Why Did Adamjee Jute Mill Fail? Reasons Behind the Closure of World’s Largest Jute Mill

Why Did Adamjee Jute Mill Fail

Adamjee Jute Mill, the famous state-owned factory of Bangladesh, was the world’s most renowned and the biggest jute mill. The jute mill was established in 1951 in 295 acres of land on the banks of the Shitalakhya river in Siddhirganj of Narayanganj district. Wahid Adamjee, Zakaria Adamjee & Gul Mohammad, the three brothers of the noble & prosperous Adamjee family of Pakistan, built the Adamjee Jute Mill in 1951. The mill was incurring losses after the nationalization in 1972 which was after the independence of Bangladesh. After nearly three decades, Bangladesh shut down the world’s largest jute mill in 2002 due to continuous loss. Later in 2006, Adamjee EPZ officially started its operations with more than 245 acres of land of Adamjee Jute Mill.

Why was this mill continuously facing losses to the point of closing down? And why was the government forced to close the jute mill down?

History

Jute, the golden fiber of Bangladesh, was one of the ancient forms of art. Since ancient times people in Asia and Africa used jute leaves as food, whereas jute stems as weaving fabric. During the era of the Mughal emperor Akbar, in 1590, the book of Ain-e-Akbari by Abul Fazal mentions that the impoverished people of India used to wear clothes made of jute. In the 17th century, the British East India Company came to India for trading. In the 18th century, the British noticed that jute fibers could be used to make cloth, and realizing how low the price of raw jute was, they started exporting jute to England. When a portion of raw jute reached Scotland’s Dundee, the businessmen found a way to weave clothes from the jute fiber at a reasonable cost. The industry in Dundee was flourishing & evolving based on the raw jute of the Indian Subcontinent. In 1838, the first mill of Dundee was set up & gradually new mills were seen to rise there. As a result, the raw fiber in a large volume was exported to Dundee from the Indian subcontinent. The jute production rate was less due to the big number of women working in the Dundee’s mill. 

Comparatively, labor is cheaper in India & in 1855 with the support of Indian businessmen, the Acland Mill, the first Jute Mill of India was set up in Rishara on the bank of the Hugli river of Kolkata. There was a huge yield of jute due to the fertile land in the Bengal basin. During that time, lots of jute mills were established centering Kolkata. Therefore, a skilled workforce from Dundee came to the city of Kolkata & took the responsibility of management. Finding the labor & raw material at a convenient price, the Jute mill in Kolkata made several types of jute products. Hence, Dundee’s jute industry lost its market to Bengal. India before its division from the Indian subcontinent reached the world’s top in exporting jute & jute products. This industry thrived in Bangladesh, then East Pakistan, after the partition of India in 1947 as the major portion of raw fiber for the Jute Mill of undivided Bangla was produced in Bangladesh.

Seeing the endless possibilities of jute, the rich business groups of Pakistan came to Dhaka, Narayanganj & surrounding regions to set up the jute mills. As a consequence, in 1951, the Bawa Jute Mills Limited, Adamjee Jute Mills, and Victory Jute Products Limited were established. Among them, Bawa Jute Mills Limited was the first jute mill in Bangladesh. According to Jugantar, Adamjee Jute Mill started production on 12 December 1951 with an investment of Tk 5 crore with 1700 hessian and 1000 seeking looms. The jute mill also set up 3,300 looms in the factories. Fulfilling the demand of the country, several jute products of Adamjee Jute Mill like bags, sacks & carpets, etc. were exported to China, India, Canada, America, Thailand & many other countries of Europe. The Adamjee Jute Mill was also famous as the Dundee of East. Surrounding the jute mill on both sides of Shitalakhya: Siddhirganj, Bandar & Sonargaon, a huge population started living there. The jute mill was making a profit to great extent before the liberation war of Bangladesh. The Bangladesh government, after the end of the liberation war, took control of Pakistan-led jute mills. In 1974, Bangladesh Jute Mills Corporation was established to nationalize & control the 82 private jute mills including Adamjee. Since then, these jute mills were going through severe mismanagement. During the ’70s, the use of polyethylene as an alternative to the jute bag was increasing worldwide, therefore, the use of jute started diminishing. Since the ‘80s, the jute mill was ceaselessly incurring losses & at the end of the ‘90s, there were 3,000 looms in the mill. Among them, 1,200 looms were nonfunctional. During that time, the production of the mill was 59,615 metric tons. There were 2,076 employees, other staff & 16,443 workers. Facing loss continuously, on 30th June 2002, Adamjee, the world’s largest jute mill, was closed. The amount of loss during the closure was 1,200 crore BDT and approximately 25,000 employees and workers were working in the mill. 

Apart from Adamjee, all other jute mills under the supervision of BJMC had been incurring losses continuously after the liberation war. According to a report of Prothom Alo, in the last decade, the government jute mills made a profit of 17 crore BDT. On the other hand, the state treasury incurred a huge loss of 10,000 crore BDT to bear the expenses of these jute mills.

In the last decade, the government jute mills made a profit of 17 crore BDT | Source: Prothom Alo

Why Failed?

Bangladesh was well-known worldwide for its high-quality jute cultivation. Moreover, the name & fame of Adamjee was all across the globe for producing jute products. Hence, before the war, the mill was making profit each year. It raises a question of why this Adamjee jute mill under the supervision of BJMC did not make profit & got closed. 

Poor Management

One of the salient reasons behind the closure of Adamjee Jute Mill is mismanagement. After taking the responsibility of running the mills BJMC did not able to lead the management properly. Among the mills, Adamjee Jute Mill had the most number of workers. There was a bottomless pit of corruption due to poor management in Adamjee Jute Mill. Due to nepotism & corruption, unnecessarily a lot of unskilled employees got appointed. Controlling too many workers & staffs was an arduous task. The tendency of being absent & having irregularities in the work made the efficiency of the Adamjee Jute Mill deteriorate. Besides corruption in hiring, there was thievery all around the mill. Dishonest workers & staffs sold the pieces of machinery of the mill in secret. This badly hampered the mechanical operation of the mill. The trade union’s gradual agitation & strike hindered the production activities of the mill. As a consequence, neither the jute mill was able to fulfill the clients’ demand for volume nor they could meet the deadline. Therefore foreign orders got canceled. 

Quality Drop

The quality of the jute product got reduced due to the low-level work of many unskilled workers appointed through corruption. Low-quality jute was bought in the mill because of corruption & fraud. Besides, the jute farmers never got the right price of jute. As a result, the quality of the jute products of Admajee was low & the foreign clients slowly started losing confidence. 

Competition

When the local mills in Bangladesh were losing the orders due to massive corruption & poor management, India was making progress with their jute industry. Although the quality of the jute cultivated in Bangladesh was better than that of India’s. The Indian Jute Industry & mills were regular in production & hence all the orders for Bangladesh were shifting to India. Bangladesh did not evolve that much & incur losses in this sector. On the other hand, such speedy growth of India made put them in the top position in the jute industry. Adamjee Jute Mill, the largest jute mill in the world went through a huge loss. 

Lack of Innovation

Lack of innovation was another reason behind the closure of the Adamjee Jute Mill. According to Statista, in 2019, Bangladesh became the second in the world for producing 1.6 million metric tons of jute. The amount of jute production in India was over 1.7 million. Another report of Statista said that Bangladesh was the top exporter by exporting jute in tantamount to $107 million whereas India exported jute approximately $13 million. That means the jute industry of Bangladesh was export-oriented and India & China focused on producing jute products. Bangladesh was producing jute products using the old technological machines of the British reign. With time, Bangladesh did not bring any innovation in producing jute products. Hence, in the world market, the demand for jute products of Bangladesh was declining. Both India & China were progressing faster due to technological innovation & the varieties of products. Therefore, the government jute mills along with the Adamjee got shut down.

Adamjee EPZ

After the closure of Adamjee Jute Mill, on the land of 245.12 acres, Adamjee EPZ was built. The number of plots of this EPZ is 229. The area of each plot is 200 square meters. On 6th March 2006, the EPZ was officially launched. Since the inauguration, 48 industries in association with local & foreign investment have been established. Among them, the number of local, foreign & joint industries are 11, 27 & 10 respectively. These factories are producing a variety of fully exportable products like garments, zippers, cartons, hangers, levels, tags, shoes, sweaters, textiles, socks, jewelry, polyester & dyeings, etc. After the inception of Adamjee EPZ, in the first FY, $40 million was invested & $230,000 worth of products were exported. The number of workers was 1,625. With the flow of time, both the amount of investment & export was increased. According to BEPZA in 2018-2019, the total number of investments in Adamjee EPZ was $521.93 million. At the same time, the amount of export was $4483.67 million. The total number of workers & employees was 62,200. The Jute was completely a bio-degradable & eco-friendly fiber. It comes from the earth, helps the earth & mixes with the earth once its life span ends. The demand for jute & jute products has increased worldwide to a great extent. Therefore, local jute mills need to be modernized & technology-friendly. A lot of issues like corruption, nepotism & poor management & the appointment of unskilled workers must be stopped. Because of these factors, Adamjee Jute Mill got closed.

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