MAS Holdings is moving to shut down one of its Sri Lankan production facilities, a decision that affects 2,200 workers and signals a strategic shift away from a business model dominated by cut-and-sew. The company says it is repositioning capacity toward upstream capabilities—knitting, dyeing and finishing—to build a more vertically integrated supply chain and reduce exposure to global economic volatility. The move marks a significant step in the MAS Holdings Sri Lanka factory closure, with the company planning to convert the site rather than abandon it.
The factory involved is MAS’ Methliya plant in Thulhiriya, in Sri Lanka’s Sabaragamuwa Province. MAS, which operates 53 manufacturing facilities across 17 countries and supplies brands including Calvin Klein, Victoria’s Secret, Marks & Spencer and Patagonia, said it intends to repurpose Methliya to expand fabric manufacturing. The company argues that the plant’s location within MAS Park—Sri Lanka’s first privately owned apparel-intensive free trade zone—makes it especially suitable for upstream production because wet-processing infrastructure is already in place.
“This transition is part of MAS’ ongoing efforts to optimize operations and ensure long-term stability, in line with evolving business needs and market conditions,” a spokesperson said. “Production capacity from Methliya will be reallocated to other MAS facilities in Sri Lanka.”
MAS said every employee at Methliya has been offered transfer opportunities to other facilities in Sri Lanka or to overseas sites within its global network. Those who decline transfers and choose to resign will receive above-minimum compensation and full settlement of outstanding dues, including annual bonuses, the company added.
While MAS rejected reports suggesting the shutdown is a precursor to additional closures aimed at shifting more supply chain activity to India, labour rights groups say the disruption highlights the vulnerability workers face when large suppliers restructure. Abiramy Sivalogananthan, regional coordinator for South Asia at the Asia Floor Wage Alliance, said: “When a major supplier to the world’s richest and most powerful brands shuts down, it is workers who pay the price—losing their jobs, their wages and their dignity. Sri Lankan garment workers built this industry with their labor, yet they are treated as disposable when profits shift.”
The broader context is Sri Lanka’s heavy reliance on apparel manufacturing. The industry accounts for 44% of the country’s total exports and roughly 33% of manufacturing employment. Despite a difficult global demand environment, the Joint Apparel Association Forum (JAAF) said exports increased 5.4% year on year in the first 11 months of 2025 to nearly $4.6bn.
“Particularly encouraging is our 13 percent growth in the European Union market, which demonstrates the success of our strategic focus on strengthening relationships with EU buyers and meeting their increasingly stringent sustainability and compliance requirements,” JAAF said in a statement. “Similarly, our continued growth in the U.S. market, despite tighter margins, shows that Sri Lankan manufacturers remain competitive on quality, delivery and ethical manufacturing standards.”
Trade-policy uncertainty has also shaped the operating environment. Prior differences in regional US tariff rates—18% in India, 19% in Bangladesh and Pakistan, and 20% in Sri Lanka—have been temporarily neutralised after the Supreme Court struck down the White House’s “reciprocal” levies issued under an emergency powers act. For now, countries face a temporary 10% tariff—potentially rising to 15%—under Section 122, which allows short-term import duties to address “fundamental international payments problems.”
Sri Lanka’s apparel exports are forecast to reach $5.5bn this year, supported by enhanced duty-free access to the UK under the Developing Countries Trading Scheme introduced this year.
For MAS, the company says execution remains central as it reorganises its footprint following the MAS Holdings Sri Lanka factory closure.
For now, MAS Holdings says maintaining operational stability and delivering customer orders reliably remain “key priorities.”
“This process is being carried out in compliance with Sri Lankan labor laws and regulatory requirements, with the necessary approvals and employee engagement processes in place,” the spokesperson said of the Methliya plant’s closure. “MAS remains confident in the strength and agility of its operating model across a global network.”