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Is local textile production making a comeback?

10 April, 2015

BSTIM. Best Solutions in Textile Manufacturing Fair

Catalan Fashion Industry II / III – The strong dollar, the need for flexibility with regard to orders, the savings on stock management and customers who are more demanding about product origins are all recent changes which point to a potential and gradual move back to Catalonia of the fashion textile sector.

Fashion sector customers are now used to seeing labels saying that the products they buy come from countries as far afield as China, Thailand or India. Very few fashion textile products today are made here or in other Western countries. After the textile trade was liberalised in 2005, the local sector stopped focusing on production processes and ploughed its efforts into marketing and designing clothes. That’s why for many years, while textile production around the world was growing at an average annual rate of 1.2%, the figure in Asia was 3.6%, according to information from Spain’s
Ministry of Industry, Tourism and Trade for the years up to 2007.

But for some time now the Catalan textile industry has been talking about the ‘pendulum effect’. This refers to the possible and gradual relocation of part of the industry back to Catalonia and Spain. “2014 figures for Spain suggest that after 15 years of job destruction in the textile sector, recruitment rose by 2.5% last year, industrial
production was up around 3.5% and sector exports delivered 8.5% growth. Furthermore, fashion purchases, after six years of continual decline, rose by 3% for the first time,” says the president of the FAGEPI textile businesses association Antonio Egea.

If these figures continue apace, we could be talking about a certain recovery in the volume of activity of the textile and clothes-making industry in the medium term. According to the CITYC Centre for Textile Information and the FITEX technology centre, the Catalan textile industry has the capacity to provide 30% more jobs. Spain’s FEDECON clothing federation is even more optimistic, believing there could be “a progressive return of between 50% and 60% of textile production volume over the next few years”.

Micro consequences

Leaving aside the macroeconomic figures, from a microeconomic perspective there are also encouraging signs. Experienced sector figures say there could well be sustained production growth in the fashion textile industry in Catalonia over the next few years. The owner of Gavi Punt, Joan Gavarró, says that for five years there has been an increasing demand from local customers which is “getting stronger and stronger every day”. This company, which has 12 people on staff, specialises in the production of knitted goods for men, women and children. Although it was founded in 1992, its origins
date back half a century.

Gavarró is the second generation of a family dedicated to making knitwear. Thanks to its commitment to new machinery and the fact that it took on the many changes the sector has required in the past 30 years, he is fairly optimistic about the incipient growth in orders from local customers: “Our customers today are mainly new ones. They all need to manufacture closer to home and with quicker turnaround times. We have trebled our sales and turnover figures in the past five years.” EseOese, Desigual, Oysho and Kilt are just some of the firms that work with Gavi Punt. The financial downturn not only in Spain but around the world has meant that many of these companies have reduced the number of units in each order. “This has seen production prices abroad shoot up too,” he says.

The dollar

“Local fashion-sector customers have to buy with shorter times and need flexible deliveries,” adds Genís Vera, the owner of Quinto Punt. Together with Mireia Vera, he runs a company that employs 22 people and which makes all sorts of clothing. “We buy the thread and deliver the finished pieces,” Vera says. He says the reaction times that a local company can offer are a highly competitive factor, in addition to another element which is fundamental to understanding the growing demand in the textile industry, i.e., the rising price of the dollar.

“If we talk about production today, the large fashion groups also include Turkey, Morocco and Portugal as local manufacturers. Right now the most decisive factor is the price of the dollar. We have to take advantage of this situation. When our currency recovers, everything will return to normal,” says Vera, whose brand customers include El Corte Inglés, Blanco, Trucco and Uturqüe.

“We aren’t looking at manufacturing in Spain because consumers are willing to pay more for a piece of clothing made here,” says Yerse CEO Josep Generó. “Indeed, that isn’t happening yet. But what is extremely interesting is that there are sets of circumstances like the present one (referring to the fluctuations in the dollar and the euro) that lead us to manufacture locally. Time and stock management are other decisive reasons for producing here”.

The role the customer plays in the relocation raises opposing opinions. “Customers no longer buy in huge quantities; they are more exacting and want a product that meets their requirements, something that stands out from the crowd and which is reasonably priced,” says Gavarró, who argues that these factors explain why “local products are more suitable to today’s market”. Antonio Egea agrees and also remarks that a customer’s purchasing decisions directly impact the general health of the local economy. “The Price factor is not competitive in the long term,” he says.

Igualada promotes the textile industry

Being able to make changes mid-season, solve a stock shortage or place smaller orders are the main factors businesspeople give when they enquire about locally placed manufacturers available to carry out their production. It also explains why many of them visited the first BSTIM fair in February, set to be an annual initiative designed exclusively for local producers and sponsored by the Fira d’Igualada trade fair and FAGEPI, with funding from Igualada City Council.

The BSTIM organisers say that despite the relocation process the textile sector has undergone, in Anoia province alone there are still 150 businesses which generate up to 2,500 jobs. Altogether they have a turnover of €350 million per year. Six million knitted items are produced in Igualada every year for labels and distributors across Europe.

These figures speak to the local potential to handle a growth in production. “But making forecasts is risky. Everything speaks to consumer growth in middle segments in detriment of low-cost consumption. This channel has enjoyed non-stop growth in recent years but it seems it may have now peaked. If the return of the production industry is
consolidated, we will have many reasons to be happy over the next five years, in the form of stable work and increased industrial activity,” concludes the FAGEPI president. That is why both Egea and Gavarró say that what is needed now is to “gain the loyalty of our new customers by assuring them quality and detecting their needs before they arise to adopt to necessary changes quickly”.

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