The Hindu Business Line : Global textile sourcing closer to consolidation

ECONOMIES rich in raw materials and labour, which keep a tight rein on costs and delivery schedules, will reap the benefits of the end of textile quotas. Some of the countries already doing so are India, China, Peru, Honduras, Guatemala and Uzbekistan.

Even countries such as Mauritius, Sri Lanka and Bangladesh that thrived under the quota regime and were expected to do badly from 2005, are holding their own.

According to Mr Baqar Iftikhar Naqvi, Manager, KSA Technopak, the future may see arrangements or tie-ups between countries or companies that are good at creating garments and those making fabrics for conversion. This is already happening between companies in Sri Lanka and India.

He added that though many European and US companies still sourced 40-50 per cent of their products from Eastern Europe and Africa, price pressures would force them to source from fewer points.

Worldwide, the consolidation of sourcing points has begun. In the past few weeks, there have been reports that that Liz Claiborne, which sources its 37 brands from 35 countries, will consider sourcing its products from 10-15 countries.

Similarly, Dewhirst, a supplier to Marks & Spencer, is reportedly closing seven plants in Morocco and shifting operations to China this year.

Mr Andrew Lo, Deputy Chief Executive Officer, Crystal Group, Hong Kong, said his company was winding up its Mauritius plant and its Mongolian and Malaysian units might not last long.

It is considering consolidating its manufacturing processes in Vietnam, India and China. Crystal Group already has operations in Sri Lanka and it will continue investing there. Issues such as political stability and free trade agreement favourability are crucial for its manufacturing plans.Mr David B. Collins, Assistant Executive Director & Regional Director, South Asia, Cotton Council International, anticipates that a number of US companies would begin sourcing products from India. Though China would do a lot of business, many firms would be wary of only depending on China for all their requirements. India, Pakistan and Bangladesh have a competitive advantage, while Turkey's opportunities are limited because its labour costs are more than twice those of India.

He added that the US textile industry had shrunk dramatically over the last five years and a lot of the activity has now moved to nearby countries such as Mexico, Honduras, Guatemala and the Caribbean Basin. Speed and short turnaround times are important for American buyers. Some of the buyers scouting for Indian manufacturers include Benetton, Mothercare, Fruit of the Loom and German retailer Peek & Cloppenburg KG.

Mr Martin Quigley, Vice-President, Quality and Product Development, Fruit Of the Loom, Ireland, was looking to outsource the production of knits and had narrowed down the search to a couple of producers in Ludhiana. Fruit Of the Loom already sources jackets from Kochi.

Mr Stefano Pigozzo, Purchasing Manager, United Colors of Benetton, said that the company had just graduated to the idea of outsourcing some of its requirements. It produces 110 million pieces a year. While the fabric is produced in Italy, the cutting is farmed out to subcontractors Hungary, Croatia, Tunisia and Portugal.

He said, "To stay in the market, we need to change many things — the method and processes of production. We have to convert to the idea to buy ready garments. I am here to understand what the Indian market has to offer us."

Mr Stephen McNamara, Director, International Sourcing, Peek & Cloppenburg KG, Germany, said that there are large opportunities for small manufacturers who could produce a few thousand pieces for small retailers in Europe and could change products to suit fast-changing choices.

However, Indian manufacturers need to drastically hasten their delivery schedules, especially when China is able to deliver its orders withinthree weeks.

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