Bangladeshi garment owners desperate to lease out factories

The most unscratched textile producer during the recent global recession is seeing panic slowing creeping among garment exporters in Bangladesh as declining demand, has forced some factories to shut down and lay off workers.

Many factories are finding it hard to stay afloat as the orders are diminishing while input costs like energy and power rates hike resulting in bank liabilities.

This is on top of the challenging economic climate and ongoing war. Some owners are looking at the option of leasing out their factories.



This strategic move is to survive the declining demand in Western markets. But even this option is turning into frustration as the owners are struggling to find anyone willing to lease or purchase these factories.

For instance, the owner of Rose Garden, an Accord-approved medium light woven garments factory with six production lines located on Birulia Road in Savar, has been trying to sell the factory for the past eight months. Despite reducing the selling price by 25 percent to Tk3 crore, he is yet to find a buyer.

Some owners have been advertising in national newspapers to either sell or lease out their factories. In early May, a spinning mill with 63,120 spindles located in Vannara of Mouchak in Gazipur advertised a monthly rental price of Tk3.

10 crore but has failed to attract any lessees. Some owners have even been forced to close their factories and lay off workers, they said.

Dird Group, a global conglomerate of garment, textile, engineering, software, and agriculture companies have shut down three factories, with the most recent closure occurring just a few days before Eid-ul-Azha, resulting in over 8,000 workers losing their jobs.

“Many factory owners want to rent or sell their facilities, but there are no buyers because almost every manufacturer and exporter, be they big or small, is struggling for survival,” said Fazlul Hoque, managing director of Plummy Fashions, one of the country’s top green factories, and former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

It was found that the number of active factories in the woven and knitwear sector has dwindled to approximately 2,000, down from 4,500 in previous years.

Experts point out that renting out factories is often the first step before closure. Even factories in export processing zones are reducing production lines and laying off workers.

Faruque Hassan, president of the BGMEA, admitted that the overall business situation is gloomy as the global market has been in a downturn for a prolonged period. He emphasized that when factory management fails, owners attempt to lease or sell the unit, but bank liabilities often present a major obstacle for entrepreneurs.

Besides diminishing orders, the screw was further tightened by the government’s decision to significantly increase gas prices earlier this year. The sudden jump, ranging between 88 percent and 179 percent depending on the industries and their sizes, has been the final nail in the coffin for some entrepreneurs, prompting them to consider exiting the industry altogether.

Among few are U-Sun Knit Composite Mill in Sonargaon upazila under Narayanganj district has been shut down recently after failing to pay gas bills. As the bank liabilities balloon, any buyers are leery to take over the mill.

According to industry insiders, one of the primary obstacles to the sale of garment and textile factories is the substantial loan and interest liabilities with banks. This factor drives away potential buyers or leads to minimal response. Even Chinese buyers who initially showed interest ultimately withdraw their consideration upon seeing the balance sheets.