Katunayake, Sri Lanka – NEXT Manufacturing, a subsidiary of the UK-based NEXT Group, has announced the closure of its apparel production facility in the Katunayake Free Trade Zone, citing persistently high operating costs as the key driver behind the decision.
In a statement released by Director David Reay, the company acknowledged the closure was a difficult but necessary move after all alternative options had been explored. “At the heart of this decision is the increasingly high operating cost of the Katunayake Manufacturing Plant. For some years now, the plant has been unprofitable, and despite our considerable efforts to rectify the situation, we have been unable to make the factory economically viable,” Reay said.
While the company did not specify the cost components that influenced the shutdown, industry analysts point to rising labor costs as one of the primary challenges faced by export manufacturers in Sri Lanka.
1,400+ Jobs Lost, Compensation Promised
The closure will impact 1,416 employees, who are set to receive a comprehensive severance package. NEXT has pledged to pay affected staff a minimum of two months’ salary on top of the standard TEWA (Termination of Employment of Workmen) entitlements, which are capped at LKR 2.5 million. Additional payments will include all outstanding holiday pay, bonuses, and gratuity.
Departing employees will receive salary payments through the end of May 2025, without being required to report to work during that period. NEXT also announced plans to assist redundant workers in finding new jobs by coordinating with other local apparel companies and production sites.
Other Sri Lankan Operations to Continue
Despite the Katunayake plant closure, NEXT has confirmed that its other operations in Sri Lanka will remain open. This includes the Embellishment and Product Development Plants in Katunayake (albeit with reduced staffing), as well as the company’s factories in Andigama and Nawagaththegama (NMA 2, NMA 3, and NMA Cutting). The Colombo-based sourcing office will also continue operations unaffected.
The company emphasized that no further redundancies are planned in Sri Lanka at this time.
Looking Ahead
Reay closed the statement by expressing his personal regret over the closure, thanking long-time staff for their dedication and service. “I would like to take this opportunity to thank colleagues affected for their service to the Company over the years and wish them well for the future.”