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For the purpose of this study, the "textile and clothing industry" was defined as those business activities covered by NACE Rev.1.1 Divisions 17 and 18. NACE 17 comprises mainly the “textile” sector. The term “clothing” is understood to cover the manufacture of wearing apparel, dressing, leather clothes and accessories (NACE 18).
The level of e-business in the textile and clothing industry is below average compared to other manufacturing sectors in all four dimensions measured by e-Business [email protected] The sector's e-Business Index – a compound indicator of ICT adoption and e-business intensity – is close to that of service sectors such as tourism and construction, but below manufacturing sectors analysed by the e-Business [email protected]
The textile and clothing industry is dominated by small and medium enterprises. Small company size is reported as a main reason by many firms which say that e-business does not play a significant role in their operations. Data also show a clear dichotomy within the industry itself. While medium and large companies appear to be fairly well equipped with ICT infrastructure, small and micro enterprises still show significant gaps.
However, and this is new evidence compared to the findings presented in the sector studies of 2004, there are signs that the use of advanced ICT systems in large textile companies is quite in line with adoption rates among large companies from the most advanced manufacturing sectors. Examples are Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) systems. It appears that a significant share of large textile firms have taken the lead towards supply chain integration and online trading with business partners.
Survey data about ICT skills indicate limited recognition of the skills and resources needed to exploit technological innovation and to support reorganization of work processes. The availability of qualified personnel with specialized skills is limited and, even more important, there are scarce investments in this direction. This could represent a critical issue for the European industry in its focus on technological innovation, process reorganization and striving to remain competitive in the international market.
Results about product innovation and comparisons with other sectors confirm that the EU textile and clothing industry has high value added segments (for example, new materials, technical textiles, high-end fashion, and sportswear) where design and research & development are important competitive factors. This kind of innovation uses human capital (in design and marketing) more intensively than information technology. On the other hand, the importance of ICT is very pronounced for process innovations: 28% of enterprises (by employment) introduced new processes supported by ICT in 2004.
The adoption of e-business in this industry is mainly demand-driven. Pressure from distribution and business partners along the value chain are the main motivations. Companies are aware of competitive advantages related to e-business, the most important of which is the possibility to gain efficiency in a very complex and fragmented organisation structure.
The main barriers to the adoption of e-business in this industry are related to the negative market trends and the increasing competition, which affect overall investment capacity at a general sector level.
Particularly in this sector, small and medium-sized firms are facing difficulties with the introduction of new technologies. Many firms not only lack the financial capacity to make investments, but also the skills of how to introduce and manage organisational change. Moreover, the limited degree of computerisation and the diversity of technological equipment in place are constraints for the adoption of e-business. However, the growing international competition and quick changes in market trends will eventually force companies to adopt more effective solutions in response to these new strategic challenges.
Policies that can positively affect the adoption and usage of e-business include those designed to improve, at a general level, the development of telecommunications infrastructure and the legal and regulatory environment, to create a favourable business environment, to raise awareness about e-business benefits and to improve understanding and managerial skills in e-business.
Policy measures in this industry should focus on the key issues of training and standards. They also should aim at providing information on how to assess cost-benefits of e-business; promoting participation to the value chain at large and moving from the narrow concept of e-commerce to a broader integration of internal and external processes. The e-business potential should be exploited in order to support innovation and competitiveness. Suggestions for policy include:
The textile and clothing industry generated a combined production value of about 203 billion euros in the EU-25 (of today) in 2001. More than 224,000 companies were active in this sector and employed about 2.5 million people. This represents 7.6% of total manufacturing employment.
The EU textile and clothing sector is predominantly an SME-based industry. Enterprises of less than 50 employees account for 60% of the workforce in the EU clothing sub-sector and produce almost 50% of value added. There has been a sharp decline in employment over the past decades, together with a substantial rise in productivity brought about by deep restructuring and the introduction of new technologies. The latest available data about production and employment (for the year 2002) indicate that this year was very difficult for the textiles and clothing industry with significant declines in production (-4.8% in textile and -12.8% in clothing) and employment (‑4.9%) with respect to the previous year. The trade deficit amounted to € 26.2 billion in 2002, the trade in textiles reaching a surplus of € 7.9 billion and the deficit in clothing € 34.1 billion.
In the past few years, the European textile and clothing industry has undertaken significant restructuring and modernisation processes in order to remain competitive in the global market. The main macro trends which have been – and still are – affecting this evolution are: liberalisation of trade – in particular the elimination of import quotas on 1st January 2005 – globalisation of production and markets, strong competitive pressure related to price-competition, the evolution of competitiveness factors increasingly associated with innovation, research, skills, quality and creativity; concentration in manufacturing and distribution, pressure on innovation and differentiation, the EU enlargement.
In order to tackle these unprecedented challenges, on October 29 2003, the Commission adopted the Communication “The future of the textile and clothing sector in the enlarged European Union”. The Communication is a sectoral application of the EU's industrial and trade policies, taking into account the particular features of the sector. The Commission has carried out a review of its policies and instruments, with the objective of identifying measures or lines of action that can improve the competitive position of the sector.
On 27 November 2003, the competitiveness Council welcomed the Communication and stressed the importance of ensuring the effective interaction of policies at EU level. In its conclusion, it was emphasized the strategic importance for the sector of improving competitiveness via research, innovation, training measures and protection of intellectual property rights. As a follow up, the Commission set up a High Level Group for textile and clothing with mandate to formulate recommendations on an integrated set of concrete initiatives to be taken at regional, national and EU level. The High Level Group report confirmed that the EU strategic approach in this industry should be focused on continuous progress in the areas of research, innovation and training. Moreover, appropriate framework conditions are to be insured especially to SMEs, in order to enable the sector to fully exploit its competitive potential.
The sector was covered as part of the "Textile, clothing and footwear" in sector studies of 2004