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Global Textile Industry Sets Sights on Survival

Major trade fairs prepared for tough season.

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The global textile industry is adopting a survival mentality.

This story first appeared in the February 3, 2009 issue of WWD.  Subscribe Today.

Europe’s largest and most influential textile fairs, including Première Vision, Texworld and Milano Unica, will kick off this month with the specter of worsening global economic conditions looming. Production and exports are down in Italy, France, China, India and Japan, and more pain is expected. As textile executives and trade show organizers prepare to face a smaller pool of buyers with dwindling budgets, the measure of success is now being judged simply by the ability to stay in business.

“It’s going to be a really tough year, and until the horse comes back to drink, there is little you can do, aside from reducing costs and preventing unemployment,” said Paolo Zegna, Milano Unica’s president, calling job preservation the industry’s aim for 2009. “Once the crisis is over, it will be hard to get the industry going again with less workers.”

Curd Hahnbück, chief executive officer at German mill Becker & Führen Tuche, which will be exhibiting at Munich Fabric Start, Ideabiella in Milan and PV in Paris, said, “Buyers are very reserved at the moment and everyone’s very noncommittal.”

The biggest challenge for European mills in particular, said Hahnbück, is that designers and manufacturers are looking for the cheapest possible fabrics.

“There is a small group ready to pay for high-quality fabrics, but the vast majority is looking to save money,” he said. “We haven’t lost any customers. The problem is that our customers don’t have any customers.”

Trade show organizers anticipate fewer exhibitors and weaker order-taking for those that do show.

Première Vision, which runs Feb. 10 to 13, has confirmed 684 exhibitors, a marked decline from the as many as 800 companies that filled the halls of the Parc d’Expositions north of Paris in years past.

“We anticipate fewer visitors this year but, in spite of the difficulty, we will not be reducing the sorts of services we provide or the promotion of the fair,” said Philippe Pasquet, PV’s ceo.

The event, which courts leading textile manufacturers, about 85 percent from Italy, has 24 new companies, Pasquet said.

“Even if the volume of sales is hit in the short term and there is a lull in the market, people still need to make clothes and collections,” said Pasquet.

Organizers of Texworld, which runs Feb. 9 to 12 in Paris, expects 650 exhibitors. However, there has been a noticeable decrease in the presence of Asian mills.

“Certain exhibitors from China have pulled out due to economic and financial reasons,” said Stephanie Keukert, director of textile fairs worldwide at Texworld.

The trade show is promoting eco-friendly fabrics, cotton, linens and wools, and Keuker said prices will be competitive.

“What we do is we prepare our customers to be prepared for tough times,” said Keukert.

Until demand revives in key Western countries, labor-intensive sectors like textiles and handicrafts, specifically in Asia and India, are expected to be among the hardest hit. Japan’s textile production in 2008 slumped 8.9 percent, according to preliminary data from the Ministry of Economy & Industry. Since Aug. 1, the yen has appreciated about 29 percent against the euro and almost 16 percent against the dollar.

“We don’t think it can improve immediately. We have to endure,” said Kohji Yamanaka, director of the textile department at Mitsubishi Rayon Textile Co., noting Mitsubishi, which exhibits at PV, is trying to keep its prices as competitive as possible. “Such circumstances [force] textile manufacturers to exert themselves to survive. It might be tough, but it will be worth it.”

Indian textile companies are reducing the number of trade fairs in which they participate as a way to lower expenses.

“Most companies have reduced overseas travel and participation in trade fairs as part of cost-cutting measures,” said D.K. Nair, secretary general of the Confederation of Indian Textile Industry. “They have even cut down on sending trade delegations overseas.”

Nair said there has been a decline in participation in domestic trade fairs, as well.

“Companies are saying they would prefer to lie low for a year until the business situation improves,” he said.

Apparel exports from India for the year ending March 31 are projected to fall 9.4 percent to $8.78 billion. CITI estimates that about 700,000 jobs were lost in the textile industry last year and lower demand has prompted textile companies to cut production by 15 percent since last September. Indian government-sponsored export councils for sectors like apparel, cotton and synthetics are urging companies not to entirely abandon overseas marketing campaigns. The councils are organizing two exclusive Indian trade fairs in South Africa and Latin America next month.

“We have fairly good response for the fair in Brazil and Argentina in March,” said an official with the Mumbai-based Synthetic & Rayon Export Promotion Council.

The council organized an exclusive Indian textile fair in Damascus, Syria, last November that drew good response. Nineteen exporters and about 30 other representatives participated in the exhibition, aimed at tapping the Middle Eastern market for textiles. Indian companies appear to be less interested in trade fairs in the U.S. and Western Europe, both major markets for textiles. Export council officials said companies didn’t see any point in spending funds on markets where the business outlook is so gloomy.

The Italian textile industry also saw significant declines last year. Estimates by SMI, the Italian Federation of Textiles and Fashion, show the Italian textile industry’s volume fell 4.6 percent to 8.8 billion euros, or about $11.27 billion at current exchange, compared with 2007. Exports declined 8.1 percent to 5.45 billion euros, or $6.98 billion. While the industry’s downturn six years ago was due to the pending removal of quotas on China and the corresponding influx of cheaper fabrics, executives fear current economic problems could leave a deeper wound. Many mills closed their doors after 2002’s crisis and more are expected to shutter this year after registering meager orders in the last two months of 2008.

SMI also reported 9,000 workers in the textile and fashion industry were made redundant in 2008, with that figure expected to rise in 2009. In recent months, some Italian mills applied for Cassa Integrazione Guadagni, where workers are sent home on state-paid leave due to economic hardship. The government-financed public fund protects up to 80 percent of workers’ income over fixed short-term periods.

Fashion designers are faced with the prospect of working with fewer Italian-based sources.

“I’m worried about it,” said Massimiliano Giornetti, Salvatore Ferragamo’s men’s wear designer. “I use only Italian or English fabrics, so I fear less mills in Biella, where I order the bulk of our textiles.”

Pier-Luigi Loro Piana, president of Milano Unica’s Ideabiella sector and co-ceo of Loro Piana, said the question was not whether mills would close, but rather “whether we can maintain the entire process together, from yarn to textile to finishing and final garment, which is the real value added to Made in Italy.”

Alberto Jelmini, president of Moda In, part of the textile trade fair Milano Unica, said he was impressed with how executives were confronting problems.

“Compared to 2002 when they were crying, now it’s all about rolling up their sleeves and working really hard to get out of it,” he said.

German clothing manufacturers and mills were divided in their outlook. Dorothee Schumacher, co-director and creative chief of fashion label Schumacher, said she would not cut her fabric budget nor scale back in terms of price.

“We have to do our business as usual and to cut the fabric buy wouldn’t be smart,” she said.

Gerd Strehle, ceo of Strenesse, said the company would attend “all the major fairs, as before, but with smaller teams.” Consideration of price will take a backseat to innovation, as “the interest on new and innovative fabrics is bigger than ever. It’s the only thing that works, and this is not the place to pull back. If the product is right, it will sell.”

Marino Edelmann, sales manager of German label Drykorn, said, “When times are tough, like now, it’s more important than ever to invest in good textiles. It doesn’t make any sense to skimp and go for cheapness. Good fabrics are the most important thing we have to offer.”

Turkish textile manufacturers, which make up a major slice of PV’s exhibitors, are also feeling the recession’s pinch.

Akin Tekstil, which produces 2 million meters of shirting, fancy and outerwear fabrics monthly and boasts an Italian design team, said it expects sales to drop.

“There’s nothing to do, but enhance our service,” said Esat Haksal, director for marketing and sales. “We are trying to increase our personalized orders for customers with smaller minimums and not have too much raw materials laying around in stock.”

 

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