The Hindu Business Line : Garment exporters in Tirupur feel the heat of US slump

Coimbatore, Jan. 5 Knitwear garment exporters in Tirupur are in a fix, caught between not getting any support from the Government’s second stimulus package and orders literally drying up.

The situation, they say, has worsened in recent months. The few orders that the exporters managed to bag during the last season are being executed at present but new orders, they say, have come to a halt.

An unprecedented gloom appears to have set in on the township, which saw hectic activity for over a decade. Industry insiders do not recall such a predicament as the one they are passing through.

Drying up

A good number of exporters Business Line spoke to confirmed that the orders, which trickled in during the last season, have started to dry up. “It is almost nil after March. The units are now executing the orders confirmed during September and October. This should be over by end of February. With a few importers seeking postponement of shipment, some units might operate into April. But after that we may cease to exist,” said Mr Raja Shanmugham, Managing Partner, Warsaw International.

Exporters in this hosiery hub have all along depended on the US market. The massive fallout within the retail sector in the US and with stores such as WalMart, JC Penney, Macy’s and Ann Taylor, among others, forced to scale back or down shutters, the exporters here are in a quandary.

Mr Shanmugham said: “Every competing country – such as Indonesia, Bangladesh, Pakistan or Taiwan – is eager, hungry to fetch orders. The US orders have fallen by 30 to 35 per cent volume-wise, and the price negotiation is water-tight. We were operating on wafer-thin margins. Now, we have started to compromise on our returns just to keep the plant running and to enable us service our loans.

“The Government should support the industry as the Government in the competing countries have done to help us survive the onslaught and strengthen our position in business.”

Business on Trust

Replying to another question, he said: “Getting an LC is a precious achievement. The orders invariably are not backed by LCs and this has been the situation since 2006. Most of us do business on trust.”

On default in payments, he said: “So far we have managed. But we do not know what the future holds.”

Players such as the Royal Classic Group, which had started to address the domestic requirement, say there is a lot of pressure and the market is flooded with offers.