- What is the biggest hurdle to “speed to market”?
- What’s more important these days? Dollars or days?
- Is mass customization a nice to have or a need to have?
- How are companies fostering better partnerships with vendors?
- How much has your company been impacted by the “Trump effect”?
- Industry buzzwords: Amazon, sustainability, digitalization, transparency, on-demand manufacturing, data analytics.
- How well are companies executing on their data?
- 2017 is the year of _________? And What will 2018 be known for?
The U.S. Department of Commerce recently released its first-ever market report for technical textile and apparel, covering product categories including: non-wovens, specialty and industrial fabrics, medical textiles and protective apparel. According to the report:
- The U.S. exports of technical textiles totaled $8.5 billion or 46% of U.S. textile mill product exports in 2014.
- By size, the top 10 export markets for U.S. technical textiles from 2015 to 2016 include: Mexico, Canada, China, Germany, Japan, Hong Kong, United Kingdom, Belgium, Brazil and Honduras.
- North America is the largest regional consumer of technical textiles due to the presence of the majority of end-use industries. Europe and Asia Pacific follow North America in terms of current consumption; however, development in emerging markets including India, China, Japan, Korea and Taiwan is expected to increase overall technical textile demand. Among the best prospect in the emerging markets for U.S. companies are Vietnam, India, Taiwan and Brazil.
- Major challenges facing U.S. technical textile exports include: 1) trade protection such as high tariffs and non-tariff barriers, such as import license requirements; 2) foreign competition and continual investment in research and development in many developing countries; and 3) lack of transparency by foreign customs agencies which could slow the flow of trade and lead to processing delays.
Eight country studies are provided by the report, including: Brazil, Canada, China, India, Korea, Mexico, Taiwan and Vietnam.
The full report can be downloaded from HERE.
- Why do you think the German textile and apparel (T&A) industry supports the Trans-Atlantic Trade and Investment Partnership (T-TIP)? Should they?
- Should the U.S. textile industry worry about the competition from Germany after T-TIP?
- What strategy should the U.S. textile industry adopt in response to T-TIP?
Background: the German textile and apparel industry
- Similar as the case in the United States, the German T&A industry has significantly shrunk in size over the past few decades. In particular, employment and total industry output were only a fraction of what they were in the past.
- At the same time, the German T&A industry has undergone tremendous structural changes. While most simple production has gone overseas, German companies remain global leaders in the technical textile sector. Statistics show that the production of technical textiles in Germany went up by 40 percent from mid-1990s to 2011. Manufacturers of technical textiles in particular are benefiting from the increasing use of their products in new fields of application (e.g. vehicle construction, building industry, energy sector, medical technology and functional clothing).
- Additionally, German T&A companies in general support trade liberalization. On one hand, imported T&A components are of great importance for German T&A companies to get access to needed raw material today. On the other hand, German T&A companies are eager to explore export opportunities in many fast-growing emerging markets in the world. In 2011, Germany’s top export market for textiles were Poland, France, Italy and Austria. The United States was the largest non-European export market. Germany’s largest export market for apparel in 2011 include Austria, Netherlands, France, Switzerland and Poland.
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As the saying goes, change is the only constant in the fashion apparel industry. According to a newly released market report by Lectra*, “the pace of fashion has never been faster and neither has the pace of change”.
Lectra’s report highlights a few factors driving the changes in the fashion apparel industry:
Consumers has much more control than in the past, implying the fashion industry can no longer define what to make and sell without taking consumers’ inputs into consideration. Some companies have alter their business models to be completely demand-driven, i.e. allowing integrating all their resources to meet the customized needs of all consumers.
Social and economic changes like internet access and growing prosperity, have also spurred the growth of new fashion markets in emerging countries that had typically been only supplier region, creating new opportunities for western fashion brands and retailers to expand business.
Historically, local brands dominate local market. However, because of the strategies of geographic expansion and international growth of many fashion brands, in more and more markets, local brands have to face competition from foreign brands. (for example: the Australian fashion industry is worried about the competition from H&M).
But globalization does not reduce diversity and localized consumer preferences. On the contrary, increased internationalization means that populations are more heterogeneous than in the past and retailers have to bring a localized response to individual markets.
New social media and mobile technologies have given consumers the power of instantaneous sharing and buying without restriction of time, place and in many cases, price. The availability of new technologies such as RFID, product life cycle management (PLM) and many other supply chain management tools have also enabled brands, retailers and manufacturers to reduce product development cycle, improve efficiency and better collaborate across the global process.
For example, digital prototyping gives companies the agility they need to adapt to changes in the market and test new products before they start to incur real production costs. PLM facilities the collaboration between design and development departments and breaks the silo mentality that has reigned for so long in the fashion and apparel industry, eliminating bottle- necks that resulted from outdated linear processes and increasing decision making power earlier on in product development.
4. Change of Business models**
In response to the application of new technologies and consumers’ updated demand, companies start to seriously reconsider their business models, especially the process of design, product development, production and distribution. As noted in the report, fashion brands, which have traditionally gone through retailers who sell on their behalf, have developed retail operations with the purpose of capturing a higher percentage of the final sale price and achieving complete control over the presentation, distribution and final price of their merchandise. Many retailers, however, also start to offer more and more private brands and exclusive products that can more effectively segment market and attract targeted consumers.
The traditional manufacturers are also looking for ways to cut costs and increase efficiency because of the pressure from retailers/brands. Manufacturers also have realized that selling directly to the end consumers is the most powerful way to protect revenue. As quoted by the report, roughly 60% of Chinese apparel manufacturers have launched their own brands. Armed with all that know-how, a growing number of Chinese manufacturers are now turning their efforts toward developing an offer for the domestic market and some are even setting their sights abroad. (recall the topic of “upgrading” in our lecture)
*: Lectra is a company which provides fashion-focused technology solutions such as the CAD system and the product life-cycle management (PLM) system.
**: Corporate business strategies of fashion apparel companies in the 21st century world economy is specifically addressed in TMD432 (Fashion Retail Supply Chain Management).
Vietnam attracts a lot of attention these days in the textile and apparel world. But what does Vietnam’s textile and apparel factory actually look like?
This video features PPC (Phong Phu Corporation), one of the largest textile mills in Vietnam. It is said that PPC accounts for over 50% of Vietnam’s total textile exports.
- Anything in the video interests you or surprises you?
- How is PPC different from textile mills in the US?( You may think about the video we watched in class about the textile mills in NC. For example, are there any differences in working environment, the facility, what it is producing, required labor skills, efficiency and productivity?)
- How should the US textile industry treat Vietnam? A competitor? A threat? A potential partner? or a great opportunity for investment?
Please feel free to share your thoughts.
[Please leave no more comment for this post unless you have NEW ideas to share]
In a recent analysis report, the EU Commission foresees that skills needed by jobs in the EU textile and clothing industry will continue to evolve from 2013 to 2025. Specifically, the report argues that:
First, employment in the EU textile and clothing sector is forecast to decline by 13.4% from 2.5 million in 2013 to 2.1million in 2025. Even with shrinking employment levels, because of the need to replace nearly 1 million workers forecast to retire or leave the sector, about 611,000 job openings are anticipated from 2013 to 2025.
Second, employment in the EU textile and clothing sector is no just declined, but also evolved. From 2013 to 2025, demand for “crafted and related occupations” as well as “plant and machine operators and assemblers” will decline 34% and 13% respectively, whereas job openings for “technician and associated professional occupations” are estimated to grow at a modest rate. Among the estimated 611,000 job openings, 93% will require high or medium level qualifications.
Third, in terms of specific skills needed by the EU textile and clothing sector based on where the sector might progress towards 2020:
1) Technical production competencies will remain central to recruitment with increased focus on the demand for versatile staffs that can operate across different workstations.
2) Supply chain management, business, sales and marketing skills (including the skills in international trade) are growing in importance. For many EU textile and clothing companies, “trade has taken place of production”.
3) The EU textile and clothing industry is further expecting skills on technology, innovation and sustainability. Leading technology-led areas include mass customization, 3D body measurement, advanced CAD and eCommerce technologies, internet infrastructures for custom-tailored clothing and business-to-consumer eCommerce among retailers.
‘The Next Black’ is a documentary film that explores the future of clothing. Watch as we meet with some of the most innovative companies on the planet to get their opinion on clothing and its future, including: heroes of sustainability, Patagonia; tech-clothing giants, Studio XO; sportswear icon, adidas; and Biocouture, a consultancy exploring living organisms to grow clothing and accessories.