Epic Group chairman and CEO Ranjan Mahtani

Epic Group chairman and CEO Ranjan Mahtani

View 2 related images

As one of the biggest garment exporters in Bangladesh, with a commitment to the country that goes back more than 30 years, Epic Group chairman and CEO Ranjan Mahtani knows better than most how the industry has reinvented itself in the wake of the Rana Plaza disaster. Here he tells just-style why his belief in Bangladesh means the company's investment in the country continues unabated.

With 13 manufacturing units in Bangladesh – where it is one of the country's largest garment makers and the single largest producer of woven bottoms and shirts – there's no doubt that in the case of Hong Kong based Epic Group, bigger is better.

"We're close to about 72 million garments from Bangladesh," Mahtani explains. "We added a shirt facility in 2017, and we just launched a new facility in January 2018, which is part of an existing hub.

"So we are basically opening one facility every year as part of our brick and mortar expansion, and we have another facility coming up at the end of this year."

The company is also a strategic partner in the Envoy Textiles denim mill in Bangladesh, which has a capacity of nearly 4m yards a month and gives it an important backward linkage into fabric.

The latest plants are in addition to two factories in Vietnam, a denim jeans facility in Jordan, and a fledgling operation in Ethiopia, between them supplying more than 80m garments a year to customers such as Walmart, JC Penney, Levi Strauss, VF Corp, Tesco, Sainsbury's, Marks & Spencer and C&A.

In a bid to bring a cheaper cost to customers every year, the company targets an annual 20% growth in units. "We are in that battle where if we don't grow, we will not be able to amortise these investments and the increased overhead that we carry.

"We can never just take a back seat because wages are going up every year, overheads are growing – and when customers and brands are working with a company like Epic, they're transferring more and more responsibility to us, be it design, be it anything."

It is also a point of pride that the brand-new facility in Bangladesh – Green Textiles Ltd Unit 3 – has just received a Platinum rating from LEED (Leadership in Energy and Environmental Design), which sets out criteria for the design, construction, operation and maintenance of eco-friendly buildings.

The move means the company joins a coveted list of less than 15 factories in the region that have achieved similar Platinum ratings – and adds to Bangladesh's standing with some of the highest Platinum factory ratings in Asia.

"At Epic all our buildings have gone through a LEED certification and we have received Gold and Silver ratings for all our existing facilities over the years, Mahtani says, adding: "As part of our new design, achieving Platinum was our end goal in the construction of Green Textiles' new facility."

It also confirms his belief that efforts to improve worker and building safety over the past five years have not only helped redefine the reputation of the Bangladesh apparel industry, but also set it on a path to leapfrog many of its competitors in terms of industrial excellence.

"Bangladesh is definitely driving an escalated requirement under the focus of the brands, and while there is endless improvement to existing factories, the industry's expansion is going in the right direction"

"Bangladesh is definitely driving an escalated requirement under the focus of the brands, and while there is endless improvement to existing factories, the industry's expansion is going in the right direction."

Mahtani also believes his perspective on the pace of change in Bangladesh is more objective thanks to the company's experience in other countries. "We are able to compare ourselves to other countries and we're growing in Bangladesh, so I think that puts a lot more weight into our expansion.

"If we want to expand in Bangladesh, it has to stand alone versus Ethiopia, versus Jordan and Vietnam. As a company we definitely want to grow a lot more outside Bangladesh, but we also want Bangladesh to continue to grow."

Building safety improvements

Mahtani estimates that even though Epic Group boasts modern, purpose-built facilities in Bangladesh, it has invested between US$5m and US$10m on building safety improvements alone in the last five years.

"I think what the Alliance and Accord have done has been phenomenal. There has been mega progress since Rana Plaza in the form of tangible, physical activity and investment into factory building and fire safety – but at the same time the standards are evolving, and the bar is being raised year on year.

"The top suppliers who control the major percentage of business coming out of Bangladesh have gone about it non-conditionally, and have really taken it to the highest international standard that's possible. Some of our customers have even asked us to meet US building covenants and requirements."

Another challenge for manufacturers such as Epic is that they have also had to bring in a whole new level of expertise in building safety.

"I would say that the depth of our building and fire safety organisation has been multiplied by ten times in the last five years: in the form of number of people, expertise, technology and overheads.

"We all tend to look at our production, we all tend to look at our efficiency – but how about the building management systems? We've imported building management systems, so we can see online the exact performance of our buildings, the water, electricity, steam emissions, and make sure this transparent to the entire organisation. It has become a very important part of our sustainability.

"The way we look at it, we are in apparel manufacturing because that's what we consider to be our core competency. We are in this for the long run, so whether it's building safety, whether it's efficiency, we have to constantly make investments. There no shortcuts for us."

He adds that those firms who "have the foresight to look at the industry five, ten, 15 years down the line, know they have made the right investment. We have 24,000 workers in Dhaka. If we cannot make sure that they're safe, I personally would not be able to sleep at night."

US and European retailers and brands "have in their own way partnered and collaborated with all of us," and continue to have a "very, very strong commitment to Bangladesh

He also stands by earlier comments that the leading US and European retailers and brands "have in their own way partnered and collaborated with all of us," and continue to have a "very, very strong commitment to Bangladesh."

Yet he is acutely aware, too, that there are still suppliers in the country who are "playing a different tournament."

"I don't know how some of those traditional factories stay in business, when the top suppliers have made so much investment. I don't have an answer, but quite honestly, it scares me, because if something happens in one of those factories, ultimately it reflects on the country."

Mahtani believes the next challenge for the apparel industry in Bangladesh is make sure that the improvements achieved so far are sustainable into the future. "Once the Alliance and Accord are not there, how do we recreate the strength and depth in our organisations to create our own requirements? It's like having to manage your own health when the doctor's not around. It's a question I ask myself every day."

Company-wide standards

He has also been able to compare and contrast developments in Bangladesh with operations in other countries, but doubts the legacy of the Rana Plaza tragedy has led to an industry wide change in attitude.

"I've travelled to many countries, and I feel that even the factories in some of the biggest countries would not make the cut of the Alliance and Accord inspection."

That said, all facilities in the Epic Group follow a company-wide model that standardises everything from the lighting, the ventilation, the type of machinery and the layout of the factory floor, to the workers' uniforms and even the chairs they sit on. This has also been extended to the addition of a building management system too.

There are also plans to bring in the latest technologies for laser finishing, already being used in the company's Bangladesh and Jordan plants. The systems replace manual techniques to create worn, faded designs on denim, as well as speeding time to market and eliminating chemicals from the supply chain.

"There's so many different fragments of the business; were not just manufacturing a pattern. One day we're on a sustainability mission, next we're on a mission to improve workers' lives, then we're on an efficiency mission. There's so many things you have to put in the fire at the same time."

There's also the challenge of diversifying the business, both into new supply countries and new product categories.

The company's latest factories are in Ethiopia and Jordan, "because we have to look at bringing in new duty-free options.

"And although we are in apparel manufacturing, we also have to diversify our product line. So at times we'll build a shirt factory, at times we'll build an activewear factory – so that we stay within our core competency, but are creating internal sub-diversification. At the end of the day we don't want to end up competing with ourselves."

Ethiopia momentum

In Ethiopia, Epic Apparel Plc operates out of the flagship Hawassa Industrial Park, and has been focused on improving efficiencies and worker training since its first exports left the facility about 15 months ago.

Production has kicked off with cotton bottoms, which benefit from duty-free access to the US under AGOA (the African Growth and Opportunity Act), and effectively means a saving of 16.8% on import duties for these products.

The future focus, however, will be more on synthetic products such as shirts, where the savings on import duties under AGOA will be even higher at 30%. Ethiopia also benefits from duty-free access to the EU under the Everything But Arms Initiative (EBA).

"While we see tremendous potential in the country, we knew nothing was going to happen overnight," Mahtani explains, adding that from a standing start "we have added more lines and we have progressed in our efficiency. We see there's a certain stability that's come into our production lines and that is what makes us more hopeful."

But he admits: "I feel the slow grind is going to become a medium grind in a year's time, before it becomes a fast grind. We don't worry about the struggle as long as the results justify it."

Ongoing challenges include getting the workers up to speed on the industry and the discipline required for a day-to-day job. And future demand for workers in a park that could eventually employ 100,000 people means investors are having to look at new plans for transportation and accommodation.

"At some point when things really pick up momentum there's not going to be enough workers around the Hawassa area, which means they will have to come from anywhere as far as from five kilometres to 500 kilometres away.

"The workers want the jobs and the income; but they have to be able to relocate and have the housing and facilities available."

Range of options

As part of its commitment to offer a range of different options for its customers, Epic Group also has a US$20m set-up in Vietnam, with two factories making woven bottoms with a high standard minute value (SMV), more styles, faster lead times and more versatility. But Mahtani emphasises this operation remains very small in comparison to the company's Bangladesh business.

"We are using Vietnam to do a lot of our testing in automation, technology, ERP and lean manufacturing, so it becomes a test-bed before we use it in places like Ethiopia in time to come."

Likewise, the company acquired a chinos and denim bottoms facility in Jordan in July last year, and has spent five months "upgrading the factory to meet 80% of our standards. We have set ourselves a timeline to improve that facility by 30% to 40%; and have already embarked on a journey of securing land and going into another satellite unit in the early part of next year."

Jordan has free trade agreements with the US, EU, Turkey and Canada – and benefits from duty-free access to the EU market with relaxed rules of origin for companies employing Syrian refugees.