Emerging fashion designers can beat the recession

Although the financial recession is compelling consumers to curtail their spending, there are opportunities for emerging South African fashion designers to establish brand recognition in this tough economic climate.

In the 1920s, economist George Taylor used fashion as an economic indictor with his controversial "Hemline Index", proposing that skirts got longer as the economy slowed. This theory was countered by the logic that longer hemlines require more fabric, and in tougher times designers would be more likely to use less fabric in manufacturing sellable contemporary clothing.

The cost of importing textiles to South Africa and the limited variety available to designers has long been a hindrance in the fashion sector. But South African designers concerned about the cost of fabric have been given a lifeline: the government’s notice that import duties will be reduced on a range of textiles not made in commercial quantities enables designers to acquire affordable fabrics.

Astute emerging designers understand that consumers now want durable, versatile clothing at a reasonable price. There are indications that purchasing decisions are less likely to be based on rapidly changing fashion trends that lock them into buying “throw-away” apparel in ever-shorter life cycles. Apparel that combines quality fabric, expert finishing and classic lines that can be adapted and enhanced into novel forms will be sustainable over a longer period.

This opens up a new arena of creative evolution for emerging designers to explore. Fashion is a means of communication and need not be stunted by adverse market conditions. Brand equity can be built by utilising inexpensive marketing tools and seizing every opportunity to establish labels that reflect, express and respond to socio-economic realities.

The 2009 Vodacom Durban July Fashion Experience was one such instance; 164 young designers in KwaZulu-Natal entered the competition, with 20 being selected for the semi-final round. This group proved their abilities in a rigorous judging process, gained substantial media exposure, and learnt valuable lessons about the commercial aspects of fashion.

It is crucial that these designers capitalise on the market exposure they have gained in this very important national fashion showcase. While larger design houses and retailers are constrained by institutional operational systems, emerging designers are free to leverage their names and brand within the market in unique ways, using electronic and street level networks to infiltrate, negotiate and entrench themselves into niche and divergent markets.

There are four seams for this path to success: the first is to maximise their fledgling presence within the local fashion industry and consumer consciousness by promoting the recognition they have achieved on the platform of the Vodacom July Fashion Experience. The second is to identify and decode their target audience so as to tailor their creations to specific economic requirements and aesthetic desires. The third entails establishing operational linkages with the manufacturing and supply sectors of the fashion industry. The fourth seam is locating innovative cost-efficient points of sale.

Rather than retreating into the vortex of economic gloom, emerging South African designers can embrace this time and space to offer commercially viable, desirable clothing that fulfils the needs of the fashion-conscious public.

Written by Renato Palmi

June 09

Urgent action to save jobs in global clothing and textile industry

With the recession in full swing and job losses within the global apparel and textile sectors due to increase the international Textile, Garment and Leather Workers' Federation made an urgent plea for action at the International Labour Conference that took place on June 17 2009 in Geneva.

It is interesting to note that that The Southern African Clothing and Textile Workers Union agreed to a collective wage increase of 8.5% for the South African footwear sector.[1] The question I put forward is thus: is wage increases in an already stressed industry sector prudent for the growth of the industry and sustainability of jobs? Is it a short-term victory for the union and their members? Would it not be more effective in finding mechanisms to sustain current job levels in the apparel and textile sector by providing the space for unions and industry to work and develop mutual beneficial operational systems that ensure apparel and textile firms remain in business?

Have your say.

Below is the speech given by Neil Kearney of the ITFLWF

INTERNATIONAL TEXTILE, GARMENT AND LEATHER WORKERS’ FEDERATION
Speech by ITGLWF General Secretary Neil Kearney

International Labour Conference
Geneva, 17 June 2009

As the global economic recession deepens workers, their families and communities are hurting. Particularly hard hit are those who have lost their jobs. There are now twelve million such workers in the textile, clothing and footwear industries - mainly women and often the family’s sole breadwinner - laid off in the past year. At least another three million workers in the sector await the same fate.

These workers are paying for the recklessness of greedy bankers, lax labour law enforcement and unregulated globalisation. Their pain needs urgently to be turned into gain for the industry and for its current and future workforce.

With up to fifteen million unemployed or potentially unemployed the luxury of drawn out academic and theoretical assessments of the situation is not an option. Workers and their trade unions recognise that urgent remedial action is needed to deal with the immediate crisis and to chart a course for a sustainable future for the industry and those it employs.

That’s why a broad section of shareholders and stakeholders in the industry, brands and buyers, manufacturers and trade unions, governments and international institutions and various civil society bodies, under the umbrella of the MFA Forum, have worked at breakneck speed, as the crisis has unfolded, to develop survival and recovery proposals with decent work as their mainstay.

Noting that economists foresee domestic consumption, particularly in Asia, as the best route to recovery, the Forum has devised a strategy grounded in decent work and promoting the payment of a living wage as a key tool.

The strategy, under the title “Sustainable Apparel and Footwear Initiative”, demands that the sector secures access to some of the US$3 trillion allocated by the G20 as counter recession stimuli packages. Corporates and trade unions recognise the urgent need to leverage trade finance, the absence of which is today strangling the industry. The Forum wants workers in the industry to benefit immediately from the Rapid Social Response Fund of the World Bank’s Vulnerability Financing Facility with aid going to “good manufacturers” and with preferential access to credit and at preferential rates for businesses demonstrably providing decent work.

This is seen as a remarkable opportunity to support raising labour standards in the industry through instruments of financing.

Short-term stabilisation efforts need to be accompanied by measures designed to ready the industry for recovery and to boost competitivity.

Maintaining employment is seen as key here with training and retraining cutting in to stave off redundancies, keeping workforces intact and using downtime to up skill to boost productivity Funding derived from part of the stimuli packages and government involvement and support will be crucial in this preparation for recovery.

The final element of the strategy is aimed at those where survival isn’t possible at the moment providing for a responsible transition with displaced workers receiving their full legal entitlement to all outstanding wages, pensions and severance, access to jobs banks and retraining and underpinned by government provided safety nets. The current crisis has clearly demonstrated the hardship caused by the absence of severance, unemployment and pension funds in many economies and the need for the urgent establishment of such provision.

Interestingly, the MFA Forum strategy recognises the fallacy of total reliance on exporting for growth and development. Given that consumption in US and European markets is likely to take some considerable time to reach pre-recession levels, the strategy places central importance on promoting economic development and stimulating consumer demand primarily in textile, clothing and footwear producing countries. Hence the emphasis on decent work incorporating the payment of a living wage to all workers in the sector.

Key players in the industry have already begun considering options for modifying their supply chain strategies in order to focus on a broader geographic distribution of consumption, the need for a more highly skilled labour force and innovations in environmental sustainability.

The Sustainable Apparel and Footwear Initiative is, in reality, seeking a revolution in the sector using the recession to fashion a new model for the textile, clothing and footwear industry based on new global supply chains and new global consumption patterns.

To succeed the strategy will require urgent input from a range of players, including the industry itself, the ILO, World Bank, UNDP and governments from North and South!

The ILO should be at the heart of honing this decent work centred stabilisation and recovery initiative for the textile, clothing and footwear sector. In the first instance trade unions want to see the ILO hosting an early round-table brainstorming bringing together the wide range of players needed to provide the oxygen for the initiative including representatives from the entire textile, clothing and footwear supply chain - manufacturers and trade unions, brands and retailers, governments from both exporting and importing countries, and the financial institutions and the development agencies.

This unprecedented range of interests would then work on how to share the tasks needed in developing the new model industry centred on decent work and paying a living wage to every employee. In co-ordination they would then roll out the initiative in strategic textile, clothing and footwear producing countries and linked closely to the ILO’s Better Work programme.

The broad framework outlined has been put together rapidly. Our challenge is now to refine it and put it into operation. The International Textile, Garment and Leather Workers’ Federation believes the ILO is well placed to play a lead role in this in fulfilment of its long-term responsibility for defending and promoting employment, decent work and sustainability.

We welcome the commitment of the ILO in addressing the impact of the current economic crisis on employment and look to it to translate this strong political will into immediate action on the ground in the textile, clothing and footwear industry.

[1] Ref Ifashion- SA fashion website.

The South African Apparel Industry to now work with government

Introduction

After much stalling the South African government has published and intends to implement through the Department of Trade and Industry a rescue package for the clothing and textile sector that incorporates skills development, capital investment and the controversial proposal of increasing tariffs on apparel imports.

Maybe at last we are seeing some concrete forward movement in dealing with this troubled sector and we have to collectively put aside personal issues from all quarters of the industry and work in cohesion with the government in making the most of these policy decisions. The rescue package may not be the saviour of the industry but it is the first comprehensive plan of action we have seen from government. As for the implementation of tariffs there will always be debates from different political and social economic spectrums about their worth.

What the industry as a collective needs to do is work with government in focusing on illegal imports. Companies and individuals conducting such business must be brought to book and exposed.

The industry must upgrade every level of their operations to become viable operations and build stronger relationships with the powerful retail sector in the area of service delivery and costing. Pressure must be placed on retailers not to support unregistered apparel suppliers and in-turn retailers need to educate their buyers on the complexities of the industry[1].

The announcement that certain textiles will be exempt of tariffs duties is a pleasing outcome for the fashion sector as access to textiles and the cost incurred to designers has been a contentious issue. Our fashion sector needs to now exploit this opportunity by creating closer workable links down the value-chain between designers, manufacturers and retail.

The one concern is the direction of possible union activity within the apparel sector. Jobs will continue to be lost and I expect there is immense pressure being placed by the Southern African Union of Textile and Clothing Workers Union (Sactwu) on their former boss Embrahim Patel who is now a minister of economic development in Zuma's new cabinet to deal with the loss of jobs and factory closures.

Background

Globally textile and clothing trade grew by 10.6% to US$583bn in 2007, while textile exports from Asia to Africa increased by 18% and from Asia to Europe rose by 16%. The world’s biggest textile exporter in 2007 was the EU27, followed by China, Hong Kong, the USA, South Korea, Taiwan, India, Turkey, Pakistan and Japan. The EU27 was also the biggest textile importer, followed by the USA—although China ranked as high as third, followed by Hong Kong, Japan, Turkey, Mexico, Vietnam, Canada and Russia.

In clothing, China was the world’s leading exporter for the second year running, followed by the EU27, Hong Kong, Turkey, Bangladesh, India, Vietnam, Indonesia, Mexico and the USA. As for clothing imports, 46% of the world total went to EU countries in 2007, while the USA took 24% and Japan took 7%. The countries which followed in importance had only small shares and included Hong Kong, Russia, Canada, Switzerland, the United Arab Emirates, South Korea and Australia[2].

It is estimated that the South African apparel and textile sector is the sixth largest manufacturing sector employer and eleventh largest exporter of manufactured goods. A total of 230,000 people are estimated to directly be employed in the industry with a further 200,000 employed in dependent industries[3].

In 1939 the clothing industry consisted of 268 factories employing about 19000 workers and by 1959 there were 560 factories employing 49000 workers with 844 firms registered in 1960[4]. This equates to roughly 3770 jobs per year since 1960.

Much of the debate relating to formulating a policy future and past to "rescue" the South African apparel sector has been thwarted with political motivation and interest groups pushing their own agenda and a lack of trust between various sub-sectors within the apparel sector. For an industry sector that contributes an estimated 11% of all manufacturing employment and as part of the manufacturing sector which contributed 16.2% of annual GDP[5] the delay in finding a cohesive policy and the infighting is inexcusable.


The recent Draft Rescue Package for the Clothing and Textile Sector covers the following:

• A production incentive which allows companies to receive a subsidy based on their production


• More flexible working capital loans to be made available by the Industrial Development Corporation (IDC)


• The IDC to increase its equity exposure in the industry


• Amending the Manufacturing Investment Programme to ensure greater uptake


• Structuring of the guidelines for the Clothing and Textile Competitiveness Improvement Programme (CTCIP) to ensure maximum benefit for the industry


• A coordinated and well-resourced skills development programme


• All three tiers of government to procure their clothing and textiles locally


• All government assistance to be conditional on tax and labour law compliance


• A dedicated clothing unit to be set up to combat customs fraud


• An increase in clothing tariffs to their bound rate of 45%


• The initiation of a safeguard investigation by the International Trade Administration Commission (ITAC), with a view to implementing provisional duties in the short term, followed by final duties


• The closing of loopholes which allow other Southern African Development Community (SADC) and Southern African Customs Union countries to be used as conduits for imports into South Africa, thereby bypassing trade regulations
  
  The Quotas Failed
  
  The implementation of the controversial quotas on Chinese apparel which was implemented in 2007 came about due to the surge of imports in both clothing and textiles after South Africa went down the road of trade liberalization in the 1990s. China has and continues to be a needle in the discourse of South Africa's clothing and textile industry, however new arrivals have dispersed the total negative influence of China for these sectors. In 1996 imports for China accounted for just over 16% of the total clothing imports growing to an alarming 75% in 2006 which then dropped as would be expected during the quota period.
  
  New import players such: Vietnam, Bangladesh and Malaysia actually saw an increase by 33% in imports from the "HS lines which the quotas targeted" during the quota period[6].
  
  Data reflects that during the quota period domestic output of clothing and textiles increased by 2.68% in 2007 but decreased by 1.46% in 2008[7].
  
  When the quotas were implemented Ebrahim Patel then general secretary of the Southern African Clothing and Textile Workers' Union (Sactwu) said that 55 000 jobs would be created the very opposite happened. A researcher from Sactwu said that jobs losses were "substantially less" than before the quotas[8] an admission that employment did not grow as was expected and sold to the industry and government by the union as a reason why the quotas needed to be implemented. It is interesting to note that Sactwu is unable to provide evidence of the number of job increases that occurred during the quota period. However, there is evidence of job losses during this period. The December 2008 Quarterly Employment Statistics show a decrease of 35,000 jobs in the manufacturing sector and 22,000 lost jobs in the same sector for 2007 with the apparel manufacturing sector "listed as contributing to the overall decrease in manufacturing employment[9]."
  
  The Future
  
  With clothing companies continuing to close over nine companies and 5000 people losing their jobs within the first three months of 2009 with the expectation of more job losses in the months to come-the Department of Trade and Industry predicts the industry will shed a total of 20 000 jobs a year over the next two to three years-makes a mockery of Zuma's promise to increase jobs. Apparel imports have grown by 64% by value and 12% by volume in January 2009 in comparison with same period in 2008 and exports of textiles and clothing down 9% for the same period.[10] The dispute about the amount of people who have lost their jobs is immaterial. The Department of Trade and Industry says that over the past six years employment in this sector has decreased by 39% equating to a loss of 69000 jobs. The fact is jobs have been lost and there is very little scope of large reemployment in this sector unless the tariff implementation and rescue plan work but this will be contingent on the industry taking advantage of any opportunities these economic policies present.
  
  The cost of labour is an issue that also needs to be address and as I have eluded in the relationship between retailers and suppliers to which is backed up by a report[11] the demand for shorter delivery times and flexibility of manufacturers still hampers the relationship and support of local manufacturers by retailers.
  
  With tariff implementation planned it is pleasing note that an increase in protectionist tariff for textiles is excluded from the targeted lines that mostly consist of clothing imports that could be produced in South Africa. The notice on 13 June that import "duties will be cut on a range of fabrics not made in commercial quantities in South Africa[12]" is a welcome note for the industry and for fashion designers. This could result in a manufacturing reduction of at least 10% in locally apparel. Not everybody is happy with this. The Textile Federation (Texfed) said the body was concerned with some of the provisions on the fabrics and has registered their concern with the International Trade Administrative Commission (Itac)
  
  However, the difference between bound and applied tariffs lines[13] is so minimal in the South African context that will the implementation of tariffs actually do the job of both protecting and increasing employment in this sector and provide incentives for the industry to restructure?
  
  The debate of tariff implementation within the South African clothing and textile sector is not new. The 1925 New Customs Tariff Act was the first truly protectionist policy to provide "space for growth in the industry," and by the 1960s a total of 400 items fell under tariff protection for the clothing and textile sector[14].
  
  Past evidence shows that the South African textile sector in the 1950s was in a similar position as it is now with the industry complaining that it could not compete on an "equal footing as per competitor countries." One wonders what development has occurred in the last fifty years. Between 1958 and 59 the local apparel sector used up to 36% of locally produced textiles however the apparel sector reported that "quantity, qualities, types, finishing and delivery" was a problem when supporting local textile suppliers[15].
  
  Conclusion
  
  It is noted that the government has listened in some aspects to the industry. The removal of tariffs on certain textile lines, the implementation of the rescue plan and the focus on illegal imports are examples. Government and the industry must now move forward put aside past differences and work together to make the best of these economic instruments. If there is going to be union action from Sactwu it is best if they change their tactics. They should not target the industry as a collective. They should target retailers supporting unregistered apparel manufacturers, work closer with apparel employers in finding mechanisms to save jobs within individual companies and develop a strategy to target individuals within government. I firmly believe, our leadership, should be demonstrating and walking the fashion by wearing locally designed and made clothing. Admittedly the South African government has made blunders and created a difficult environment for this sector. The industry needs foster stronger ties with government and within to build a unified industry that has one vision-growth.
  
  
  [1] There is concern from within the apparel sector that many buyers working for the major SA retailers lack the experience, knowledge and full understanding of the complexities that forms apparel industry.
  [2] Trends in World Textile and Clothing Trade- March 2009 –Textile Intelligence
  [3] http://www.infomat.com. 2008 edition Research Report
  [4] . Bureau of Census and Statistics, Special Report No 237-1960-61
  [5] DTI's Industrial Policy Action Plan 2007
  [6] tralac Working Paper No 5/2009 June 2009
  [7] "South African Quotas on Chinese Clothing & Textiles Economic Evidence." Research Note 9. Econex, 9 March 2009
  [8] Costau Media Monitor: 15 April 2009
  [9] South African Quotas on Chinese Clothing & Textiles Economic Evidence." Research Note 9. Econex, 9 March 2009
  [10] "Industry rescue plan may be too lat." Financial Mail. 24 April 2009
  [11] tralac Working Paper No 5/2009 June 2009
  [12] "Textile import duties cut in state drive to help industry." Business Day 15 June 2009
  [13] Bound tariff is the maximum duty that can be applied within WTO rules. An applied tariff is the duty that a country applies in practice.
  [14] "The economics of the Wholesale Clothing Industry of South Africa: 1907-1957." by H. Barker, Pallas Publication 1962, SA
  [15] The economics of the Wholesale Clothing Industry of South Africa: 1907-1957. by H. Barker, Pallas Publication 1962, SA