The Hindu Business Line : Textile units shutting, laying off workers

New Delhi, Nov. 3 With a bevy of US textile retail chains going belly-up, and other large American retailers closing down stores, Indian textile and garment exporters are bracing up for an estimated 25 per cent drop in orders this winter season.

Domestic players are, in turn, “temporarily” shutting units across most textile hubs and are laying off employees, starting with contract workers.

Big customers such as New York-based Steve & Barry’s and California-headquartered Mervyns have already filed for bankruptcy protection under Chapter 11 in the US. According to reports, Anaheim, California-based sports clothing and accessories retailer Pacific Sunwear has closed 150 stores while retailers such as Lane Bryant, Fashion Bug and Catherines are downing shutters on nearly 150 outlets which are under-performing. Among other major players, New York-headquartered Foot Locker is winding up 140 stores and Ann Taylor is closing 117 outlets.

Many others like Eddie Bauer, Cache, Talbots, Gap Inc, Foot Locker, Goodbye Levitz, Home Depot, Macy’s and Office Depot are among those reported to be scaling down operations due to plummeting sales.

“There is a clear cascading effect of the retail demand slowdown in the US, and the EU,” a Confederation of India Textile Industry (CITI) official told Business Line.

He said that while it was difficult to put a fix on how many employees have been laid off in the industry so far, reports were coming in of retrenchment of workers across all major textile centres, especially the garment and spinning sectors in the Tirupur textile belt in Tamil Nadu.

“There is at least a 25 per cent drop in the orders for winter apparels from India this year. A large number of stores in the US have been closed or are in the process of being closed. Many buyers have filed for bankruptcy due to low demand and economic crisis,” an Apparel Export Promotion Council (AEPC) official said. According to an industry estimate, of the 58 lakh jobs in the garment industry, the rupee appreciation over the last year-and-a-half had rendered nearly 1.5 lakh unemployed, while a fall in export volumes could force garment producers to cut another 1.5-lakh jobs.

Exports of readymade garments tumbled 6.59 per cent in September over the corresponding period last year as a direct consequence of global economic slowdown, according to AEPC estimates. Cumulatively, apparel imports by the US have declined by 4.15 per cent between January and August 2008. The US accounts for nearly 35 per cent of the total textile exports from the country.

Among textile sector players, the knitting industry, which exports 45 per cent of $3 billion turnover to the US, is badly hit.

In Tirupur, already 16,000 have been out of jobs for the past one year, while another 15,000 workers could be laid off on account of a slowdown in orders from the key markets such as the US for the winter season, a Tirupur Exporters Association official said.