rags to riches 31st oct 2013

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  • 1.! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !For and in Association with www.ukdealmakers.comFrom Rags to Riches Bringing UK Textile Manufacturing Into the 21st Century! ! !October 2013!1! ! !castintelligence.co.uk

2. ! ! ! ! ! ! ! ! Best Efforts Basis Policy ! ! ! ! Considering the nature of the requirement, which requires information that ! ! ! may be considered sensitive by certain ! !parties; we provide this ! independent study on a best efforts basis. ! ! ! ! ! ! Every effort is made to ensure the accuracy of the information contained ! ! ! within this document and we accept no! responsibilities for any ! services are available to enhance, ! inaccuracies. More in depth intelligence ! ! ! this document. verify and increase the information within ! ! ! ! ! ! ! ! ! October 2013www.castintelligence.co.ukWhat is Reshoring? Reshoring is the reversal of outsourcing; the transfer of a business operation back to its country of origin.! ! !October 2013!2! ! !castintelligence.co.uk 3. 1. Introduction & Background !! ! ! ! 79,000 businesses that employ over ! The UK fashion and textiles industry consists of over ! ! 340,000 people and it is worth in excess of 11.5 billion (3 Billion of which is textile ! ! ! ! manufacture) per annum to the UK economy. ! ! ! Textile manufacturing along with most other manufacturing sectors in the UK has over the!last ! ! 15 years suffered from the movement of low and medium value manufacturing to the Far East ! ! and southern/eastern Europe due mainly to reduced transport costs, the lowering of economic ! and most signicantly the attraction of ! trade barriers, improved communications, technology ! ! ! ! lower-wage economies. ! ! ! ! In the UK where design and sales hubs have ! ! remained, textile manufacturing has been ! focused on high value, technology and/or ! ! ! ! design led high quality short run customised ! ! apparel products. ! ! ! Cast Intelligence have been commissioned to produce an outline report on the UK textile ! industry by a number of investment organisations coordinated by www.ukdealmakers.com. It goes beyond the politics and associated "noise" to examine the size, state and viability of the industry in the UK and what the requirements are to make a step change in product capacity to interest investors and determine the prospects of growth in the next 5 years. The report seeks to stimulate debate and action in one of the most active textile manufacturing centres left in the UK namely Leicester and Leicestershire.! ! ! ! !October 2013!3! ! !castintelligence.co.uk 4. 2. Key Findings! ! ! ! ! ! ! There is a signicant UK Textile market achieving annual revenues ! of around 8 Billion. ! ! 15 Billion worth of textiles were imported during 2012 and 7.125 ! ! Billon up to summer 2013. ! ! Leicestershire has a vibrant textile industry embracing over 820 ! ! companies with a combined annual turnover of sector totalling ! 558,579,000. ! ! ! There are signicant and real benets of reshoring production back ! to the UK and evidence of it gathering pace within several manufacturing ! sectors including the textile industry. There are signicant indications that reshoring will increase over the next 5 years. There is an increasing desire by UK retailers to buy British - driven by economic factors. The British textile industry needs support in terms of developing a skills base and enhancing innovation, capacity and capability. Eastern and Southern Europe are key competitors and a signicant risk to UK textiles in competition for the reshoring to the EU. Greater industry representation and awareness is required in our study area of Leicestershire and beyond to exploit the reshoring opportunity identied.! ! !October 2013!4! ! !castintelligence.co.uk! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 5. 3. Market Size! ! ! ! The textile manufacturing industry in the UK has been in long-term decline, with the number of jobs ! ! falling from 800,000 in 1980 to around 100,000 at ! present. Last year it had export sales of 8.1 ! ! ! billion, most of these high-value items for export, whilst imports of clothing has rose to 15 billion ! ! last year, mainly from Asia. The complete market size is 23.1 billion. ! ! ! ! Imports ! ! ! ! The import gures were sourced from Inland Revenue gures. 2013 gures are year to date gures up ! ! ! ! to Summer 2013. ! ! ! ! (000) Apparel Non Knitted Apparel Knitted Total Imports ! ! ! 7,125,518 ! 2013 3,690,856 3,434,662 ! ! 15,160,415 ! 2012 7,534,608 7,625,807 ! ! ! ! ! ! Geographical Awareness Cast Intelligence asked a number of experts and buyers within the textile community which areas of the UK they considered to be the key areas for the textile manufacturing industry. Findings are as follows: Northern Ireland 12.5% North West 80%Borders 62%Yorkshire87%London 10%Leicestershire 75%When questioned further the following areas were deemed as specialist in certain skills. As Follows: East Midlands - Knitted Fabric - Leicestershire Weft Knitting and Nottinghamshire Warp Knitting Yorkshire - Woollen and Worsted Sudbury Silk Lancashire Cotton Scottish Borders KnitwearWe conclude that there is clearly a viable industry in the UK and the substantial imports arriving! ! !! ! !into the UK suggests there is a signicant scope for growth with around a 15 Billion opportunity to exploit. !5 castintelligence.co.uk October 2013 6. ! "Anybody who can do anything in ! ! ! Leicester but make a jumper has ! ! got to be a genius." !! ! ! Brian Clough ! ! ! ! ! ! ! ! ! ! 4. Leicestershire in the ! !Spotlight! ! !October 2013!6! ! !castintelligence.co.uk! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 7. Cast Intelligence decided to focus on a single area to determine the size of textiles industry in a localised area. Leicestershire was selected down to Casts location in Nottingham and data available.! ! ! ! ! Historically, as the Brian Clough quote suggests, Leicestershire had a reputation for textiles!and ! there are still 829 textile related companies in the ! !area. ! ! ! 287 of these companies revealed their annual revenue providing us with a total textiles value to ! ! Leicestershire of around 504,379,000. Of the companies revealing their revenue the average ! ! turnover is 17,757,418. (Appendix B details the companies in Leicestershire) ! ! ! ! ! ! 46 companies achieve revenues over 1 million, 14 over 10 million and 7 over 20 million. ! ! ! an annual turnover of 200,000 this would add ! Even if the remaining 542 companies just averaged ! ! an additional 108,400,000. ! ! ! ! With this in mind Cast Intelligence predict the annual value of the Leicestershire textile industry to ! be worth between an additional 504,379,000 to 612,000,000, which suggests the area is! ! ! ! responsible for c.20% of the UK's clothing manufacturing capacity today. ! ! ! ! These gures clearly indicate that textiles in Leicestershire is still extremely important to the local economy. We also assessed awareness of the signicant number of textile companies and skills within Leicestershire.When discussing the textiles in the UK, 75% of those questioned isolated the Leicestershire areas as one of the main players, suggesting that Leicestershire is still known as a region where textiles are seen as a major player. A number of universities are aware of Leicestershire as a hub especially for socks and knitwear as many students undertake work placements in the region. This data suggests that the knitwear industry in Leicestershire is still vibrant Some feedback from respondents implied that there is a signicant amount of nishing products rather than raw material manufacturing. There is a trade association in the region but they do not appear to be proactive or helpful and stuck in the past. They questioned why Cast were chosen to conduct the research and what we were going to do with the report rather than contributing positively. They made the rather obvious statement that textiles "was not as good as it was in the 1970s". There are strong indications that some Leicestershire textile companies are investing signicantly in their businesses of late. Recently Regional Growth Funding and local LEP initiatives have been heavily subscribed by textile related companies. According the BIS.gov website Lee Ann Fashions (Hinckley) received over 1 million of public funding to back their own signicant private investment - safeguarding 60 jobs and creating 100 new posts.! ! !October 2013!7! ! !castintelligence.co.uk 8. The Economist in 2013 stated that a crucial change has taken place over the last 10 years in that wages have soared in the Far East, increasing by 7.1% to 7.8% (International Labour Association) and wages for senior managers in China match or exceed those in Europe and the USA (Hay Group).! ! ! ! ! However the nancial crisis in the UK has meant reduced wage costs while ! ! Chinese workers have enjoyed increments of 10% between 2000 and 2005 and ! a further increase of 19% between 2005 and 2010 (Boston Consulting Group). ! ! The Chinese government has also expressed its desire to increase wages by a ! further 13% until 2015. ! ! Pressure on these rates will increase with regular strikes becoming more ! ! common and the management tending to succumb to employee demands as trained workers can walk out and nd a better paid ! relatively easily. job ! ! ! ! !! ! !October 2013!8! ! !castintelligence.co.uk! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 9. Honda gave Chinese workers at their plant a 45% pay increase after strikes in 2010 - Economist! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !Chinese aspirations are rising and they are less willing to work long hours whilst new labour laws make it very hard to lay-off employees. The Chinese one child policy a rising aspirational middle class, European attention to detail requirements (compared to Chinese domestic products) for high quality products means labour is increasingly

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