A Sukumaran
Chairman Joint Apparel Association Forum (JAAF)
Sri Lanka has some of the strongest labour laws in the region
The Joint Apparel Association Forum (JAAF) is the apex body that guides Sri Lanka’s apparel industry towards its ultimate goal of being the world’s number one apparel sourcing destination. JAAF represents five associations that cover supply chain partners, the export-oriented apparel manufacturers, buying offices and representatives of international brands in Sri Lanka. JAAF chairman A Sukumaran speaks to Fibre2Fashion about the Sri Lankan garment industry and its preparedness to meet the challenges in 2022.
What are your key takeaways from the textile and apparel industry developments in 2021?
Sri Lanka was able to leverage resilience and adaptability to weather the pandemic in 2021. Ensuring that all workers were fully vaccinated was our topmost concern this year.
My key takeaway is that the industry’s resilience stemmed from our capacity to adapt and innovate our supply chains and products.
Sri Lankan manufacturers adapted to the challenges of virtual work by leveraging 3D and digital product development technology to ensure that product cycles were not affected.
Our strategic partnerships with clients, our reputation and the trust among buyers were critical this year. The impact of the pandemic on the industry could have been significantly worse if our relationships with buyers were transactional and the country’s offering was commodity-driven.
One challenge that continues even today however is the impact on shipping. We have seen drastic increase in sailing times, coupled with steep hikes in freight rates adding both time and cost to an industry where these are two key drivers. That situation continues today, and we see no signs of a return to pre-pandemic levels anytime soon.
Following the recent COP26 meeting and given the textile industry’s influential role in climate change, what major developments do you expect in 2022?
Sri Lankan apparel manufactures have made a strong commitment to sustainability in their operations and products, even before COP26. Consumers and brands are more conscious about the environmental impact of a garment, and Sri Lanka will continue to prioritise low carbon footprint in manufacturing, greener facilities, reduced use of hazardous chemicals in the production process and demonstrate greater transparency across the supply chain on the environmental impact of each garment produced (e.g., carbon impact tags).
We are grateful for the renewed commitments by the Government of Sri Lanka that were made at the COP26. However, challenges remain in reducing the carbon footprint related to the transport of raw materials and finished goods.
Related to this, will we see brands increasingly start focusing on sourcing with sustainability/ethics as a factor?
Sri Lanka is one of the world’s premium suppliers of ethical and sustainable garments. Sustainability has been at the core of our operations and will continue to remain so. With the emergence of slow fashion and circularity, we do expect brands to source from ethical and sustainable suppliers.
Does 2022 seem to be as uncertain as 2021? Which factors would you rank as of topmost concern?
There is some uncertainty, yes, emanating from the potential threat posed by the emergence of the Omicron variant of COVID-19. Its impact will be hard to quantify at this time.
There is also some volatility on the global macroeconomic front, the impact of which is also hard to quantify at present.
The agility in our supply chains and operations has meant that the industry was able to overcome challenges posed by the pandemic.
Increasing raw material costs coupled with higher logistics and shipping costs are having a crippling effect on the sector. While ensuring worker safety remains our top priority, concerns like losing GSP+ will be critical to the sustainability of the industry going forward.
By when do you expect the challenges of shipping industry to ease?
Maritime freight rates had been on an upward trend since the second half of 2020. As of September 2021, rates had increased by 292 per cent year-on-year. Sadly, we don’t see any signs of this being reversed even next year.
On average, Sri Lanka had 200 ships on a monthly basis, and a further 78 flights and freighter operations moving in and out of the country on a weekly basis.
Will we see greater technology adoptions in 2022 to solve transparency and traceability issues in the supply chain?
Adopting technologies like blockchain will definitely solve transparency and traceability issues in the supply chains. Transparency is also key to addressing the ‘green-wash’ debate as it provides consumers and brands with verifiable data to inform the purchase of a garment.
Energy prices are currently a major concern across the world. How do you see them continuing and what business strategies can we expect to cope with them?
By energy prices, if you are referring to crude oil prices, clearly, they push up prices of raw material imports, like fabric and yarn, which are important inputs in making apparel. So, transport costs – like shipping costs matter.
Second, petroleum products are raw materials in the manufacture of synthetic fibres that are used in some fabric used in apparel. That translates into input cost increases for us, and while they may not be very volatile just now, it’s something we keep an eye on.
All of this has an impact on the costs of production right through the supply chain, be it yarn, fabric, trims, or garment manufacturers. The key to resolving this is to have a proper strategy for these incremental costs to be shared by all stakeholders, and not pushed down in their entirety on the apparel manufacturers.
How pressing could be the labour issues for the textile and apparel industry in 2022?
Worker welfare is our biggest priority. Sri Lanka has some of the strongest labour laws in the region and in addition to these and other legislative measures, all of Sri Lanka’s large apparel manufacturers have established their own internal procedures and protocols in order to protect the rights of workers, establish grievance handling procedures, and ensure strict compliance with domestic laws as well as the often-stricter compliance standards of international brands.
Do you expect any significant movement in textile and apparel supply chains in 2022 due to the geo-political scenario, particularly the US-China tension?
We expect buyers to diversify their market portfolios and show interest in apparel sources out of other geographies so that they aren’t overly leveraged in one country.
While we have seen some trade shifts away from China, it is unlikely to be to the degree where China loses its dominance as the leading apparel manufacturer. However, opportunities are emerging for countries like Sri Lanka to increase market share because of such shifts.
The most recent Xinjiang cotton issue has indicated that sourcing both fabric and yarn may move away from China, and towards countries like India. In Sri Lanka, projects like the Eravur Fabric Park will transform the country into a regional hub for ethical and sustainable apparel sourcing.
Do you expect any changes in the textile and apparel business model in the New Year?
In the coming year, the vision for Sri Lanka’s apparel industry growth is through value addition and by positioning the country as a “total solutions provider” for buyers – offering end-to-end solutions; opportunities for hub operations, greater backward integration for speed to market and flexibility. Factors like sustainability, generating greater value addition through the setting up of Eravur Fabric Park-like infrastructure to gain better control over the value chain are in line with our vision of becoming a global hub for apparel manufacturing of the most sustainable and high-quality variety.
On the demand side, do you expect a significant pick-up beyond pent-up consumption in 2022, without government support?
After two challenging years, the global fashion industry is picking up pace. The State of Fashion 2022 report also found that in many regions, the business of fashion is set to pick up momentum in 2022. In Sri Lanka, the government support in terms of macro-economic stability and growth-oriented fiscal policy will be critical to the sector.
Published on: 12/01/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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