The textile manufacturing industry in Bangladesh continues to grow at a very high rate. The industry plays a significant role in the countrys economy. The textile industry is responsible for approximately forty-five percent of all employment in industries all over the country. 5 per cent of the national income also comes from the sector. The industry employs almost four million citizens most of whom are women (Ahmed). The country exports its textiles mainly to Europe, the USA, and Canada. The main products include PV fabrics, spun yarns, polyester filament fabrics, and viscose filament fabrics. The garments consist of shorts, trousers, sweaters, blouses, jackets, and woven shirts. However, the country exports most of the product to the USA since they have some partnership through outsourcing.
The process of the USA outsourcing the textile it is manufacturing to Bangladesh began after the 2nd world war. Before the war, the textile industry in the USA was doing well since cotton production was high. However, after the war, new textile companies emerged to satisfy the efforts of the war. The companies continued dominance some decades after the war. The war emphasized the need for countries to be self-sufficient. There came a new world order that resisted the notion of made in USA ideology. It is due to the move that outsourcing to Asia started increasing. The idea of buying from the lowest cost producer made the textile manufactures exit the production and began importing process.
The actual process of the USA outsourcing its merchandise from Bangladesh started in the 1970s. The USA motivated the Bangladesh entrepreneurs to produce apparels under particular conditions and terms. The first consignment was exported to the USA in 1978. The USA provided marketing and technological support. It also made sure there was an efficient financing vehicle that solved the working capital concern among the Bangladesh entrepreneurs. The Bangladesh entrepreneurs got interest in the business since it was a low investment and a little technology kind of business. The opportunity made sure that Bangladesh received captive markets for exporting the textiles to the USA and other European countries. The reasons made the textile manufacturing industry grow rapidly to become one of the economic powerhouses in the sector.
Grounds for the outsourcing
Outsourcing is a business technique employed by many people and countries. A cost-benefit analysis is a primary drive to the option of outsourcing. The primary reason for outsourcing is to cut down on costs of production whereas increasing the benefits/benefits. Several factors necessitated the process of the USA outsourcing from Bangladesh:
Demography of workers
The demography of workers in Bangladesh was one main attractive factor to the USA. The largest portion of the total population was the young people. The workforce in the country was, therefore, dynamic and more motivated compared to the other nations of Asia. The production rate could, therefore, be very high since the young people are ready to work.
Cheap cost of labor
The cost of labor in Bangladesh is approximately fifty percent lower than that in America and other European countries. It is also smaller than that in India, China, and other Asian countries. A Bangladesh worker pockets around fifty US Dollars in a month. Most of the employees in the country were untrained and hence the cheap cost of labor. However, the workforce in the country was trainable and hence a further advantage. Most of the citizens of Bangladesh live below the poverty line and hence the demand for employment is high. Labor is, therefore, available at a very cheap cost. The cheap cost of labor was the primary motivating reason for the outsourcing business (Sameer Kumar).
Low cost of infrastructure
Bangladesh was an impoverished country at the time of the outsourcing process. It is still a developing country to date (Mohammed Ziaul Haque).Textile manufacture needs a lot of efficient infrastructure in place. Transport, space, and building infrastructure are crucial. However, the cost of setting up the necessary infrastructure in the country was very low. The USA would, therefore, save a lot of money and resources than it would have when manufacturing at home.
Laws and regulation
Another reason behind the outsourcing process was the lenient legislation and regulations in Bangladesh. The country had low costs of office and factory space. The laws governing the acquiring of space were also lax and therefore, providing the necessary space to construct many production plants at a low cost. The lax laws would also create a conducive environment to operate the textile manufacturing facilities. The worker strikes would also be very minimal hence operations would continue efficiently compared to the frequent labor strikes back in the United States of America.
A thorough scrutiny of all the above factors provided a viable opportunity for the USA to outsource its textile manufacturing industry to Bangladesh. The profits outweighed the costs and hence the country would save a lot of resources from the process. The overall total production costs in Bangladesh were very small compared to the costs back home. The profits would, therefore, be higher than operating at home.
Ahmed, Fauzia Erfan. "The Rise of the Bangladesh Garment Industry: Globalization, Women Workers, and Voice." NWSA Journal (2004): 45.
Mohammed Ziaul Haque, Fara Azmat. "Corporate social responsibility, economic globalization and developing countries: A case study of the readymade garments industry in Bangladesh." Sustainability Accounting, Management and Policy Journal (2010): 189.
Sameer Kumar, A. Samad Arbi. "Outsourcing strategies for apparel manufacture." Journal of Manufacturing Technology Management (2004): 91.
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