Spinning Sector Is Now Being Operated At A Loss

- Sep 30, 2018 -

Modern technology and efficient manpower can revitalize the spinning sector of Bangladesh.

Abu Hasan Mahmud, Director (Operation), Amber Cotton Mills Ltd

The resiliency of the spinning industry directly dominates the other forward industries utterly. In the last few years, total industry environment has changed dramatically due to some unavoidable issues like utility problem, cotton price increase, workers wage hike etc. All the circumstances of Bangladesh spinning industry came out in a recent discussion between Factory Tales Research Team of Textile Today and Abu Hasan Mahmud, Director (Operation), Amber Cotton Mills Ltd., some important conversation revealed here for the readers.

Abu Hasan Mahmud Director Amber Cotton Mills LtdFigure: Abu Hasan Mahmud, Director (Operation), Amber Cotton Mills Ltd.

Textile Today: What is the present scenario of Bangladesh spinning sector?

Abu Hasan Mahmud: To meet the export target ‘USD 50 billion by 2021’set by RMG leaders, the spinning sector has the potentiality to play a leading role for bridging the gap in value contribution. As much as it supplies the yarn to make fabrics for RMG, it can gain the maximum price of the profit. According to Bangladesh Textile Mills Association (BTMA), there are 425 spinning yarn-manufacturing mills in Bangladesh. Value addition in knit and woven RMG are over 70% and 35% respectively. Around 90% yarn demand for knit RMG and 35-40% yarn demand for woven RMG are met by Primary Textile Sector (PTS). Local fabric demand and the yarn demand for handloom are also met by PTS. Backward and Forward linkage industries provide employment for more than 5 million people where 80% are female.

According to the report of USDA (November 2017), yarn and fabric consumptions in Bangladesh is expected to rise to 1.13 MMT and 7.4 billion meters on strong international demand for clothing due to population growth, urbanization, and disposable income growth. Demand for quality cloth also increases in domestic markets as wages and living standards rise. The retail market size of clothing in Bangladesh is nearly $8 billion a year, according to industry insiders.

Albeit having greater opportunity to flourish considering the strong demand, the spinning sector at present is undergoing through various obstacles and situations, which are getting more crucial day by day. The price of raw cotton is increasing drastically and very volatile as usual. We do not have any control over it and cannot make a sustainable stock what China, India and other countries do. The price is around 20% higher comparing to the corresponding month of last year. Price of electricity, wages, and transportation costs have also increased concurrently whereas the yarn prices are the same as before. Hence, the spinning sector is now at a breakeven point or often being operated at a loss.

The Present situation of Bangladesh spinning sector at a glance

Textile Today: Government is importing LNG and announced for yet another round of gas price increase. How will it affect your business and how will you manage the additional cost?

Abu Hasan Mahmud: The price of gas may go up in captive power and industrial sector, which is like to pour water on a drowned mouse. Any increase in prices of gas will deal a blow and have a negative effect, forcing front-end industries to suffer further. Production costs will be higher than before. To mitigate the additional cost we need to increase productivity by means of increasing unit production and increasing output realization as well which can be possible if the other factors like availability of raw materials, manpower, financial facilities, and even electricity are available.

Besides, we need to pay concentration on increasing the efficiency of both man and machinery. Reduction of electricity consumption has important environmental and economic benefits, which can be achieved by replacing old machines with new machines equipped with advanced technology where we get more output by consuming less electricity. Setting automation is another way of reducing cost. Moreover, there are value-added products for earning more premiums.

Adoption of high-quality new equipment to automate elements of the RMG industry can be a way to mitigate the upcoming gas price hike and increased minimum wage.

ABU HASAN MAHMUD, DIRECTOR (OPERATION), AMBER COTTON MILLS LTD.

Textile Today: How will RMG makers cope up with the current wage hike?

Abu Hasan Mahmud: The government of Bangladesh has raised the minimum wage of RMG workers to Tk 8,000 that is 51 percent higher than the current minimum wage Tk 5,300. At this stage when RMG is struggling hard to meet their export target by competing with the other countries who are playing well for their highly value-added goods, the wages hike can be very crucial to sustain. On the other hand, if minimum wage hikes really do spur the creation and adoption of high-quality new equipment to automate elements of the RMG industry, then that would be a very positive outcome. Productivity-enhancing technology, after all, is a crucial pillar of social and economic progress. Hence, the RMG industry needs to increase their overall efficiency. As it is not yet fully able to produce high value-added goods, it needs to concentrate on it, which can mitigate the excess production cost by earning more value.

Finally, RMG millers must emphasize on escalating its export to the emerging markets in Asia, Africa, and America. As much as it expands its market, it can have a remarkable success.

Textile Today: What are the initiatives Amber Cotton Mills Ltd has taking for a sustainable business?      

Abu Hasan Mahmud: Amber is one of the prominent local conglomerates having an integrated textile unit of 3 Ring Spinning mills, 2 Open-end spinning mills, and 2 Denim mills. We strongly believe the proverb “First reach your target in your mind, then reaching your target, in reality, will just be a formality.” As we cannot cut down the fixed cost and in some cases, variable costs are also unavoidable, we are going for productivity-enhancing technology by replacing age-old machinery phase by phase, which enables us to achieve more output with less input. We are incessantly striving to reach our targeted goal. At present, commissioning of compact yarn attachment is going to dig up more unit output with improved quality.

Undoubtedly, our textile sector needs to concentrate on more value-added products and we are no exception to that. We are producing slub, ciro, core-pun, multi-count, multi-twist and blended yarns like Viscose, Modal etc.

Considering the market demand for quality and value-added products, we have planned for another fully automated new project where efficient use of power (both electricity and manpower) will be ensured.


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