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"Apparel sector wage compensation is extremely low, creating a stir in the industry. A new report by Deloitte for Oxfam Australia reveals big brands are to be blamed for keeping people working for them in poverty, which means they are not paying a living wage. Oxfam describes living wage as: enough money to provide a worker and their family with food, shelter, healthcare, clothing, transportation, electricity and water, childcare and education, plus a little leftover for emergencies or savings. And that wage should be earned in no more than 48 hours a week."
Apparel sector wage compensation is extremely low, creating a stir in the industry. A new report by Deloitte for Oxfam Australia reveals big brands are to be blamed for keeping people working for them in poverty, which means they are not paying a living wage. Oxfam describes living wage as: enough money to provide a worker and their family with food, shelter, healthcare, clothing, transportation, electricity and water, childcare and education, plus a little leftover for emergencies or savings. And that wage should be earned in no more than 48 hours a week.
The report says, on an average, only 4 per cent of the price of an article of clothing sold in Australia goes toward garment workers’ wages. That’s 40 cents on a $10 T-shirt. In Bangladesh, that percentage drops to 2 per cent, where workers earn as little as 33 cents an hour; Indonesia, its 48 cents an hour; Vietnam, they make 49 cents an hour. If brands absorbed the cost of paying living wages within their supply chain, it would cost them less than 1 per cent of the price of a garment. Indeed with profits being made at the factory, wholesale and retail levels in garment supply chains, there is room for big brands to absorb these costs without passing them on to consumers.
Pay disparity
As per reports, just eight men around the world held the same amount of wealth as half of all humanity. One of those eight men is Inditex founder Amancio Ortega. Perhaps, there is no starker example of the growing global inequality than the garment industry, where millions remain trapped in poverty, while a few amass great wealth. Though garment industries have improved economic conditions of many low-cost sourcing countries, benefits have not been shared at the bottom. Oxfam says, Asia is home to most of the world’s garment production. Although the region has experienced strong economic growth in, the poorest 70 per cent of people in Asia have seen their income share fall. Meanwhile, the share held by the top 10 per cent increased rapidly.
What needs to be done
In Bangladesh, a living wage would be more than five times the current minimum wage. In India, it’s three times more, and in Indonesia, Vietnam and China, a living wage would be more than four times the minimum wage many workers are being paid. Oxfam points out the apparel industry can afford to pay a decent wage to garment workers. On a $25 T-shirt, if a company opted to pay a living wage, factory labour costs would maybe jump from $1.00 to $1.15 and transport and tariff costs would go from 75 cents to 77 cents. That would mean supply chain only needs to absorb 17 cents more. Profit margins vary from 3.4 per cent to 8.4 per cent based on the product and sourcing destination. If manufacturers and brands absorb the costs rather than pushing them to consumers, their margins will only drop a little to allow workers to earn a living wage. This is especially the case if wholesalers and retailers also work to reduce their overhead costs. The only way to make inroads with living wages is through government intervention.
The report suggested to recognise purchasing practices and pricing policies have an impact on wages (and working conditions) and commit time and resources to calculate labor costs of merchandise to ensure prices facilitate payment of a living wage at the least. This means the freight on board (FOB) price should cover a living wage labor cost.
Bangladesh’s export earnings from the apparel industry saw only a 0.20 per cent rise 2016-17. While India’s earnings from apparel exports rose by 12 per cent in 2016-17. In the last fiscal, garment shipments from Bangladesh to India were down 4.85 per cent year-on-year.
The value of the taka against the dollar, poor infrastructure and shortage of power and gas are the key challenges for the export oriented readymade garment sector in Bangladesh. Garment buyers are shifting to India from Bangladesh due to the inefficient port facility and the extra lead time.
Garment production cost has increased near 18.01 per cent in the last two years in Bangladesh. Similar costs are also increasing in competing countries but the rate of increment is much higher in Bangladesh. With continuous increase in salaries, gas and electricity price, system losses, Bangladeshi apparel manufacturers are struggling to retain their advantage over major competing countries.
India has allowed global apparel brands to open stores in India with a clause that at least 30 per cent of their products are made in India. This policy helps the apparel manufacturing industry of India as it can manufacture global brands in its domestic factories.
Consumer demand for textile products—including clothing and home textiles—is predicted to grow by 2.8 per cent per annum between 2015 and 2025. However, growth will be driven almost entirely by a rise in demand for textile products made from synthetic fibers.
As a result, the share of non-cotton textile products in total consumer demand for textile products will increase from 73 per cent to 79 per cent between 2015 and 2025 whereas the share of cotton textile products will fall from 27 per cent to just 21 per cent. Further, demand for cotton textile products at the end of this ten-year period will still be less than the level of demand seen in 2010.
Consumer demand for textile products made from synthetic fibers will grow by an average of 3.7 per cent per annum over 2015 and 2025 whereas consumer demand for cotton textile products will grow by only 0.2 per cent per annum. The rise in the share of non-cotton textile products reflects a significant increase in the share of textile products made from synthetic fibers. In fact, this share rose in each of the 10 years to 2016 and is expected to rise further in 2017.
A mini textile park is coming up in Salem, Tamil Nadu. The state will either bear 50 per cent of the cost that will be used for the construction of roads, sewage treatment plant and captive power plant or offer subsidies worth Rs 2.5 crores to manufacturers.
Around 10 apparel manufacturers will build the park. But they have to buy the land on their own and establish at least ten work sheds in the textile park to get the subsidy. Further, the total investment in building construction and machinery should be double the amount spent on the above-mentioned facilities. Entrepreneurs should open a bank account in a nationalised bank in the name of the park. The subsidy will be released in three installments and the entrepreneurs should produce all necessary documents at the time of release of each installment.
The aim is to improve the living standard of handloom and power loom weavers in the district. The entire project will be monitored by the Director of Handloom and Textiles which will hold meetings with manufacturers to take the plan forward. Tamil Nadu accounts for nearly 30 per cent of the country’s handloom textiles production and 50 per cent of exports.
Spinnova is a developer of wood-based textile fibers based in Finland. Spinnova is currently researching methods to increase the amount of textile fiber produced by its proprietary technology. The wood-based textile developer is currently the only one in the world that is able to convert pulp directly into textile fiber without using chemical solvents. Fabrics made out of the fiber have a smaller ecological footprint than traditional alternatives as they can be reused, recycled and composted.
Chemical solvents are used, for example, in the production of viscose. Spinnova has been involved in material research for years and has paid close attention to developments in this area. Globally significant expertise and technology needed for material development exists in Finland.
The company wants to find new materials for producing fabrics and textiles for environmental reasons. Spinnova, founded in 2014, has developed its technology based on research conducted by the Technical Research Centre of Finland.
Spіnnova uses a globally unіque technology to turn wood fіbers dіrectly іnto yarn, wіthout complex chemіcal processes. The patented Spinnova yarn technology is the first sustainable and cost-efficient alternative to cotton, providing unprecedented benefits and advantages compared to other technologies and materials. It leaves a smaller envіronmental footprіnt than polymer or cotton-fіber processes.
Orissa has framed guidelines for apparel parks. The guidelines will be applicable to industrial bodies as well as young entrepreneurs who want to start their business in the state. Entrepreneurs who want to set up textile units will have to obtain an identification number through the micro, small and medium enterprises department whereas bigger industrial bodies will have to do the same through the department of industrial policy and promotion.
To set up apparel parks, the promoters will have to obtain permission from the Odisha State Co-operative Spinning Mill Federation Limited (Spinfed), which monitors the physical and financial activities of member spinning mills and power loom industries in the state.
Spinfed will examine the preliminary report submitted by the promoter of the park and then accord approval. Land for the park has to be obtained by the promoter. But they will get assistance from the government for land acquisition mainly for private land.
Orissa aims to boost the textile sector through this policy by setting up apparel units, parks. The state has come up with six different policies under the ease of doing business based on the potential of the state and textile is a focus sector.
Michael Kors total revenue rose 5.4 per cent in the second quarter. It faced a 1.8 per cent drop in same store sales in the second quarter. The company has forecast revenue of $4.59 billion for the year ending April 2018. The company expects Jimmy Choo to contribute up to $225 million to sales for the rest of the year.
Once a top name in affordable luxury, Kors is grappling falling same store sales, as people shop online. Over-distribution and a reliance on promotions to boost sales also eroded its brand value and appeal. To reverse a more-than two-year slump in same-store sales, Kors is pursuing a multi-brand strategy for growth. In July, the maker of the popular Mercer and Hamilton handbags announced a deal to buy Jimmy Choo. The company has also pulled back heavily-discounted inventory from department stores and off-price channels, refreshed its line of bags and shut underperforming stores.
Sales also got a fillip as the company boosted new products and high-end accessories by 40 per cent for the fall season and sold more bags at full-price, helping it overturn a one-year slide in total revenue for the first time.
Italy-based Imprima, dedicated to textile finishing has bought Set (Società Europa Tessile). Set, also in Italy, is a company specialized in textile printing. This will make Imprima one of the main textile printing and finishing industrial group in Europe.
At the base of the choice to let Set enter the group is Imprima's strong willingness to diversify its creative offer and costumer portfolio, increasing not only the figures of the fast fashion market but also those of the planned market at a geographical level.
Imprima aims at affirming itself as a partner of choice for fashion brands and retailers, offering digital printing and textile finishing services at an industrial level through the creative heritage of the acquired brands, clean and smart manufacturing, proximity to markets, qualitative excellence and sustainability. This business model evolution follows the concept of sustainability from a financial, industrial, social and environmental point of view.
In 2018, Imprima will launch a fully digital industrial platform in Como, Italy, which will be implemented in other areas as well. Societa' Europa Tessile manufactures textile products. The company offers textile goods including linen goods, felt goods, padding, and upholstery filling.
Bill Kingdon is the new Managing Director of International Cotton Association (ICA). He has a masters in law and defense studies and has lived and worked overseas for much of his professional life as a soldier and senior leader. He has collaborated and partnered international teams all over the world, including Afghanistan, Iraq and Bosnia-Herzegovina.
As brigade commander he prepared large organisations for deployment to Iraq and Afghanistan as part of the British army in Germany. He has managed a varied and strategic portfolio as the chief operating officer for British forces in Cyprus and provided the focus for collaboration between international organisations, the Afghan government, diplomats and NATO in Kabul.
Established in 1841, ICA is the world’s leading international cotton trade association and arbitral body. The majority of the world’s raw cotton is traded internationally under ICA bylaws and rules. ICA has 550 members representing all sectors of the cotton industry, including the world’s major cotton companies. Its vision is to ensure contract sanctity in the global trade of cotton. Its mission is to protect the legitimate interests of all those involved in the cotton trade, whether buyer or seller. ICA operates on a not-for-profit basis.
Gerber Technology has made major advances in its software product lines AccuMark and YuniquePLM to make it easier for customers to adopt technology and achieve optimisation through improvements in their digital workflow. AccuMark Cloud offers all the features of AccuMark, the industry leading pattern design, grading, marker-making and production planning software, with the benefits of cloud computing.
AccuMark Creator leverages core functionality of the Yunique PLM product in the form of simple AccuMark add-on modules beginning with virtual sample management, allowing AccuMark users easier and more efficient collaboration with internal and external partners.
YuniquePLM 8.0 is the latest in easy-to-use, cloud-based PLM with a new modern look, more intuitive functionality and equipped with a self-guided tutorial for easier training and adoption.
Gerber is partnering with Avametric on an advanced 3D simulation engine that powers Gerber’s 3D product, integrates into AccuMark 2D and gives users the most realistic representation of fabric properties to create digital samples, saving companies up to 50 per cent of time and associated cost. The Avametric partnership also expands its 3D offer to cover the complete apparel value chain from retail/consumer all the way through design, development and production.
These innovations will enable customers’ digital transformation, so they can be agile and competitive in today’s e-commerce and internet driven markets.
