Friday June 18, 2021 2:39 pm
Friday June 18, 2021 2:39 pm
ECONOMYNEXT- Brandix, an apparel group employing over 70,000 staff worldwide is fighting a twin battle to keep workers safe and earning export revenues vital to keep the pandemic hit Sri Lanka stable, while also overcoming price competition and rising costs, an official said.
Sri Lanka’s exports fell after the first quarter of 2020 as supply chains got hit at the start of the pandemic foreign demand for goods evaporated with lockdowns in the US and Europe.
Sri Lanka managed to contain the pandemic and get cases down to zero by May 2020 making the island an oasis of stability for manufactures.
But one year later in 2021 Sri Lanka is battling a new wave and the country is in a lockdown with workers under movement controls.
“The situation is the opposite of what we faced in 2020,” Hasitha Premaratne, Group Finance Director Brandix said.
“Due to the aggressive vaccination drive, the Western world has recovered much faster than we anticipated. As a result there is a pick up in the orders.
“But we are constrained by the new wave. Our primary focus is worker safety in these difficult times.”
In 2020 Brandix shifted to personal protective equipments as demand fell away for regular clothes. The PPE work kept workers in jobs though health regulations and placed constraints on output.
In September one factory near the airport got infected, after a variant of Coronavirus. The so-called Nordic variant was suspected have leaked from a hotel where transiting air crews were housed, officials have said.
In the last week of May 2021 Sri Lanka went into a nation-wide lockdown as surgical isolation of small areas failed to contain the pandemic after the April New Year.
Lockdowns created further constraints.
Export factories were allowed to operate during the lockdown with workers provided company transport.
Workers in areas under strict isolation stay at home, increasing absenteeism. Brandix has been operating a health protocol in its network involving pre-screening and temperature checks. Based on red flags worker are asked to stay home with pay.
“The screening will check whether they attended a public gathering,” Premarate said. If they fail the screening they will b paid the full salary at home.”
During the first Coronavirus wave April 2020, Brandix gave a factory in Punani to the government to be used as a quarantine centre.
In October, a Brandix factory in Pinnawala was given to be used a quarantine centre.
In the latest wave, a factory in Seeduwa was given to the government be used an intermediate care centre. The Army converted it to a hospital and it is run by the Health Ministry.
Brandix continues to provide power and other utilities to keep the hospital centre running. Brandix workers can also get treatment at the centre.
“While we work during these difficult times and do our best to prevent our employees getting infected, if there is an infection to any of our employees then we ensure that they have appropriate care,” Premaratne said. “That is where this facility helps.”
The firm had also appointed counselors to the factories to help workers cope with psychological stresses of coping with Covid lockdowns. In the second wave some workers faced pressure from the community requiring support.
Sri Lanka’s export industries have also been calling on the government to vaccinate their workers, given the need to earn foreign exchange.
Sri Lanka has been facing forex shortages, and balance of payments deficits as the central bank embarked on an unprecedented money printing spree de-stabilizing the external sector, analysts have said.
The health ministry has ramped up vaccinations over the past two months and also started to vaccinate workers in industrial zones.
About a third of the Brandix workers have now been vaccinated Premaratne said.
Though the global economy is opening, with stimulus and handouts in the US putting more money in consumers’ hands, new challenges are also emerging in the form of price competition and soaring raw material price in addition to the Covid challenges.
“The price competition is quite severe, as suppliers who were left out by the brands in the first wave are now coming back, and try to win orders at any cost,” Premaratne says.
“As a result buyers also expect use to offer lower prices which led to significant pressure on prices.”
“Though people have money due to stimulus, retail brands expect us to lower prices.”
Meanwhile the Federal Reserve through its money printing is firing commodity bubbles, along with asset price inflation in stocks and digital currencies.
“Cotton prices have gone up significantly, also 40-50 percent in the last 12 months and this is having an impact on our raw material prices and our margins,” Premaratne said.
Covid related expenses and additional heath protocols and usable were also adding to overheads.
“While the orders are there, we have a huge challenge on profit margins. So we are operating under a very challenging business environment, improving international efficiencies, bringing in technology, automation and digitize to improve productivity.
“These measures have been adopted to mitigate these challenges and stay on course. So we are coming up with measures to counter this triple whammy. (Colombo/June18/2021)