Aluminium industry struggles to come out of Covid squeeze

After 1990, Sheikh Yunus Mia set up a kitchen utensil factory at the Mohammadpur Aluminium Lane in Chattogram. From a small shop, he established a factory named Mohammed Eunus and Brothers at Panchlaish in the port city. His brother, Sheikh Hatem Mia, followed in his footsteps and established Hatem Aluminium Works.

The factories were used to manufacture 10-12 types of cookware after collecting aluminium circles from rolling mills. But the factories have been closed after failing to weather the losses incurred in the Covid-19 pandemic.

"Our business has been here for 35 years. The factory was closed for eight months in two years due to Covid. It caused a massive loss. We were unable to recover funds held by wholesale buyers. Due to a lack of capital, daily production dropped from 700kg to 100kg only," Sheikh Yunus Mia's son Aminul Islam told The Business Standard.  

"My father died of coronavirus in April 2021. Then, we closed the factory in the following December as we could not recover the losses," he added.

Unable to bear the burden of the losses caused by the pandemic, at least 25 small and big industrial plants like Messrs Yunus and Brothers and Hatem Aluminium Works have been shut down in the last two years.

The factories have gone out of production mainly after failing to pay workers' wages, factory rents, rising raw material prices, and recovering their dues in the market.

The rise of the aluminium industry in the 1990s overtook the market for clay utensils. At that time, many factories were set up in Mohammadpur's aluminium alley. It was possible to set up a factory with little capital. The aluminium industry expanded later, according to industry insiders.

Around 20 types of aluminium utensils, including pots, pitchers, buckets, saucepans, lids, and tiffin carriers, were manufactured in the factories. But the demand for these items dropped slightly around 2010 with an increase in the popularity of aluminium, plastic, melamine, and SS steel products. They added that the new products were also cost-effective.

According to stakeholders, the industry is currently going through the most challenging times. It is facing difficulties in turning the wheel of production in a multifaceted crisis.

Half of the raw material for aluminium products is ingot, while old aluminium products, ship scrap, foil paper, pharmaceutical waste, drink cans, and bottle caps make up the remaining 50%.

In two years, the price of ingots increased from Tk280 to Tk440 per kg. There is also a shortage of recyclable raw materials. The wages of workers have also increased. Earlier, the labour charge was Tk2 to Tk2.5 per kg, which has now increased to Tk8-Tk10.

The price of the product has not increased accordingly. Before the pandemic, pots were sold at Tk300 per kg, but now they are selling at Tk370. The pitcher price has increased from Tk380 to Tk450-470. The bowl is selling at Tk350 per kg, compared to Tk270 earlier.

Md Ekramul Haque, president of the Chattogram Aluminium Industry Owners Association, told TBS, "After incurring losses in the pandemic, the industry faces a shortage of raw materials owing to the Russia-Ukraine war, which has also driven up the raw material prices. And due to the fuel crisis, aluminium factories experienced losses in September and October this year when the production fell below 30%."

Large factories are strategic in their struggle for survival

Aluminium products are manufactured in three stages. First, raw materials are melted in a gas furnace to form ingot bars. Then the ingot bars and the old aluminium products are melted in a rolling mill and circled. In the last step, the product is manufactured from circles by spinner machines. Separate factories have been set up with low capital for three stages of production. They suffered drops in profit due to market competition. In order to survive, large factories are doing all the production stages themselves.

After 1990, Messrs Sakib Moulding and Shaheed Aluminium Industries of Mohammadpur used to manufacture only ingot bars. Due to declining profits, the companies jumped into direct production of aluminium products in two stages. Sabbir and Brothers, and Allahr Daan are also manufacturing circles in rolling mills.

Sahidul Islam Sakib, owner of Messrs Sakib Moulding, told TBS, "Even though the production cost has gone up, the price of the product has not increased accordingly due to competition."

"Conducting the production process at separate stages leads to higher labour costs. We have been forced to produce everything—ingots, circles, and products—by ourselves in order to survive," he added.