Report for the Council of Regional Economic Advisers

March 2009

Textiles Sector and the Economic Downturn

The importance of the textiles sector in the West Midlands region

The textiles sector is a significant employer in the West Midlands region. According to some analysts, the number of employees in this sector across the region is around 20,000. Some of these employees are home workers and therefore their visibility in the market place is lower as a consequence.

A significant number of the people employed in this sector are from deprived communities and are from BME communities. According to the Midlands Fashion Showcase, which is supported by Advantage West Midlands, 75% of the businesses engaged in this sector are owned by members of the Asian community.

Therefore, this sector is important in terms of the number of employees and keeping deprived areas from slipping further into economic decline. It is also an important sector in terms of community cohesion.

This report covers the general state of the textiles sector in the region and the steps that could be considered to help the sector weather the economic downturn.

Textiles sector in the West Midlands region

According to the report, A stitch in time - Working in partnership to support the clothing industry in West Midlands region of UK, August 2004, by Nigel Berkley, Centre for Local Economic Development, Coventry Business School, there are 700 clothing manufacturing companies, employing about 10,000 people, with an annual turnover of £500 million. This report states there is a clear future for the textiles industry – but only if there is support given to help the industry diversify.

Another survey of apparel, footwear textiles and related businesses in the West Midlands by Skillfast-UK, prepared for Birmingham and Solihull Learning and Skills Council, submitted in May 2004, stated that the sector, in Birmingham and Solihull, employs 21,585 people as detailed below:

Manufacture of Textiles                              7,176

Manufacture of apparel                              5,470

Manufacture of Leather, footwear            1,315

Agents: sale of textiles clothing etc          507

Wholesale of Textiles                                  748

Wholesale of clothing and footwear        2,324

Repair of boots/shoes                                 219

Washing/dry cleaning of textiles etc        3,826

According to this report the turnover is £452. million, manufacturing output in the region fell by a quarter between 1998 and 2001, employment in the sector fell by over a third between 1998 and 2002.

Another report - from Aston Business School, Entrepreneurship in the West Midlands by Jonathan and Stephen Roper, February 2005 states that a conservative estimate is that clothing manufacturing sector contains 700 firms and 10,000 employees. If, however, home workers are included then the number of people employed in the sector increases to 20,000 to 30,000 people.  

The Unite union states that over 160,000 people across the country are employed in this sector.

In March 2009, a briefing note by the Midlands Fashion Showcase for the Business Voice WM gave an indication that the full size of the textiles sector across the region is large by looking at its own membership of 543 clothing and textile manufacturers, 137 designer and designer makers and 11 component suppliers of technical expertise.

On this medium sized sample, there is estimated to employment for full time staff for 4000 people. Part time employment leads to another 2000 people and “this has been subject to an increase in the last 12 months”.

In terms of the commercial value of the sector, Midlands Fashion Showcase state that the “levels of aggregate annual turnover for the region of GVA for the sector is best estimated at £350,000,000”.

In terms of skilled people coming into the sector, Midlands Fashion Showcase state that the sector covers the following sub sets:

• Work wear and corporate wear clothing;
• Promotional wear product;
• Country wear and outerwear product to include tweed related and highly technical garments;
• Leather clothing and accessories;
• Technical textiles;
• Interiors as a component supplier;
• Fashion garments supplying High Street retailers;
• Own brand fashion labels in high value end of the market.

In terms of spatial location, the Midlands Fashion Showcase states that most textile businesses are concentrated around Birmingham, Wolverhampton and Coventry. There are also a number of businesses operating out of Staffordshire, Worcestershire and Warwickshire.

Birmingham City University has some 500 students annually qualifying in fashion related courses. Matthew Boulton College and City College, in Birmingham, have active fashion departments. Coventry University has close links to the industry in Warwickshire. Wolverhampton University offer fashion related courses. However, Midlands Fashion Showcase state that “technical skills are in short supply”.

Economic trends for the regional textiles sector

Despite the problems afflicting the sector, there is some cause to believe that this sector could be one of the sectors that will help the region recover from the recession.

For instance, the Sector Skills Council, Skillfast-UK, state that UK consumer expenditure for clothing and footwear, including cleaning and repair services, increased by 5.9% in July – September compared to the same period in 2007.

Skillfast also state that clothing and footwear prices fell by 7.1% in the 12 months to November 2008 while for the same period the consumer prices index (CPI) saw an increase of 4.1%.

The manufacturing output of the sector fell by 1.4% in the three months to November compared with the previous quarter. But this compares favourably when the output for all manufacturing fell by 3.3% over the same period while the fall in this period for engineering and allied industries was 3.5%.

In addition, manufacturing productivity for this sector was 9% higher in Q2 2008 compared with Q2 2007. For the wider manufacturing sector the figure is virtually static.

However, exports from the sector fell by 7% (£42 million) in November compared with November 2007. Vacancies for September to November is 3% lower than for the same period of 2007 (equivalent figure for the wider economy is 25%).

A CBI survey of the national retail sector between 27 January and 11 February found a decline in retail figures – but footwear and leather sales grew at a balance of 39%. The CBI’s Distributive Trades Panel Chairman and CEO of Asda, Andy Clarke, explained this by stating “supermarkets and footwear and leather shops enjoyed some pretty strong growth proving that, as the fight to the value end of the market continues, those with the right offering can fare well during these tough times”.  

Midlands Fashion Showcase has states its optimism for the sector. It states that “export has been a key player for the industry and is currently seeing strength I n terms of sales. This is due to the advantageous exchange rate for overseas buyers”.

It states “there has been a resurgence in the demand for local UK production as buyers look to work with lean manufacturing units and seek smaller volumes and frequent drops. This is a lower risk business decision that buyers are making as they are unsure of the UK High Street during the current financial crisis”.

Despite the national decline in employment, as recorded by Skillsfast, the regional textiles sector seems to be in a better position in holding its own. For instance, recently (state later) secured a £1.5 million contract with (state later) to supply work wear. Manufacturers for the brand John Partridge (HS Tank & Sons) are seeing increased orders as the brand is seeing good sales across Europe.

Regional Actions – Textiles Sector

The analysis of the sector demonstrate that the pressing problem for this sector – which is mainly an SME and micro businesses led sector – is that businesses engaged in the textiles industry need support for diversification.

If, however, diversification assistance is delayed until after tariffs come down then it could be too late to adapt the sector for the competitive global economy with a high value added approach being adopted for textiles production in the West Midlands region.

Therefore clothing is an example of an industry where clustering would secure the regional economic base and could lead to sectors becoming, in time, high GVA performers.

The clustering work of Advantage West Midlands and Business Links West Midlands could be focused on helping the sector to further diversify. This can include the following areas of work that can help the sector:

·         Marketing;

·         Design and new product development;

·         ICT;

·         Export development;

·         Lean manufacturing and sampling;

·         Stronger UK buyer linkages.

 Therefore the help the sector needs is not just access to finance but also focused on improving the capacity of the sector by using existing services.

This is critical for several reasons. First, employees in this sector can be from the most deprived areas and therefore support for the sector leads to help for deprived areas going further into deprivation.

Secondly, because of the demographic make-up of the sector, support for the sector also assists with community cohesion.

Finally, as the sector is weathering the recession better than other manufacturing sectors, despite the national decline in employment in this sector, support for the textiles industry could lead to helping the region move out of recession.

In addition, with regional efforts looking for sectors that can help the region move beyond the recession, early indication show that textiles could be one of those sectors.

Business Voice WM

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