MANAGING CHANGE IN THE TEXTILE AND CLOTHING INDUSTRY
INDUSTRY STRATEGIES FOR MANAGING CHANGE
ADDRESS TO THE MEETING ON 25th April
FILIEP LIBEERT
President EURATEX
Mr. Vice-President,
Mr. Chairman,
Ladies and Gentlemen,
Let me begin this address by saying that the European textile and clothing industry has no
strategy for managing change. I would then immediately qualify that comment by stating that
the European textile and clothing industry has no single strategy to manage change. Indeed
how could it?
Most of those present here today will be sufficiently familiar with the industry to know two
essential things about it:
The first is that it is a big industry made up of a myriad of small and medium-sized
companies: roughly 2.500.000 workers employed in some 170.000 companies across the EU25. Average employment per company: 15 people.
The second is that the industry cannot be seen as a single entity – not only do we have what
one would view as the classic split between the textile industry on the one hand, involving the
production, preparation, spinning and weaving and/or knitting, dyeing and finishing of fibres
into fabrics, and the apparel industry on the other, in which the fabric is cut, trimmed and
sewn into its final form, but close to 60% of production in textiles is destined for carpets and
interior textiles, together with the newer and growth markets of technical or industrial textiles
covering a bewildering array of high spec articles for transport, building, filtration, medical,
sportswear, protective wear, roads, the list of which is almost endless.
With this multiplicity of sectors and sub-sectors, and of end-uses, there will by definition be
major differences in the market place and in market opportunities and pressures: is the market
still growing, has its reached maturity, is it stagnating, and why, and what is the position of
the individual company within that broader market place? These issues today are crucial to a
proper understanding of what motivates decision-making in what still remains an extremely
tough trading environment.
Just to give one well publicised example – the still growing area of technical textiles. It has to
be recognised that in spite of the enormous promise of this new area, there is not room for
everyone in it. It will therefore simply not be feasible for everyone to manage change by
changing production into technical textiles. The market needs proper research and it needs
new discoveries and end-uses.
We must then be sure that certain sectors are not seen as panacea, just as much as we must
not automatically consider that a company which is still producing the type of goods which it
has for many years has no future. The market including the export market will decide, and
provided that the company concerned is offering its own distinctive quality at a price which is
accepted by the market and enables it to make a profit, there is no reason why such a
manufacturer should not enjoy a successful future in the longer term.
There are therefore no hard and fast rules, no more than there are one size fits all solutions in
such a complex industry. Nor can we lose sight of the fact that in the complex and fragmented
supply chain which typifies our industry, even the most efficient producer may well find that
he has to reduce or re-focus his own activity if one or more of his major customers get into
difficulties. Cases of this kind are of course not new. However, today’s combination of
sluggish consumer and overall demand, coupled with the one-way liberalisation of trade, have
created added pressures, and this, Mr. Vice-President, is why I congratulate you on taking the
initiative of organising this important event today.
Let me attempt nonetheless at this point to give the lie to those who suggest that European
industry over the years did little to prepare itself for the end of quotas. In 1994 when the ATC
was agreed, no one could have predicted the rise of China in the form and with the prices that
occurred, and yet over the period to January 1st 2005, the European textiles and clothing
industry changed to a very considerable extent.
The end of quotas and the China shock may have been a further driver for change over the
past eighteen months but an overall macro-economic view of the situation in terms of job
losses does demonstrate that to a large extent what we are living through today is a
continuation of previous trends, rather than an entirely new phenomenon.
The chart on your screen shows this, the deeper coloured extensions of the bars being job
losses in the new member-states. In this light there is little reason to suggest that the specific
ways in which to undertake and manage change will differ vastly in the future from those of
the recent past. Undoubtedly, certain of the 15 member-states faced change much earlier than
others. Hence we must recognise that the negative impact on the latter and on the new
member-states whose manufacturing employment is heavily dependent upon textiles and
clothing will be much more evident and acute.
As globalisation gathers pace, often, I would have to say, as a one-way street, especially in as
much as the EU is concerned, other industries will be drawn into similar situations to our
own, and success or failure in the management of change by the Commission and European
Parliament, by member-states, by local and regional authorities, will serve as an example to
follow, or as one to be avoided, in other areas of manufacture.
Having said this, I would also be very clear in pointing out that the main responsibility for the
management of change lies foursquare in the hands of the management of the company
concerned. After all, they know and understand the market in which they operate; they are
aware of the competitive pressures exercised upon them, and they ought too to be aware of
how best to combat such pressures within or outside their existing field of activity.
Here however, too, there is an important reservation to be made: very small companies will
frequently lack the necessary resources to be able to take advantage of those opportunities for
change which might become available. They will be particularly vulnerable in these days of
difficult access to credit. This may too be exacerbated by the negative image of the industry.
We all know how bad news makes the headlines, whilst good news will be hidden away as a
mere footnote.
Later in today’s Agenda you will hear examples of how individual companies have been able
to bring about change, how they have managed it, and what the impact has been upon those
whose jobs were concerned in this process of change. At this point in my comments, I would
like to point up some ways in which a company may carry out change, successfully or indeed
otherwise.
o A company may remain in the same market segment but seek to move further up
market. (a move from commodity to specialty)
o A company may move into a new segment of manufacture (a move from apparel
fabrics to fabrics intended for protective wear for example or it may choose to set
up a company specialised in more technical and functional articles which will
grow alongside its parent)
o A company may delocalise all or part of its activities into a new member-state, a
candidate country, the Pan Euro-Mediterranean area or indeed into Asia. (Such
cases tend to occur most frequently in the apparel sector, and have been motivated
over the years by comparatively lower labour costs in the countries mentioned.)
o Alternatively, in the more unfortunate cases, change may be imposed in the form
of substantial job cuts or even company closures.
One needs to be crystal clear in this context. It is unlikely that even successful change
management can take place against a background of zero job losses. Moves up market tend to
be accompanied by lower level production with higher value added. The same can almost
always be said to be the case where moves into more technical, high-spec areas are concerned.
As for delocalisations, it will be self-evident that a move of all or part of a clothing plant from
within the EU to its periphery or further away will result in substantial manufacturing job
losses, even if an expansion of that same production might in fact create additional jobs on the
design, distribution and logistics side within the original company headquarters. Even in such
cases, there are clear opportunities for the profile of employment to change, and the nature of
the job offered, given appropriate levels of re-training, can be enhanced.
Job cuts as such or even company closures will naturally be the most painful, and here it
should be clear that those companies who have taken early steps to downsize and to adapt will
be better placed than those who choose to hang on in the hope of better days.
However, whatever the circumstances, and however large the proportion of workers who lose
their positions, we do believe that it is extremely important that proper training be provided
for those workers who are now seeking new positions. New skills will be critical to our
industry in the new areas into which companies will venture, whether by moving upmarket, or
indeed by shifting their focus of interest towards new products and new textile applications.
But new skills are essential too for those who have to leave the industry and seek
employment elsewhere – even if I feel obliged to point out that it is not evident that there will
always be opportunities on the spot and that they may be a need for some to move to another
region or another country. Language skills too will come into play in this respect.
There is also a need, wherever this is possible, to ensure that company employees fully
understand the circumstances in which the company decides to move upmarket, to look for
different markets, to delocalise and/or to reduce its employee numbers.
In addition adequate advance planning can enable companies situated in the more expensive
regions of the EU to reduce their workforce in those areas over a period of time, as older
employees reach retirement age. This might be said to form part of basic Corporate Social
Responsibility which companies should and do practise, and which more often than not, goes
unheeded and unheralded by NGOs, the media, and indeed the authorities themselves.
In working to these ends, however, and with the best will in the world, the acceptance by
management of responsibility for its decisions in a market economy based upon a Europeantype social model, cannot work to proper effect unless the authorities themselves are prepared
to become involved at some point in the process. We are not asking for state aid for our
companies, but for recognition that there will be circumstances in which certain regions of
textiles and clothing activity will face employment problems which will not be easy to
overcome because of the lack of alternative industries and jobs in their area. These issues
cannot be solved by the industry alone.
This led EURATEX to make the following proposals in a paper entitled “Structural
Adjustments” which it released to the High Level Group on textiles and clothing in February
2006:
Textiles and clothing have to be clearly identified among those sectors who former employees
benefit from the Globalisation Adjustment Fund and from the European Social Fund and a
proportion of those funds should be made available for use in the regions or localities
concerned to enable the following activities to be carried out:
o Large scale training schemes to improve the employability of production
personnel from the textile and clothing industries both internally and externally
o Re-skilling units for employment outside the sector
o Forecasting the strategies needed for jobs and skills management
o Implementation of “waiting arrangements” in the form of job centres and other
local initiatives through which the improved placement of workers on the basis of
the current skills could take place, thus facilitating the finding of new positions for
those who have lost their jobs
It will be self-evident from this set of proposals that we have placed the stress upon assistance
to company employees who lose their jobs, and rejected any form of assistance to the
companies themselves. This approach is recognised by the Commission in the proposals it has
made in March of this year for an annual Globalisation Adjustment Fund.
Over and beyond the question as to whether, across industry as a whole, the sum allocated is
adequate for the needs which will arise, there is a clear challenge here for national and
regional authorities, who have the responsibility of administering the scheme, to use it
effectively and fully.
o
I would also add at this point that we in EURATEX are doing our best to aid in this process of
managing change by our active involvement in a number of initiatives which stem from the
work of the High Level Group and its report of June 2004.
I am sure that Mme. Fedeli will touch upon these elements in greater detail in her statement,
but I would mention in passing the creation of observatories for employment and training
across the EU, based upon a Leonardo pilot project, the elaboration of common skills and
qualification standards, and, through the strengthening of the Social Dialogue at all levels,
enhanced anticipation and preparation for industrial change.
In the field of research and development too, we are putting great efforts into securing
innovative products and processes in collaboration with companies, institutes, and academia
throughout the EU, seeking in this way to maintain leadership for Europe throughout the
textile and apparel pipeline.
The recently created Technology Platform is an ideal example of this collaborative and
forward-looking activity, with, as its major objectives, a move from commodity to specialty,
the exploitation of new textile applications, and move from mass production top masscustomisation in apparel. Here I can only express my satisfaction at the help and
encouragement these efforts have received from DG research and DG Enterprise and Industry,
Mr. Vice-President, and to hope that Framework Programme 7 will offer every opportunity
for further significant progress.
If I refer here to help and encouragement in research and development, I do also want to
conclude by stressing that we as an industry, even in the market economy in which we live,
look to the Commission and member-states to provide an appropriate framework in which we
can move forward.
For example, we still need to correct the flagrant imbalance in market access to enable us to
increase our exports – we employ seven times more people for exports alone than the total
workforce of AIRBUS - and we need confidence that predatory pricing will be tackled
objectively and swiftly. We are always told that we need to innovate unceasingly, and we
agree with that. But we need too the assurance that today’s European innovation will not be
our overseas competitors’ counterfeit or pirated stock in trade tomorrow.
We accept too that care has to be taken with the environment. We are sure here that the
Commission and the Council and Parliament are aware of the serious concerns we all feel
about REACH.
We look forward then to working in ever closer co-operation with our authorities at all levels
to ensure that as we as entrepreneurs seek to manage change in the difficult circumstances
which lie ahead, we can be sure that the Commission and member-states will also be aware
that they too have a major role to play in minimising the impact of this change on our
employees and the companies who employ them.
Thank you for your attention.
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