Dr. Christian Schindler
Director General International Textile Manufacturers Federation (ITMF)
The companies along the entire textile supply chain must become more resilient
The International Textile Manufacturers Federation (ITMF) is an international forum for the world’s textile industries, dedicated to keeping the world-wide membership constantly informed through surveys, studies and publications, and participating in the evolution of the industry’s value chain. Through ITMF, the textile industries cooperate at the international level with organisations representing other sectors allied to their industry. In a discussion with Fibre2Fashion, ITMF Director General Dr. Christian Schindler talks about the challenges and expectations for the textile and apparel industry in 2022.
What are your key takeaways from the textile and apparel industry developments in 2021?
In crises like the pandemic, it is key to act quickly and with determination. Pro-active adaptation to new economic, social, or environmental circumstances can turn a challenge into an opportunity. The pandemic has also shown how important it is to have a sound balance sheet that does not only provide a company with the financial resources to overcome a crisis but that allows a company to emerge stronger by being capable to invest during and after coming out of a crisis.
Does 2022 seem to be as uncertain as 2021? Which factors would you rank as of topmost concern?
A pandemic is difficult to handle as so many factors play into it. The biggest challenges well into 2022 are to deal successfully with logistical issues and the related price increases. It will be crucial that the textile value chain will be able to pass on some of the price increases to the end consumers. Certain parts of the cost increases need to be absorbed by increasing the level of automation and improving labour productivity.
By when do you expect the challenges of shipping industry to ease?
The logistical problems will remain a headache as long as the global economy is overheated as it was for the most part in 2021. Since the extraordinary expansive fiscal policy has come to an end and also the expansive monetary policy is reversed cautiously, global demand will grow slower, which should help to bring demand and supply back into balance. In the 11th ITMF Corona-Survey in November 2021, practically all segments of the textile value chain expected good business in the first half of 2022.
Do you expect any significant movement in textile and apparel supply chains in 2022 due to the geo-political scenario, particularly the US-China tension?
Already in the past 5-10 years it could be observed that China’s share of apparel exports fell slowly while many other countries increased their global shares, especially Bangladesh and Vietnam. But it should not be overlooked that China is still by far the largest apparel exporter in the world. The reduction of China’s share is a result of higher labour costs in the country and therefore a logical development. Many Chinese textile companies have already invested outside China and will continue doing so. As for textiles, China is and will remain very competitive. Textile production is much more capital intensive than apparel production. Hence, rising labour costs in China are not as relevant in textile production. In addition, China has such a large and deeply integrated textile industry covering everything from spinning to the production of finished textile products. This gives China a unique position to provide practically everyone with any type of product at any quality and quantity.
On the demand side, do you expect a significant pick-up beyond pent-up consumption in 2022, without government support?
Many supportive measures have come to an end or will be phased out in important end-consumer markets, especially in the US. Since unemployment has also dropped significantly, demand can be expected to remain strong, albeit slightly weaker than in 2021. This is also the expectation of the majority of participants in the 11th ITMF Corona-Survey.
Following the recent COP26 meeting and given the textile industry’s influential role in climate change, what major developments do you expect in 2022?
With all the different weather extremes around the world during the year 2021, the awareness that climate change is not only a theoretical threat but a real and existential one has increased tremendously. Leading brands and retailers have started numerous initiatives to identify ways and means to reduce their carbon footprint. The most well-known initiative in this regard is the Fashion Industry Charter for Climate Action (FICCA) that was launched at COP24 in Katowice, Poland in December 2018. Its mission is to drive the fashion industry to net-zero Greenhouse Gas emissions no later than 2050 in line with keeping global warming below 1.5 degrees Celsius. This means that textile and apparel producers around the world should increase their efforts to reduce their carbon-footprint as quickly and as much as possible. There is no single solution to do this. What is important is to start the process. Before companies can act, they must know where to start with. This requires reliable data. Therefore, it is important that companies digitise their production processes as much as possible.
Related to this, will we see brands increasingly start focusing on sourcing with sustainability/ethics as a factor?
Brands and retailers cannot afford in the medium- and long-term not to focus on sustainability—both environmental and social sustainability. What is important to note here is that brands/retailers must improve their sourcing practices. During the first lockdown period, too many brands/retailers cancelled or delayed orders, sometimes even orders that were already produced and shipped. Such purchasing practices are not acceptable. It sheds light on how such practices force suppliers often to cut corners like asking workers for more overtime, subcontracting, etc. This led to the formation of the Sustainable Terms of Trade Initiative (STTI). STTI consists of 13 industry associations from nine countries facing similar challenges regarding purchasing practices in the textile and garment industry. Through a process of consultation, these associations have jointly agreed on the text of the white paper released in September 2021.
Will we see greater technology adoptions in 2022 to solve transparency and traceability issues in the supply chain?
Transparency and traceability will play an increasingly important role in the future. The technology is there to trace products through the value chain both physically (tracers) and/or electronically (blockchain technology). Producing textile products in an ethical way will be indispensable in the future. More and more countries are introducing legislation that requires companies to be responsible for the products they source.
Energy prices are currently a major concern across the world. How do you see them continuing and what business strategies can we expect to cope with them?
Energy prices have peaked already and unless there are major geopolitical crises, the oil price should not be of much concern in 2022. What is more important for companies in the textile value chain is to decarbonise themselves. This means that companies must analyse their energy supply and should develop strategies to transform from fossil to renewable energy resources. To constantly increase the share of renewable energy will require a long-term strategy and a coordinated effort with other industry partners and governments.
Do you expect any changes in the textile and apparel business model in the New Year?
The pandemic has revealed that the global supply chains are vulnerable to extraordinary events. The companies along the entire textile supply chain must become more resilient in cases of external shocks. They must identify risks associated with external shocks such as natural disasters, trade disputes, financial crises, cyberattacks, terrorism, epidemics and pandemics, climate change, etc. The frequency of such events as well as the costs involved have increased significantly in the past two decades. A new balance between efficiency and resilience or just-in-time and just-in case needs to be found.
Published on: 13/01/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
