Recently, fibre2fashion published an interview with IAF president Han Bekke on how the impact on the environment creates a negative image of the apparel industry. We gladly present the full interview.
In the last few years, how has the apparel world changed?
The apparel industry in the past years had to work under volatile global macro-economic conditions. The fashion market has become a very competitive market with high pressure on margins. Since 2009 the global apparel market is experiencing a slowdown in growth to some 2-3% per year as a result of the economic crisis that started in 2008.
But there also positive signs. In its most recent World Economic Outlook the International Monetary Fund (IMF) indicates that growth of the world economy in 2018 and 2019 will be 3,9% on average. Economic growth in the EU will be 2,4%, Japan with 1,2% and the USA with 2,9%. The conclusion is that strong economic growth will be in other parts of the world like in India, China and Brazil.
The IMF also reported that growth of welfare in Western countries will, per capita, never get as high as before the financial crisis of 2008. As most important reasons for this the IMF is mentioning in its report: the population getting older, a decreasing labour participation and a low growth in productivity.
For all of us working in the apparel and textiles industry it is good to realise that these figures can be quickly influenced by geo political developments, by tensions in international trade via import duties, by tax plans in major consumer markets etc.
What are the major challenges faced by the apparel sector?
Consumer behaviour continue to change, stimulated by new technologies. According to the McKinsey survey “State of Fashion 2018” consumers have become more demanding, more discerning and less predictable. This is challenging for companies in our sector who have in my view to reconsider their business models. Speed to market is key. Innovation is needed next to a sustainability approach.
Which factors affect the overall performance of the apparel industry?
New challenges and opportunities are ahead of us. Entrepreneurs are used to initiate, to innovate and to invest, knowing that risks will be there all the time. Geopolitical tensions will continue, the trade policy landscape is still uncertain, disruptive technologies will continue to come up, the digitisation of the fashion market will not stop and consumers will be more demanding. On top of that we as apparel sector have a huge responsibility to make our value chain more sustainable. Not only in terms of social conditions under which our products are produced, but also from an environmental point of view. The image of our sector has deteriorated in the past years and I see a growing pressure from the society to improve.
I see two main developments: a race to the bottom on the one hand, where one could question whether this is profitable at the end and whether it will improve the living and working conditions of workers in low wage countries. The pressure on our supply chain to be really transparent and be accountable for these conditions increases.
On the other hand I see a movement from focus on price to focus on quality, more value for money, sustainability and speed to market. This could make local manufacturing or re-shoring based on new technology (robots, 3D) attractive.
Which major projects are you currently working on?
IAF’s mission is to unite all stakeholders of the fashion industry, including brands, retailers, suppliers and country associations from around the world to enable and promote smarter, stronger, more sustainable supply chains.
IAF is structurally carrying out projects with the multiple goals of supplementing income, learning and working in depth on industry development with IAF members. IAF has worked in the last two years on four projects, 1 in Ethiopia, 1 in the Netherlands and 2 in Bangladesh. In the Netherlands, IAF has been supporting Dutch member MODINT for several years in its innovation stimulation work. In Ethiopia, together with its member Actif Africa and funded by the EU, the IAF researched the development of the Ethiopian garment industry and organized export preparatory workshops for Ethiopian garment manufacturers. In Bangladesh, the IAF acted as advisor to the Dutch Embassy in Dhaka, helping it organize a large conference, named ‘Sustainable Sourcing in the Garment Sector (SSGS). This was a success and led to a follow up project which IAF is leading. It is essentially a feasibility study for a global management course aimed at both buyers and manufacturers called ‘Collaborative Sourcing Course’. The Dutch Ministry, IAF, IAF member BGMEA and ILO Better Work are core project partners.
Last year IAF opened its first regional office in Sialkot (Pakistan) at the premises of its Pakistan member PRGMEA in order to assist local manufacturers to respond to the challenges in de textile-clothing pipeline.
We are actually also working on a common project with ITMF (International Textile Manufacturers Federation) on audit effectiveness. There are too many audits and a lot of costs are involved for manufacturers. Our aim is to cut these costs in our supply chain by harmonizing these audits.
Sustainability is another topic IAF is working on in order to harmonize all the efforts worldwide to make our sector more sustainable.
How can automation and technology reshape the global clothing industry
Automation is reshaping the industry in many different ways. Digitising the product development process and basically doing away with physical samples will not only save costs, it will also enable a much faster and more flexible supply chain, which in turn will improve profitability. A digital sample of a product can be shown to potential customers very quickly after the product is created and if the consumers don’t like the product, it need never be produced at all.
But this is only one example of the way digitalization improves operations and actually create a more equal balance of power in the supply chain. For instance, we now also see the quality control process being partly digitalized, enabling self-assessments by manufacturers to be verified in a digital environment.
And then of course there are the developments in robotization, which have the potential to really change the structure and the geography of the industry. Although in the near and medium term future I do not foresee large percentages of the global apparel production to be made by robots.
Where is the adoption rate Industry 4.0 higher – sourcing, designing, development, manufacturing, distribution, and retailing of apparel?
I think that if we look at industry 4.0 in the narrow sense, as driven by IOT (internet of things) then in manufacturing, where sewing machines are becoming intelligent, the adoption rate is picking up. We see a positive impact on productivity and flexibility caused by the enhanced functionality of the machines.
What is the future like for secondhand clothing and new clothing?
There is a consciousness among a growing group of consumers that part of the global environmental problems are caused by overconsumption and overproduction. More and more stories are emerging about huge stockpiles of unsold clothing. By buying secondhand consumers alleviate their guilt about their negative impact on their environment. But secondhand clothing is only one manifestation of circular fashion. I believe circular fashion, including a much increased use of fabrics from recycled sources, will be a theme of fast growing importance.
What initiatives have you taken to improve the image of the apparel industry? What new is in the pipeline?
Apparel’s adverse impacts on the environment, in some cases on workers and also a deteriorating perception of value caused by price races to the bottom are creating image problems for the industry. A negative image of an industry is really the largest threat any industry can face collectively, and can also only improve collectively. Industry associations, industry initiatives and global federations such as IAF, ITMF and WFSGI are in a good position to play this collective role. IAF, mainly using its World Fashion Convention platform, is a strong advocate of global collaboration to create smarter, stronger and more sustainable supply chains. Through projects we support better collaboration between buyers and suppliers, we help reduce audit and standard fatigue and to improve their effectiveness, we support global schemes to increase the share of circular fashion and we strive to better connect the worlds of large brands and retailers to the millions of small and medium sized businesses in our industry.
With the US losing interest in buying new clothes, what is the future of apparel manufacturers?
I do not see US losing interest in buying new clothes. The issue there in my view is whether these clothes can be imported duty free or not. There is NAFTA and we know that China is dominating the apparel market in the US. We have to see whether Mr. Trump’s trade policy will also affect our sector. So far there are no signs this will happen, but uncertainty is key here.
IAF is in favor of free trade but fair trade. Import duties and non-tariff barriers disturb the world trade in clothing and textiles and in that sense will hurt all companies working in our sector, not at least the consumers we want to serve.
What is the effect of China’s One Belt, One Road Initiative on the apparel industries in the Asian countries?
It is hard to overstate the impact of this initiative, which is really going to have a fundamental impact on the global apparel production map in the coming decade. The investments made as a result of the initiative are boosting the development of the apparel industry in a large number of Asian and African countries. Following the hard investments in infrastructure and in machinery will come the softer investments in people, in their skills and in the management. Investments are needed to improve our industry in a more structural way, so potentially this is a good development. I envision that IAF members and IAF’s Chinese member CCCT will be working together more intensively the coming years on all issues surrounding industrial development as a result.
What is the agenda of the upcoming World Fashion Convention?
The theme of the 34th IAF World fashion Convention from October 8-10, 2018 in Maastricht (The Netherlands) is “Building a smart future for fashion”. In a world where prices cannot drop much lower, boats cannot go much faster and people cannot work much harder, improvements are made only when the business is made smarter. Sessions will be held on smart raw material use, smart supply chains, smart new business, smart manufacturing and smart retailing. This convention will show many inspiring examples of a smarter apparel supply chain.
The IAF Convention caters to apparel industry leaders from across the supply chain, from all continents. This convention is a unique opportunity to gain the insights necessary to understand where our industry is heading. Top speakers from across the globe cover the width of the supply chain, from raw materials to apparel sourcing and from production to retail trends. On top of that, the convention provides an excellent opportunity to meet the global industry in one location in a few days time. See www.iafconventionmaastricht.com for more information and registration.