Technology, Trade, Climate · Orientation in Disruptive Times

Bali, Indonesia/ September 14 – 16, 2017

ITMF Conference 2017 took place in beautiful island of Bali and it was my privilege to attend 2017 ITMF annual conference. It was the major event in the world of textile manufacturers.

It already promises many good presentations and talks on topics of great importance to textile industry. It is the first time that conference is held in the wonderful country oflndonesia. Sincere thanks the Indonesian textile association and its organizing committee for the warm welcome we received.

This year’s conference focus: Technology, trade, climate: orientation in disruptive times. All words included in this title are of extreme importance in today’s context. They are all major subjects with direct influence on economy, politics, environment. It is especially interesting to think about these topics in relation to industry’s past influence on major developments in international trade and technological innovation.

It all started with cotton a couple of centuries ago. Historically, this natural fiber was one of the first globally traded commodity. The scale of its production, consumption, and exchange was greater than any other manufactured good. The demand for cotton fostered trade between Europe, the Americas, Asia, and the Asia-Pacific . Buying and selling yams, fabric, and garments created a world wide network of manufacturers , merchants, and consumers.

In the late 18th century, South Asia was generating about one quarter of the world textile output &Indian cotton was traded via land and sea to Indonesia, Japan, the Middle East, Africa, and Europe. At that time, India was literary clothing the world .

Yet, one may ask: if innovation is a disruptive force, why are we experiencing challenges in disruptive times? While the answer to this question is very complex, one way of approaching it the recognition that innovation creates a vacuum for new sets of opportunities. Hence, making a discovery with commercial use creates room for inventing many products and applications which could not have been foreseen in previous times. Take the very first “artificial silk” patent ever granted for example.

This was in 1855 in England. A Swiss chemist, Audemars, produced cellulose and patented it. While his innovation was of great importance, he failed to recognize that he could emulate a silkworm by extruding the cellulosic liquid through a small hole and this process was ofno use for the textile industry at that time. Humanity had to wait for the creation of the American Viscose Company in 1910 to produce rayon and the work of Camille and Henry Dreyfus at the same period to advance research on cellulose. It is only in 1931 that a scientist called Wallace Carothers created a “giant” molecule named “polymer” .

He focused on developing a specific fiber initially referred to as “66” and, there you go, nylon, the” miracle fiber”, was born. After that, the world of textile extended to a whole new set of fibers ; those who are completely synthesized from petrochemicals. At this point in time, things started to accelerate in the man-made fiber industry. The advent of WWII, the increasing need for cars and houses, the ever-growing consumption in the modernizing western hemisphere, as well as the ground-breaking U.S. space program were all geopolitical and economic developments which boosted the demand for polymers year after year.

What happened it that scientific research paved the way to innovation and innovation paved the way to commercial Successes.

Today, the textile industry is still a major player in the worldwide economy but is has changed. It has reinvented itself for competitive reasons, it has adapted to consumption preferences, it has opened to the circular economy. Some countries begun at some point in time a transformation process which ended up in rearranging the global economy. The changes that occurred in the textile industry and set new standards for our economic activity can be captured in three points.

First, in today’s world, technology is a source for competitive advantage for each component of the integrated textile value­ chain . Take fiber for a start. The production of natural fibers increasingly relies on the use of transgenic seeds which characteristics have been optimized with regards to the crops environment. The research on chemicals searches for solution to improve pest control. The evolution of irrigation systems boosts water productivity. In the man-made fibers segment, there is a constant strive to close the gap to cotton quality in terms of touch, feel, and absorption. The invention of brand new fibers opens innumerable potential markets in different economic sectors. Technical textiles such as Smart textiles or nano technologies and the existence of nonwovens give rise to additional applications next to the apparel and home textiles . This segment of technical textiles is especially important in developed economies as it requires lots of interdisciplinary research and expertise. Just think of the creation of composites for the aerospace industry or the development of special texti Jes for the medical segment.

Of course, improving fiber characteristics is not the only domain of innovation in textile. On the topic of yams, fabric and garments, the automatization of many production processes has been jostling routines and habits for decades. Textile machinery manufacturers have constantly improved their apparatuses in terms of quality, speed and versatility . The result is the emergence of greatly superior products and strongly improved yields. If you now add the internet of things to the equation, future developments in the industry have virtually no limit.

Once again, of course, this is not the end of the story. Retail is undergoing a metamorphosis all around the globe. The emergence of innovative E-commerce selling strategies and E-market places has revolutionized distribution channels . Research shows that apparel sales on E-commerce have surpassed any other B2C categories. This is especially true in Northern America, western Europe, and developed Asian countries. A new McKinsey report explains that China has gone from a share of 1%of worldwide transactions in the digital economy a decade ago to 40% now. Moreover, the value of China’s mobile payments related to consumption by individuals was $790 billion in 2016, I I times that of the United States.

These are novel consumption trends which are still not fully integrated in the textile value-chain. The question thus remains: what are the long-term consequences for our industry?

The second transformation which has set new standards for our industry is the global context of  trade.

In 2017, the World trade organization forecasts a 2,4% increase in global trade. The WTO, however, points out that this figure is surrounded with high uncertainty.

 

More specific for our industry,it is wellknown that textile and apparel trade has been the main force for economic take-off in many countries.It can be observed now in Myanmar,it was the case before in China  or India. It could also be the case for other developing economies but rising concerns about some regions of the globe are to appear. In today’s context, for example, the stakes are high for Africa. According to the World Economic Forum, “Africa’s cotton and apparel value chain have forces to integrate the global textile supply chain. Efforts to increase productivity, competitiveness, and sustainability are made in South Africa, Tanzania, or Mozambique. Investment are currently made in ginning, spinning, weaving, and garmenting. What will happen, however, if the Trump administration does not renew or extend the Africa Growth and Opportunity Act? What are the consequence for the African textile industry? Unfortunately, nothing is sure yet apart from the fact reported to Reuters on August the 8th, 2017, by Mr. Kim Elliot, a trade expert at the Washington based Center for Global Development, that “this administration has just shown almost zero interest in Africa”.

Another region of the world nevertheless focuses on a trade initiatives which can impact our industry in a great manner. I obviously talk about the “One road, one belt initiative” , which aim at improving the trade route and speed between China and Europe, on land and on sea. As the guardian wrote it on May 12th, 2017: “There are plans for pipelines and a port in Pakistan, bridges in Bangladesh and railways to Russia – all with the aim of creating what China calls a “modem Silk Road” trading route that Beijing believes will kick start “a new era of globalization”. Contradictory liberal and protectionist forces still shape the trade environment for textile exchanges. These trade evolutions always bring uncertainty, challenges, and the consequential opportunities along with them.

The third point to add is of course the environmental issue. In today’s world, each industry player, from producers to consumers, is more and more conscious of the textile manufacturing global ecological footprint.

It creates a set of brand new economic opportunities which prepares the future for new disruptive times. Environmentally friendly innovations are intended to increase market shares, create competitive advantages, and save on production costs.

On the production side, as explained by Dr. Blackbum from the University of Leeds, the challenges for the textile, dyeing, and finishing industries are multiple and complex . They consist of creating material that provides an equivalent function to the product it replaces, performs as well as or better than the existing product, is designed to be desirable, is available at a competitive or lower price, has a minimum environmental footprint for all the processes involved, is manufactured from renewable resources, uses only ingredients that are safe to both humans and the environment, and finally , has no negative impact on food supply or water.

On the demand side, moreover, the millennials, or the consumers of the future, are much more sensitive to environmental issues than their parents. Many initiative have been launched lately to reach these new consuming expectations. According to the 2016 Textile Exchange’s “Preferred Textile Market Report”, the latest initiatives in sustainable textile include circular systems, recycling textile waste , and bio-based polymer developments. These movements are supported by a growing number of certifications and labels which help ensuring sustainability claims are accurate
and actions behind the claims result in real and meaningful changes. The downside of the multiplication of audit initiative is, nevertheless, the emergence of confusing and conflicting standards in addition to rising related costs of meeting social compliance requirement. It can be said that the global consumption patterns are constantly changing and that per capita consumption rapidly grows in developing countries such as China and India. The global consumption patterns will change by 2025 as follows:

  • Europe and U.S. current market size (USD$665bn) is poised to grow to USD$775bn by 2025;
  • China and India, whose current market size is USD$320bn and poised to grow to USD$795bn, which is bigger than U. and U.S. combined.

Obviously, the demand patterns will shift the supply. The world will operate in a new normal, in a local area network, whereby India will be supplied by itself, Bangladesh, Nepal & Myanmar, and on its side, China will be supplied by itself, Vietnam, Cambodia, and Laos. The EU and US markets will open to new supply chains possibly based in Africa, which enjoys a competitive advantage of duty and quota free market access. Besides shifting demand and supply patterns, the world of tomorrow will witness the greatest localisation movement ever experienced. It will see global brands operating in a local environment. Hence , competition will become the new mantra, i.e. co-operate to compete.

Textile and clothing industry plays an important and strategic role for the growth of the Indonesian economy. The important role is mainly from the acquisition of foreign exchange and the provision of employment. Indonesia is one of very populated country in the world. With a population of over 250 million and more than 127 million of total labor force, Indonesia faces the problem of unemployment. The textile, apparel and its supporting industry is one of the answer to increase the widest possible employment opportunities.

Indonesia has a fairly complete textile industry structure, from upstream to downstream. From man-made fiber in dustries , either polyester, rayon or nylon; spinning industry; weaving industry; knitting industry; dyeing / printing / finishing; home textile; non woven up to garment factory are existed in Indonesia. It can be a competitive advantage for Indonesia.

Disruptive times are source of unce rtainty. In such a context, access to relevant data and in formation, networking opportunities, and the existence of platforms for discussion that allow launching initiatives on relevant topics to the industry is more meaningful that ever. Technological innovation , ever evolving trade policies, and the challenges linked to sustainability in our industry are major topics that we must face every day. In this regards, participating to such a conference as the ITMF annual conference and being able to share on common issues on a neutral ground is of great necessity. At ITMF Conference delegates and organizers, willing to exchange on these important topics here. It can only lead to an increased awareness of the necessities we need to tackle today to ensure a long-lastingsuccess to our organizations in the future. It is worth pointing out the important role that plays this conference in today’s context of ever changing economic conditions