Echotex is a leading garment manufacturer in Bangladesh, established in 2008, known for its robust growth and commitment to sustainability. Starting with just six production lines, the company has expanded to 110 knit production lines, 12 denim lines, and 5 outerwear lines, now exporting close to $200 million annually. Echotex prioritizes worker welfare through various initiatives, including health insurance, subsidized meals, and childcare facilities. The company is also dedicated to environmental responsibility, implementing projects like solar power and water recycling to minimize its carbon footprint, positioning itself as a forward-thinking player in the global RMG sector. Recently, Team Textile Focus met with Redwan Chowdhury, COO of Echotex, and discussed a lot of industry-based situations, sustainability, and the upcoming future. The summary of the discussion is given below for our readers.
Textile Focus: How do you view the industry’s recent changes due to the country’s political shift, particularly in the RMG sector?
Redwan Chowdhury: In the RMG sector, we don’t immediately notice any changes because changes take at least three months until orders for the next season come in. There hasn’t been any noticeable change in the ongoing orders. We haven’t observed any negative changes here. Expecting changes, will likely be positive. For instance, If we receive more orders from the U.S., it will benefit our country as Bangladesh’s RMG production capacity is currently higher than the number of orders it receives. The negative impact is when the capacity is higher compared to lower demand, it adversely affects prices, and almost every factory suffers from price point. Many brands from countries like Europe and America used to have direct offices in Dhaka. but, due to the shift in their main offices to neighboring countries, they can now submit prices or compare and negotiate much faster, leaving us behind. This trend isn’t suitable for Bangladesh as it affects our competitiveness. In December last year, when worker wages increased, the cost in every industry in Bangladesh rose by around 6-7%. Due to the large number of suppliers in Bangladesh, many factories work at a much lower rates, constantly reducing buyer prices.
Textile Focus: How would you describe the journey of Echotex over the years?
Redwan Chowdhury: Echotex’s journey, which began in 2008 with just six production lines, has now increased to 110 knit production lines, 12 denim production lines, and five production lines for outerwear. Initially, our exports were less than $10 million and have surged to nearly $200 million. Despite the challenges posed by the COVID-19 pandemic and other factors, our growth trajectory remains promising, offering a ray of hope for the future of the RMG sector. Our ability to navigate these challenges with resilience is a testament to our stability and commitment to growth, inspiring all who are part of our journey.
Textile Focus: What facilities does Echotex provide to its employees, and how do these ensure worker wellness?
Redwan Chowdhury: Since our establishment in 2008, Echotex has steadfastly committed to worker welfare. We started by providing hot meals cooked on-site, and with the shift system, we now offer breakfast and lunch for the morning shift, all for free. To compensate for the lack of overtime in this system, workers receive an additional two hours’ wages for work beyond eight hours shifts. We ensure food quality, as most workers rely on factory-provided meals. Additionally, we offer snacks like the savory mix, biscuits, rice, and lentils at a 10-15% discount, payable via their next month’s wages, using a cashless card system. Health insurance is fully covered for our 18,000 workers, extending to four family members, benefiting around 1,900 families. Female workers get free sanitary napkins every month. We have one childcare facilities in our factory and two nearby, supported by BRAC, which also helped set up a school. Despite the challenges posed by COVID-19, we have continued to ensure provident funds, gratuity, and financial inclusion. Since 2008, wages have been paid through banks to facilitate access to bank loans. Various training programs are also in place to enhance worker skills, demonstrating our unwavering commitment to worker welfare and ethical business practices.
Textile Focus: What challenges do you face in the RMG sector or the overall industry?
Redwan Chowdhury: Our operations are always aligned with credit. At one time, near past we worked with all customers on an at-sight payment basis, then gradually moved to a 60-days credit system, with payment completed within a maximum of 75 days. Similarly, the raw materials we purchase follow a 60-90-day payment credit system. Since we buy raw materials in advance for the next season, there’s a 60-day gap between receiving payments and paying suppliers, which adds pressure to the industry. Sometimes, this timeline doesn’t match, and we have to take loans from banks by documents purchase, which previously had a 1-5% interest rate but is now 7%, which is relatively high. Obviously, those who budget properly face fewer problems.
Textile Focus: What are Echotex’s future plans for workers and overall growth?
Redwan Chowdhury: We are keen on improving the living of workers and every year, we try to add new benefits for our workers, but it’s becoming increasingly difficult as prices continue to drop. While prices are falling, the currency’s value is also decreasing due to high inflation, which poses a significant challenge. This double impact affects our ability to maintain the same benefits for our workers. It also puts pressure on our financial planning and budgeting, making it more challenging to ensure the sustainability of our operations.
To discuss future growth, we must first address the challenges we face. Energy costs in our industry have surged by about 190%, relying on LPG, diesel, CNG, REB and natural gas. Carbon emissions are a significant issue. Energy costs affected Echotex’s costs by $200,000 monthly. However, we’ve initiated a solar panel project, installing panels on all factory rooftops to generate 1.2 megawatts, which covers only 20% of our energy needs. This project has significantly reduced our reliance on traditional energy sources and is a step towards sustainability. For the rest, we still rely on other sources. We also implement zero liquid discharge to recycle 100% water into production. With our new building, we aim to expand printing and outerwear lines, increasing exports by $50 million next year to reach $250 million and create 2,000-3,000 jobs. These efforts inspire us to overcome the challenges and continue our growth; we hope they inspire you.
