Representatives from a range of organizations joined the roundtables, including Better Buying, Care International, China National Textile and Apparel Council (CNTAC), Crystal Group, Elevate, H&M, Hong Kong Research Institute of Textiles and Apparel (HKRITA), the International Labour Organization (ILO), All Indonesian Trade Union Confederation, Nike, PT Pan Brothers, the Sustainable Apparel Council (SAC), Texas A&M University and the University of Michigan.
Rethinking the business modelExamining the current situation in the sector, participants agreed that COVID-19 will continue to have significant impact on garment supply chains in 2020 and beyond. The pandemic has exposed the vulnerability of global garment supply chains and put a spotlight on the fragile structural dynamics of the industry. At the same time, the crisis brings with it a critical opportunity to transform the industry into something stronger and more resilient for the future.
I remain optimistic because there's an incredible opportunity for the industry to rebuild differently and better."Amina Razvi, Executive Director, Sustainable Apparel Coalition (SAC)
A common view was that the current crisis will precipitate a further round of consolidation in the sector, with bankruptcy-led closures among many smaller firms leading to a long term reduction in the number of manufacturers.
At the same time, Marsha Dickson, President and Co-Founder of Better Buying, highlighted the possible need for larger manufacturers in Asia to subcontract orders to smaller units as a result of reduced workforces due to COVID-19, which may incentivise new or rehabilitated smaller firms to (re)-join the industry.
Among manufacturers, some experts suggested that there will be stronger incentives to upgrade production units and to diversify capabilities post-COVID-19. This will enable manufacturers to mitigate risk, reduce costs, increase efficiency and enhance their long-term competitiveness.
Concerns were raised however regarding some buyer’s purchasing practices during the pandemic, which might also lead to a further ‘race to the bottom’ among some manufacturers. According to Ian Spaulding, CEO of Elevate, many factories are now agreeing to payment terms that they never would have accepted a year ago.
Data and technology key to the futureCOVID-19 has also highlighted the need for more data-driven processes, meaning some Asian manufacturers will increasingly need to invest in digitalization and technology-based solutions as a response to buyers asking for more control over and precise information about the production process.
Roundtable participants suggested that garment manufacturers increased usage of data analytics could improve efficiency and transparency of garment supply chains. It was also proposed that manufacturers would be in a stronger position if they increasingly leveraged data to forecast and proactively respond to market demands.
Larger manufacturers with more capacity and financial strength will be in a better position to respond to this development, particularly as they typically have stronger relationships with buyers that can assist with technological upgrading.
New pressures on Decent WorkIn the discussions, experts also expressed concern that the pandemic will place increasing pressure on garment manufacturers to lower prices, leading to more unsustainable practices and violations of labour rights in some factories.
As the focus for many manufacturers is on business survival, issues related to wages, retrenchment and worker’s health and safety when returning to work might not be adequately addressed. For this reason, roundtable participants emphasized the vulnerability of garment workers, and the importance of mitigating the severe short-term and possible long-term consequences for these workers. In this regard, Elly Rosita Silaban, President, All Indonesian Trade Union Confederation (KSBSI), emphasized the importance of wider collaboration, including tripartite action, to mitigate the severe impact on workers.
It was also suggested that COVID-19 could positively affect the situation for workers in the longer term, as it has raised awareness of precarious working conditions and limited social protections. To achieve this, participants stressed the need for more coordination, dialogue and partnerships for the industry to recover and build back better.
Garment workers are one of the most severely impacted groups by COVID-19, but I firmly believe that eventually the pandemic is going to play a long-term positive role in improving workplace and social protection for workers and ensuring a more sustainable industry."Dr. Liang Xiaohui, Deputy Director & Chief Researcher, Office for Social Responsibility of China National Textile and Apparel Council (CNTAC)