LAHORE, Pakistan — Given the rising costs, global recession and the prevailing thin margins of Pakistani mills, the country’s recent 31 percent currency devaluation has given a breather to mills.
But if prices don’t soon start creeping up, many more of them will be forced to shut down, further reducing the capacity of this major textile exporting country, executives said.
The trend is for lower volume, but slightly higher prices, said Shahid Butt, chief executive officer of Shahkam Textiles, based here. Shahkam is Pakistan’s largest composite vertical knitwear facility with a capacity of 60,000 dozen a month. Its clients include retailers such as Macy’s Inc., sportswear brands like Puma and Nike and urbanwear buyers such as Phat Farm.
“There is a marginal increase in global prices, where earlier there was a 2 to 3 percent decrease, so the trend has reversed,” Butt said. “With the appreciation of the Indian rupee in the 2007-2008 fiscal year and inflation in China, Pakistani vendors have gotten the added advantage of the devaluation of the Pak rupee compensating for the higher input cost so were able to maintain the current low product price,” Butt said.
In Pakistan, the government devalued the currency by as much as 24 percent since the beginning of this year to save exports and to temporarily absorb a 30 to 35 percent input cost increase.
“Unfortunately, inflation will catch up with the devaluation in the next two to three months,” Butt said. “Just the price of yarn, which makes up 60 percent of the cost of production, has risen 25 percent in the last six months. There is a transportation strike in Karachi since mid-August as the higher price of oil is hurting truckers.”
The government has just this month increased power tariff rates by 31 percent for the state-run electrical company.
“At this time, mills have stopped large-scale investment and importers don’t want to carry very large inventories,” Butt said. “Some mills have even decreased their capacities and their revenue has been lowered, but the upside is that there is greater efficiency and the hidden cost of wastage has gone down. Shahkam has laid off 110 workers and is consolidating itself presently.”
Naveena Group, with mills here and in Karachi, recently shut down its knitwear unit, but is continuing with its denim and woven divisions. Naveena had been exporting knitted garments to brands such as Target prior to this.
Naveena director Asif Riaz stated that one reason was that, in the knit division, the firm was dealing with American buyers who were not willing to go against the travel advisory and come to Pakistan, whereas in the wovens division, it is dealing primarily with Europeans who don’t have any such issues. Even if American importers did come, he said, they wanted to buy cheaply, which was not feasible anymore.
In November, Irfan Textile Unit 1, based here, shut down its Irfan Unit 2, but since then 50 percent of its capacity has been added to Unit 1. Irfan Textile provides polo shirts and T-shirts for various divisions of Gap Inc.
Director Jawad Irfan said, “The price of Pakistani garments has not risen in six months, thanks to its rupee devaluation, but Chinese and Indian manufacturers are refusing orders at the current price. Pakistani mills working under capacity are accepting these orders at the low prices, but that cannot continue indefinitely.”
With high oil prices and global inflation, the cost is accelerating at an alarming rate. Whereas in 2007, the Pakistani wage increase was 15 percent, this year it is already 30 percent and even then it’s not at par with the increase in cost of living index. The cost of commodities has gone up and food prices have almost doubled.
Furthermore, Pakistan’s government announced last month that it will be capping this year’s fuel bill subsidy at $2 billion, after which the industry is on it’s own.
In Bangladesh, which has the cheapest labor available in the region, the government is subsidizing mills to provide commodity items like rice to workers to delay an increase in the minimum wage. It also offers lower interest rates and gives incentives to use local raw materials to mills.
However, when the living rate and minimum wage grow further apart, then if there is a spark, riots can erupt, like two years ago in Bangladesh when several factories got burned down over the minimum wage issue.
Similarly, in July, at least seven workers were shot in Faisalabad, Pakistan, when gunmen allegedly hired by factory owners opened fire on textile workers demonstrating for higher wages. One of the Kamal Textile Mills units in Faisalabad also was reported to have beenburned down by protesters due to labor unrest. The minimum wage here has gone up to $91 a month from $61, and some of the factory owners were dragging their feet in complying with this raise.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast