Gildan Activewear has invested US$15m in a manufacturing facility in Bangladesh

Gildan Activewear has invested US$15m in a manufacturing facility in Bangladesh

Canadian clothing company Gildan Activewear Inc has invested US$15m in a manufacturing facility in Bangladesh as part of plans to grow its international business in Asia and Europe.

The company, Shahriyar Fabric Industries Limited, operates a vertically-integrated knitting, dying, finishing, cutting and sewing facility near Dhaka, Bangladesh that makes high-quality ring-spun T-shirts.

It has an annual T-shirt production capacity of 2.2m dozen, but Gildan says it intends to raise this to 3.5m dozen a year as well as boost the plant's operating efficiency.

The acquisition of Shahriyar ends a search by Gildan to find a low cost strategic location turn into a major vertically-integrated manufacturing hub in Asia.

"Although modest in size - the plant will represent about 5% of the company's sales - this acquisition is likely an important first step in building what could become the company's second-largest manufacturing hub," said analyst Claude Proulx at BMO Capital Markets.

In a note to clients today (31 March) he said: "If successful in replicating the efficiency of its Honduran operations, this could allow Gildan to become a major supplier of basic non-fashion apparel in various Asian countries, including China and India."

The Canadian firm says the deal won't change its textile expansion plans in Central America and the Caribbean Basin.

This includes the construction of a third state-of-the-art textile manufacturing facility in Honduras (Rio Nance V) to support the company's projected future sales growth in the North American screenprint and mass retail markets.