Epic Apparel PLC is located in Hawassa Industrial Park, EAPLC is a subsidiary of Epic Group headquartered in Hong Kong. Epic Group has been in the clothing trade and manufacturing business for 35 years, with production facilities located in Bangladesh, Vietnam, Jordan and Ethiopia.
The group employs 30,000 people around the world and protects the livelihoods of 200,000 family members directly and indirectly employed with us.
In Ethiopia, we employ 2,500 direct and indirect workers in the Hawassa manufacturing plant, and from a livelihood perspective, we take care of 8,000 working family members.
We have been very proactive in extending food, education, financial stability and medical care to all of our employees and their families.
We work with the first generation workforce in Ethiopia. Each of the factories in the park taught the workforce about tailoring, quality, techniques and more. While huge sums of money have been invested in knowledge transfer and training, they have not yielded the expected results due to the high absenteeism and attrition that still prevails in the industrial park. Every month we lose around 7% of our workforce and every month we recruit and train 10% of our workforce.
Epic has annual revenue of over $ 20 million and projected year-over-year sales growth of 15% from current operations and as we expand into multiple hangars, YOY growth would exceed 20%.
We started with a very big dream in Ethiopia, to provide jobs, provide financial stability, provide livelihood for families, support industrialization in the country, increase foreign exchange income for the Ethiopia and to develop Ethiopia’s garment and textile sector and convert Ethiopia into a world-class manufacturing destination for overseas buyers and place Ethiopia in the international market as the dominant site in the chain of ‘supply.
AGOA was the only incentive that drew us and other manufacturers to move to Ethiopia. We are a 100% export company to the United States and supply the largest retailers in the United States. 95% of Hawassa Industrial Park’s exports are to the United States – this stand-alone data is factual enough to show how dependent we are on supplies in the United States.
We all know that the United States is the largest importer of apparel products in the world and has a huge market share in the consumption of production products all over the world. For any industry to survive, you need volume of business, economies of scale as we call it. Therefore, buyers from the United States are the most important when it comes to enterprise scale.
The AGOA privilege allows the buyer in the US market to import duty-free goods, which makes Ethiopia more attractive than any other region in the supply chain. If AGOA is halted, it would mean that buyers would end up paying a higher price and lead to the diversion of supplies to other countries and the complete shutdown of operations in Ethiopia.
EU, Asia – many of us are hoping Ethiopia will always survive with businesses from these continents – but that is not true – none of the buyers from these regions work on high volumes and orders would usually be large quantities lower and would lead to longer learning curves and will only increase productivity challenges.
Productivity levels have been a concern here in Ethiopia, especially as the workforce has learned to sew over the past 4-5 years and has started improving efficiency and quality levels now and gets consistent performance over the past few months, to say the least.
Epic has invested significantly in the infrastructure of HIP and has suffered heavy operating losses over the past 5 years. Investors are absorbing these losses, as a learning curve for the continuation and growth of business in this country and when we hope and see the light at the end of the tunnel – the withdrawal of AGOA privileges has become an obstacle, which is generated not only by fear. but sleepless nights for us as business owners and for the workforce as it has a direct impact on their livelihoods
If the AGOA privilege is removed, all investors will be forced to relocate to a country with low political instability and with better incentives to support business. All investors in the park are complete with orders for the next 12 months, what will happen to orders, if buyers opt out or opt out of paying duties, it will only add further burden to already loss-making business in Ethiopia.
Of the total exports to the United States, approx. US $ 525 million, textiles and clothing exports amount to US $ 270, which is over 50% of total exports and all of these exports are 100% under AGOA.
Ethiopia grows at an annual GDP rate of 10%, making it one of the most dominant African countries in terms of investment and return. These investments provide significant opportunities for supply chains that create and maintain responsible jobs. By withdrawing from AGOA, the US is losing its one / only greatest trade and economic relationship with Ethiopia.
The USTR could also look at trade facts and figures – Ethiopia is one of the very few trading partners with which the United States has a positive trade balance. US exports to Ethiopia are significant, resulting in a trade surplus of US $ 450 million in 2019.
On the other hand, there is much for the Ethiopian government to do to continue in the AGOA privilege. We are all deeply saddened by the ongoing violence and unrest in the northern region, leaving millions of people displaced. The humanitarian crisis must be resolved, food and aid must be administered and the ongoing violence must be converted into peace talks on all sides. This is the need of the hour, by enforcing peace, not only will the GoE be an example of a model government in the world, but at the same time protect the livelihoods of millions of people in the region. North and millions of employees in AGOA dependent industry.
Likewise, our message to the US government is not to use AGOA as a tool to tackle the current crisis in the northern region. On the one hand, when we propel the GoE to resolve human rights violations in the northern region, withdrawing AGOA would not be such a strong act to displace at least 2 million people employed directly or indirectly by sectors dependent on AGOA.
We must not forget – Ethiopia and the United States together through investments and incentives such as AGOA – have enabled the country’s workforce to earn a living, as well as financial stability. of the population of this country. As investors, we are just a means that facilitated investments, facilitated the livelihoods of the people. Are we going to shirk our responsibilities as sustainable households that we have created through jobs and investments? there needs to be a deeper sense of responsibility of GoE, GoUSA and USTR in mutual cohesion to help Ethiopia’s workforce and investors who have invested heavily in building this industry .
We hope and are confident that voices will be heard and there will be arrangements from GoE to end the war in Tigray, GoUSA and USTR to take no adverse action on AGOA and us, as investors, we will strive to commit to making a meaningful difference in people’s lives – jobs, health, health care, financial stability.
It is the need of the hour!
We urge the government of Ethiopia and the government of the United States to work together to resolve and protect the livelihoods of the AGOA dependent workforce.
(BY: Rohit Nair, Vice President of Epic Apparel PLC)