After three decades on the low, the industry started reassembling and picks up its pieces to face a new era of sustainability and digitalization.
Industry picks up its pieces after the fall, to face a new era of sustainability and digitalization. The brake out that came after the financial crisis ended up with the closure of companies that were already crashed after two decades of the delocalization of manufacturing. Closures continued during the economic crisis, as well as restructurations and acquisitions. With this last move, the industry puts a stop to three decades on the low.
In 2014, the concept of relocation stated entering the Spanish industry. Even though at the end, the expectations of this new wave didn’t happen as fast as it was expected, the comeback of a part of the production that once was destined to Asia help to prevent the fall.
One of the biggest corporate operations that took place in the textile industry was the purchase of Invista, owner of Lycra and Coolmax, by Shandong Ruyi, a Chinese holding that has grown its size in the last couple of years with acquisitions. In this period, the new owner of the elastic thread has acquired Smcp, Bally, Jab Luxury, Bagir Group (specialized in tailoring), Trinity, Taylor&Lodge or Carloway Mill (one of the few manufacturers of Harris tweed in Scotland), amongst others.
Sustainability and industry 4.0: new paradigm in textile
The denim industry, one of the most polluting in the textile sector, was the first one that NGO’s and other pressure groups placed in the spotlight because of the impact it had in the environment. The growing interest of some groups in the sector like Levi Strauss or G-Star to find an alternative to its production, placed in the center of the sourcing strategy the company Jeanología. In 2016, the group opened for the first time its capital to MCH Private Equity, with a minority share. At the beginning of 2019, the company gave entrance to The Carlyle Group, with another pack of minority shares.
The Austrian Lenzing has been other of the giants to spin the wheel towards sustainability. The company entered a deep restructuration between 2013 and 2014, that ended with the closure of factories and the dismissal of part of its team, to start a new stage. In 2015, the company turned its efforts into sustainability and created a new path. Only in 2017, Lenzing launched three new fibers to the market.
Lenzing has been one of the giants to spin its wheel towards sustainability
However, not every formula worked. Crailar, that proposed to the market a new textile fiber created from linen, hay and others, finished its path in 2015 calling Chapter 11. Despite that, bases for a new industry already exist. H&M and Inditex have leading research projects in this context.
The Swedish company has been looking since 2016 for alliances with recycling companies, startups that research circularity of the materials and even other holdings like Stora Enso, to look for new fibers. The Spanish giant, on the other half, started in 2017 projects with the Massachusets Institute of Technology (MIT) to research textile recycling.
Apart from sustainability, another factor of transformation in the industry during the last ten years has been technology. In other sectors like the car industry, digitalization has speeded its progress. However, in fashion it started taking its first steps. Li&Fung started in 2017 a three-year plan to revolution its value chain, digitalizing processes and winning speed.
One of the challenges of the industry is the transparency of the entire value chain
Adidas, on the other hand, introduced its first speedfactories in Germany. Factories that are completely digitalized and robotic. With these new factories, Adidas suggested a new production system that shows how proximity, speed and personalization can be profitable with technology. Nike and Reebok also started to enter this model with factories in the United States. Amongst the technological advances, are the 3D printing and new weaving machines, that started robotizing processes.
However, the past ten years ended with technological challenges on the table. One of them is the digitalization of a very fragmented value chain and with many actors, to give speed to the process and have a vision over the entire system that allows to make fast decisions to improve efficiency. Other of the challenges is the transparency of the chain. The industry has started thinking new formulas with the blockchain technology, that allows traceability in the entire value chain.