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Textile industry needs a more “imaginative” industrial policy

The UK textiles sector needs a more imaginative industrial policy to help it build the capabilities needed for a sustainable future, argues a major new report co-authored by Alliance MBS academics.

They say the findings of the report Coming back? Capability and precarity in UK textiles and apparel are directly relevant to the current UK government consultation on industrial strategy and to debates about reshoring manufacturing.

Said Julie Froud, Professor of Financial Innovation at Alliance MBS: “The textiles and apparel sector remains important but is now dominated by small and micro-firms with, on average, low investment, productivity and wages. While it is possible to make high quality products in the UK, many producers struggle with low returns.”

Mundane sectors
The report argues that industrial policy needs to have a more explicit focus on important mundane sectors like textiles. Policy also needs to move beyond generic concerns around innovation and skills by addressing some of the specific challenges that a diverse sector presents.

Drawing on sub-sector cases, the report explains how the business environment acts as an ecology that offers both opportunities and challenges to producers. Ecological conditions therefore shape the way in which firms develop the productive, marketing and finance capabilities that they needed to be sustainable.

Adds Prof Froud: “For example, carpet manufacturing includes some of the largest, capital intensive firms in the sector, paying higher than average wages. The relative success of these firms reflects technical capabilities that lead to distinctive high quality ‘Made in Britain’ products and co-operation between producers and retailers, which supports marketing and distribution.

“In contrast, many small clothing manufacturers have little power in their relationships with major retailers, resulting in low and uncertain profit margins. These conditions make it more difficult to achieve prices necessary to pay UK wages, manage risk, secure a modest return for business owners and invest for the future. The result here for many firms is precarity not sustainability.”

Addressing obstacles
She said an effective industrial policy needs to address such obstacles to developing sustained capability. For example, in the apparel sub-sector this should include supporting co-operation between producers, fostering innovative ideas that improve garment makers’ bargaining power within the supply chain, and enforcing minimum wages.

“In other sub-sectors, ensuring management succession and securing patient capital that can withstand the cyclicality of the industry are relevant to sustaining capabilities. Overall, the priority is not simply the number of jobs but the sustainability of firms and of clusters of textile and apparel manufacturing,” she added.

The report, which was funded by the British Cotton Growing Association Workpeople’s Collection Fund, was a joint research project between the Centre for Research in Socio-Cultural Change at Alliance MBS and the School of Materials at the University of Manchester.

Further reading
Bowman, A., Erturk, I., Froud, J. Johal, S. Law, J, Leaver, A., Moran, M. and Williams, K. (2014)
The End of the Experiment. From Competition to the Foundational Economy

Bowman, A., J. Froud, J., Johal, S., Leaver, A., and Williams, K. (2013)
Opportunistic dealing in the UK pig meat supply chain: trader mentalities and alternatives’ Accounting Forum, 37(4): 300-314.