‘A New Dawn - Rebuilding UK Textile Manufacturing' was the title of a remarkable conference staged by Britain's textile industry on Friday (2 November). Remarkable for its positive inspiration - but also for the doubts it raised about the quality of thinking in the industry and the quality of journalism reporting on it.

In the late 1970s, Britain's textile and clothing industries employed about 800,000 people; today, 90% of those jobs have gone.

One piece of good news, though, recently described in a just-style white paper, is that the decline in sales, profits and employment now seems to have more or less bottomed out. And at Friday's conference, a lot more good news was presented about real growth among the best-managed British spinners, weavers and dyers.

But Vince Cable, the UK's Business Secretary, pointed out that while his government department had seen predictions of better times for textiles before, they've turned into false dawns.

The Financial Times (FT) newspaper had predicted that Cable would "throw his weight behind an industry-led scheme to resurrect the UK textile industry by creating up to 200,000 jobs" (four times the number it employs today).

He didn't. He merely reminded the audience about some useful, but low budget, government support programmes and offered lots of encouragement. No backing for resurrection plans; no great schemes quadrupling employment.

The FT had predicted wrong. And it hasn't bothered correcting its mistake - so the more gullible among just-style's competitors are happily churning out false reports that the UK Government would back a plan "seeking establishment of clothing manufacturing plants in the UK."

But however much the conference has been misreported, it had a lot of good things to say. Mostly, it described an industry that hasn't just shrunk but has been completely transformed.

For the first three-quarters of the 20th Century, most of its business consisted of supplying UK-based garment factories mainly, in turn, supplying UK retailers. Now though, as the table below shows, just like Germany and France, Britain has no domestic volume garment production anymore. 

Origin of garments on sale in 2011

  France Germany UK
Domestic 3.8% 4.6% 4.8%
European/Med neighbours 33.2% 31.4% 24%
Rest of world 63% 64% 71.2%
Total 100% 100% 100%

The success stories presented at the New Dawn conference were mostly of spinners, weavers and knitters selling high quality fabrics to demanding customers - usually abroad (most presenters exported over 60% of their output) - and often outside the garment industry altogether.

The problems faced by these businesses weren't low-cost competitors or declining markets: most frustrations were around problems raising finance and recruiting, training and retaining staff. 

There was criticism of the educational system's ability to provide properly trained recruits - but encouraging evidence from training organisations that these criticisms are being acted on, and that public funds are being used to meet employers' needs. Getting money from banks is tough, but banks aren't the only source of funding.

So far, so reassuring. The global economy is growing, and a lot of Britain's textile businesses have management that is capable of finding profitable niches to exploit. And there's some evidence Britain's government is offering much of the help needed to take even more advantage of global growth.


No-one seriously argued that selling more seat covers to foreign railways is going to bring back the three-quarters of a million jobs lost in garment and textile making over the past 30 years.

So instead a case was presented for a completely different opportunity, based on the unprofitability of clothing retailers' sourcing strategies. A case, sadly, based on a complete misunderstanding of how British retailers operate. And like so many complete confusions, founded on a kernel of accurate insight, carried to an illogical conclusion.

Virtually all clothing is sourced from abroad. Foreign sourcing inevitably, the claim went, means longer lead-times than domestic sourcing, and hence slower response times and more inventory in the system. 

An example calculated by Accenture was quoted, showing "overseas" (we'll come back to that) procurement needed 2.5 times as much inventory in the pipeline as domestic sourcing. 

In an industry such as garment retailing, which is geared to selling as many new products as possible every year, forecasts of demand are often going to be wrong. And "overseas" sourcing means the cost of forecasting errors will be higher - resulting in markdowns that will often make "overseas" sourcing less profitable than domestic sourcing.

The theory was elaborated by some hastily-presented mathematics, purporting to show that domestic sourcing of a tailored shirt, for example, would yield 17% more gross profit than a similar shirt from Asia once markdowns are taken into account.

At first sight, Britain's retailers - like their peers in other major developed countries - seem to have the potential for a huge improvement in profit at their fingertips. Can it really be that for the past decade they've been beating themselves and their suppliers up in pursuit of better margins when there's a screamingly obvious opportunity sitting under their noses?


Sadly, the numbers presented seem to have no connection with the real world. Apart from some improbably high prices on display (the average buying cost of a shirt from Asia was calculated to be GBP14.42 (US$23) whereas in 2011, the average price of a cotton shirt imported into the UK from Asia was GBP6.75 including import duty, VAT, transport and insurance), the comparisons just didn't reflect how European retailers buy clothes. 

The markdown problem is real. But for Europeans, the sourcing comparison between domestic and "overseas" buying isn't. 

Accenture's theoretical model with 2.5 times as much inventory in the pipeline reflects the American experience, where "domestic" procurement is from a country the size of a continent, and "overseas" procurement is mostly from thousands of miles away.

In London, though, "overseas" (a quaint term I'd not heard for years until the New Dawn presenters started using it to describe where things were bought) isn't the other side of a 5,000 mile wide ocean.

It starts less than 100 miles away from the New Dawn conference. Indeed, the train journey from London to the closest traditional "overseas" textile cluster at Lille in France takes half the time of travelling to Manchester or Huddersfield, which still harbour most of Britain's textile operations. 

Over the past few decades, France (and Germany) have lost as much of their garment and textile capacity as Britain. But trucks from the textile/garment clusters of northern Romania or western Poland get clothes to stores in London more quickly than a US domestic sourcing retailer like American Apparel or Forever 21 can from their Los Angeles plants to stores in New York. 

Properly managed, lead-times from the nearest "overseas" suppliers (those in lower-income Europe) are shorter, and require less inventory in the pipeline, than the American domestic procurement models created by Accenture

In 2011, British retailers bought around 30% of their garments from the UK, other EU countries or countries round the Mediterranean. For garments where forecasting is difficult, or where really fast response is essential, garment retailers buy from countries that deliver in a few days by truck. 

The 70% they bring in by (mostly) ship from Asia are the garments they can forecast with much greater accuracy. 

Of course, some garments might be made at home more profitably than in nearby countries. But comparisons with other European countries shows Britain is unusual in that it doesn't use neighbouring suppliers enough. 

If there is an untapped profit opportunity under British retailers' noses, it would be to make better use of producers in the poorer EU countries, Turkey or the Balkans.

If they thought otherwise, government ministers would risk building unrealistic expectations and even more scepticism among those best-placed to help Britain's textile businesses. Banks and venture capitalists need to see the industry as a profitable investment, young people need to see it as a source of good jobs, and governments need to direct tax allowances and training programmes towards it.

Poorly informed analyses don't help anyone, however well-meaning their motives. It would be a tragedy if the head of steam Britain's textile industry is likely to enjoy was blown out by unhelpful well-wishers.

I drew three crucial conclusions from the New Dawn conference.

  1. Britain's upstream textile industry has stopped its downward path. In fact, it's very likely to start showing real growth, especially if it can improve its access to investment and properly trained staff. These two areas desperately need a helpful government, and there are real signs of more understanding from today's Business Secretary than the industry has had for decades. Britain's textile businesses can find customers and development ideas - and more inspirational events like New Dawn would help.  
  2. The huge market opportunity being touted to quadruple the industry's workforce doesn't exist - at least not on the basis of the data presented last week. China's largest cotton spinner, Texhong, has had its credit rating downgraded for adding cotton spinning capacity in low-income Vietnam to a world burdened by too many spinners and weavers. No-one at New Dawn was complaining Britain's textile makers were held back by a shortage of yarn or fabric.  
  3. The conference didn't discuss one set of opportunities that kept being referred to. Over the past few decades Britain has developed an extraordinary group of designers - from Paul Smith and Stella McCartney to the hundreds of exciting unknowns on sale around London's Carnaby Street, Spitalfields and Camden Market. 

    These designers have huge problems tracking down suppliers to deal with their often minuscule orders. The complaint isn't so much fabric or yarn availability, since technologies like digital printing look set to make innovative raw materials more easily available to even the smallest new business. The problem constantly cropping up, though, both at the conference and in messages we get at Clothesource, is the lack of garment assembly facilities capable of dealing with short orders. 

    Plugging this gap won't create hundreds of thousands of jobs, but it's an important step in turning British design talent into an explosion of profitable new brands. Not just in London; the really hot design show this year is Oxford Fashion Week, and it's matched by similar events throughout Britain.

These glimmerings of hope CAN turn into a New Dawn for Britain's textile processors, garment makers and designers. 

But this dawn is about innovative businesses competing globally on the basis of unique - and usually premium-priced - insights into market niches. 

It won't come from deluding ourselves that British producers can compete in the UK volume market with Bangladesh and Indonesia.