US market helps Sri Lankan fabric maker weather EU downturn
ECONOMYNEXT – Sri Lankan fabric manufacturer Textured Jersey Lanka (TJL) has said its well diversified business with big clients in the United States helped it weather the downturn in European demand.
TJL chairman Wing Tak Bill Lam said the company managed to reduce energy costs to help counter eroding competitiveness against other origins with cheaper labour and power costs.
"Your company’s client portfolio being well diversified, with key clientele comprising the United States and EU, supported its resilience once again, enabling TJL to offset the downturn in one market with the upturn in another,” he told shareholders in the firm’s annual report.
Sri Lanka’s reputation and track record as an investment friendly destination and as a manufacturer for a large number of the world’s leading apparel brands, continue to make it an attractive destination for inflows of new investments by overseas apparel manufacturers.
But, Lam said, Sri Lanka’s high labour and energy costs continue to be a challenge which dampens its cost competitiveness for all manufacturing industries.
"We are also mindful that its global competitiveness as a manufacturing destination is being challenged with the opening up of new destinations such as on the African continent, and some South Asian and East Asian nations which enjoy lower costs of production," he said.
The company’s commissioning of its own coal power plant has helped reduce energy costs.
Other initiatives to enhance profitability in the near term include continuous focus on enhancing efficiencies, and increasing value addition to products to offer more customised solutions.
"We expect our focus on technology and expansion as a regional player to be key solutions to meet rising labour costs, in order to sustain growth in the near to medium term future," Lam said. (COLOMBO, July 28, 2016)