Blog: Ethiopia unrest a sourcing risk?

Leonie Barrie | 18 October 2016

Fashion retailer H&M and UK based glove and leather manufacturer Pittards both say they are monitoring the situation in Ethiopia closely after the country's government declared a state of emergency after months of unrest.

Recent riots illustrate all too well the short-term superficiality of too many 'visionary' sourcing strategies, believes Mike Flanagan. He also argues that the apparent benefits of Ethiopia make the country a serious risk – both politically and commercially – for apparel and textile investors.

Despite the wreckage wrought on Haiti by Hurricane Matthew, the country's textile and garment exports are expected to rise 10% to roughly US$550m this year – as the bulk of the industry's factories are located outside its impact zone, industry executives have told just-style.

They also revealed a new joint venture in the country between Grupo M and Sri Lankan apparel producer Brandix, which should sharply bolster synthetic textiles and activewear output for US customers.

The volume of US apparel imports booked another double-digit hike month-on-month in August thanks to retailers stocking up for the back-to-school season – with Vietnam and Indonesia seeing the largest growth and Cambodia a massive 21% year-on-year decline. That said, the data also shows the volume of imports is down on last year.

Mexico's textiles and apparel industry is also restructuring following a 40% decline in exports since its 2002 heyday. Latin America's second-largest economy expects to see textile exports including yarn and garments rising to $4.2bn this year as manufacturers invest in new technologies to make more value-added and fashionable products.

US sportswear giant Under Armour says it wants to propel its brand into the future through a new state-of-the-art Lighthouse manufacturing innovation facility that brings new opportunities in local-for-local manufacturing and customised products.

Described by the group as its"magic bullet" and barely three months old, there are already plans for a second centre – and for the launch of several contract factories next year, according to the unit’s vice president.

But faced with a saturation point in the amount of clothing that can be sold and consumed – what Robert Antoshak refers to as "peak apparel" – the US retail industry has some serious thinking to do in order to survive into the future.

On the other side of the Atlantic, there have been warnings that failure to strike a good Brexit deal by 2019 would have a "disproportionately severe impact" on retailers and their customers, with clothing and footwear liable to attract double-digit tariffs instead of the current zero-rating for all EU imports.

While for Hong Kong-based TAL Apparel, one of the world's leading garment manufacturers, the road ahead involves continually looking at how it can add value in the apparel supply chain, as chief technology officer Delman Lee tells just-style.

Elsewhere, jeans giant Levi Strauss & Co is expanding its 'Worker Well-being' initiative – which now aims to reach more than 300,000 workers by 2025 – and developing a toolkit to help suppliers measure key wellbeing metrics.

Gap Inc's female empowerment initiative is also being extended to include girls, with pilot programmes set to roll out in Haiti and India this autumn, followed by Sri Lanka and other countries next year.

And US outdoor brand Patagonia is ramping up its relationship with Fair Trade USA, with a view to manufacturing 300 styles – approximately one-third of its products – in Fair Trade Certified factories next year.

But a comment on just-style points out that even though NGOs play a vital role in regulating and holding brands and retailers to account, especially when it comes to the transparency of their supply chains – their radars may be locked onto the wrong targets.

And in other news, the Alliance for Bangladesh Worker Safety has suspended another seven garment factories; Ralph Lauren Corp has named David Lauren as its first chief innovation officer; Benetton has launched a limited edition made-in-Italy seamless sweater; and Oeko-Tex has unveiled a new compliance tool that allows textile manufacturers to assess their progress on Detox targets.