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Apparel heavyweights soldier on

24 Oct 2020

Too early to forecast impact on December quarter

A fresh new cluster of Covid-19 cases is sweeping through Sri Lanka as new positive cases are found each day in different parts of the island. The resurgence of the virus came when an employee of Brandix, one of the country’s leading apparel manufacturers, tested positive for the virus on 4 October. Further aggressive testing of their other employees confirmed that the disease had spread through their plant in Minuwangoda, Gampaha; as of Thursday, 22 October, the cluster had grown past 2,500 positive cases, making it the single largest cluster in the island. However, according to Joint Apparel Association Forum Sri Lanka (JAAFSL) Secretary General Tuli Cooray, this is something that could have happened in almost any industry. Speaking to The Sunday Morning Business, he explained that the current pandemic is spreading amongst people and has nothing to do with the company’s practices. “Brandix and its employees have been unfairly targeted due to this virus, but people need to understand that the company is part and parcel of our society, and a very important one at that. Brandix currently provides jobs to 50,000 Sri Lankans, which is more jobs than all the companies in most industries combined.” The industry provides a means of employment to nearly 350,000 people directly and twice as many indirectly. These employment figures make up around 15% of the nation’s workforce. Cooray stated that all the big apparel companies had adopted the health and safety practices dictated by local health authorities and the only reason this new cluster spread from the sector was due to the factories providing jobs for thousands of people who congregate in their premises. “This has nothing to do with our practices; it's a problem everyone in Sri Lanka is facing, but fortunately, it did not stem from any other sector. This is because we account for more local livelihoods than those sectors.” In the last few weeks, the country’s other two major apparel companies, MAS and Hirdaramani, also reported that some of their workers had tested positive for the virus. According to Sri Lanka Apparel Exporters’ Association (SLAEA) Chairman Rehan Lakhany, this has caused a panic among Sri Lanka’s largest export markets such as the US and Europe. He explained that this was due to the local situation being blown out of proportion by the media and social media, despite the country’s competitors like India being in a worse situation. The industry exports faced a setback last April and May during the initial outbreak and saw the country’s apparel exports fall by 82% and 49%, respectively,  month-on-month (MoM) compared to 2019. However, according to the JAAFSL website, the industry reduced its MoM deficit to 12% in August, and controlled the annual cumulative decline to 24% while strictly adhering to the guidelines given by the Government together with the health authorities. “We do not know the impact this has had on our apparel exports yet, but there will definitely be an impact going forward. We are all working to mitigate the situation, but unfortunately there has been an unnecessary panic created amongst our customers,” said Lakhany. Lakhany stated that most apparel manufacturers have already been following the Government's safety protocols and are even taking down the information of each of their employees to help the authorities when it comes to contact tracing. Moreover, these employees have also been trained by companies and have been told to avoid social events. In light of the prevailing situation, we reached out to all three of these apparel manufacturers to learn how the situation has impacted them and what they have done to mitigate it. Brandix According to a Brandix spokesperson, the company has put in place health and safety protocols based on the regulatory authorities of Sri Lanka, including the protocol for the prevention and control of Covid-19 across all their facilities. They explained that the disease is new and evolving, and that they are still learning about the efficacy of their processes. “Our independent investigation will help us understand if there has been a lapse on the part of our Minuwangoda plant in following the standards mentioned, and also the new controls that would be needed to augment our current processes to ensure the prevention and control of Covid-19. The emphasis at all our plants has been and will continue to be strict adherence to the protocol.” The company is currently working with the regulatory authorities of Sri Lanka to implement the new recommendations to facilitate a sustainable operating model for the apparel industry in a Covid-19-prevalent environment. Adoption of continuous random PCR testing at all their plants, the recommended hostel operating model for their associates, and the additional controls in the recruitment process which includes comprehensive screening and PCR testing are some of the new practices they currently working towards implementing. Speaking on the impact the current environment has had on their pre-existing orders, the spokesperson stated that as a result of the curfew implemented across areas adjacent to Minuwangoda, several of their plants in these areas have been impacted and that their teams are working in order to reschedule the impacted orders and minimise the impact to customers. “We are extremely grateful to our customers for their understanding and extensive co-operation throughout this period as well.” Furthermore, they stated that there has been an impact on employee attendance across the plants within the curfew restricted areas and in plants where employees are residing in curfew areas or are required to travel across such areas. They explained that since the outbreak, their main focus has been to support their affected employees and their families, ensuring their recovery and return to normalcy. Teams across the group have rallied around to give their time by manning the many call centres and supported the relief efforts for their team members in hospital, quarantine centres, and home quarantine. “Once these efforts are completed, we will assess the wider impact of the situation and determine the next course of action for our business.” MAS Holdings A spokesperson from MAS stated that before the first outbreak of Covid-19 in the country, the company already implemented health and safety protocols to prevent its spread. Following the months after the lockdown in March, these practices were continued without any deviation, reducing the possibility for any incidents to take place. Constant awareness was given to employees and the communities in which they operate, with the assistance of the public health inspector (PHI), the Ministry of Health, and local government health authorities. They explained that following the second cluster of cases, these health and safety measures were further tightened with the support of MAS Technology Services. “We have the technology to track information of our employees and their close associates. A continuous relationship is maintained with PHIs, MOH, and local government health authorities. In addition to this, we are conducting PCR tests on a weekly basis. This is the new normal and we continue to embrace it. Furthermore, MAS’ Covid Response Team continues to review the situation on a daily basis. As always, our first priority is the safety of our employees and we will continue to focus on these areas at any cost.” Moreover, they stated that the group also came up with an emergency plan in the event where if one of their employees test positive for Covid-19, he/she would be directed to the company's own quarantine centres which are approved by the MOH and the relevant authorities, and will be further extended to the employees’ immediate families. According to the company spokesperson, since the resurgence of the virus, there has been a drop in employee attendance. “We have the technology and visibility to assess who is unable to report to work under these conditions. Following the police curfew imposed in some high-risk areas, we have decided and instructed our employees in these areas to remain safely at home, and the company has granted paid leave to these employees.” They stated that their initial assessments indicate that there could be slight delays in the completion of a few orders due to facilities located within high-risk zones being closed by the company as a safety measure. However, they explained that their teams have proactively utilised available capacity within the group to minimise these potential delays. “These are unprecedented times, but it’s encouraging to note that our strategic customers have been extremely supportive during these difficult times.” The company spokesperson stated that it is still a little too early to assess the impact on their final quarter of 2020. Despite this, they stated that the situation in the country has not affected the demand from their customers. “Provided we are able to keep to our delivery commitments, we do not envisage any significant adverse impact for the final quarter of 2020.” Hirdaramani Speaking to us, Hirdaramani Group Director Siddarth Hirdaramani stated that the company has been following extremely stringent health and safety regulations ever since the first Covid-19 case in the country was recorded in February this year. He explained that following the most recent developments, they have further reinforced these working practices by constantly communicating with their workforce on the importance of following these practices. “From our end, we ensure that they are followed and inform their superiors of any symptoms. We have also created a very enabling work environment where individual associates feel that they can reach out to their supervisors, HR teams, and other management to address their needs, questions, and even ask for help. This puts us in a position to better understand the sentiments within each factory and to support our teams. All companies across the apparel industry have worked towards creating this supportive environment, and this has certainly helped us in this time.” Hirdaramani stated that they have had a few expected delays owing to the current situation, and that there are many challenges the industry has had to address as a result of the pandemic. He explained that they are currently working with customers and stakeholders on how best to navigate and overcome them together, so as to support the industry as a whole. He stated that the second cluster has also led to a higher rate of absenteeism in the company and that they have had to constantly reiterate their teams and employees, so that they should not be reporting to work if they are experiencing any Covid-19-related symptoms or even have been in contact with anyone else expressing those symptoms. “Recent negative sentiments about the industry have also added to this, unfortunately, and this is why we recognise the importance of addressing unfounded misconceptions.” Hirdaramani stated that while it is still too early to tell, they are expecting there to be some financial impact due to late shipments, factory closures, and absenteeism.  

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