Tailoring EU textiles to meet global competition
A giant with feet of clay – that is the general image that comes to mind of the overall state of the European textiles and clothing sector (T&C). The erosion of this industrial fortress is all the more worrying as it is still of major importance to the EU economy, accounting for 4% of industrial gross domestic product (GDP), 7% of manufacturing jobs, and a surprisingly large export volume that, despite a trade deficit for all categories combined, makes Europe the worldwide leader in textiles and clothing sales. Such a global analysis paints a simplified picture, however, and one that fails to reflect the complexities of a sector in which each segment has its own characteristics.
Concerns about developments in Europe’s textiles and clothing industry are not new. While problems in the clothing sector are rightly the focus of attention, they should not conceal the very different situations found in other areas. Over the past decade, falling production in the labour-intensive clothes-making segment has led to the loss of almost a million jobs and tougher competition will certainly add to the losses in a field that generated 43.5% of the industry’s global turnover in 2003.
Yet in terms of foreign trade, the segment shows a paradoxical picture. During this same reference year, while the EU’s trade deficit was €35 billion, it remained the world’s number two clothing exporter (€15 billion).
The complex reality of relocation
This ability to sell on foreign markets while importing more reflects one of the fundamental aspects of the highly controversial phenomenon of relocation. Prior to their recent accession, there was relocation to the new Member States and this is now continuing within a so-called ‘pan-Euro-Mediterranean’ zone (including countries such as Morocco, Tunisia, Romania, Bulgaria and others).
A complex link has been established between Europe, that remains a garment-making and fashion centre of primary importance – supported by a huge and increasingly unified internal market and a major external market on which its products are much in demand – and industrial sites that have relocated outside its borders, acting as both suppliers and sub-contractors. As part of their supply strategy, the major clothing retail circuits are including a growing number of these external partnerships that bring mutual benefits – but with cruel consequences in terms of European jobs – with a production pool in close proximity. In the context of the newly liberalised global market that was completed in 2005 (see page seven), it is also these suppliers and sub-contractors that are at the front line in the face of Asian competition.
From fibre to fabric
“While the clothing sector is the most visible and most sensitive part of the textile problem, no sectoral analysis is possible without taking into account the totality of the long and complex production and processing chain stretching from the fibre to the fabric,” stresses Lutz Walter, head of R&D with Euratex(1). When the fibrous raw material is natural– essentially cotton or wool – it must undergo purifying and cleaning treatments that vary depending on the original characteristics and quality. In addition, synthetic fibres, which currently account for the greater part of the sector’s basic materials, originate in the chemical industry.
|Europe is particularly strong on the design front. Here, the latest uniforms worn by Air France hostesses, created by fashion designer Christian Lacroix.|
© Musée Air France
The chain subsequently consists of a succession of specialised trades – spinning, dressing, dyeing, weaving or knitting – some of which are carried out by distinct industrial players. These intermediary stages have long been largely automated and capital intensive. On completion of this traditional chain, there is then a whole range of possible finishing treatments (printing, waterproofing, hydrophilisation, etc.), that come under the generic name of ennobling and that depend on the final use and quality of the fabrics or materials produced.
“Today, it is the field of technological innovation that is particularly active,” notes Walter. “In the future, competitiveness will lie in perfecting the functional uses of textiles and not in the race for new raw materials and innovative production methods as was the case in the last century.”
Fabric for new uses
At the end of this series of operations, more than half of all textile products find other markets than the clothing industry and the range of outlets is growing increasingly diverse. The interior textiles market segment (from carpets to bedding, and including curtains and wallpaper) is of considerable importance. This represents one-third of European production and, thanks to extremely advanced technological automation, the Union has retained a relatively intact competitive advantage in this field. But that does not mean that European manufacturers are out of all danger in the face of the increasing power of competitors in the global economy.
The other major non-clothing market is technical textiles. This is an area particularly rich in technological innovations, producing products with high added value to meet an increasingly wider range of sophisticated needs in the industrial and service sectors (automobiles, aerospace, food, construction, agriculture, medicine, pharmacy, specialised fabrics for sport, work, protection, and comfort). Walter believes that “the growth of these markets – with their growing constellation of niche markets – is particularly dynamic. They currently account for almost a quarter of European textile product sales, compared with around 15% at the beginning of the last decade. In any event, it is generally viewed as an area in which the Union is in the strongest position, provided it is prepared to make the major research and development effort.”
Behind these major categories into which the sector can be broken down, the reality of the textiles and clothing industry is one of a vast array of operators often acting autonomously within their particular ‘window’. In 2003, in the EU-15, 177 000 companies were active in this branch, the majority of them SMEs employing fewer than 20 persons. This fragmented structure is clearly a handicap when it comes to investment capacity and innovation.
In addition to this marked fragmentation, another distinctive feature – for easily understandable reasons of commerce in the different products – is a high geographical concentration in certain EU regions. This is an additional source of concern as it also concentrates and amplifies the socio-economic effects of the competitive threat.
To conclude, the health of the massive European textile sector is cause for concern. Given the labour costs, production in the clothing branch inside Europe is certain to continue to decline. In this respect, the competitive advantages enjoyed by the new EU Member States are likely to prove short-lived as they too come under attack.
More globally, over the past few years the indicators have been pointing to the erosion of the market at all the high-tech stages of the production process. Fibre production (€99 billion in 2000) was down 13% in 2003. Weaving (€23.7 billion in 2003) is 21% down on its record 1997 level.
(1)The European Apparel and Textile Organisation
|Textile production in the EU|
Source : Euratex – CIRFS 2003 data