Wednesday, November 24, 2010
Cheap goods demand, but Tirupur is getting costly!!!
Although the recessionary trend is now abating and things have begun to look up, what is worrying the exporters in Tirupur most is the spiralling cost of production. With the hike in prices of yarn, electricity and the dyeing cost, the huge increase in the labour cost has made the garments from Tirupur costlier.
The US market and the recession.........
If Tirupur was growing at 30 per cent every year, the exporters too were growing at an annual rate of 20-25 per cent. Then recession hit the global economy and exports earnings to the tune of Rs 11,000 crore in 2007 dropped to Rs 9,500 crore (Rs 95 billion) the next year, a drop of more than 10 per cent. Almost 40 per cent of Tirupur's exports are to the US, 30 per cent to Europe and the rest to other parts of the world.
Unlike the fashion-conscious European market, the US market is voluminous and imports cheap garments in millions of units. However, the margin from the European market is double that of the US market. Buying agent Balraj says that the US market is as big as Europe and the United Kingdom together.
With exports dropping, many a textile unit in Tirupur started to gasp for survival. Thousands of people lost their jobs and returned to their native places. Those who decided to remain had to work on sharply reduced salaries, and production was down in many units by almost half.
There is unanimity in the opinion is that units that suffered the most were the companies that exported only to the US as compared to those who had European customers.
Those who made Tirupur the export hub.....
The yarn going around the town is that the very air in Tirupur turns everyone into, first, a garment manufacturer and then an exporter.
Take for example, Rajan of Rajsujee International, who was a banker once. The success of many exporters that he dealt with while being in the bank made him set up his own unit in 1995 with only Rs 200,000 by way of capital and 20 employees. In the first year, his turnover was Rs 650,000. Today it is Rs 20 crore (Rs 200 million) and 450 people work for him now. This is not an isolated case; there are many, many such amazing transitions and rags-to-riches stories in Tirupur.
How it all began...
The amazing growth of Tirupur as the Indian hub of garment exports started only in the late seventies. Before that, this small town was the manufacturing hub of white knit inner wear (the first knitwear unit in Tirupur was set up in 1925 and it emerged as the prominent centre for knitwear in South India in the 1940s) thanks to the Noyyal river and the cotton belt all around the city. With the Manchester of India -- Coimbatore -- next to Tirupur, it was only natural that the city should evolve as the garment manufacturing powerhouse of the country.
Initially, knitwear from Tirupur went to suppliers and exporters in Kolkata and Mumbai. But in the late seventies, Italian garment importer Verona chose to go directly to Tirupur to buy white T-shirts, and that was the beginning of the rise of a new Tirupur.
In short, Verona was the man who brought European business directly to Tirupur. In 1981, European retail chain C&A also came to Tirupur. In no time, other international stores too started approaching the garment manufacturers in Tirupur.
A miracle called Tirupur!
Welcome to Tirupur (occasionally spelled Tiruppur), a city of around 600,000 people in Tamil Nadu. It has a population of over a million in the urban agglomeration and has been registering an annual growth of 30 per cent since 1998.
This city exports knitwear worth Rs 11,000 crore (Rs billion) (Rs 110 billion) a year but it has no airport -- the nearest one is in Coimbatore (50 km away) and the nearest seaport is in Chennai.
The first stop for any international buyer of Indian garments is Tirupur. Buyers from 35 countries frequently visit Tirupur. Tirupur can deliver customised samples in less than 12 hours; half a million pieces in a matter of days.
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