The global economic crisis has intensified structural changes in the textile and apparel sector as nations try to boost their competitiveness and avoid more job losses, a new report says.
The study by the International Labour Organization (ILO) estimates that between 11m to 15m jobs were shed in the sector worldwide in the critical first phase of the global recession.
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The biggest losses have been posted in China at around 10m, followed by India, Pakistan, Indonesia, and Mexico, it says.
The report also points out that estimates of jobs losses by textile industry groups and manufacturer associations are often higher than estimates by trade unions.
In the case of India, for example, it notes that while the Textile Ministry and sector trade unions broadly put the number of job losses at around 300,000-500,000, the Confederation of Indian Industries by comparison estimated that 1m jobs had been lost.
The ILO report argues the causes, however, are not clear-cut for the huge number of job losses worldwide.
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By GlobalData“The pattern of these closures and lay-offs cannot be explained simply by the drop-off in export demand,” it says.
The report also claims: “Consolidation of supply chains is making it harder for small apparel producers to remain viable in the global market.”
Along with the end of the restrictive global quotas in 2005, the report asserts the rise of “fast fashion” and better inventory control means buyers are increasingly looking for suppliers that can source materials, coordinate logistics, and operate in locations that lend themselves to shorter delivery cycles.
Major buyers are increasingly shifting away from sourcing from many small firms towards a smaller number of “strategic suppliers,” either manufacturing groups or agents, who manage production across multiple factories and international locations, providing greater value-added services, the ILO says.
“Brands increasingly do not make sourcing decisions on a country-by-country basis, but select firms to work with,” it adds.
The expert study also found that discounters and fast fashion retailers are “outperforming” mainstream apparel specialists and department stores.
Finally, the ILO paper lists numerous responses taken by governments and industry associations to assist problematic industries to compete and stem the loss of more jobs.
China’s ruling State Council, it notes, is offering financial support to textiles producers and urging financial institutions to boost credit loans to producers in the sector, especially small and medium ones.
Similarly, Morocco’s government, it says, has outlaid $100m in a support package which includes cancelling payroll taxes and offering government guarantees to companies seeking bank loans.
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