Energy crisis hits orders at 55% of knitwear factories

Some 55 percent of knitwear factories have seen international retailers and brands either cancel or reduce work orders amid the ongoing energy crisis, according to a survey by the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

The disruption has also caused widespread production losses, shipment delays and higher costs, with nearly two-third of the surveyed factories facing the risk of defaulting on bank loans, according to the survey findings released yesterday.

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The BKMEA surveyed 20 percent of its member factories in Narayanganj, Gazipur, Chattogram, Dhaka and other areas between August 21 and September 14, BKMEA Executive President Fazlee Shamim Ehsan confirmed to The Daily Star.

Nearly 78 percent of the surveyed factories reported partial production shutdowns, while 87 percent faced shipment delays. Around 60 percent had to offer discounts to buyers because of the disruptions.

Electricity shortages were the biggest reported disruption, affecting around 90 percent of the factories.

The crisis has also increased production costs. Around 92 percent of the surveyed factories incurred additional costs for alternative fuels, while a similar proportion reported wasted labour and working hours.

Nearly 89 percent said they faced the risk of losing buyers’ confidence, while about 59 percent faced the risk of defaulting on bank loans. Around 7 percent reported completely shutting down production.

“The garment sector is going through a difficult time. Even though many of us are doing well… some factories got shut down. If the government gives us good policy support we can overcome this challenge,” said Fazlee.

90% AFFECTED BY POWER SHORTAGE

The survey showed that electricity shortages were the biggest reported disruption, affecting around 90 percent of the factories. Nearly 75 percent were affected by gas shortages and about 14 percent by other shortages or disruptions.

Among respondents who provided information on gas pressure, supply had fallen by an average of around 78 percent from normal requirements.

The deterioration in electricity supply was also significant. Among respondents who provided information on load-shedding hours, the average daily duration of outages had increased by around 200 percent from the previous period.

The disruptions have had a substantial impact on production. Knitting output fell by an average of 37-38 percent, dyeing production by 51 percent and garment sewing production by 40 percent, according to the survey.

Of the surveyed factories, around 45-46 percent were from Narayanganj, 20 percent from Gazipur, 18 percent from Chattogram, 13 percent from Dhaka and nearly 3 percent from other areas.