Industrial production falls, sales hit snag 

Prothom Alo illustration

The manufacturing industries, including ceramic, steel, textile, and cement, have been under extreme strains as they had to cut production up to 30-50 per cent due to a crunch in gas and electricity supply.  

The banks now turn a deaf ear to the applications submitted by the non-exporting importers for opening letters of credit (LCs), which is eventually putting the local manufacturers on the brink of a raw materials crisis. 

The export earnings have also dipped into the red as the major buyers – the United States and the European countries – are cutting their purchase orders for the Bangladeshi products.  

There has been a dollar crisis in the country for the last six months. The industries have been hit hard due to low pressure of gas coupled with load shedding. Inflation is dragging down the people’s actual purchasing power. On the whole, the situation is feared to go downhill in the days ahead. 

Citing the facts, the industrialists said they all are even struggling to maintain their current business, let alone business expansion. It is raising concerns over employment. 

The companies have already started feeling the heat of the ongoing economic crisis. Singer Bangladesh, a multinational company of the electronic sector, has registered its first ever loss in the previous 12 years in July-September quarter of the current fiscal year. 

The scenario is quite similar for the local electronic giant Walton as it posted its first ever loss since 2014 in the July-September quarter.  The quarterly loss of Walton was calculated at Tk 460 million while that of Singer stood at Tk 80 million. The unusual hike in the dollar exchange rate and high prices of raw materials and machineries have widely been blamed for the scenario. 

Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry (MCCI), said the production costs have risen in all industries owing to the gas and power crisis. The import-dependent companies have been in crisis over the LCs. 

However, the MCCI president suggested that the government should give more emphasis on food and energy security in the current perspective. Only then, he opined, social chaos will not rise and the factories will be able to keep their production unhampered. 

Industrial production drops 

Shahriar Steel Mills in Konapara of the capital had applied at a private bank for opening a letter of credit (LC) of USD 500,000 around one month ago, to import raw materials for manufacturing rods. But the bank expressed its inability to spend such a big amount of greenback for the LC. Later, the manufacturer arranged the dollars itself and opened the LC.  

Sheikh Masadul Alam, managing director of Shahriar Steel Mills, said they normally have a reserve of raw materials in their warehouse to continue production for a month, with that of another two months in the pipeline.

But, they have been struggling to open LCs for the last few months due to the dollar crisis. They now have raw materials for running production for only 10-15 days while that of the pipeline can ensure production for a maximum of one month, he explained. 

Sheikh Masadul Alam also said they suffer from a gas outage from 6:00am to 10:00pm daily, in addition to a minimum load shedding of three hours a day. All these issues have translated into a 50 per cent drop in their output.  

They will have no choice but to close the factories in December if the situation does not improve in the meantime, he noted. 

The steel factories of Chattogram are also suffering from the gas and power crunch. Three major steel manufacturers in the port city now keep their factories shut for one day a week upon a request from the power division. Also, they keep the production activities suspended for 12 hours a day to combat the power crisis. Other small and medium factories are also going through a similar experience. 

Mohammad Sarwar Alam, director of Golden Ispat factory in Sitakunda's Kumira,  said their production dipped by 20-30 per cent due to the power crisis. The consumption of furnace oil rose due to the low pressure of gas. The production costs, on the whole, jumped by 15-20 per cent.  

Some 25 of the 70 ceramic factories have been going through an acute gas crisis. They have been facing gas outages for at least 12 hours a day for the last two months. It pushed up their production costs, but brought down the production volume.  

Artisan Ceramics Limited exports ceramic tableware to various countries, including the European ones. It has a facility in Gazipur with a production capacity of seven tonnes a day. But the gas crisis slashed their production by 35 per cent. 

Mamunur Rashid, the chief executive officer of Artisan Ceramics, told Prothom Alo, “The transaction of our company was the lowest in several years in the last month. Our costs increased by 30-35 per cent due to the gas shortage.”

“I am in the dark about the future,” he added. 

Some 90 per cent of factories in the textile industry are struggling due to the gas crisis. Around 60 per cent of the industry’s production capacity is lying unused due to the daily closure for 12 hours on average.  

Mohammad Ali, president of the Bangladesh Textile Mills Association (BTMA), said the businesses in the sector have been incurring losses for several months. If the crisis is not resolved quickly, they will have no choice but to lay off workers after December. 

Fall in sales 

Bangladesh manufactures almost 95 per cent of the total motorbikes – around 600,000 – that are sold in the country every year. There are around nine factories that manufacture and assemble motorcycles here. 

The businesses said they sold around 65,000 motorbikes in April, which fell to around 35,000 in September. The sales volume dropped further in October to around 32,000. The factories have reduced production due to the low sales.

Biplab Kumar Roy, the chief executive officer of TVS Auto, said the high dollar exchange rate pushed up the prices of motorbikes by 6 to 10 per cent in the local market. The fuel oil price is also high. There were some complications regarding the registration process. Added to that is inflation. All these issues brought their sales down to a remarkable extent.  

There is no good news in the export market either. The commodity exports decreased by 6.25 per cent and 7.85 per cent respectively in the previous two months, due to the fall in purchase orders. 

The readymade garments (RMG) make up over 80 per cent of the country's total exports. It is also facing setbacks as the overseas purchase orders are being deferred, in addition to the decline in new orders. 

The exports of RMG products fell in September. Later, it rose three per cent in October, but is feared to fall again in November. 

Mohammad Hatem, executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the RMG factories can now use only 50 per cent of their total production capacity and most of the factories do not employ the workers for overtime duty. 

Grim picture of investment  

The commercial banks have imposed strict restrictions on opening all types of LCs, due to the multifaceted initiatives by the central bank amid the dollar crisis. A feared global recession is knocking at the door due to the Russia-Ukraine war coupled with the gas and power crunch. 

Against such a backdrop, the entrepreneurs are holding back themselves from undertaking new industrial projects, business expansion and revamp. The number of LCs for importing capital machinery decreased by 66 per cent in the period stretching from July to September. 

Most of the capital machineries are imported here for the export-oriented garments and textile industries. Some 2 million spindles will be added to the spinning industry by the next year as around Tk 40 billion have been invested in 10 new textile mills. It will create employment opportunities for several thousand people.  

BTMA president Mohammad Ali said some have imported machinery or opened LCs before the crisis. And those who could not open the LCs in the meantime are not doing it now. In consequence, all the factories would not be able to go into production at the scheduled time. 

The office of the registrar of joint stock companies also indicated a grim picture of investment. It said 2,815 new companies, partnership firms, and trade organisations were registered between July and September, which is about 20 per cent less than the same period of the last fiscal. 

Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD),  said there will be a negative bearing on employment and investment if industrial production plummets. The consumer products might have to be imported in the face of a low production here. A rise in imports will swell the demand for dollars. So much is being done now to protect the reserve, but these will not work then. 

According to him, the production should not be disrupted. In deviation, the growth, human welfare and the balance of payment will be affected negatively.

Employment opportunities shrink

Disruption in production and reduction in investment normally have a negative impact on employment and it has already begun this time., the largest job searching platform in the country, said the employers sought candidates against a total of 6729 posts every month from January to June this year, but the average circular fell to 6558 in the following two months.  

AKM Fahim Mashroor, chief executive officer of, told Prothom Alo, “The trend of job advertisements had returned to the pre-pandemic level in July. But it started to decrease again in August.”

He also noted that the job site had fewer job circulars in September, compared to the previous year. It turned negative in October.