“We’re seeing an industry that’s growing”
The (t)exodus of European spinning, weaving, and knitting manufacturers slowly began in the 70s: customers moved away, prices fell, and companies were shaken by crises. Those who were not overwhelmed by globalisation right into the 90s were eventually brought to their knees by the world economic crisis in 2008. Nevertheless, European fibres are now ‘growing’ again around the world. Nobody knows this better than Lutz Walter. As Department Head of Innovation & Education and Training Policy at EURATEX, the umbrella organisation of the European clothing and textile industry, he has a good view of the sector from his base in Brussels.
Mr Walter, would you please tell us how the textile and clothing industry is doing in Europe?
It’s now no longer a secret for most of us: we’re clearly seeing an industry that’s growing. Who’d have thought it, after everything that’s happened to us in recent decades? Then there was the slump in sales in 2008/09 in the wake of world economic crisis. This was catastrophic, even for an industry experienced in crisis management such as our own. It had a huge impact, because no one thinks about refreshing their wardrobe or buying a new sofa when they’re worried ¬– they want to save money. At the time, sales revenues collapsed by 21 percent within a year, and many people may well have wished that they could spin gold out of straw. The figures also show, though, the generally favourable trend after 2009: the total turnover of the European textile and clothing industry was still around 155 billion euros then; by 2017 it had already exceeded 180 billion euros.
How did it come about that textile threads from Europe are now spinning their merry way around the world again?
There are lots of reasons for this. For one, many companies have developed attractive new target groups with technical textiles, including lucrative customers from sectors such as the aerospace and automotive industries, but also from the construction and medical industries. This diversification is good for the whole industry. In the past, companies were too dependent on end user markets, i.e. from fashion, its trends and its cycles. This has changed with the growing demand for technical textiles. And here too, the figures speak for themselves: in 2008 the production value of technical textiles was still around 14 billion euros; by 2016 it had reached around 18 billion euros.
So, are technical textiles the key to successful sales?
Of course it’s not that simple, because not all European textile manufacturers are producing filter fabrics and aircraft components now. And that wouldn’t be possible anyway. We also need to understand that it’s a very big leap from clothing manufacturing to producing materials for technical applications. So there’s not a weaving, spinning or knitting manufacturer who would say: “OK, I’ll manufacture haute couture today and tyre cord tomorrow”. The European clothing manufacturers in the luxury segment, in particular, have also shown enormous staying power. These days, they are benefiting from a growing and strong demand in the luxury goods sector, with interesting margins.
To summarise, we can say that the European textile industry has become more resilient to cycles and economic downturns because of its experience of crises and its staying power, as well as diversification and its own globalisation efforts. The looming economic slowdown shouldn’t cause the industry too many headaches because their export markets now extend far beyond the EU internal market.
How about exports?
In 2008/09, European exports, i.e. those exported from the EU internal market, made up less than 20 percent of the sector’s overall turnover; today they’re approaching 30 percent. This represents an increase of just under 60 percent in the last ten years. It’s mainly Italy, France and Germany who are the drivers here, in both clothing and technical textiles. And it gets even more interesting if we go back to the time when statistics began (EURATEX has recorded figures for the textile industry since 2004; editor’s note), when exports were around 15 percent. This means that we’re in a far better position today than we were before the economic crisis in 2008/09.
Traditionally, Germany has a high concentration of small and medium-sized enterprises (SMEs) in the textile sector. Are they benefiting from this favourable trend?
Yes, definitely. And this is not only in Germany. In smaller countries such as the Czech Republic, Poland and Portugal, small and large textile companies are also benefiting from the global demand for technical textiles.
Is it generally advantageous to be a small scale enterprise?
Yes, I’d say it is. Take the German textile and clothing industry, for example: as the country’s second largest consumer goods sector after the food industry, more than half of the 1,300 or so medium-sized companies employ fewer than 100 people – and fewer than ten of them have more than 1,000 employees. Companies like this have been in family ownership for generations. They’re not only experienced in crisis management, but their small scale also gives them extraordinary agility and flexibility, so they can adapt to changing markets. Nowadays, many family-run companies in the sector have found perfect niches because of their long-term strategic thinking. These are the famous ‘hidden champions’ with multi-million turnovers, whose names are known to hardly anyone, even in the nearest town, not ten kilometres away. One of my colleagues refers affectionately to these companies as ‘pocket multionationals’.
Cover photo ‘Textile threads’ (Source: Pixaby/TheAndrasBarta)