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"With textile and apparel export volume of close to $12 billion and a workforce of almost two million people, the Indonesian garment and textile industry has been raising the bar in global textiles market. The Indonesian government has set a target of increasing the nation’s value of textiles exports to $75 billion by 2030. With this, Indonesia’s textile and apparel products would have 5 per cent share in the global market."
With textile and apparel export volume of close to $12 billion and a workforce of almost two million people, the Indonesian garment and textile industry has been raising the bar in global textiles market. The Indonesian government has set a target of increasing the nation’s value of textiles exports to $75 billion by 2030. With this, Indonesia’s textile and apparel products would have 5 per cent share in the global market.
And, there are homegrown designers who are ably pushing this growth. Michelle Tjokrosaputro, Chief Executive, Dan Liris, is the name behind global behemoths like Calvin Klein, Tommy Hilfiger and Marks & Spencer. At the recent Jakarta Fashion Week, she shared her expertise with the next generation of designers. She provides a portfolio of services such as auditing, subsidised courier services, sustainability management, quality control and specialised state-of-the-art machinery. Like her, there are other designers who are pushing the ‘Made in Indonesia’ tag.
‘China Plus One’ strategy
Recent PwC studies reveal Indonesia will become the 5th biggest economy in the world in 12 years’, moving up from 16th place and surpassing the likes of Brazil, Russia and Germany. Anne Patricia Sutanto, Chief Executive, Pan Brother Tex, one of the largest Indonesian manufacturers producing for the likes of Uniqlo, points out there are three massive factories just for the Japanese brand and ASICS shoes. Indonesian apparel manufacturing will play a huge role in the country’s future in the next 20 years. There is no doubt Indonesia with its large population will have a huge influence on both manufacturing and sourcing as well as consumers’ buying. This industry will have a multiplier effect and give a major boost to the economy provided the government is willing to see this labour-intensive industry as pillars of growth. Pan Brothers Tex also has tie-ups with Indonesian retail brands like Salt n Pepper and Zoe Black.
While China undoubtedly remains a powerhouse in the region, Indonesia is benefitting from China’s rising labour costs, prompting companies to diversify in the region by following what’s called a ‘China Plus One’ strategy. Like China, Indonesia has the advantage of a domestic supply of raw materials, an expansive labour force and a big domestic economy that is transitioning steadily from low income to middle income. Unlike China, however, it is integrated into the Association of Southeast Asian Nations (ASEAN).
Besides, manufacturing is becoming increasingly sophisticated with vertical operations in spinning, weaving, printing and garment plants, making them a one-stop destination for international clients. One such example is Java-based Sritex that makes 8 million pieces of apparel a year for bigwigs like Uniqlo, Guess and H&M.
Fast fashion driving growth
Helena Helmersson, H&M’s Global Head of Production, says the advantage of manufacturing in Indonesia is the great mix of fashion, price and sustainability. Today, biggest international buyers in Indonesia are fast fashion giants or those operating diffusion labels of designer brands. It is high-volume sportswear production that allows major multinational sportswear brands — Adidas, Mizune, Asics, New Balance, Nike, Pentland and Puma — to keep up with global demand, and expand into new countries. Because of its investments in technology, innovation and training, Indonesia is being regarded as an advanced sourcing opportunity. And where it cannot compete on price, it can on scale.
The government too has been pushing many infrastructural projects and bureaucratic slimdown in order to ease business. The industry is anticipating zero tariff (access) to the Australian market will happen next year and hopefully zero tariff or a free trade agreement with EU will be signed by end of 2018. This will help Indonesian industries grow further allowing them to compete with neighbouring Vietnam and Bangladesh. Indonesia already has free trade agreement with Japan, which has brought scores of Japanese brands to manufacture in the country.
China accounts for 43 per cent of the global cotton spinning capacity and over 54 per cent of global fiber consumption and 38.53 per cent of global textile and apparel exports. In the first seven months of 2016, China’s investments in the textile and apparel industry were up 7.29 per cent year on year. In the same period, textile enterprises' prime operating profits were up 4.54 per cent year on year.
Stricter requirements are being put on chemical safety control and carbon emission, environment-friendly technology and standards. Taxes will be levied on air pollutants, water pollutants. China remains the largest supplier of textiles and apparel to the US market, accounting for a share of 38.92 per cent in 2015, a slight improvement from 38.74 per cent in 2014. In the Japanese market too, Chinese suppliers dominate with a share of as much as 64.53 per cent in 2015, which has come down slightly from 67.39 per cent in 2014.
In the first half of 2016, water consumption of textile companies fell 2.9 per cent year on year, 1.1 percentage points higher than that of all industries. It is expected that over the next 15 years, China, Uzbekistan, Pakistan and India between themselves will have around 100 million spindles.
The US administration has informed Jordanian government that garment products from the country will now be allowed into the US markets on a larger scale than before. The US Department of Labour recently lifted restraints on the industry, the Jordan News Agency, Petra reported. The letter, received by the government late last month, said that Jordan was not listed among countries that violate international anti-human trafficking laws and allow child labour. In a separate letter, the US Department of Labour has recently lauded Jordan’s efforts to address child labour through continued field inspections, Petra reported. Credit was given to the government’s measures that included developing legislations to regulate labour and protect the rights of workers according to international rules.
The US law blacklists products of any country that uses children or forced labour. The government has taken several measures in association with the International Labour Organisation and Tamkeen Organisation, a local NGO and intensified inspection campaigns on violating industries to ensure their commitment to the rules, including the provision of a sound and healthy environment with appropriate wages and a set working hours. The Jordanian government is seeking alternative market for Jordanian products such as the US market which receives 21 per cent of the Jordanian exports.
A number of brands and suppliers from across the textile industry in the United Kingdom have pledged to the Responsible Wool Standard (RWS), says Textile Exchange (TE), a non-profit organization. The TE announced the release of the new RWS voluntary standard this summer.
The 15 brands that have made commitments to the Responsible Wool Standard include: H&M, Marks & Spencer, William-Sonoma, Inc., Patagonia, Eddie Bauer, REI, Eileen Fisher, Tchibo, Varner, Vaude, Coyuchi, Mountain Equipment Co-op, Deckers, Kathmandu and Knowledge Cotton Apparel. Many wool suppliers have expressed their individual commitment to the Responsible Wool Standard. They are : Rambler’s Way, Imperial Stock Ranch, New Merino Australia, Oviz 21, Chargeurs, ABMT Textiles, Lanas Trinidad and Lemprière. Several other wool suppliers have participated in global training events with a focus on setting up an RWS supply chain.
Besides, 10 additional companies have expressed support for the standard and are working toward implementation, Textile Exchange reports. These include LL Bean, Arc’teryx, Indigenous Designs, Nau, Point6 and Prana.
The RWS is an independent, voluntary standard. On farms, the certification aims to ensure that sheep are treated with respect to their five freedoms and the best practices in the management and protection of the land are adhered to. Through the processing stages, certification ensures that wool from certified farms is properly identified and tracked.
BRICS countries (Brazil, Russia, India, China, South Africa) are having a trade fair in New Delhi, October 12 to 14, 2016. This is their first such trade fair. There is a strong feeling that measures need to be taken to deepen intra-BRICS economic engagement, trade and investment ties. India is the chair for 2016 BRICS group of emerging economies.
The trade fair will showcase about 20 key sectors. These include aerospace, agro-processing, auto and auto components, chemicals, green energy and renewables, healthcare and pharmaceuticals, railways, textiles and apparel, infrastructure, IT, engineering goods, tourism, gems and jewelry and skill development. The fair will be a platform for BRICS countries to exhibit state of the art technologies and advances made in industrial development. The fair is being staged just ahead of the BRICS political summit in Goa, October 15 to 16, 2016.
Global merchandise exports of BRICS countries have gone up from $3.2 trillion in 2012 to $3.47 trillion in 2014. Merchandise imports from the world into BRICS nations have gone up from $2.95 trillion in 2012 to $3.03 trillion in 2014. In 2012, intra-BRICS trade stood at $281.4 billion and this increased to $297 billion in 2014.
With the hatching of more than 40,000 silkworms, Kraig Biocraft Laboratories, a leading developer of spider silk based fibres, has successfully launched production at its new Indiana production facility. The company is now on schedule to produce all of the recombinant spider silk necessary to fulfill its contract with the US Government on time and in the set budget.
The company has a large inventory of silkworm eggs ready to hatch. In the coming weeks, the company plans to ramp up the hatch rate. Kraig Biocraft Laboratories’ COO Jon Rice says the first batch of 40,000 silkworms were just the beginning of the company’s aggressive plans to scale up domestic production. With this facility, the company now has the capability to rapidly respond to the numerous request that it receives for its Dragon Silk.
In months to come, the company will be increasing the throughput of new facility. Then it will prepare for an expanded US operation which will include the planting of thousands of mulberry trees in addition to its new domestic plant.
It is important to note the company received a contract worth $1 million from the US Army for the development of high performance fibres for protective apparel applications this summer. Under the fully funded base effort valued at $99,962, the company was contracted to deliver ballistic shoot packs constructed from its proprietary Dragon Silk material for performance testing. Kraig Biocraft Laboratories, a fully reporting biotechnology company is a leading developer of genetically engineered spider silk based fibre.
Three big companies namely H&M, IndustriALL and IF Metall have converted Global Framework Agreement into a permanent collaboration. All the signatories share the belief that collaboration and a well-functioning dialogue between the parties on labour market is necessary for lasting improvements for garment workers in all working conditions. These include fair living wages, also for stable production markets, and in the end; a mature textile industry. The goal of the work is improved industrial relations where the freedom of association is respected, where workers’ representatives have a voice and where trade unions can negotiate collectively.
The collaboration within the Global Framework Agreement has led to several positive results. National monitoring committees – consisting of representatives of IndustriALL’s affiliated trade unions and H&M have been set up and trained in Bangladesh, Cambodia, Indonesia, Myanmar and Turkey. The committees support employers’ and workers’ organisations to negotiate and to solve conflicts peacefully and in good faith at the factory level. Their work contributes to functioning labour markets in the countries where H&M source its products.
Thanks to the collaboration within the Global Framework Agreement, several cases have been solved for example a conflict at a textile factory in Myanmar earlier this year which started mainly due to misunderstandings and a lack of communication between management and employees. The conflict resulted in strikes and at a later stage also a dismissal of employees. However, after negations initiated and organized by IndustriALL and H&M, all employees were rehired and a union was launched that allowed the factory to take steps towards sound industrial relations and a reduced risk of future misunderstandings and conflicts.
Support to factory level unions within the supply chain of H&M has been one key objective of the GFA between IndustriALL Global Union and H&M. Moreover, during the first year of the implementation process, there have been several new factory level unions registered.
The apparel industry touches almost each and every environmental topic viz climate change, limited resources, lost biodiversity and water scarcity. And Intertextile Shanghai Apparel Fabrics has, all along, been striving to keep these issues at the forefront of people’s thinking.
Particularly in China, sustainability is gaining importance with the government announcing it will strive to promote clean industrial production, low-carbon development and energy conservation to ensure sustainable growth over the next five years. According to proposals released by the government in its 13th Five-Year Plan (2016-20), traditional manufacturing will be steered along an environmentally friendly path, a low-carbon production system will be established and businesses will be encouraged to upgrade their technology.
All this shows that sustainability has been and will continue to be one of the biggest topics in the global apparel textile industry. Continuing to cater to the industry’s ever-growing demand for sustainability products and services, the ‘All About Sustainability’ zone is returning to Intertextile Shanghai with a 10 per cent increase in scale compared to the 2015 Autumn Edition.
Recently, OEKO-TEX launched a new certification system called ‘Sustainable Textile Production (STeP). This certification system is for brands, retail companies and manufacturers within the textile chains that want to communicate their path to more sustainable production conditions to the public in a transparent and credible manner.
Throughout the three-day fair, numerous seminars and panel discussions will be held to offer an interactive platform for sustainability experts to share their unique insights. Amongst these events is a panel discussion titled ‘Holistic Sustainability Performance Measurement: The Higg Index Driving Transparency & Continuous Improvement’. The panel discussion would be held on October 11 at the Forum Space area in All About Sustainability. It will be moderated by Scott Miller, Business Development Director of SAC, and the two panellists Peter Bartsch, Lenzing AG’s Head of Global Sustainability, and Peter Yang, Sustainability Supply Chain Manager of H&M.
The Tirupur Exporters Association (TEA) is set to constitute a special task force to achieve overall turnover of Rs one lakh crore from the Tirupur knitwear cluster by 2020 that would include exports and domestic sales. Disclosing details, association general secretary T R Vijayakumar said the task force would include exporters, bankers, technocrats, industrial consultants and a few other stakeholders. He also said they were planning to liaison with the Union and state governments to speed up the infrastructure development works listed in the road map, which the textile industry here prepared and submitted to the governments.
The immediate needs of the cluster include: development of ring roads to quicken transportation of garment consignments bound for foreign destinations to various sea ports, creation of affordable housing facilities for the predominant migrant labour force in the knitwear sector, uninterrupted power supply, effective effluent treatment facilities and softer bank loans, among few others.
Another major aspect which the exporters here plan to talk to the government would be steps to reduce the delays happening in Walayar check post so that exporters could use the Kochi port too instead of heavily depending on Thoothukudi port for dispatching apparels. Presently, almost 75 per cent of the apparels are sent through Thoothukudi port as delays in Walayar check post is a major deterrent when it comes to sending goods at the eleventh hour.
Turkey has made headway in cotton production. Availability of high quality seeds, an increase in number of harvesters and good farming practices has facilitated higher yields. Turkey became part of the Better Cotton Initiative three years ago. Turkish mills have been investing in new machinery and technology to increase quality and lower costs in order to get ahead in the very competitive international textile trade.
In 2015, domestic cotton consumption was about 1.47 million metric tons in spite of the lower textile exports. War conditions in Syria, Iraq and Ukraine, and the end of exports to Russia after the Turkish downing of a Russian plane in November 2015 resulted in a decline to these destinations. In the meantime, mills had to lower their margins to keep their market share in the European market to continue operating.
During the first 10 months of 2015 Bangladesh and Greece were the leading foreign destinations for Turkish cotton. Turkey also exported about 70,000 bales of hydrophilic cotton for medical use during the same period. Domestic consumption is expected to go up, even though marginally, during 2016 due to recent initiatives to improve relations with Russia and regional countries. Also, textile exports to Europe are expected to grow due to relative growth in the economies of the region.
