Already hurt by a reputation for uncertainty, Pakistan’s apparel industry has been hit again by the fall-out from the recent floods. The solution, according to Mike Flanagan, is to keep buying from the country, and to make sure Western aid is used to build an infrastructure that works.
Pakistan’s garment industry has surprisingly successful. Though its owners are never happier than when they’ve got something to complain about, it sold more garments to the US in 2009 than its neighbour India whose population is five times Pakistan’s.
Its garment exports to the EU went up 8% last year too. It has got a good reputation for quality across a surprisingly wide range of clothing products; there are remarkably few scandals about child, forced or disgracefully paid workers, or gross abuse of their rights; and its prices are generally competitive. Indeed, it’s now Europe’s third largest, and America’s fourth largest, jeans supplier.
But every buyer I’ve spoken to agrees there’s one drawback to manufacturing in Pakistan: reliability.
Not just that garments and household textiles are late in delivery, but there’s a widespread frustration among buyers at the difficulty in getting a straight answer from manufacturers about what’s happening.
That probably isn’t because the factory owners are lying or bad at planning; it’s most often because the owners themselves don’t know what’s going on. For the past couple of years now, power has been cut off from factories with no notice, and the country’s had a disturbing amount of random bombings close to many of its factories.
So for the garment and textiles industry, the damage from Pakistan’s recent floods has had a unique twist.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe floods themselves have done relatively harm to the country’s ability to make and deliver clothes: transport is badly disrupted (especially for trim being flown in from abroad) for example, and power is as unreliable as ever – but by and large, garments are being made and delivered to ports more or less as planned.
Compared to the deaths and homelessness the floods have caused, textile and garment production has got off relatively lightly. Not least because of some very nimble footwork by Pakistani mills and factories.
But that’s not what the outside world’s hearing. Western media report cotton crops “devastated”, and – without much direct evidence – “chaos” in the country’s factories.
The country’s government ministers are now claiming the economic effect is so catastrophic the country has been reduced to the level of the world’s very poorest countries. Pakistan’s textile industry will collapse, some of them are claiming, if it doesn’t get duty free access for its garments and textiles to the EU and US. Bad news always flows fast – even if media have to invent it.
All of which adds to the image of unreliability that is the biggest threat to Pakistan.
Certainty is the first casualty
The first casualty of a major disaster like Pakistan’s floods is certainty. Above all, most flood affected Pakistanis just don’t know where to go for safety, food or shelter – and their relatives elsewhere don’t know what’s happening to them (even in the cell phone era, no-one knows what’s going on if the phone masts are all without power).
Economic news is even more chaotic. We’ve no idea how much cotton really has been washed away, and we won’t know the real damage for months, till we’ve seen how successful Pakistan’s farmers will be in fighting the crop diseases that pests like armyworm, jassid and whitefly can bring in the aftermath of floods if they’re not fought with enough of the right pesticides.
That’s too complex a story for Western newspapers, though – so it’s easier to run headlines like “up to 30% of crops will be ruined, say experts.”
Actually, most experts don’t: the Pakistan Cotton Ginners Association estimated on 24 August that the country’s cotton crop would fall just 10% (far less than the fall China’s dealing with right now). And the US Department of Agriculture earlier in August estimated Pakistan would grow 7% less.
Who’s right? No-one can possibly tell: but it comes easier to TV stations to talk about “official underestimates” than about the media’s own wild, unsubstantiated, panic mongering. Even humanitarian aid agencies add to the problem. If you want to raise funds for assistance, there’s an inevitable tendency to exaggerate the dangers ahead – whether that undermines fundamentally healthy businesses in the area or not.
Buyers I’ve spoken to don’t know whether their normal orders to Pakistani factories will be affected over the next few months – so they’re increasingly looking elsewhere just in case the wildest rumours are true.
Sadly, the one thing Pakistan’s apparel industry didn’t need was even more of a reputation for uncertainty – but that’s exactly what it’s getting.
What should the garment trade do?
So what should the garment trade do to help Pakistan? Well first of all, it should keep buying garments there if it can.
Writers in other trade media have arguing that buying clothes is liable to disrupt flood relief. Getting routine commercial cargo – especially if it’s airfreighted – into Pakistan has been difficult lately, as airport cargo handling capacity has been overwhelmed with emergency supplies like food and tents.
“So shouldn’t we stop sending in buttons and labels, because they’re getting in the way?” asked one magazine columnist? To which the answer has to be “of course not”. Cutting off orders means laying off workers – which in turn means stopping the flow of funds from city-dwellers to their flood-affected relatives and friends.
Orders over the next month or so might be delayed, and if that’s a problem, obviously buyers need to find somewhere less liable to disruption for a while. But that’s a commercial argument, not an ethical one: if you want to help Pakistan, you’ll keep buying.
Second, we can lobby our governments to help the country in the right way. New duty-free programmes aren’t going to help: there’s enormous opposition from America’s textile lobby (because Pakistan competes with the US in growing, spinning and weaving cotton) and from Europe’s textile-dependent countries (because Pakistan’s got a far more sophisticated textile industry than Sri Lanka or Haiti had when they were hit by natural disasters).
And there’s also going to be opposition from India to programmes that give Pakistani factories a commercial advantage over Indian factories that get wiped out by the monsoon every year.
Even if Europe’s and America’s politicians fight the opposition (and in a US election year, few Americans will), it’ll be months before any programmes can be implemented. By which time, most of the immediate disruption will be over.
So what will help?
Well, that’s the third thing we can do. Money, supplies and technical assistance are needed for treating crops so they come to harvest properly. Pakistan’s long-standing problem of power unreliability needs money to rebuild its generating infrastructure, and provide reliable power transmission. Many of its roads and some of its manufacturing infrastructure will need rebuilding.
Western cash – either as charitable donations or tax-funded aid – to rebuild the country will do far more to ensure the reliable flow of goods than a tax concession its next door neighbour and world’s second biggest country, India, will challenge in every court it can find.
And if, as happened in 2003, India again forces Europe or the US to withdraw a duty programme from Pakistan, Pakistan’s reputation for reliability will be hit again.
It’s Pakistani factories’ reputation at risk, not their competitiveness. Whether Pakistan’s cotton crop falls 5% or 35%, the whole world’s going to be hit by higher cotton prices anyway, since the world’s growing less cotton than it wants to use. The way to improve Pakistan’s reputation is for it to get infrastructure that works.
For once, here’s a case where a poor country hit by a disaster needs aid, not trade.
