No pension for RT workers

The Aberdeen-based Richard Textiles, which went under receivership in 2002, has caused more problems for its approximately 1000 employees concerning their pension. The employees will lose their pensions due to technical issues following the company's closure last November. The pension scheme for Richard Textiles went into receivership before the company itself did.

The Department for Work and Pensions (DWP) maintains that it cannot compensate the workers because the firm kept trading when its pension scheme had collapsed. There are currently investigations under way to find a solution on who will be eligible for money under the department's Financial Assistance Scheme. Ministers are expected to announce details some time this year. The DWP has a reserve of GBP400 million to provide for those who have lost their pensions when their companies went belly up, but with the necessary preconditions attached.

Employees of the textile company are currently pressuring the department to include them when it announces who will benefit from the scheme. A large of these employees contributed to the company pension scheme for thirty years before the company's collapse. Liquidators were summoned in November 2004 after a number of financial disasters befell the 200-year-old company. Ian Suttie, a local businessman, had attempted a buyout after the company went under receivership in 2002, but to no avail.

15 February 2005

Thomas Smith sells Kirkburn Mill

The British textile company Thomas Smith and Co has put its Kirkburn Mill in Peterhead up for sale. Recievers PricewaterhouseCoopers, who were assigned to the business in December 2004, are attempting to negotiate an agreement to save the business. Thomas Smith is said to be planning to sell the factory and move production to its other plant in Mintlaw.

The company was forced to fire over 60 employees last year as a result of a restructuring strategy. At present it is not yet clear how many of the 50 workers at Kirkburn Mill will keep their jobs. PricewaterhouseCoopers wants to sell the business as a going concern. Thomas Smith manufactures raw wool to make yarn under the trade names Rennies, and Alexander of Scotland.

www.thomas-smith.co.uk
14 February 2005

Cotton Traders' sales soar

The British leisurewear concern, Cotton Traders, has reported its most successful Christmas season in its 18-year history. Sales for the four weeks up to Christmas-day 2004 were up by 28%. The company, which offers mail order, wholesale and retail shopping, said that all areas of business saw "incredible growth". Mail order increased by 47%, wholesale climbed by 44% and retail rose by 8%.

During the year 25% of sales through male order were carried out online. In December 2004, that number climbed to 32% of mail order sales made online, as opposed to 25% in the same period the previous year.

www.cottontraders.co.uk
17 January 2005

IT textile vendor appoints re-seller

The Manchester-based IT company XeBusiness (XeB) has chosen an Indian value-added re-seller (VAR) Tex-App Enterprise Application Services (Tex-App) to re-market its apparel industry business management and management information system. The system, known as Xe-ERP, for apparel and textile manufacturers and exporters will operate locally.

Chief Executive of XeB, David Cullis, visited New Delhi in October to negotiate with Tex-App partners. He was impressed by their knowledge of the textile sector in general and of local market in particular. He is convinced that their company will be the right local VAR to market and support XeB's product.

The Indian economy is dependent on apparel manufacture and export to boost its economy. Although local labour costs are cut-throat, the elimination of quotas at the end of this year will improve the competitive climate in India and abroad. Local apparel manufacturers need modern and efficient information systems to ensure the speeding-up of processes and operations to meet quality and delivery targets. Meeting these targets will grant these Indian companies added value.

A partner of Tex-App, Prashant Saxena, commented on XeB's compatibility. "The flexibility and speed of response of the XeB team in dealing with issues like local market pricing was decisive in our decision to market their product," said Saxena. Tex-App will initially be focusing on XeB's production management and MRP system.

The team responsible for promoting and managing Tex-App has extensive experience in the textile and apparel sector. The company's goal is to provide its customers with the best service possible.

24 November 2004

China Dominates World Textile Market

China has emerged as the biggest threat for many exporting countries as its domination of the world's textile market is heading towards an unassailable height with the abolition of export quotas next January. At the current growth rate China is expected to claim 75 percent market share in the US, a key market of the world's textile and apparel arena, in the quota-free regime, according to a study of a US-based coalition of trade bodies.

While quotas are still in effect, Chinese market share in the US has increased by 794 percent over the past 27 months, says the study report titled 'The China Threat to World Textile and Apparel Trade' of the National Council of Trade Organisations (NCTO). China had only nine percent share in the expanding US textile market in 2001, which rose to 65 percent in March this year, the NCTO report says, threatening the other major apparel exporters including Bangladesh and India.

NCTO presented the paper at the World Summit on Fair Trade in Clothing and Textiles in Brussels last month. Textile and clothing associations from 47 countries attended the summit to find out ways to face the post-2004 challenges. China is constantly capturing significant amounts of market share from every major competitor such as Bangladesh, Mexico, the Caribbean nations, Turkey, the Philippines and Pakistan. India however managed to maintain a three percent market share.

According to NCTO statistics for 2001 to March 2004, a total of 31 countries suffered 75 to 100 percent loss of market share, 40 countries suffered 50-74 percent decline and 17 others suffered 25-49 percent loss of market share. Exporting countries are also lagging behind China in offering prices for most of the categories as China's prices declined by 48 percent after quotas were removed on those items. China's export prices fell from an average of USD6.23 per square metre in 2001 to USD3.12 at the end of March 2004, according to NCTO.

7 July 2004

Industry Conference Targets Students

A one-day student conference, Fashioning Textiles, will bring together some of the industry's top experts. The conference, organized by the Association of Suppliers to the British Clothing Industry (ASBCI), will be held at the Hollings campus at Manchester Metropolitan University on November 12. Speakers include Miss Selfridge technical manager Liz Hartwell and Chris Thierry, retail and general manager of The Woolmark Company. The conference is free to ASBCI student member and GBP15 to non-members

For information please send an e-mail to info@asbci.co.uk for details

29 October 2003

Healing textiles developed

In Germany researchers have invented clothes that heal and nourish the body while you wear them. These clothes include ladies' tights that feed vitamins A, B and C directly into the legs and shirts embedded with tiny particles of soothing balm to aid people who suffer of rheumatism.

The scientists involved say that their smart clothes - heated jackets and internet-linked dresses - bridge the gap between wellness and fashion.
Dirk Hoefer, of the Medical Textiles Research Institute near Stuttgart, said: "We are making clothes that make you better when you wear them." He teamed up with drug companies and textile manufacturers to impregnate fabrics with creams for people with dermatitis, rheumatism and other aches and pains.

By spraying microscopic particles of lotions and creams on to fabrics treated to respond to different atmospheric temperatures, the lotions are released gradually "directly into the body and bloodstream, bringing quicker relief than tablets and traditional balms", he said.

The Institute for Textile Technology in Aachen has developed a shirt with a computer mouse in the breast pocket lining that is manipulated by touch. The mouse can tell the shirt to release anti-ultra-violet radiation protection to the wearer on a sunny day.

Trevira, the polymer specialist, has developed technology for textiles that kill bacteria in sweaty sports clothes, underwear and shoes that is still effective after 100 washes, while Frank Grenzel, the teddy bear maker, has used the nanoparticle technique to impregnate his bears with a perfume that is released when a child hugs it.

April 19, 2003

Scientists develop scented textile

Thanks to new technology that allows scents to be woven into fabric, perfumed clothes are soon to hit fashionable retailers.

The Sensory Perception Technologies (SPT) allows textile producers to weave particles of moisturisers, deodorants, fragrances and even anti-tobacco agents into fabrics.

"Early trials have proved SPT a success with many global clothing companies interested," ICI, whose fragrances unit Quest developed the technology. ICI said the technology allows fabric makers to incorporate tiny droplets in miniature particles into fabrics that are activated by movement or touch.

"They can be woven into any fabric and are dry cleanable and machine washable. Every time you wear a jumper, vacuum, or walk on a carpet you will release what is stored in the particles," it said. "The smells are almost subliminal so as not to create any conflicts with the wearer's personal perfumes," ICI added.

This innovation offers the textile industry and designers, long dependent on senses such as vision and touch, a multi-billion pound future opportunity as the market expanded to include new scented fabrics.

February 26, 2003

Cashmere now affordable

Cashmere, once the luxury trademark of people of a certain importance, is going mainstream as low manufacturing costs have made it affordable. With the expansion of cost-effective production in Asia enabling mass-market retailers to make the sumptuously soft garments available for well under 100 USD, they no longer adorn only the rich and famous.

Sweaters, made from the silky undercoat of mountain goats, have been sold at warehouse club stores recently, just steps from jumbo containers of nacho cheese. "Cashmere used to be perceived as this ultra high-luxury, expensive product, and now we're being introduced to single- and two-ply cashmere, a yarn that's being used to give high perceived value to a low-priced product," said Marshall Cohen, co-president of market research group NPD's fashion division.

There has been a boom in low-cost production of cashmere sweaters and other items where there wasn't any before, namely in China. "The Chinese have a lot of capacity, a lot of people and a lot of machines. And the raw material is raised there," said Karl Spilhaus, president of the Cashmere and Camel Hair Manufacturers Institute.

January 28, 2003

AGOA: A Flash In The Pan?
Or A Real Opportunity For Economic Development In Sub-Saharan Africa?

US textile and apparel imports from Sub-Saharan Africa grew at a rapid pace in 2001, according to the latest issue of Textile Outlook International.
Furthermore, they grew during a year when imports from Mexico fell, after soaring during the second half of the 1990s.

The main cause is the African Growth and Opportunity Act (AGOA), which is designed to boost the economic development of some of the poorest countries in the world. AGOA is also designed to encourage the use of US yarns and fabrics. But US textile manufacturers have yet to reap the rewards.

The impact on Sub-Saharan African trade has been rapid. US textile and apparel imports from Sub-Saharan Africa grew in volume by no less than 25.4% in 2001. By contrast, imports from all sources fell by 0.2% and those from Mexico declined by almost 10%. And yet the main benefits of AGOA - duty-free and quota-free access to the US market - did not become available to apparel exporters until the early months of 2001. And even then the benefits were only made available to a handful of countries.

AGOA was implemented as part of the two-part US Trade and Development Act 2000. In its early days the Act was described by a US industry spokesperson as an "Asia beater". The underlying logic behind this assertion was the fact that imports from Asian suppliers have a very low US yarn and fabric content. So, it is argued, any measure which promotes exports from suppliers who use US materials - while clipping the wings of Asian exporters who do not - has to be good for the US industry.

However, AGOA provides apparel makers in Sub-Saharan African countries with a number of options. One is to use US-made materials. Another is to use locally made materials. But best of all, under the Special Apparel Provision, apparel produced in poorer Sub-Saharan African countries can be
made from any materials - even Asian ones. This helps producers in such countries to compete by using the world's most competitive fabrics.
Madagascar, for example, has already benefited significantly from the Special Apparel Provision. In 2001 exports of textiles and apparel from Madagascar to the USA increased by almost 83%.

US imports from CBI countries declined by 2.2% in 2001, in spite of the fact that they have tended to grow much faster than most other sources in recent years.

Sub-Saharan African countries even beat Mexico. Imports from the latter fell by almost 10% in 2001, having grown at meteoric rates during the second half of the 1990s. In January 2002 alone, Mexican exports to the USA were down by 16% compared with a year earlier. The downturn is reported by a Mexican industry association to have caused widespread factory closures, 5,000 job losses and an increase in illegal trade.

The speed with which AGOA has captivated US buyers is illustrated by this year's Cotton Council International Sourcing Summit - held in mid-April.
Normally, the summit's geographical scope is limited to Mexico and the Caribbean - the US industry's traditional "offshore manufacturing" locations. But the 2002 event, held in Miami, Florida, included representatives from Sub-Saharan Africa for the first time.

The region's newly-acquired high profile is, however, out of proportion to its actual importance. In spite of rapid growth, Sub-Saharan Africa supplied less than 1% of total US textile and apparel imports in 2001.

This leaves plenty of scope for further growth. But whether growth continues at a rapid pace will depend to a large extent on how much foreign investors are prepared to invest in the region.

One of the earliest to invest in Sub-Saharan Africa after AGOA was enacted was the Malaysian firm Ramatex. However, not all went smoothly. Ramatex first intended to invest in South Africa. But after some wrangling with the South African authorities, it chose instead to move to Namibia.

Sub-Saharan Africa is also host to a number of other, longer established inward investors who know the region well, and who stand to benefit from
"first mover" advantages. Many, like Ramatex, are from Asian countries, and have investments in countries such as Lesotho, Madagascar, Malawi, Mauritius and South Africa.

Most importantly, all of these investors appear to be there for the long term. US buyers, by contrast, are notoriously fickle. In 2001 many did little more than dip their toes in the water. Despite assertions that they want to build long-term relationships with suppliers, they do not have to worry about recouping investments in machinery and factories. If they like what they saw in Sub-Saharan Africa they will probably come back. If not they can easily move on elsewhere.

Even those highly committed to southern Africa would quickly move away if significant currency depreciations made other sources more competitive - as happened during and after the Asian financial crisis. They could also be frightened off by social or political disruption - as appears to be happening in Madagascar, one of the jewels in the Sub-Saharan African crown. For the region as a whole, much will hinge on whether or not the Special Apparel Provision is renewed. This provides AGOA benefits to apparel producers in lesser developed Sub-Saharan African countries regardless of where the materials are sourced from. By buying fabrics from the most competitive sources, apparel makers in Sub-Saharan Africa have a fighting chance of competing in international markets. But the Provision expires on September 30, 2004 - three months before quotas are eliminated on exports from the rest of the world, including China.

After September 30, apparel makers in poorer countries will have to start using US or local fabrics. For the most part, these are more expensive - and local fabrics lack the variety and quality needed for international markets.

Furthermore, not all would-be investors are willing to fund long-term commitments in textile mills or verticalised operations. Many will want to invest merely in apparel-making operations. And unless they can have some assurance that the Special Apparel Provision is likely to be extended, few will be willing even to risk their capital in garment making operations.

Even if a decision were made to extend the provision, it could get stuck in the US legislature. This happened to the Andean Trade Preference Expansion Act (ATPEA), which was introduced in March 2001 to provide duty-free access to the US market for textiles and apparel exported from Bolivia, Colombia, Ecuador and Peru.

Long-term investment will certainly be needed if AGOA is to have any chance of achieving its primary task - that of improving the economies of some of the poorest countries in the world. Without firm commitments by industrialists and financiers, the spending spree by US buyers could turn out to be just a flash in the pan.

AGOA: A Flash In The Pan? Or A Real Opportunity For Economic Development In Sub-Saharan Africa? is an extract from the March-April 2002 issue of Textile
Outlook International.

14 june 2002

Performance Apparel Markets

May 2002 will see the launch of a new publication, Performance Apparel Markets, to coincide with Avantex in Frankfurt, the European trade show aimed at the performance apparel industry.

Performance apparel represents one of the fastest growing sectors of the international textile and clothing industry, according to Textiles Intelligence, the world's leading provider of business and strategy information on the global textile and apparel industries. This view is supported by a growing number of exhibitors at textile and apparel fairs around the world (including Preview In Daegu in Korea, March 2002 and Pitti Filati in Italy, January 2002) who have introduced 'smart' or 'intelligent' textile products during 2002. Garment producers are all too aware that they need to find new niche markets using new materials, if they want to protect their businesses against low cost imports of traditional textiles and apparel. This pressure will only intensify in the run-up to the elimination of quotas at the end of 2004.

The market for performance apparel fabrics is being fuelled by the emergence of new fibres, new fabrics and innovative process technologies. Market growth is also being boosted by changes in consumer lifestyles. People are living longer and spending more time on leisure activities. New high-tech fabrics are being developed for a wide range of active sports such as aerobics, athletics, running, cycling, hiking, mountaineering, swimming, sailing, windsurfing, ballooning, parachuting, snowboarding, and ski-ing.

Exciting innovations are emerging in fire retardant materials and those which protect against extreme temperatures, both hot and cold. The market for corporatewear is growing - and, in some cases, it is becoming increasingly fashion-oriented. Fashion designers are looking to high-tech fabrics to create more exciting and innovative ranges for the high street. The distinction between high-tech sportswear and leisurewear is no longer clearly defined.

Performance Apparel Markets will be published four times a year by Textiles Intelligence, and will
provide decision makers with a regular source of in-depth information about developments in performance clothing and in the yarns, fabrics and finishes used in their manufacture.

Each issue of Performance Apparel Markets will contain research-based information on one of the following topics: moisture management; temperature regulation; stretch; strength; reflective wear; support wear; UV protection; windproof, waterproof and water-resistant technologies; flame retardancy; and 'smart' textiles.

In addition, each issue will contain an update on the major developments in the performance apparel sector, a profile of a company involved in the industry, and a summary of relevant business news.
textilesintelligence.com
6-5-2002

Fast among Equals: Japan's Fast Retailing Looks Set to Repeat its Success Story in the UK - and then China

Starting with the United Kingdom, Japan's Fast Retailing is poised to fulfil its aim of becoming the world's largest casualwear retailer, according to a report in the latest issue of Textile Outlook International. And before the end of the year, the company will start building a massive clothing chain in China.

In less than a decade, Fast Retailing has more than lived up to its name. Its Uniqlo brand name has grown from a chain which was little known outside the suburbs of Japan's major cities to become the country's number one clothing outlet. Net sales have risen fourfold in only two years, says Textile Outlook International.

The first Uniqlo shop opened in Hiroshima in 1984. By early 2002 Fast Retailing had captured around 15% of the Japanese market in volume terms. An estimated one in five Japanese now owns a Uniqlo fleece, the symbol of its fashionable rather than trendy products.

By 2001 Fast Retailing's sales amounted to 418.6 billion yen (US$3.13 billion, Euro3.59 billion, £2.19 billion). But in the long term, by expanding rapidly overseas, the company aims to increase that figure to no less than 2,000 billion yen (US$15 billion, Euro17.2 billion, £10.5 billion). In fact foreign sales will account for half of Fast Retailing's total sales -- if all goes according to plan.

Fast Retailing's design for success will be based on the model which has worked such miracles so far. Its philosophy is to keep things simple -- and Uniqlo focuses on less than 200 items. Its operations -- from buying through to planning, production, and marketing -- are fully integrated.

The company says its main aim is to sell clothing which enhances what people already have in their wardrobes, and which will mix and match easily with other brands.

Company president Tadashi Yanai sums up the firm's approach, saying, "while there seems to be a general perception that the only choice consumers have is between pricey designer clothing and cheap unbranded apparel, our aim is to market low-priced clothing of superior quality."

Fast Retailing relies on outsourcing, mainly through trading companies. As much as 80% of its merchandise is manufactured in China, and a further 10% is made in South East Asia.

China may have a poor reputation as a manufacturing base with some. But Fast Retailing keeps a close eye on the manufacturing process by making daily visits to factories.

All quality control checks take place before shipments. Codes enable the company to identify where faulty items were produced. Furthermore, almost all overseas production is carried out under cooperative agreements at factories funded and managed by other companies.

Fast Retailing demands the highest standards from its suppliers. In return it operates under a "buy-all" contract in which it commits itself to buying everything that it has ordered from its merchandise suppliers. This helps to build trust and better coordination with suppliers, leading to improved quality and lower costs. But it also means that Fast Retailing must get its demand forecasts absolutely right.

Fast Retailing keeps its costs down by renting its shops. In some cases it ties rents to turnover, which means that it can share risks with the shop owner. At the same time, the company is quite prepared to shut shops which are not meeting expectations.

Heads of stores are remunerated under a turnover-based incentive scheme.

GOING FOR THE GAP
Fast Retailing opened five stores in and around London in 2001 -- in Knightsbridge, Wimbledon, Uxbridge, Romford and Bromley - and will have a further ten stores by mid-2002. Within three years, says the company, there will be some 50 Uniqlo shops dotted around the United Kingdom.

But why choose such a crowded market for its first overseas foray? Fast Retailing felt that the UK would be a tough nut to crack. But success would give it the confidence to tackle other markets. Moreover, Fast Retailing's growth needs to be exponential for its formula to work. And exponential growth can only be achieved in a large, open market.

Fast Retailing has also opted for different shopping environments, so that it can monitor different formats and assess the customer profiles which each format suits best.

Fast Retailing's stores have been designed by British design guru Terence Conran. The emphasis is on openness and simplicity, very much in the mould of Gap stores. Indeed, Uniqlo has its eyes set on Gap customers.

And with prices fixed at around two thirds of those charged by the US chain -- but with quality and design which easily match it -- Uniqlo looks set to make an impact on British consumers.

If Fast Retailing does crack the British market, it will be one of the few Japanese clothing retailers to do so. Muji has managed to gain a foothold with 16 stores, but Yohan and Sogo failed to capture British consumers. The key to the UK market, say the analysts, is the ability to keep up with rapidly changing tastes while keeping prices low.

FINANCIAL PERFORMANCE
Fast Retailing's financial performance has been little short of meteoric. Revenue and net income increased for the 13th consecutive year in 2001. Net sales rose by 83% on the previous year, from 229 billion yen (US$1.71 billion, Euro1.96 billion, £1.20 billion) to 418.6 billion yen (US$3.13 billion, Euro3.59 billion, £2.19 billion).

However, sales have been slowing down. In 2001 Fast Retailing recorded a still impressive 42% increase on the previous year. But this was less rapid than the 68% rise achieved in 2000. And in the second half of the company's 2000/2001 financial year, growth slowed considerably with sales in the six months to October up by less than 20%. Inevitably, the pundits are paying close attention to the company's performance.

Worse still, in October 2001 sales were down by 5.3% compared with October 2000. And had it not been for Fast Retailing's aggressive policy of pushing ahead with opening new stores, the real fall would have been almost 25%.

The company says that it misjudged demand levels and ordered too much stock. Soaring sales in the first half of the year meant that it was unable to meet demand on some occasions. Thus it stepped up orders in the second half. But demand fell short and, sticking to its "buy all" policy, clothes had to be sold off at discounted prices.

For the moment, though, Fast Retailing remains well ahead of its domestic rivals -- who have continued to suffer from the poor performance of the Japanese economy.

WILL UNIQLO BECOME A VICTIM OF ITS OWN SUCCESS?
The danger for Fast Retailing is that its strengths could become weaknesses. So far, by sourcing 80% of its merchandise from China, it has managed to remain highly competitive. But its rivals are already following suit, and many will be looking to produce cheaper imitations of Uniqlo items at short notice.

Strong merchandising abilities account for a large part of the firm's explosive success. But some voices have begun to ask what will happen if it gets its merchandising wrong again, as it did in the second half of 2001.

Fast Retailing's period of rapid expansion may well be coming to an end. Merrill Lynch Japan Securities Co, which predicted October's lower sales, seems to think so. But analysts also forecast stable sales growth - albeit at a slower pace - after August 2003.

Fast Retailing was also given an "A" long-term credit rating by Standard and Poor's, and was seen as more than able to defend its market share through competitive pricing and strong merchandising abilities.

"Fast Retailing: Japan's Biggest Apparel Retailer Goes Global" is one of five reports published in the January-February 2002 issue of Textile Outlook International. The other four are: "Profile of Levi Strauss"; "Prospects for the Fibre, Textile and Apparel Markets in India"; "Profiles of 12 Yugoslav Textile and Clothing Companies"; and "Trends in World Textile and Clothing Trade".

Textile Outlook International is a bi-monthly publication from Textiles Intelligence covering strategic issues in the global fibre, textile and apparel industries. The report costs £140 / Euro270 (Europe, Middle East or Africa) or US$265 (Americas or Asia Pacific) and is available from Belinda Carp at Textiles Intelligence, International Subscriptions, 10 Beech Lane, Wilmslow SK9 5ER, United Kingdom. Tel: +44 (0)1625 536136; Fax: +44 (0)1625 536137; Email: info@textilesintelligence.com
1-03-2002

Robin Anson will be a guest speaker at Interstoff Asia Spring 2002

Robin Anson, editorial director of Textiles Intelligence, has been invited to speak at the Marketing Strategy Seminar at Interstoff Asia Spring 2002 on Wednesday, 20 March.

The theme of his presentation will be: "After September 11: Is a Global Textile and Apparel Downturn Inevitable?".

Robin Anson is recognised as a leading worldwide authority on textile and clothing industry strategy and trade issues, and will be available for short meetings with visitors at the Textiles Intelligence booth at Interstoff Asia - free of charge - following his presentation at the seminar on Wednesday, 20 March. Robin Anson is also the editorial director of Textiles Intelligence, one of the world's leading providers of global business information on the international textile and apparel industries. Samples of Textiles Intelligence publications will be displayed on the company's stand at the exhibition.

The Market Information & Marketing Strategy seminar, held on Wednesday, 20 March, will provide information, advice and opinions from industry experts. If you are involved in marketing, merchandising, importing and exporting fashion garments, or if you are a commercial manager, consultant or financial analyst, you should attend this seminar.

Interstoff Asia Spring 2002 International Fabric Show will take place from 19-21 March at Hong Kong Convention & Exhibition Centre. Seminars on Design & Trend and on Technology will also run alongside the exhibition Seminars are free of charge to trade visitors. For further information about Interstoff Asia Spring 2002, please contact Messe Frankfurt (HK) Ltd, 1608 China Resources Building, 26 Harbour Road, Wanchae, Hong Kong. Tel: (852) 2802 7728; Fax: (852) 2598 8771;

Website: www.interstoff-asia.com

Yugoslavia: a low cost production opportunity for West European clothing firms?

After a decade of civil war, UN trade embargoes and Nato bombardments, Yugoslavia's clothing industry could once more be poised for growth, says the latest issue of Textile Outlook International.

Up to the early 1990s, the country was a major manufacturer of clothing for leading West European companies. But the conflict and ensuing trade restrictions brought all that to an end. Most of the country's infrastructure fell into disrepair. However, the downfall of Milosevic has ushered in a new era of peace, stability, economic growth and foreign aid.

Yugoslavia's textile industry has a lot to offer potential business partners in Western Europe, says Textile Outlook International. The industry employs skilled workers, pays very low wages, has years of experience in making clothing to West European standards, and has retained a strong knowledge base -- supported by textile technology centres in Belgrade and Lipovac. The industry also has a good mix of production facilities, ranging from small operations -- usually private -- to very large state-owned companies.

One of the industry's main problems is low capacity utilisation. Overall, this is estimated at less than 30%. Another is the fact that workers in state companies are kept on the pay roll -- whether or not they are productive. But for Western firms, the industry offers very low wages. In state owned companies most workers earn only US$30-US$50 a month. Foreign customers seeking CMT (cut, make and trim) contracts are able to negotiate prices of less than US$0.065 per minute. Furthermore, Yugoslavia offers potential investors and customers easy access by road to Western Europe and the Middle East.

Until the early 1990s, Yugoslavia was one of the EU's most important locations for outward or offshore processing. German firms, in particular, made extensive use of the country's manufacturing facilities. But since the 1990s, Yugoslavian companies have lost business to competitors in Romania, Bulgaria and other low-wage countries.

Output in the textile and clothing industry has dropped to an alarmingly low level. Nonetheless, the sector still employs 120,000 people in a country with a population of only 10.6 million, which suggests that it has managed to retain much of its skills base and therefore has the capacity for growth.

Yugoslavian textile and clothing companies have developed extraordinary survival skills over the last decade -- including a strong ability to counterfeit popular Western garment brands. But many companies face severe financial difficulties. With little investment over the last decade, much of the machinery in Yugoslavian factories is obsolete. Factories desperately need fresh investment in order to be able to comply with West European quality requirements.

Fortunately, the international community is stepping in with measures to help. All UN sanctions have now been lifted. In June 2001, as much as US$1.3 billion in aid was offered by international donors for Yugoslavia's economic rehabilitation. The IFC (International Finance Corporation) has been studying the textile industry in Yugoslavia with a view to recommending investment by foreign as well as Yugoslavian firms. Meanwhile, EBRD (European Bank for Reconstruction and Development) has been talking with Beko, the largest clothing manufacturer in Belgrade, and with several other big clothing companies.

But many Yugoslavian textile companies face a gloomy future unless they can find financially strong foreign partners. Many are planning to downsize significantly -- such as the vertically integrated giant Yumco, which has 10,000 workers in 13 factories. Kluz, with 4,600 workers in six factories, is considering selling its women's wear production facilities in order to concentrate on the technically more difficult but more profitable manufacture of men's suits.

Those who are best placed for the future, says Textile Outlook International, are well-equipped fashion-oriented private companies which have established strong brands -- including Afrodite, Cinderella, Mona, Nicola's, St George, STEM, Tiffany, Todor, and Uno Martin. These companies are flexible and keep in close touch with global fashion trends. Also, rather than have capital tied up in obsolete factory buildings and machinery, many subcontract their production to other firms. Some of these companies are formulating ambitious export plans.

Yugoslavia is in the midst of a major transition from war to peace, and from isolation to re-integration in the world economy. To compete in the world market, Yugoslavian companies will have to attract the necessary foreign investment.

For their part, would-be foreign investors would have to be prepared to supply machinery, yarns and fabrics. But Yugoslavia's low wages, ample human resources, good skills base and proximity to West European markets could provide them with ample rewards over the short to medium term. The November 2001 issue of Textile Outlook International contains the following six reports: "Speed, Connectivity and Value-Creating Intangibles: the New Rules of the International Apparel Sourcing Business"; "Profile of MAS Holdings: Managing Joint Ventures in Sri Lanka"; "Survey of the European Yarn and Fabric Fairs for Autumn/Winter 2002/03"; "Prospects for the Textile and Clothing Industry in Yugoslavia"; "Profile of Polo Ralph Lauren"; and "Innovations in Fibres, Textiles, Apparel and Machinery".

Textile Outlook International is a bi-monthly publication from Textiles Intelligence Limited covering strategic issues in the global fibre, textile and apparel industries.
The report costs £140 / Euro270 (Europe, Middle East or Africa) or US$265 (Americas or Asia Pacific) and is available from Belinda Carp at:
Textiles Intelligence, International Subscriptions
10 Beech Lane
Wilmslow SK9 5ER
United Kingdom
Email: info@textilesintelligence.com