The break caused by the financial crisis knocked out companies that had been unstable after two decades of productive and manufacturing relocation.
The industry picks up its pieces after the fall to face a new era of sustainability and digitalization. The break caused by the financial crisis knocked out companies that had been unstable after two decades of productive and manufacturing relocation. Closures continued in the agenda during the economic crisis, as well as restructuring, merges and acquisitions.
One of the largest deals in the industry was the acquisition of Invista, owner of Lycra and Coolmax, by Shandong Ruyi, a Chinese group that has gain strength through acquisitions. The group acquired Smcp, Bally, Jab Luxury, Bagir Group (specialized in tailoring), Trinity (former luxury business of Fung Retailing), Taylor&Lodge or Carloway Mill (one of the few Harris tweed makers in Scotland), among others.
From professionalization to suppliers
Apart from the deals of the textile industry to gain size, there has been an evolution of the trade business model to the ‘make under demand’ of Spanish giant Inditex.
The new business model of supplier mixes the functions of a design company, production manager and logistics operator, it has all the operators in the supply chain gathered in one. Spanish location Barcelona is know for having companies that work with this business model. Companies such as Hallotex, Hitex or Happypunt, all based in Mataró (Barcelona), have sophisticated to the maximum this business model.
The rise of this model did not go unnoticed among the traditional Asian suppliers of Inditex, which also began to evolve their business model and increasingly integrate the design piece to gain value. On the other hand, many of them also began to take positions in Spain, opening offices in the country to have a more direct and close deal with designers and buyers of the Spanish giant.
Many of them also built bridges with other major fashion groups in the country, such as Tendam, El Corte Inglés or Mango. In Barcelona, Fung Retailing came to open his own commercial office with several designers. Turkish, Indian or even Bengali suppliers were settling on this busy road in the center of Barcelona.
Sustainability and industry 4.0: new paradigm in textile
The denim industry, one of the most polluting of the textile sector, was the first that NGOs and other associations placed in the spotlight to show its impact on the environment. The growing interest of some of the large groups in the sector, such as Levi Strauss or G-Star, to seek an alternative way of producing, placed Jeanologia in the center of sourcing strategies. In 2016, a group’s stake was acquired by MCH Private Equity.
The Austrian Lenzing has been another of the giants in taking a 180 degree turn towards sustainability. The company undertook a deep restructuring between 2013 and 2014, which meant the closure of factories and the dismissal of part of its employees, to lay the foundations for a new stage. In 2015, the company launched a new road map. Only in 2017, Lenzing launched three new fibers.
Lenzing has been another of the giants in taking a 180 degree turn towards sustainability
However, not all green formulas worked. Crailar, which launched to the market a new natural textile fiber based on linen, hay and other textile fibers, ended its journey in 2015, filing for Chapter 11 bankruptcy. Despite this, the basis for a new, more sustainable industry already exists. H&M and Inditex are also leading research projects in this regard.
The Swedish company has been looking for alliances with recycling companies since 2016, start-ups that investigate the circularity of textile materials and even with other holdings, such as Stora Enso, in search of new fibers. The Spanish giant, meanwhile, started in 2017 projects with the Massachusets Institute of Technology (MIT) to investigate textile recycling.
On the other hand, in addition to sustainability, the other transformation driver of the industry in recent years has been technology. In other sectors, such as automobile, digitalization has advanced at a faster pace. However, in fashion has also begun to take its first steps. Fung Retailing launched a three-year plan in 2017 to revolutionize the value chain, digitizing processes and gain speed.
In 2017, Adidas launched the first of its speedfactories in Germany
Adidas, meanwhile, introduced the first of its speedfactories in Germany. These are factories in proximity to consumer markets, fully digitized and robotized. With these new factories, Adidas presents a new production system that demonstrates how proximity, agility and personalization can be cost effective with technology. Nike and Reebok, meanwhile, have also begun to enter this area with factories in the United States. Among the technological advances that are favoring this transition are additive printing and new clothing machines, which have begun to robotize labor-intensive processes.
However, these last ten years ended with new technological challenges on the table. One of them is the digitalization of a very fragmented value chain with many actors to give agility to the process and have a vision that allows real-time decisions to improve efficiency. Another of these challenges is chain’s transparency. The industry has already begun to test new formulas in this regard with blockchain technology.