The UK’s once mighty textile industry has been made to look increasingly threadbare this year by a series of events which culminated in the hostile takeover of Courtaulds by Sara Lee, and Marks & Spencer’s decision to source more of its clothing overseas. Coming after five years of steady decline, some commentators suggested these blows could mean the end for the UK clothing and fabric sector.
But rather than simply packing up and moving overseas, the UK industry has been looking at how it can succeed at home. Its strategy – outlined in a 12-point industry recovery plan published last month – includes moving into higher value-added work, investing in the best machinery and developing new high-performance materials.
One country which seems to have resolved a similar set of problems is Denmark. Ten years ago, the Danish textile industry realised that lower costs in other countries – for example in nearby Poland where wages were around 15% of the Danish rate – would soon price local goods out of the market.
Rather than trying to compete on price, clothing and fabric producers divided their activities into high value work – such as design, production engineering and marketing – and labour-intensive production work. The high value work was kept at home, while most of the production was subcontracted to eastern Europe.
As a result, the industry lost 40% of operator-level jobs within five years. Since then, however, it has undergone a remarkable recovery. Total turnover is now higher than it was in 1990, and even employment levels have made up lost ground. By the end of 2000, the Danish textile trade body expects a record number of people will be working in the sector. The changes have also resulted in jobs which tend to be more creative, more highly skilled and better paid.
One part of the UK which has tried to learn from Denmark’s experience is Northern Ireland, where the textile sector accounts for 25% of manufacturing employment, compared with around 10% in the rest of the UK. Last year, representatives of the Northern Ireland Textiles Association and the Irish Linen Guild (ILG) visited Jutland, where most of Denmark’s industry is based. These trade bodies are now encouraging their members to look at overseas manufacturing and sourcing for labour-intensive work, and to develop their own high value brands.
Quality not quantity
One company which has already gone down this road is linen weaver Baird McNutt, which recently set up a weaving plant in Estonia. The company retained its plant in Ballymena to manufacture Irish linen, which can command premium prices from fashion houses around the world.
The design work is still done in Ulster, but low-cost high-volume production has moved to Estonia. According to Cathy Martin, marketing manager of the ILG, this has protected Baird McNutt from cheap competition. `It means they can continue selling to some of their larger customers such as Gap, which are becoming more concerned with price than with obtaining a premium product,’ she says.
The next stage in Northern Irish industry’s plan is a branding programme due to start in September. The aim will be to wean companies away from producing own-label products for big retailers, by understanding who their potential customers are and appealing directly to them. This echoes the UK industry’s 12-point plan, which says manufacturers should learn from successful clothes designers, such as Paul Smith, to market their own products, rather than expect retailers to do their marketing for them. `I think the textile industry in Great Britain is looking over at Northern Ireland because we are one step ahead,’ says Martin.
As well as improving their marketing skills, most fabric and clothing makers have to improve the quality of the product itself, according to textiles analyst Joan d’Olier of Deutsche Bank. `They need to concentrate on items with a high design content, high quality fabric and high quality finish. Quick response times are also good, because that is an area where overseas companies cannot compete so easily.’
Fabrics with innovative properties also allow textile companies to charge more for their products. The Irish linen industry, for example, is set to launch a new form of linen early next year, using London Fashion Week as a springboard.
The ILG will not say exactly how the fabric will differ from traditional linen, but it is likely to be less prone to creasing. `It will be particularly useful on the apparel side, but could have some technical uses as well,’ says Martin.
Sportswear is another sector which is driving innovation, partly because of the huge amounts of money from television and sponsorship which are flowing into sport. New fabrics such as `cool wool’ and breathable artificial fibres have been developed to prevent athletes and competitors from overheating.
And technical textiles, which are chosen for what they can do rather than how they look, form a growth area largely controlled by companies not usually associated with textiles. Products include the non-woven fabrics made by the BBA Group for use in filters, medical textiles made by Smith+Nephew, and geotextiles, the fabrics which are used in the construction industry to stabilise motorway embankments and other earthworks. Eric France, director of the British Textile Machinery Association, says this is the area with the greatest growth potential: `If you make conventional textiles, you are competing with the likes of the Far East, which is very difficult. But with specialist textiles there is a tremendous market and a different customer base, and it can be very profitable.’
At the moment, however, most high volume producers are simply moving production overseas, leaving the value-added work to niche businesses. This is partly because of the UK’s highly concentrated retail sector, which gives an unusual amount of power to stores like Marks & Spencer.
Fashioning the future
One way the producers who do stay in the UK can improve their prospects is by investing in machinery which requires less labour to operate. For example, Shima Seiki’s SWG First knitting machine, launched last year, is capable of producing a complete three-dimensional garment in one operation. Previous machines knitted each section of the garment separately, and would then require another operation to sew all the sections together. As well as cutting out unnecessary labour costs, the new machines are faster, reducing time to market for high-value, time-sensitive fashion clothing. Billy Hunter, export sales manager at Shima Seiki, believes current trends should help his company sell more of the machines: `The industry is changing dramatically as companies move production offshore. We hope they will move their old machines abroad and buy our equipment for more rapid-response work.’
Industry giants Coats Viyella and Courtaulds have recently invested in advanced machines, says d’Olier, but they have been dragging their feet. `It’s something they should have invested in years ago,’ she says. `I don’t know whether it will prevent all of their business from moving overseas, but manufacturers do need to make sure that any onshore industry has the most up-to-date equipment available.’
In the long term, there could be a silver lining to the problems the industry is currently experiencing. In 2005, the international Multi-Fibre Agreement – which protects UK producers – is due to come to an end. By facing up to issues such as added-value now, textile companies should be better placed to compete in a free global market when this time comes.