THE TEXTILE INDUSTRY has taken a major hit from the global recession. But with the few remaining European countries finally emerging from the slump, a question-mark still hangs over the industry.
So long as the retailers to whom we export remain cautious, so should we,
especially when looking to the long-term future. Dharambeer Gokhool, the
Industry Minister, announced some weeks ago a move to set aside Rs3.1 billion
specifically to boost the competitiveness of the export sector.
He cited the improvement of technology to increase efficiency and drive down
production costs, in order to better compete with the likes of India, Bangladesh
and China,
as well as finding new markets in which to venture.
Looking for new markets is a great idea in principal. But in Europe and the US, Mauritius has got its foot in the
most lucrative markets in the world. Casting a glance at other prominent
markets in Asia, Mauritius
will never produce cheaper clothes for Indians or the Chinese populations than
what they already produce at home.
So, the textile industry will have to rely on the recovery of the high street
retailers in its target markets – as well as looking to reduce costs. The
industry has suffered due to three reasons. First, the global recession meant
people started buying fewer clothes.
Secondly, consumers replaced more expensive clothes with cheaper substitutes.
Mauritian factories provide clothes for the more “upmarket” of high street
fashion stores in Europe. For example, we
supply to Marks and Spencer and Next in the UK. Therefore, as consumers
downgrade, they buy less Mauritian products. So, straight away, we know that
our clothes are not the cheapest on the market.
Thirdly, we have faced tough competition from Asian countries, able to exploit
a huge cheap labour pool to produce very cheap garments. So it is no surprise
the Mauritian textile industry suffered as the retailers that Mauritius
supplies struggled to attract customers.
However, these retailers have had a very strong Christmas period and are
expected to post sizeable profits for the 2010 financial year. This is good
news for us, since if they are doing well, of course it means we are selling
more clothes. It also bodes well for future orders, and adds that level of
stability to the industry.
But it is important to realise that the same retailers use cautious language to
describe the outlook. Britain,
for example, is still in danger of slipping back into recession, as is Spain, and
other key markets. A recovery for the textile industry is therefore not
straightforward.
This is why it’s absolutely imperative for textile manufacturers here to reign
in costs where possible, and pass on the savings to retailers. This does two
things.
First, it helps to compete with lower cost suppliers in Asia
so as we don’t risk losing existing contracts with retailers in the future.
Secondly, we could become more versatile, to protect the industry should
another global economic recession rear its ugly head. This would mean being
able to supply clothing for the budget retailer market. For example, retail
chains in the UK
like Primark and New Look, who have done very well during the economic
downturn.
In recession, shoppers will revert back to budget chains. If we are supplying
the budget chains, then we protect the industry from another battering. This
means tailoring (excuse the pun) the industry into different tiers, so to
produce both cheaper and more expensive garments.
This is probably only possible with the investment in new technology and
machinery that can produce more garments more quickly, and at a lower cost.
Wages cannot fall any lower. However, I worry that such efforts could be
limited, given the abundance and seemingly never-ending supply of cheap labour
in Asia. With China
and India
both with one billion- plus populations, we just can’t compete.
The textile industry faces almost overwhelming challenges. Though the
investment in improving competitiveness is much overdue anyway, might it be in
vain? The economic recovery in our key markets will provide a nice little boost
to the industry, but only mask the deeper worrisome issues.
By SABINA JACOBS