How Ashulia factories are recovering after prolonged unrest

Most reputed apparel brands and retailers are cutting back orders from factories in Ashulia, on Dhaka's outskirts, aiming to minimise supply chain risks following last year's labour unrest in the area.

Industry insiders said major brands from Spain, Switzerland and the USA are particularly cautious, preferring to shift production elsewhere in the country to avoid potential disruptions.  

This shift has created uncertainty for Ashulia's suppliers, affecting their long-term production strategies.  

However, factory owners said Ashulia has been temporarily managing additional orders shifting from China for the Spring-Summer 2025-26 season.

This has helped bridge the immediate gap left by major brands, reducing their reliance on the zone.

Speaking to The Business Standard, Mirza Shams Mahmud Shakti, CEO of SM Sourcing, said, "Buyers have already developed a map assessing the risks in this zone to relocate their orders."

However, he noted that low-end and discount buyers are not reducing their orders due to pricing considerations.

Even so, industry leaders warn that this is not a full recovery – whether Ashulia can regain buyers' confidence will only become clear from March onwards, when exporters begin taking orders for the Fall-Holiday 2026 season.

To attract buyers back, industry leaders stress the need for stability in the industrial zone.

Some factories are relying on subcontracting to maintain full production capacity, but subcontracting for reputed buyers requires prior approval.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Ashulia is home to over 400 export-oriented apparel factories, employing around 10 lakh people and contributing about $8 billion to the country's annual export earnings.

Mirza Shams further said that following Ashulia, the Savar-Zirani area has also become a hotspot of labour unrest. Factories along the main roads are particularly vulnerable.

Notably, workers of the Beximco Group have been creating unrest in this region, demanding government intervention to reopen factories after nearly 40,000 workers were laid off following the units' closure due to financial difficulties.

Last year, SM Sourcing's export value was $85 million. One of its factories, Mango Tex, located in Ashulia, reported annual exports of $22 million.

However, it experienced a $4.5 million decline in exports last year, equivalent to about 45 days of disrupted production due to worker unrest.

The company has since recovered and is now operating at full capacity. Despite the shift in orders away from Ashulia, the factory remains in a stable position as it produces promotional products for discount retailers.

"Working with discount retailers is challenging as they try to reduce prices every year, but exporters must adjust by improving production efficiency," Shams added.

He expressed optimism about reaching $100 million in exports this year, as his company has booked full-capacity orders until May.

Considering the overall business trend, he noted that if law and order in the industrial zone stabilises, businesses across the sector could see growth.

Shift in orders from Ashulia

Apparel exporters report that many orders originally intended for Ashulia factories are now being redirected to factories in Gazipur, Chattogram and other regions with comparatively lower risks of worker unrest.

A leading apparel exporter, speaking on condition of anonymity, said a reputed US brand has already informed them that it does not wish to continue production in Ashulia-based factories.

Instead, it has requested that its products be produced at another factory within the group, located in a different zone.

Another supplier in the Gazipur zone working with the same brand said the firm is under pressure from the buyer to increase production capacity to accommodate the order shift.

Shovon Islam, managing director of Sparrow Group, told TBS, "Most reputed buyers are planning to de-risk from the Ashulia zone."

He explained that many buyers were heavily impacted by last year's unrest and are now inclined to move orders elsewhere.

"According to buyers, 100% of top buyers are planning to de-list Ashulia's suppliers from their approved lists. Some are actively seeking factories outside Ashulia, particularly in Chattogram," he said.

The situation is expected to become more evident during the March-July production period for the Fall-Holiday 2026 season.

BGMEA's former vice president Rakibul Alam Chowdhury echoed these concerns, stating that instability in Ashulia-based factories has disrupted timely production and adherence to shipping lead times. As a result, buyers are considering factories in Chattogram as a viable alternative.

Addressing challenges  

Apparel exporters noted that a significant number of orders are shifting from China due to geopolitical trade tensions following the US election.

However, Bangladesh is unlikely to fully capitalise on these opportunities unless political stability is ensured and worker unrest in major industrial zones is addressed.

Ashikur Rahman Tuhin, managing director of TAD Group, stressed the need for government intervention.

"The government must find a solution in consultation with exporters to overcome the situation and attract business and foreign direct investment," he said.

Shovon Islam added that the interim government must adopt a positive stance on the ready-made garments (RMG) sector.

"However, we observe that all policies are squeezing the RMG sector," he remarked.

He further said, "We are very hopeful that if the government can address these challenges, the apparel industry will significantly contribute to a strengthening of the economy.