New tech helps strengthen Vietnam’s apparel industry

08:40 | 21/10/2019 Industry

(VEN) - It’s business as usual in one of Vietnam’s leading textile factories, where 27-year-old Phan Chi Cao works in the laser unit. He uses laser machines to “dry process” denim apparel - a technique used to achieve the cool, faded look some consumers crave. With the lasers, Cao can dry around 300 jeans a day, a huge jump in productivity from the labor-intensive manual process, which allows for only 20 to 30 daily and exposes workers to harmful chemicals.

new tech helps strengthen vietnams apparel industry

Cao’s company, Phong Phu International (PPJ), brought these laser machines to the factory as part of a long-term effort to support Vietnam’s emergence as a major textile sourcing center in Asia. In 2016, PPJ’s efforts were boosted further by the Vietnam Improvement Program, an IFC initiative to improve resource efficiency in the local apparel, textile, and footwear sector.

IFC helped the company adopt emerging technologies and good practices that would bring it closer to its goal. Apart from landing more orders, the measures helped PPJ slash its energy consumption by almost seven million kilowatt hours per year, and use 200,000 cubic meters less water annually. This allows it to save as much as US$700,000 a year, while also paying workers a salary that encourages them to remain with the company.

new tech helps strengthen vietnams apparel industry

A laundry list of efficient practices

PPJ’s participation in the Vietnam Improvement Program helped the company reach these significant results. First, PPJ replaced its low-efficiency boiler with a high-efficiency one. It also achieved significant water efficiency by recycling 80 percent of wastewater. For higher resource efficiency and better productivity, PPJ replaced the manual process with laser machines, and switched from traditional washing machines to modern ozone machines.

“Improved efficiency and increased output have helped us attract new buyers who are in search of suppliers with global standards,” says PPJ’s Vice General Director Nguyen Thi Lien.

“A salary of US$400 allows me to save, send money home for my sister’s education, and pay for my parents’ medical treatment,” Cao says.

The company has rolled out similar upgrades in all its factories throughout 2018. As productivity grows by at least 30 percent, PPJ is expecting a turnover of US$300 million in 2018 - a 30 percent increase compared to 2017. Operating costs have decreased by 20 percent. PPJ now plans to set up a sophisticated automatic garment factory in Asia next year.

Investing in a clean future

Vietnam is one of the 10 largest exporters of textiles and garments globally. With more than US$30 billion in these exports annually, the sector contributes significantly to the country’s economy. However, chemical discharge makes the sector the second-biggest water polluting source in the country. Vietnam’s textile and garment factories are also among the world’s most energy-intensive ones, using up one tenth of the total energy consumed by all industries in the country. IFC’s Vietnam Improvement Program provides an opportunity to help Vietnam promote more sustainable private sector growth.

Since 2016, the program has enabled 70 factories to invest US$26 million in resource efficiency measures, helping them save US$24 million in water, energy, and chemical operating costs. When the program’s recommendations are fully implemented over the next three years, the US$40-million capital investment required for retrofits and more efficient equipment could collectively save four million cubic meters of water and curb 788,500 tonnes of greenhouse gas emissions annually. This is equivalent to removing 1.1 million new cars from the road. Energy consumption in this sector alone could decrease nationwide by 30 percent with technology upgrades and improved efficiency.

Simplifying financing

Benefits like these encourage other companies to consider more efficient methods, and IFC’s network of client banks can support this effort, too. For example, on IFC’s recommendation, Samil Vina Co., Ltd sought a bank loan to install more advanced dyeing machines, which use significantly less water, energy and chemical to dye textile. With IFC’s advice and the introductions that followed, Samil Vina borrowed US$4 million from the Vietnam Industrial and Commercial Joint-Stock Bank (VietinBank), an IFC client that finances energy-efficiency projects at affordable terms.

Improvements followed as soon as the upgrades were installed. The new low-MLR dyeing machines are reducing by 45 percent Samil Vina’s water, chemical, and energy consumption. The new system also reduces production time by 17 percent.

The new approach saves Samil Vina US$2 million per year in operating costs. This allows it to offer a 60 percent higher salary to its employees within just a year of the new dyeing machine installation. The company plans to construct a new US$60 million textile plant and hire 2,000 more workers when it starts operating in 2020.

“IFC’s support helped us realize that instead of building a new factory to expand production, we can double our productivity with some basic but effective upgrades,” said I.B. Park, General Director of the Samil Vina Co., Ltd. “Now Samil Vina is one of the most productive textile companies in Vietnam. And resource saving is our secret.”

Source: International Finance Corporation