The textile and clothing companies normally do not use the stock exchange market to finance their activities
Paulo Vaz discusses about the present and future of Portuguese textile industry with fibre2fashion correspondent Mary Christine Joy.
Synopsis:
ATP (Textile and Clothing Association of Portugal) is a renowned employer association consisting of around 512 companies and Euro 3,000 million turnover. It was formed by the merger of APIM (Portuguese Association of Industries and Loop Tailoring) and APT (Portuguese Association of Textile and Clothing).
Paulo Vaz, besides being the General-Director of ATP, is also the Vice-President of Selectiva Moda Association (organization of international fairs and President of CENIT (Textile Intelligence Studies Centre). He is also auditor of the National Defence.
Excerpts:
As the General Director of ATP, can you give us a brief about the role of ATP in uplifting of Portuguese textile companies and your role in particular in the association?
ATP is the most important Association representing in Portugal the whole textile and clothing cluster, including fashion designers and fashion distribution besides the entire industry from spinners, weavers, home textiles, technical textiles, knitwear and confection in general. ATP aggregates around 500 companies which are the most important in the cluster. Our role as Association is to defend the sector and the companies' interest and present their demands to the political institutions, both in Portugal and in Europe. ATP also develops numerous services dedicated to their members in terms of intelligence, consultancy, technical assistance, technical publishing and organization of internationalization programs, which allow a collective presence of the companies in 65 textile and fashion fairs worldwide boosting the exports activity.
Other than Europe, which countries outside prefer to import Portuguese textiles? Can you give some statistics in this regards?
USA is a traditional costumer that is regaining weight in our exports alongside with Switzerland, but the newcomers are Angola, China and Tunisia, for different reasons. Angola is a buyer of Portuguese brands, China is interested in our top quality fabrics and Tunisia is a production logistic platform for outsourcing, used by Portuguese companies to reduce confection's prices.
Portugal has great plans to invest in external promotion for the improvement of its textile sector. Can you elaborate a bit more on this? For example, your investment plans include participation in international fairs. What could be other ways to promote the textile industry externally?
Textile and Clothing companies have annually a strong external promotion program to help them to assure traditional markets and costumers and prospect emerging ones. ATP - Portuguese Textile and Clothing Association together with its dedicated organization for external promotional ASM prepares every year a large program of textile and fashion fairs worldwide. During 2014 almost 200 companies will be present in 65 fairs in 35 countries in all continents. We'll invest almost 9 million euros in the program. Beside fair participation we'll organize also seminars, trade missions and we publish market studies and surveys to help companies to enter in the markets. Simultaneously we organize also twice a year our Fashion Week in Porto, which aim is to build a strong fashion image for domestic and international media.
Portuguese textile industry recorded a growth in its textile exports in 2013. Do you suppose that Portuguese textile industry is flourishing in comparison to other industries in the country? Please explain your answer.
Due to the economic and financial crisis that Portugal has been suffering since 2011 companies had to change their priorities and invested a lot more in export markets. Not only the Textile and Clothing sector, but also other Portuguese traditional industries as Footwear, Furniture, Automotive, Agro-food, etc. in general. These already had an important external quota to increase sales abroad to compensate the internal market recession. We may say that in general all Portuguese activities that usually export had a very good year in 2013 including Textile and Clothing sector.
Your statistics say that the Portuguese textile industry was a major source of employment in the past (in the 90s). But the sector employs less number of people now. Why has the textile industry failed to create employment opportunities in the country?
The point for Portuguese Textile and Clothing Industry is not to create jobs. The point is to create added value and increase productivity. This is much more important for us to increase our turnover and our exports rather than to focus on employment. We're climbing very fast in the value chain and we're obtaining much more productivity from our human capital. The aim is to have more qualified jobs than more jobs in general.
Home textiles seem to be the biggest strength of the Portuguese textile industry at present. Isn't it? Can you give the current scenario for home textiles industry in Portugal?
Home textile is an important cluster in Textile and Clothing industry. Its worth is 9% of the whole sector in several points of view including exports. The most important activity is knitwear which assures 40% of whole textile cluster. Anyhow Home Textiles had a great performance last year increasing almost 10% from 2012 and recovering from several years of decreasing figures. We can conclude that Home Textile cluster finally finished its restructuration and the companies are now prepared to hold global competitiveness specially in articles and services oriented to niches, top quality and quick response.
Do you suppose if apparel giants like Nike and Adidas set up production centers in Portugal, it can prove beneficial for the textile industry of the country? Please elaborate your answer.
Nike and Adidas are working in Portugal using special companies to develop together special products which involve a lot of technological research and top quality make up. Normally those companies start producing these premium articles in Portugal and when technology was already mature they dislocated their production initially to North Africa and Eastern Europe and finally to Far East when they reached the mass market status or a commodity. Portugal Textile and Industry is assisted by very advanced Technological Centers such as CITEVE and CENTI (for nanotechnologies and new materials) which give an extra advantage for R&D activities together with the companies. Anyhow I believe that Adidas, Nike and other big brands still have an enormous potential to profit in Portugal and I believe that future will confirm what I'm saying.
Europe is your main export destination, isn't it? Why do you think is Portuguese textile favorable to the European market?
Europe is our main export destination for obvious reasons: geographical proximity and cultural proximity. We are a European country fully committed with the European project, our major markets in Europe are at 3 hours flight distance and 28 hours truck drive maximum. We can speak several languages and we are very flexible and adaptable. Those are enormous advantages when we talk about added value industries that must be distinguished by service and not by price. Portugal can't compete based on price but we still have a lot of advantages if we consider other points such us high quality, design, technical innovation, geographical and cultural proximity to the main markets and a lot of service to create value.
Amidst unresolved bailout loans and a financial crisis set in Portugal since 2011, do you suppose that there will be adequate government support for the Portuguese textile industry to grow and flourish in 2014? Please explain your answer.
Financial crisis brought many problems to Portuguese Companies: higher interest rates, more difficulties to get financial support from banks in Portugal and abroad. The crisis touched severely the internal market and it was lethal for many Portuguese brands that had a fragile financial situation. The way out was the external markets and the diversification of export countries as I already mentioned. There was no special program for Textile and Clothing during this period. Economic incentives are for companies in general and the most important were the credit lines for export and investment. We do not ask for special measures for our sector, we stressed out that more important was to live and work in a friendly environment which attracts investment and new companies, that promotes growth and value creation, well-paid jobs and increased exports and new markets. If Portuguese economy in general is more competitive, then Textile and Clothing will benefit from that for sure.
How important is the listing of textile companies in international stock exchanges? Can you give us your views in this regards?
The Textile and Clothing companies normally do not use the stock exchange market to finance their activities. Most part of the companies is SME (small and medium enterprises) and they consider they do not have the necessary size to be on it. They prefer other ways to finance their activities, normally by using their own resources or by trying to have bank support by contracting loans for investment when needed. It is probable that this scenario could change in the future, because Portuguese Stock Market is investing a lot to attract new and smaller companies to it.
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