COVER STORY: Textiles, clothing and footwear
Paul Smith is the epitome of a successful Midlands textiles firm. Hi-tech products, new markets and academic collaboration are being deployed to find the next generation of market-beaters in the region's industry.
Paul Smith is the very epitome of a successful midlands textile business. now, After years in the doldrums, the rest of the region's industry is showing renewed vigour as companies, support agencies and universities collaborate to make it more competitive. Trevor Bates reports
Although the region's textiles sector continues to haemorrhage jobs as more manufacturing migrates offshore to low-cost producers like China, the growing emphasis on flexibility, quality, design, innovation and niche markets is moving the industry nearer a more dynamic, if less labour-intensive, future.
International buyers had a glimpse of this brave new world when 20 of the region's leading firms showcased their latest products at last month's Techtextil 2003 exhibition in Frankfurt, the world's largest technical textiles trade fair.
Firms featured on the region's own stand, a first-time promotion by the cluster organisation EMCAT, the East Midlands Development Agency (EMDA), the trade association EMTEX and Trade Partners UK, notched up 130 commercial leads with Adidas and French giant Decathlon two of the potential customers.
"The response to having our own showcase exceeded all our expectations," purrs Neil Wilkinson, EMCAT's co-ordinator. One of the companies showing its products, W Ball & Son of Ilkeston, which trades as Baltex, had the good fortune on its return from Frankfurt to join the select band of companies to win a Queens Award for Exports.
The family-owned warp-knitting firm typifies the way the industry is changing in the face of intense global competition. It started life 172 years ago manufacturing silk lace. Along the way it patented special lace-making processes and proudly displayed its products at the Great Exhibition of 1851.
Its innovative pedigree was highlighted in 2002 by DTI minister Douglas Alexander when he hailed the company for using an £388,000 government grant to successfully develop a range of uniquely designed and engineered fabrics, incorporating metal, wire for use in aircraft electronics, battleground equipment, food processing and healthcare.
Managing director Charles Wood says the 25-employee company has constantly had to reinvent itself to keep pace with a fast moving industry. It focuses on supplying specialist textiles into niche markets, particularly aerospace and automotive - a classic example of the export-driven diversification industry leaders are trying to encourage.
"We have had to move into new areas to survive. Ten years ago apparel fabrics accounted for 80 per cent of our business, and technical textiles the rest. That ratio has completely reversed itself and in two years time we expect to be selling 90 per cent of our output into the technical textile marketplace."
Baltex earned its Queens Award accolade by growing its export business by 236 per cent in three years. Overseas earnings represent 38 per cent of total sales and are targeted to reach 50 per cent. Some customers have been secured through the firm's own multilingual website.
Exports are mostly to France and the US but Wood and his team also trade with Eastern Europe, the Philippines and Hong Kong, ironically the low-cost markets - along with North Africa and China - that have eaten so deeply into the region's clothing and textile manufacturing base.
Technical textiles - worth £31.5bn to British producers - is one of the key areas EMCAT, the East Midlands clothing and textiles cluster organisation, is trying to cultivate to make the industry more resilient to international competition which has largely killed off volume clothing and footwear production in the region.
The Frankfurt trade fair showed the region has a lot of world-beating expertise and quality products to offer the specialist marketplace but the switch to technical products is not going to cure all the industry's ills, caution influential figures like EMCAT chairman John Roskalns.
As managing director of Nottingham-based Swisstulle UK, another Techtextil exhibitor, he can speak from experience. "Technical textiles are seen as the answer to everyone's prayers but it often takes a number of years to get these products to market, especially if you're working for the military.
"That can be an expensive and long- winded process for a lot of SMEs who are often preoccupied with day-to-day fire- fighting. You can only do it if you're running a successful business in other areas."
Roskalns is lucky. His company is part of a Swiss-owned group and he's able to spend 20-30 per cent of his time working on new areas of business. That approach obviously pays dividends. The company has just celebrated its best trading year for a decade, boosting business by 10 per cent.
Employing 75 with a £32.5m turnover, Swisstulle makes bobbinet - 60 per cent of it for technical end use - by a weaving process invented 200 years ago. The fabric is used in low-level fast deployment parachutes, in theatre backdrops, and in high-grade insulation for medical scanners. More recently it has developed a silver-coated yarn for use in weather balloons and military decoys.
Roskalns champions the quality-plus, niche-approach to business. A number of companies, he says, are finding new applications for their expertise but more are needed.
"It's an attitude thing. People have to start thinking out of the box. When I talk to companies all they seem to be thinking about is how to squeeze another 10p profit out of a garment when really they should be making new things people want where price is less relevant."
Over the past year he has been leading a highly focused campaign, co-ordinated by EMCAT and backed by money from the development agency, to transform the region's clothing, textiles and footwear sector into "a truly dynamic 21st century economic driving force".
Aided by £32m of EU funding, EMCAT partners have hatched an ambitious five-year project and event-driven action plan to address underlying weaknesses in the East Midlands apparel, textiles and footwear sectors and exploit new opportunities in areas like performance, medical and military fabrics.
Industry leaders have been impressed by the way the Los Angeles apparel industry has transformed itself over 10 years through greater collaboration between manufacturers, retailers, support agencies and academic and research institutions.
During a fact-finding visit to California Roskalns had his eyes opened by the flexibility and speed of a what has become a niche-driven industry where there is no place for "average" products. Manufacturers have developed a fast-reaction culture, delivering 10 seasonal collections a year against three or four in the UK.
"They're giving customers new products every six weeks even though it might only be a different colour, or a slightly different look. That's why they're gaining ground. You can't do that if the bulk of your manufacturing is in the Far East," says the Emcat chairman.
Some of the LA ideas have already been adopted in the East Midlands, including a free newspaper, formation of a technical textiles network and the setting up of specific working groups to tackle issues like global sourcing, collaboration with academia and international trade.
Ilse Metchek, executive director of the California Fashion Association, provided an illuminating insight into the LA success story when she attended the first EMCAT-organised East Midlands Clothing and Textile Festival held in Leicester, Nottingham and Derby last month.
Showcasing and meet-the-buyer events are important tools in improving the industry's image and business prospects. Another big event in the calendar is the International Textile Machinery Exhibition at the Birmingham National Indoor Arena in October which is expected to attract 1,200 exhibitors from 40 countries.
The LA industry may differ from that of the East Midlands, says Amreesh Misra, EMDA's clothing and textiles manager, but the principles leading to improved competitiveness are much the same.
"Our industry needs to be much more forward looking. Where possible it should be focused on working together instead of against each other and we are having some success in promoting this collaboration. The link with education - universities, schools and colleges - is particularly crucial."
All this is good news for the government, which has pumped £375m into the UK textile industry since 1997 to counter overseas competition. Technology and innovation are key elements of the fightback and trade secretary Patricia Hewitt addressed these themes when she made a festival visit to Leicester to launch EMCAT's new portal.
Despite massive jobs losses caused by cheap imports, clothing, textiles and footwear remain critically important to the region's economy. In 2000 the industry contributed £34bn to GDP, but this could have fallen following further significant jobs losses.
Estimates of those employed in the sector vary between 85,000 and 65,000.
Coats Viyella's decision three years ago to close all its clothing factories is believed to have cost the region up to 5,000 jobs. More recently the R Griggs Group shed 1,000 footwear jobs by moving production of its famous Doctor Martens brand to China.
Three years ago Jeff Scrivener, chief executive of EMTEX, predicted a 50 per cent decline in employment by 2005 to 50,000 and is still sticking by that forecast. He visualises a dramatically changed sectoral landscape with companies operating in completely different markets and no longer dependent on the big high street multiples.
"Businesses nimble on their feet with good products will survive but those with high overheads and products with a low selling price will not be here in 2005. Firms making work-wear, for example, will not have to worry about seasons or fashion but they will have to keep up with legislation. They will face other pressures but cost will not be so crucial."
Industry estimates put the cluster strength at 2,300 companies with 1,800 manufacturers, most of them SMEs. Only a dozen quoted companies remain with Leicester-based retailer Next (which last year turned over £31.87bn) leading the way.
Indeed Leicester remains a major repository of knitting expertise, ably underpinned by the Asian entrepreneurial instinct, which has become a powerful economic driving force in the city. Of the 200 companies belonging to the Leicestershire and Nottinghamshire Textiles Association (LENCAT), a division of EMTEX, about 60 per cent are ethnically owned.
Growth in the Asian clothing community has probably peaked, suggests Kewal Athwal, LENCAT's business support officer. "Third generation Asians are more forward looking than their parents and are seeking to diversify into performance and corporate wear. They are still trying to produce goods in this country."
More Leicester firms, however, are being forced to look offshore to survive. Five years ago Richard Roberts was making all its jumpers and cardigans in the UK. In the last 18 months it has closed five factories, mainly in the Midlands, and reduced its workforce by 900 to 300.
Today 85 per cent of its products are made in its factories in Sri Lanka (on machines shipped over from its UK plants) and Tunisia, or sourced from other suppliers in the Far East.
Commercial director Dennis Hall believes the longevity of garment manufacturing in the UK is in question because of cost pressures from the big high street retailers. "If you cannot make it cheaply enough in the UK you have to go elsewhere or simply close down," he laments.
Other factors like government bureaucracy, European employment laws and UK infrastructure costs have made life hard in the industry. "Our insurance premiums have trebled over the past four years and are six or seven times more expensive than our offshore factories for the same cover."
Knitwear firms will be under more pressure when the quota system finally ends in 2004 as part of the new world trade agreement. Some industry experts predict more blood letting but Alan Clegg, Labour MEP for the East Midlands and co-chair of the all-party European Textiles Forum, is not as pessimistic.
"Most of the damage inflicted on the region by cheap imports has already been done. Some manufacturers in countries like Spain will be more worried because of the protection they have enjoyed but the impact here will only be marginal."
Clegg has campaigned for over two years without much success for country-of-origin labelling to be made obligatory across the EU. Consumers wanting to buy British to support local industry, he says, are not being given the information to help them make a choice.
"The law as it stands is ridiculous but the legal complexities of getting EU rules changed are horrific, " he says.
While he continues to stalk the Brussels corridors of power in search of change industry activists nearer home are pressing on with a range of measures to re-energise the industry, from analysing consumers' buying habits and giving small companies the information to making the industry more attractive to graduates.
One project called Global Trading, funded with EU money until 2006 and delivered by EMTEX, aims to protect jobs by assisting local manufacturers to adopt a " balanced sourcing" policy - using overseas suppliers to complement UK production rather than providing all of it. In recent years there has been no support for sourcing, only selling.
An industry forum run out of Salford University has been pressing retailers to see the logic of sourcing up to 30 per cent of goods from UK manufacturers so there is a domestic production capacity to fall back on if there is a failure in the overseas supply chain.
The EMTEX programme has helped a number of regional manufacturers protect jobs by finding trading partners, including several firms who have established good relationships with Lithuanian suppliers.
Retaining a strong element of production capability in UK provides the industry with flexibility and a fast turn-round capacity, argues Bill Barrett, the trade association's business manager.
"If someone sees a garment on a catwalk in Milan you can get it replicated here in the East Midlands with 10 days. You can't easily do that if your supplier is 8000 miles away.".
Dedicated follower of fashion
Sir Paul Smith, now 56, simply goes from strength to strength as a leader in the British fashion industry - and his company doesn't do badly on the balance sheet either.
Nottingham-based Paul Smith Ltd, made £39m profit on £354.3m sales last year and total turnover from his 11 shops, 81 franchise stores and 174 concessions worldwide is now around £3233m.
It's a heady rise from the days when Smith started working in a Nottingham clothing warehouse aged 15. In 1970, he opened his first shop in the city.
Smith has forged an almost unrivalled reputation for well-tailored but slightly eccentric clothes that particularly appeal to the home market, and he has followed his instincts to great commercial effect. It's a fashion that has followers in high places. For instance last year Tony Blair famously wore a shirt that had naked ladies on the inside of the cuffs.
Smith is now without his strong views. He recently launched a scathing attack on high street fashion, claiming consumers are being swamped with dull and unimaginative goods. He told a delegation from the world's top fashion houses they now cared more about profit margins than creating unique designs. "Too many businesses are created on hype and marketing without the product to back it up. There is too much of everything and nothing that is special or unique any more."
Companies emerging from the sector shakeout
When Coats Viyella pulled the plug on its clothing operations in the East Midlands colour specialists Karen Walters and Philip Poole saw it as an ideal opportunity to become their own bosses
Karen Walters and Philip Poole had both been employed by a Coats Viyella dyehouse subsidiary when the parent company dropped its 2000 bombshell that it was ending its clothing operations in the East Midlands.
Walters was the matching laboratory manager and Poole the sample dyehouse manager, developing knowledge and skills they wanted to exploit for themselves.
Using a government regeneration grant and the latest technology, they established Textile Coloration Services at Sutton-in-Ashfield to help retailers convert fashion colour ideas for the next season's collections into technically-correct sample dyes.
The firm reports being "very, very busy" with Marks & Spencer, Leicestershire-based Next and Adams Childrenswear of Nuneaton among its main customers. "A number of our colleagues followed production offshore. We decided to keep our expertise in the UK," says Walters.
Dozens of talented managers and technicians who lost their jobs in the recent sector shake-out have gone on to create their own businesses with help from trade association EMTEX. "Many are verysuccessful and are generating new employment," says business manager Bill Barrett.
Many newer names in the industry, such as Nottingham-based Finden Coatings, are invention driven. The company started trading after developing a new process for applying a silicone rubber coating to narrow stretch fabrics like ladies stockings.
It has since patented a breathable coating and is now evaluating another new process which, if successful, could be a significant turning point for the firm, claims managing director Ian Finden. "There is an old business adage that you're only as good as your last order. Nowadays in manufacturing industry it seems you're only as good as your last invention."
The internet has become a powerful selling tool. Ben Partridge was running a small consultancy advising clients on electronic media applications when he decided to capitalise on a family interest in horses by selling riding gear over the web.
Overseas orders started to flow in after he and his wife, operating under the brand Ashby House, provided clothing sponsorship for the UK team in the World Trec Championships, a form of orienteering on horseback. He has shipped riding boots to New York, chaps (leather over trousers) to Arizona and knitwear to the Far East and Canada.
Much of the gear sold by the company, like boots, bridles and fleeces, is made in the East Midlands. "We source nothing from overseas," says Partridge proudly.
Companies urged not to stick to their knitting
More of the region's clothing and textiles companies should be working with local universities to stay ahead of their competitors. That's the view of Jane McCann who leads a full-time MA programme in functional clothing design at the University of Derby
Jane McCann and her colleagues are currently drawing up a proposal for a centre of excellence in smart textiles within the restructured School of Art, Design and Technology at Derby University and want to encourage local companies to use the facilities for innovative research into the application of technical and performance textiles. "We would like more companies to fund projects," she says.
Built around sportswear and performance design, the MA programme attracts talented graduates from around the world. Most are lost to the region when they enter the commercial marketplace, a trend the cluster organisation EMCAT would like to reverse as part of its long-term strategy for the industry.
Derby students are currently developing leading edge products with international companies as part of the programme. One is working with Philips on wearable electronics, another with Dupont on fire retardant fabrics.
Former student Michelle Nelson, a successful Buxton-based freelance designer, has used her expertise to design everything from fashionwear to mustard gas protection suits. Her current clients include Adidas and the Ministry of Defence.
She wants to see more risk-taking by UK companies. One local knitting company, she says, refused to collaborate on a project unless she could guarantee a firm order, despite the fact that she had a major investor lined up to back her.
"Firms have had the safety net of supplying Marks & Spencer for so long they are not always prepared to be flexible. UK companies are not using graduate creativity to the full. Firms should be prepared to do more development work and have an international vision."
An outdoor sports enthusiast, Nelson regularly "road tests" her own performance wear designs in the Peak District. "I test my own stuff as much as possible."
Other universities are gearing up to help companies make more effective use of academia's technical and design expertise, a challenge highlighted in a national 55-point action plan for the industry.
At De Montfort University, Leicester, fashion and textile courses have been realigned to fit the industry's changing profile. Course leader Carol Cassidy says that since rebadging her course fashion technology rather than garment technology applications had increased because "school leavers perceive garment technology as not having a young image".
De Montfort has highlighted the value of university research in the area of smart textiles and intelligent garments through the work that the biomedical engineering group, led by Dr Wei Wang, has been doing to develop an "electronic bra" for early diagnosis of breast cancer.
Professor Malcolm McCormick, head of postgraduate studies, says large-scale clinical trials to test the technology will begin in China this summer. "If it's successful we could see the equipment in use in UK hospitals in two years, eventually becoming available in different health aids and undergarments," he explained.
East Midlands Development Agency wants to exploit the entrepreneurial potential of academic innovation by establishing a network of incubators across the region. Space for start-ups will be provided in Derby's proposed centre for smart textiles and at De Montfort to capitalise on company expertise in quick response manufacturing.
They will be modelled on EMTEX's successful Designer Forum, Nottingham, a business space, incubator and mentoring facility with links to the five regional universities offering fashion and textile courses.
A dozen fledgling enterprises currently occupy space in the centre including a cutting edge womenswear designer, an historical costumier and a designer rug business. One start-up, Beans Beans, run by Geoff Whitaker, has taken the 1970s beanbag concept and turned it into a range of contemporary, sofa-size furniture sourcing production from within the region.
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