Internship report

On

Pearl Prince Apparels

Limited

Prepared 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.

1

Mizanur Rahman

Complinace Manager

Marks And Spencer

2 Tahare Ferdouse

Dewhirst Bangladesh Ltd

3

Saheen Alam

Manager Compliance and HR

Pearl Price Appeals Limited

4

Abdur Rahman Tutul

Sr. Merchandiser

Pearl Price Appeals Limited

Contents

Topic Page No.

Executive Summery 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

saheen.alam@yahoo.com

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 Pearl Prince Apparels Limited

Address : Plot – 14, block – A, Squibb Road, Cherag Ali,

Tongi Industrial Area, Gazipur – 1711, Bangladesh.

Location :

Near the Dhaka – Mymenshing highway, 10

Minutes drive from Shahjalal International Airports

towards North.

Focus of the Factory :

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.

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.

Bank Details :

Exim Bank Limited

Motijheel Branch, Dhaka.

Legal status : Private Company

Corporate Setup

Chairman : Mr. Taslim Akhter

Merchandising : Mr. Varun Gambhir

Quality : Md. Mahabubr Rahman

Compliance : Saheen Alam

Factory Location:

Overview of the Factory:

Brand Logo

Total factory Area : 114500 Sq . ft

Monthly Capacity : 200000 – 250000 Pcs ( Woven Bottom)

Market : USA, Europe, Canada.

Customers : Marks and Spencer Jc Peny, VF Asia, Kohl’s and

Macy’s

Production Category : Dress pant, 5 Pocket Demin, Cargo Short, Trouser

and Skirts.

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:

Managing Director

General Manager

(Production)

Production Coordinator

Cutting

Sewing

Finishing Maintennance

General Manager Admin & Compliance

Security

Store

HR

Production Manager ( Washing)

Washing

Dry Process

Sand Blasting Quality

Manager

Werehouse

Man power Details:

Designation Quantity

Operator 750

Helper 350

Quality Inspector 140

Quality Controller 25

Quality Asst. Manager 2

Production Manager and Asst.

Production Manger

6

Supervisor 60

Line chief 15

Cutting in charge 1

Cutter and cutting Assistant 67

Iron man 90

Folding man 24

Packing man 28

Mechanic 13

Electrician 11

Security Guard 17

Checker 5

Sweeper 10

Cleaner 30

Pattern Master 1

Product Development 14

Admin 34

Mechhendiser 8

Store officer 2

Boiler Operator 2

Generetor Operator 2

ETP 2

Total 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:

Business Share % With Different Retailers:

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

45%

25%

10%

10%

8% 2%

M&S

VF Aisa

Kohl's

JcPenny

Macy's

Other

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 regulations 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 Export (in US $ million) Percentage change

1991 – 92 624.16 32.49

1992 – 93 866.82 38.88

1993 – 94 1182.57 36.43

1994 – 95 1445.02 22.19

1995 – 96 1555.79 7.67

1996 – 97 2228.35 43.47

1997 – 98 2547.13 14.11

1998 – 99 3001.25 17.83

1999 – 00 3781.94 26.01

2000 – 01 4019.98 6.29

2001 - 02 4349.41 8.19

2002 – 03 4859.83 11.74

2003 – 04 4583.75 5.68

2004 – 05 4912.12 7.21

2005 – 06 5686.09 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 are-

lack 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 percentage-

Primary Problems

Problems high medium low total

01.Raw-materials

3 2 0 5

60% 40% - 100%

02. Marketing problems

1 3 1 5

20% 60% 20% 100%

03. Machinery problem

5 0 0 5

100% - - 100%

04. Inefficient workforce 3 2 0 5

60% 40% - 100%

05. Licensing problem

1 1 3 5

20% 20% 60% 100%

06. Quota problem

4 1 0 5

80% 20% - 100%

07. Poor government policy

3 2 0 5

60% 40% - 100%

08. Labor unrest/strike

5 0 0 5

100% - - 100%

Secondary problems

Problems high medium low total

01.Middle man affect

1 3 1 5

20% 60% 20% 100%

02. Sluggish business linkage

0 2 3 5

- 40% 60% 100%

03. Unloading(RM) takes time

2 2 1 5

40% 40% 20% 100%

04. Time consuming schedule

2 3 0 5

40% 60% - 100%

05. Communication gap

1 2 2 5

20% 40% 40% 100%

06. Dependency on foreign market

5 0 0 5

100% - - 100%

07. Trade block

0 2 3 5

- 40% 60% 100%

08. Credit problem

2 3 0 5

40% 60% - 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 jute-

exporting 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. Employment status, wages & legally mandated benefits

2. Voluntary overtime

3. Harassments and abuse

4. 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 ever-

changing 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 duty-

free 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 providing-

proper 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

Estimated Average Wage of the Workers in a 100 worker RMG Factory

0

20

40

60

80

100

120

140

Trainee Grade I Grade II Grade III Grade IV Grade V Grade VI Grade VII

Wage Groth Comparison, in % 1994-2006 and 2006-2010

2006

2010

*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 2009 2010 Growth%

January 584.24 570.26 -2.39

February 532.57 560.46 5.24

March 542.13 615.74 13.58

April 437.79 505.9 15.56

May 493.41 555.98 12.68

June 522.62 622.43 19.1

July 521.78 671.28 28.65

August 490.09 645.39 31.69

September 364.76 473.57 29.83

October 307.76 559.27 81.72

November 439.78 534.87 21.62

December 458.49 752.68 64.16

5695.42 7067.83 24.1

Knit (MN US$ )

Month 2009 2010 Growth%

January 562.94 535.06 -4.95

February 466.87 481.85 3.21

March 480.61 552.81 15.02

April 479.96 545.38 13.63

May 578.59 632.32 9.29

June 619.66 727.93 17.47

July 651.85 798.66 22.52

August 552.46 790.06 43.01

September 449.63 592.56 31.79

October 440.46 706.75 60.46

November 487.27 644.94 32.36

December 426.27 778.95 82.74

0

200

400

600

800

Woven (MN US$ )

Total 6196.57 7787.27 25.67

Total (Woven+Knit)

Month 2009 2010 Growth%

January 1147.18 1105.32 -3.65

February 999.44 1042.31 4.29

March 1022.74 1168.55 14.26

April 917.75 1051.28 14.55

May 1072 1188.3 10.85

June 1142.28 1350.36 18.22

July 1173.63 1469.94 25.25

August 1042.55 1435.45 37.69

September 814.39 1066.13 30.91

October 748.22 1266.02 69.2

November 927.05 1179.81 27.26

0

200

400

600

800

Knit (MN US$ )

December 884.76 1531.63 73.11

Total 11891.99 14855.1 24.92

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 ‘2-

stage’. 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.

0200400600800

1000

1200

1400

1600

Total (Woven+Knit)

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?”

II. 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.

III. 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.

IV. Garment machinery import LC opening has increased by 41.91% during July-

November 2010 period (Source: Bangladesh Bank). Such a high capacity

expansion has implication on furthering the skill shortage.

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.

My focus is on Merchandising Division.

Major Division in RMG Factory

Merchandising Production Human Resource

Merchandising

Organogram of Merchandising Division:

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.

Managing Director

Manager Mrechandiser

Marketing Merchandising

Product Developer

Production Merchandising

Assistant Production Merchandiser

Junior Production Merchandiser

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 Trims-

accessorizes

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:

MERCHANDISER

Market Knowledge

Product Development

Planning & Control

Materials Managemen

t

Production Authorization

Interface with Sales

Interface with Manufacturing

Manufacturing

Sourcing

Garment Business Chain:

MERCHANDISER

Customer

Buying Agent

Raw material Suppliers

Factory Production Team

Dhipping Logistics

team

Factory quality conral team

Inspection 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

Planning

Cut Ratio

Markers

Spreaders

Production

Spreading Manual

Machine

Cutting

Machine

Die Press Cutter

Computer

Preparation of sewing

Shade marking

Cut Inspection

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 M L XL

Red 50 100 100 50

Blue 100 200 200 100

Yellow 50 100 100 50

Number of cut =

= 2

Cut 1

Size

Color S M L XL Total ply=100

Red 1 2 2 1 Ply=50 Garment= 6×100=

600 Yellow 1 2 2 1 Ply=50

Cut 2

Size

Color S M L XL Total ply=100

Blue 1 2 2 1 Ply=100 Garment= 6×100=

600

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. Single garment marker

II. Single size two or more garment marker

III. 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 = 250 gm

Fabric width = 150 gm

Pattern set weight = 900 gm

Desired efficiency = 90%

What will be the marker length?

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 : 3 : 3 : 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

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# Date:

Size: Pieces:

Part:

Cutter:

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.

Bundle card

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

Goods Ready to Ship

Metal detector

Pressing is done

Human Resource & Compliance

The Human Resource division is the combination of two section:

HR department is responsible for any kind of recruitment in the factory. They also

arrange training for the workers.

Human Resource

HR Compliance

Fire Safety and Evacuation Plan of the factory

Compliance team looks after the workers right. They make sure every worker is

treated equally.

Canteen facility for the workers

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.