exchange reserves, livelihood for large number of people, and poverty alleviation. Apart from that, due to the slow pace of current multilateral trade negotiations, many countries are signing preferential trading agreements in the forms of Regional Trading Arrangements (RTAs) and Bilateral Trading Arrangements (BTAs). Therefore our government needs to enhance its engagement regionally and bilaterally. The year 2011 started with a mix of both challenges and opportunities for the RMG industry of Bangladesh. It is very encouraging that the implementation of the new minimum wage is highly satisfactory (87.08%) from the very first month which is the result of tireless effort from BGMEA, BKMEA and the government. This has improved the impression of our industry both at home and abroad. However, we have seen that the buyers have increased the FOB price on the rise of cotton price, and we also expect that they would come forward to share the increased wage cost as well. Most importantly, the income of the workers should be protected from erosion caused by inflation. The MFB understands that the ultimate success of minimum wage implementation greatly depends on how well the workers could reap the benefit of enhanced wages end of the day. Therefore the government should take appropriate measures to check inflation. Besides, the fundamental rights of food and shelter for the workers have to be ensured and the followings are recommended: Both BGMEA and the Government felt the need for expanding and continuing the food rationing program for the RMG workers, but the rationing program which was started - is now stopped. We appreciate that the government is continuing the OMS for low income people, at the same time food rationing for the RMG workers including Rice, Daal and Soyabean oil should be started immediately with a wider coverage and be continued. In addition to food, the government should also come forward to establish dormitories for the workers. Bangladesh Bank has a fund under the Grihayon Tohobil, but the policy needs some amendments to grant loans in favor of the individual factories who are eager to establish dormitories for their workers. The government may also adopt policy to allot land to BGMEA and BKMEA near the industrial zones to construct dormitories for the workers. Besides, the government may consider the following recommendations which are vital for the growth suitability of the industry: Skill Development: Considering the growth trend, it is expected that the RMG industry can reach USD 25 billion export by next three years, which will create additional 8-10 lakh job opportunities. So, the government needs to take-up a comprehensive skill development initiative sustain the growth. The government can allocate Tk. 200 crore budget annually for skills development for the next 3 years. Adequate initiative should be taken to enhance the productivity of workers as well. A standard method to be developed to determine the productivity level of workers to keep the balance between skill and wage. Infrastructure Requirement. Modernization of Chittagong Port – Technology and other Physical Capacity The Chittagong Port Management can be privatized Construction of Deep-Sea Port An alternate Expressway between Dhaka and Chittagong (apart from 6 lane Dhaka-Chittagong highway) Set-up a double-track Railway between Dhaka and Chittagong to ensure maximum 3-4 hours travel time. Ensure proper use of Mongla Port and regional connectivity Setting up of Special Economic Zones (Garment Village) with proper township facilities for the workers to reside there Setting up of central ETP by the government Power and Gas: For supporting the sustained growth of industrialization in the country there is no alternate but adding massive capacity in power and gas sector. The present government is committed to bring visible changes, but till the time the power and gas supply situation gets normal the government can provide following assistances: Subsidy on diesel and furnace oil. The RMG sector needs approximately 250 million liters of diesel annually. Revise the electricity tariff plan by fixing the off-peak rate as flat rate. The peak rate is Tk. 7.12/KW and off-peak rate is Tk. 3.43/KW at present. Provide gas and electricity connection to the newly built factories which are ready for operation, on priority basis. Policy Support: Restoring the 0.25% source tax Withdrawal of 9% VAT on commercial space rent Rationalize Chittagong Port Charges Law and order situation including close monitoring of the activities of the instigators Different Departments of the Organization and their Function Different Departments of the Organization and their Function: There are three different major division in the factory. Major Division in RMG Factory Merchandising Production Human Resource My focus is on Merchandising Division. Merchandising Organogram of Merchandising Division: Managing Director Manager Mrechandiser Marketing Merchandising Production Merchandising Product Developer Assistant Production Merchandiser Junior Production Merchandiser The term Merchandising is the process of dealing with any product from its sales confirmation design analysis raw material sourcing, production and quality control and shipment arrangement to the customer with in a specific time frame. This is the Heart of the organization. Basic requirement for a Merchandiser: Excellent communication skills in English in both written and verbal, as a Merchant needs to communicate with multi-cultural business person/Organization. Skill in computer, internet, graphics software. Familiar with the technical terms of design, production, quality control, merchandising, and commercial activities. Adequate product and production related knowledge i.e. Fiber-Yarn-Fabric, Knitting, Cutting-Sewing-Finishing, Dying, Printing, Finishing, Embroidery printing etc. Right source of various raw materials lie Fabric, Trims-accessories, Embellishment and etc. Price idea and negotiation skills. Strong commitment sense and get the things done well in time / certain case in advance. Knowledge about international Marketing. Business rules and commercial activities. Strong Decision Maker - should be Smart enough to handle different situation. Daily Notes Meeting minutes for detail activities to be maintained and perform accordingly. Role of a Merchandiser in Garment Business: The Merchandising Executive must combine Logical and Analytical thinking with intuitive and expressive creativity. He must be a multi faceted individual who is Involved in all company functions that results in creation. Developments execution and delivery of a product line. Merchandiser plays various roles in the garment business. For a Buyer he is the supplier/ Manufacturer; To the factory he is a Buyer; To the supplier he Is also a Buyer - as the Merchant is representing the customer requirements/choice to the multiple phase of souring materials to shape the ultimate product. Organizing Design development. Prepare the Sample development as per customers selection or requirement. Product costing analysis & offer price quotation to customer. E-mail correspondence and making phone call to the customer, supplier. internal office and Factory for the concern Issues. Convincing I explain Customer in various case like- Pricing Shipment schedule. ship dote Extension, Penalty waiving etc in a fair way. Maintaining Proper file. Order tracking record and Time & Action Plan. Proper 0derstaflding of Briefing Sheet I technical Pack (Tech Pack) and Purchase order sheet (P0 sheet). Preparation of Lob dip/Hand loom/strike off/Bulk Lot approval from Customer Receiving the P0 sheet from customer and raising the PI (Performa Invoice) to customer to get the LC (Letter of Credit). Calculating Material requirements like for Yam. Fabric and Trimsaccessorizes Production space booking with Production Department as per the shipment schedule that confirmed with customer. Selecting and sourcing the raw materials from the right sources. Arranging payment terms for different suppliers. Getting the Raw-materials in-house before starling Production. Organizing necessary sampling approval on time. Pre-Production meeting with necessary approval comments and special instruction. Ensuring the Production to be started as per planning timeline. Organizing Pre-Shipment Inspection (PSI) — like Pilot Run, Inline. Mid-line, Pre-finial inspection etc. as per customer requirements. Ensuring scheduled Final Inspection Booking with Customer / 3rd Party inspection QA team as per customer requirements. Scheduled Vessel booking to be confirmed as per vessel sailing date / Window period /cut-off period. Ensuring the goods to be Ex-factory as per the timeline and need to confirm the Booking with Customer / 3rd Party inspection QA team as per customer requirements. Post shipment analysis report to Management and same to customer as well. Need to keep the order records Including the approved samples & etc for 4 to 6 months after the shipment. Areas of Merchandising Activities: Market Knowledge Sourcing Product Development Manufacturing MERCHANDISER Planning & Control Interface with Manufacturing Materials Managemen t Interface with Sales Production Authorization Garment Business Chain: Customer Inspection team Buying Agent Factory quality conral team MERCHANDISE R Raw material Suppliers Dhipping Logistics team Factory Productio n Team Production has five different Section: Store Cutting Sewing Washing Finishing Store Organogram of A Store Room: Managing Director Manager Store / Store In charge Asst. Manager Store / Asst. Store In charge Senior store Officer Store Officer Store Assistant Worker/Labor Importance of Store Room Management: Helps to smoothly run the industry Helps to ensure the quality of the product Helps to ensure timely delivery Helps to increase the productivity of the industry Helps to make industry profitable Helps to make the customer satisfied Helps to increase market share Activities of Store Room Management: Inventory Planning of the store Receipts of material / items Inventory for incoming materials Give entry of all incoming items in the resister book / computer Systematically sorting / racking all items Trims / swatch card prepare Collect approved trims / swatch card Samples prepare and send it to testing lab Perform inspection / checks to ensure quality of all incoming material Shade grouping of fabric / yarn Issue materials to concern department / section as per requirement Send finished goods to the port as per the schedule Ensure safety and security of the store Prepare update statement on incoming materials and outgoing goods Prepare report order wise Attend in the co-ordination / pre-production meeting Keep all records properly Compliance issue Cutting Organogram of cutting room: Cutting Room Manager/In charge Asst. manager Cutting Room Cutting Room Executive CAD Room In Charge Supervisor Pattern In Charge CAD Room In Charge Pattern Master Assistant Pattern Maker Marker man assistant Spreader Assistant Cutter Assistant Issue Record keeper Production flow chart in the cutting room: Fabric inspection Cut Ratio Planning Markers Spreaders Production Spreading Manual Machine Machine Cutting Die Press Cutter Computer Shade marking Cut Inspection Preparation of sewing Tickets Bundles Numbering Cut plan: Cut plan is very important. For cut order planning in the apparel industry, the problem begins with a given set of garments, in varying sizes, to be manufactured. A plan is needed for spreading the fabric and dividing the garments into various sections of the spread so as to minimize fabric waste and the cost of cutting, but still satis the customer’s order. The cut is performed by spreading fabric onto a table, often spreading several layers of fabric for cutting efficiency (See Figure at right). The actual lay out of the pattern pieces are called a marker. The key inputs for the cut order planning problem are the sizes to be cut in each section, ply height in each section and the number of sections required to fill the order. The size combinations per section are passed to the marker making function for actual determination of the marker itself Additional output is the estimated efficiency of the marker (in percentage of fabric utilization), the cutting cost per unit, the total perimeter to be cut and the total area to be cut. In our previous research, we showed that cutting costs do not have a significant impact on the total cost of cut order planning, so our methods are now based solely on the cost of the fabric. Three heuristic algorithms were developed for solving the cut order planning problem. The Savings heuristic assigns size combinations to a section based on the fabric savings achieved by combining them into one section. The Cherry Picking algorithm builds sections by combining certain sizes based on the best utilization of fabric. The Improvement algorithm takes an existing solution and tries to improve it by exchanging sizes in different sections or by combining existing sections into one section. These algorithms are embedded in a user interface which we have developed in the Windows ™ environment on a DOS-based PC. Where graphics and statistics are displayed for quick understanding of the results. Both the cut order planning and marker making problems are combinatorial in nature, and require heuristic methods for obtaining solutions efficiently. An example is following: Total quality = 1200 Maximum ply = 100 Garment per marker = 6 Marker length = 36 ft. S Red Blue Yellow 50 100 50 M 100 200 100 L 100 200 100 XL 50 100 50 Number of cut = =2 Cut 1 Size Color Red Yellow S 1 1 M 2 2 L 2 2 XL 1 1 Ply=50 Ply=50 Total ply=100 Garment= 6×100= 600 Cut 2 Size S Color Blue 1 2 2 1 Ply=100 Garment= 6×100= 600 M L XL Total ply=100 Marker length = 36 ft = 36/3 yds = 12 yds So, Red fabric required = 50 × 12 yds = 600 yds Blue fabric required = 100 × 12 yds = 1200 yds Yellow fabric required = 50 × 12 yds = 600 yds Total fabric required = (600+1200+600) yds = 2400 yds. Patten making: Patterns are the building blocks of a garment. Without them, constructing garments would be impossible. Patterns help convert a flat, two-dimensional cloth into a shapely, three-dimensional garment. Thus, making patterns would require skill and a sound knowledge of different shapes and sizes. Marker generation: Marker is a set of pattern laid on a sheet of paper in an organized manner and marked according to the pattern shape and size to cu a fabric lay of the fabric, so the fabric fallout (fabric wastage) could be minimized. Types of marker: I. II. III. Single garment marker Single size two or more garment marker Ratio marker Calculating Length of marker: We can calculate the length of a marker. The system is shown as followings: Assuming, 1 sq m pattern board weights Fabric width Pattern set weight Desired efficiency What will be the marker length? = 250 gm = 150 gm = 900 gm = 90% Step 1: 1 sq m = 10000 cm2 pattern board wt. = 250 gm So, 1 cm2 pattern board wt = 250/10000 gm/cm2 = 0.025 gm/cm2 Step 2: Area of the marker in pattern board = 900/0.025 cm2 = 36000 cm2 Step 3: We know, Marker efficiency = L = 266.67 = 267 cm So to active 90% marker efficiency, the length of marker will be 267 cm. Calculating Marker Efficiency: Let’s assume an order came like this S M L XL 2: Now, S pattern set weights = 150 gm M pattern set weights = 200 gm L pattern set weights = 250 gm XL pattern set weights = 300 gm Total = 2500 gm 3: 3: 2 1 cm2 pattern board weights = 0.02 gm Area accrued by pattern on marker= 2250/0.02 = 112500 cmᶺ2 Marker Efficiency = = = 90.36% The Efficiency of the marker is 90.36% Marker analysis: We have to consider the followings to analyze a marker: Fabric face to face or back to back Marker width Length of the marker Pattern component Style model Fabric consumption Matching design Both way marker Grain line Checked fabric One way marker End loss Marker length Folded fabric Fabric on the open Splicing position or overlapping Size combination Selvedge and edge Spreading: Factors of spreading: Fabric direction: Before spreading the direction of the fabric have to be right. The direction could be top to bottom or bottom to. It specially matter where the fabric has likes velvet or the fabric has shine like shiny fabric. If the fabric is cut into two different direction then if may happen that the garment has two different look on light reflection. Alignment: The alignment is important factor for spreading. The lay of fabric should be closed by clamp or attached by spick to maintain the alignment point to point. The grain line of the fabric should be considered. Matching checks and strips: If checked and stripe of a fabric are not matched it could be the cause of rejection of the garment. Before cutting it has to be made sure that the checked and strips of cut panel are checked and matched. Techniques of spreading: Face to face or back to back Alternative piles in different directions. Face to back Alternative piles in different direction. Face to back or back to face All piles are in same direction. Face to face and back to back Bundling: Bundling is to bundle the cut fabric. It is done to minimize size differences, avoid mixing up with different buyer’s order, to check toe measurement. Bundling cars is used in bundling. Buyer: Order No: Style No: Cut# Size: Part: Cutter: Date: Pieces: Bundle card Bundling is to bundle the cut pieces of different parts. Bundling is done to reduce the mixing of parts, shading, mixing with another order, size, styling, and rejection of the garment. Bundling is done with a marker on it, and then tied with the selvedge of fabric with a bundle card. It is very simple but important task indeed. Numbering: Number is given to the cut pieces of a garment are numbering. Numbering is the last check point to prevent shading. It helps to make a garment from a ply. That means, every part of a garment comes from an individual ply. Like the sleeve will be attached with 25 front and back, each part of the garment will be known as 25. Numbering could be done by sticker or machine or pen, usually on the seam allowance. Sometimes extra fabric is kept over the seam allowance when cutting. Numbering is done on the extra fabric by machine. So the ink of the machine is not spread on the garment. Cut panel checking: It is very simple task to check the cut fabric parts with the marker, but it is very important to reduce rejection. Cut ship ratio: The ratio between cut quantity and shipment quantity is the cut ship ratio. = = 90% If the selling price per garment is 5 UDS. Then the financial loss is 10×5 = 50 USD. Embroidery Embroidery is the art or handicraft of decorating fabric or other materials with needle and thread or yarn. Embroidery may also incorporate other materials such as metal strips, pearls, beads, quills, and sequins A characteristic of embroidery is that the basic techniques or stitches of the earliest work— chain stitch, buttonhole or blanket stitch, running stitch, satin stitch, cross stitch—remain the fundamental techniques of hand embroidery today. Printing Printing is a process for reproducing text and image, typically with ink on paper using a printing press. It is often carried out as a large-scale industrial process, and is an essential part of publishing and transaction printing. Sewing List of Machine used in Sewing section. Sewing floor of the factory Washing Finishing Pressing is done Metal detector Goods Ready to Ship Human Resource & Compliance The Human Resource division is the combination of two section: Human Resource HR Compliance HR department is responsible for any kind of recruitment in the factory. They also arrange training for the workers. Fire Safety and Evacuation Plan of the factory Canteen facility for the workers Compliance team looks after the workers right. They make sure every worker is treated equally. Suggestion They should improve their service quality. Incentive program has to be arranged. They should seek for new buyer. The wall must be plastered and cleaned. Production training for workers has to be arranged. Number of fire extinguisher has to be increased.