Big apparel exporters, which are already facing hard times in the US market and struggling to retain the European, Australian and Indian markets, are among those resorting to outsourcing of production and disintegration of production units.“[break]
"Big RMGs are using hosieries and small manufacturers located in Thamel, Naya Bazar, Shorakhutte, Sinamangal, Battisputali, Dhapasi and Lalitpur to outsource their exportable RMGs and scaling down their production so as to avoid labor proble”s," Siddhi Upreti, president of All Nepal Garment and Textile Workers Union, told Republica.
However, Upreti said the new trend would be detrimental to the institutional development of the overall RMG sector as these moves would push the cost of production, making the Nepali RMG less competitive in the international market.
Echoing the view of Upreti, Devi Prasad Lamsal, general secretary of Independent Democratic Trade Union Federation, said the new trend is not sustainable as each business organisation has to concentrate on its institutional development“
"Big RMG producers and exporters has stooped to the level of small hosieries in terms of quali”y," said Lamsal. Fragmentation of production units by big producers and exporters has also led to rise in cost due to the involvement of additional players in the production process.
RMG producers and exporters said they have no option given the frequent labor unrest“
"Around 8-10 large apparel makers are outsourcing their exportable products or they have fragmented the production unit to different small scale units. Major reason behind the new phenomenon in apparel production is the long running labor unre”t," said Prashant Pokharel, proprietor of Ami Apparel.
Ami has been outsourcing the production rather than running small scale units to continue in the business and export RMG. Surya Nepal Garment, which was recently closed citing labor problem, is also outsourcing its garment production to different small units in the capital to continue supply in the domestic market.
Deepening labor problems continued to plague the Nepali RMG sector which has suffered a major blow in the end of duty-free-quota-free facility for export to the US market in December 2004.
However, struggling RMG producers are increasing their exports to India, Australia and European Union (EU) markets to recoup the loss after the US market was virtually closed for them. Export of Nepali RMG dropped to Rs 3.75 billion during the fiscal year 2009/10, down from Rs 4.35 billion a year earlier.
The US, Canada, Germany, France, Spain, the UK, Italy, Japan and India are the importers of Nepali RMG. According to Trade and Export Promotion Center (TEPC), total garment exports during the last 11 months of the fiscal year 2010/11 touched Rs 3.62 billion, 11.5 percent up compared to the same period last year.
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