Sri Lankan apparel manufacturer opens new factory in Egypt

Sri Lankan garment manufacturer Hela, which makes clothing under its own brand name as well as international brand labels such as Tommy Hilfiger and Calvin Klein, formally commenced operations at its new factory in the historic seaside Egyptian city of Alexandria in February. The new 275,000 square foot manufacturing facility is Hela’s twelfth manufacturing facility and marks an expansion of its presence in Africa, adding to its operations in Kenya and Ethiopia. The new factory, located within a special economic zone (which the Egyptians call Qualified Industrial Zone) will allow the firm to export its products duty-free to the US on condition that at least 35% of the value add has been done in Egypt and 10.5% in the state of Israel. The factory can accommodate up to 2,500 workers per shift but is set to nearly double in capacity as its operations in Egypt grow. It aims to export up to US$100m worth of garments each year from the country.

Hela’s ambitions are rooted in the comparative structural and geographic advantages available in Egypt. The North African republic already has a strong apparel and ready-made garment (RMG) industry, estimated to be worth more than US$1bn. Availability of cotton and a long history of manufacturing yarn has made Egypt into a regional textile hub. Labour and electricity costs are low Egypt offers garment makers preferential access to Europe and US. Shipping to these markets is quicker too.

Hela’s new Egypt factory underscores the advantages that textile manufacturers enjoy in Africa. These advantages have become so apparent that Hela now produces most of its apparels in the continent even as its headquarters remains in its home ground - Sri Lanka. Countries like Ethiopia, Kenya, and Egypt can compete effectively with low-cost Asian garment manufacturing centres such as Bangladesh and Laos. Egypt, Kenya and Ethiopia also offer shorter shipping times to Europe and North America.

Although the apparel industry in Africa is experiencing significant growth, the same benefits of competitive labour costs, geographic location, and preferential market access apply to a wide range of manufacturing sectors. This has the potential to fuel a resurgence in the continent's manufacturing sector and mark a shift in operations from former Asian manufacturing hubs such as Vietnam and China to African states. However, as Hela has illustrated, this can be successfully done by Asian-headquartered firms seeking to globalise their operations.

 

References

'Hela Apparel Holdings formally starts operations in Egypt', Daily FT, 22 February 2022.

'Hela Apparel formally begins Egypt operations', Daily Mirror, 22 February 2022.

'Hela Apparel soon in Egypt', The Sunday Times, 9 January 2022.

'Hela Clothing Expands To Egypt', Ceylon Exchange Mentoring, 15 September 2021.

'Hela Clothing becomes first Sri Lanka manufacturer to foray into Egypt', Apparel Resources, 15 September 2021.

'A Look at Sourcing Apparel From Egypt and Investing in its Textile Industry, Sourcing Journal, 5 April 2019.