Nearly 70% of Garment Manufacturers Worried About COVID-19 Challenges
Date: Wednesday, June 3, 2020
Source: Sourcing Journal
The impacts of the COVID-19 crisis have been felt across industries worldwide. But as people everywhere fight to stay healthy amid increasingly difficult economic circumstances, the footwear and apparel sector is taking a particularly brutal hit.
According to newly released data from Sedex, which works to improve the conditions of global supply chains, nearly 70 percent of its members in the textile, footwear and apparel manufacturing sector said they expect the dearth in business to create significant or critical challenges.
Taking into account 2,500 comments received from its member businesses, Sedex said the vast majority are most worried about disruptions to their supply of input materials, followed by restrictions on transporting goods, and reduced or canceled orders.
Companies are also anxious about debts and other financial problems, insufficient personal protective equipment, store closures, labor shortages, disruptions to production processes, delayed payments and rising prices on input materials.
While 56 percent of survey respondents across industries said they felt their brand and retail customers were being supportive of their businesses during this trying time, just 38 percent of textile, clothing and footwear manufacturers said the same.
“This reflects the picture we are seeing in factories worldwide, where many companies are closing and hundreds of thousands of jobs are being lost resulting in vulnerable situations and health risks for those affected,” analysts wrote. “This is particularly the case in apparel and footwear where whole regions and countries depend on international retailers for income, and where state support to provide safety nets for workers who lose their jobs are close to non-existent, pushing workers into poverty and heightened risk of contracting COVID-19.”
Despite the bleak picture painted by its assessment, Sedex said most buyers (79 percent) believe they are taking appropriate actions to support their suppliers through actions like reduced auditing, better forecasting, health measures for workers, supported wage payments and low-interest loans.
Still, these actions have not proven to be enough to keep supply chains running smoothly.
More than half (56 percent) of textile, apparel and footwear manufacturing respondents said they were facing labor surpluses due to decreased demand for their goods, while just 30 percent said they experienced workforce shortages.
“Global supply chains rely on a workforce that tends to be low-cost, easily accessible and flexible across geographies,” Sedex said. “The low costs mean that workers out of work are at higher risk of poverty, while restrictions on movement mean easy access to migrant labor is no longer an option.”
Due to waning consumer interest, textile, apparel and footwear suppliers have had to lay off or furlough workers, or reduce staff hours. Forty-six percent have taken actions to reduce shifts for their employees.
Despite the difficulties in managing workforces due to demand, nearly all respondents said they were taking actions to prioritize staff safety and health through the crisis. Ninety-nine percent of businesses said they were using tactics like physical distancing, training, policy development and increased personal protective equipment to try to mitigate the virus’ spread.
When asked what actions their customers could take to help them manage the impacts of COVID-19 and ensure the physical and economic health of their businesses, suppliers overwhelmingly requested improved purchasing practices.
Because of rampant industry-wide order cancellations and contract breaches in recent months, 67 percent of textile, apparel and footwear manufacturers requested that their buyers avoid these actions moving forward. A recent survey of 35 top global fashion brands found that just 19 have committed to paying for production orders in full, while others ask for retroactive discounts or push payment terms out to six months.