Textile Industry is the main foreign remittance earning sector for Bangladesh. This industry suffered a lot during the COVID -19 pandemic. Now the industry is trying to recover the gaps. According to many sources it is evident that most of the export-oriented garments factories are packed with business orders up to April 2022. Team Textile Focus talked with different factory owners regarding how to capitalize on this situation and what is the way forward to ensure maximum profit out of it. Md. Jasim Uddin, Managing Director, Texture BD shared his views-
Yes, most of the factories are currently overbooked for AW22 and SS22 orders. We are passing very critical moments; as you know, nowadays, cotton yarn prices hike historically—the trend of the cotton share price on markets showing more strong positions. My idea 30/1 Ne cotton yarn price will hit USD 5 plus shortly.
If anyone already took the orders and didn’t in-house the raw material, they will be in big trouble executing the orders. Many factories are suffering to get the yarn on time from the spinning mill. It usually takes 15 days to get the yarn, but currently, it hits 45 days. This delay sometimes causes air shipment, discounts as well as cancellation of products. The cost of knitting and dying has already increased by 15%. The overall raw materials cost increased 60-70%, which impacts a big difference on profit margin.
The vital points are raw materials price and how you calculated CM to maximize the product’s profit. As we have an overflow of orders, there is a possibility of negotiating the prices with buyers and pushing them for an up-charge. We should offer better prices to customers and keep patience to get the response from them.
Sometimes we hurry to book the orders to secure the factory space, but we should change our selling behavior. There is no alternative to increase product prices to get the profit margin, and this is the high time to set a new benchmark of prices with buyers, which might run for the long way.
We need to improve our product selection knowledge and cost parameters and increase production efficiency to maximize profits. In addition, everyone should analyse the risk parameters before taking any orders, which might increase profitability.
I am very much concerned about the SS22 orders because of cotton prices claiming and higher container cost. We might face orders shortage because of unstable market conditions. Everyone should take the necessary steps to make sure sustainable orders grow.