A Major Blow to the Textile Industry
In a shocking announcement, Gul Ahmed Textile Mills Limited (GATM), one of Pakistan’s leading textile companies, has closed its export apparel division after years of continual losses and structural integrity of the division ultimately led the company to be unable to continue operating in this highly competitive space.
Structural Issues and Global Challenges
Pakistan’s textile industry, which represents about 60% of the country’s exports, has been impacted due to climbing costs of production, energy shortages, and fluctuating global demand. All of these variables for Gul Ahmed resulted in margins they could not afford while also operating in the export apparel space where international competition has grown. Bangladesh and Vietnam, for instance, have proven their comparative advantages through more affordable labor and government incentives and their advantages.
Consequences throughout the Industry
The closure of Gul Ahmed’s export division is potentially concerning for the textile industry in Pakistan as one of the market leaders is not able to participate in this valuable export division. Analysts worry that if the textile industry is not able to address systematic issues that includes high energy costs, untimely government policies supporting the industry, and lack of technological advancements in production, their global competitiveness will come into question and more closures will follow.
Next Steps
Gul Ahmed will continue to operate in different divisions, but the closure of the export apparel division points to serious reforms that need to be made for the industry overall. Improving, or at least addressing basic infrastructure for the industry, sensitive and meaningful government support, and providing financial support for innovative technology will be imperative for helping Pakistan’s textile industry better compete globally to grow as an exporter.
