Sourcing and production in the EU

IN_DEPTH_ With sourcing in so-called low-wage countries like Bangladesh, Pakistan, China, India and others running into their own set of problems like noncompliance with fire and safety standards and minimum wages among the gravest ones,

some in the industry would like a complete or partial pull-out of these countries. In this next installment of our sourcing series, Fashion United looks at the European market as an alternative.

According to the Texmedin report “The textile and clothing sector in Europe”, the TCL industry (TCL standing for textiles, clothes, leather, leather products and footwear) in the current 28 EU member had to battle “slowly growing demand, low productivity and strong international competition” in the last few decades and “lost one third of both production volume and jobs within a ten year period from 1996. It had to accept continuously rising import shares from low-cost countries – China in particular.”

Apparel production in Europe

The strategy of TCL companies in the EU and their workforce of roughly three million over the last few decades has thus been to divide orders into specialized production in high-wage countries like Germany, the UK, Italy and France and mass production in low-wage countries like Portugal, Greece, Romania and Bulgaria. “Mass production largely disappeared from high-wage areas in the EU while low-cost areas – the New Member States, Portugal and Greece – could keep at least parts of TCL production,” confirms the report. That means technical textiles from Germany; 3-euro-t-shirts from Bulgaria.

This division has not been without its own set of problems as the basic eight social standards set by the International Labour Organization (ILO) – no forced labour, no discrimination, no child labour, freedom of association for the workers, fair wages, regular working hours, humane working conditions and regular employment – are regularly spurned in Europe as well.

Huge wage gaps even within Europe

“The biggest problems in Eastern Europe are wages, working hours and occupational health and safety. In Turkey, freedom of association is another serious problem,” explains Bettina Musiolek of the Clean Clothes Campaign (CCC) and adds that even in Germany or within the EU, minimum wages are not always a given.

So much for better working conditions per se in Europe. To be fair, one should also distinguish between trade and industry, which, as Wilfried Holtgrave, president of the northwestern German textile and garment association, points out, is often mixed up in the general discussion. “German textile producers who produce abroad do so in their own companies or in authorized ones that they know”, he states. He admits that once in a while, there are “black sheep or companies that trick their clients” but he is convinced that “this is not a textile problem but one that is known from other global industries as well.”

The curse of the 3-euro-t-shirt

Rather than being industry-specific, the problem seems to lie where dumping prices come in. When apparel is highly discounted or offered in the market at cut-throat prices to beat the competition, it is a given that it has to be produced where the lowest margins are possible – be that in Asia or in low-cost areas at home. The outcome is the same - workers pay the price with their health and safety as the fulfillment of those standards remains a “nice to have” and is thus not very likely.

Rolf Heimann, head of corporate responsibility at German fashion company Hess Natur explains why a fair produced t-shirt can’t be sold for three euros. "From the cotton plant on the field via spinning, knitting, dyeing, tailoring, trading and then paying 19 percent value added tax – that’s just not possible,” he says.

Cheap is not chic

Reason enough for consumers, brands and retailers to do a bit of soul searching. Is cheap really better? Does value for money really mean at the lowest price possible? Will customers buy according to price only? Would they be mature enough to spend a few euros more if they knew that they were invested wisely? Namely in long-term measures like worker and factory safety and the overall well-being of those at the bottom end of the supply chain?

Though questions like these are here to stay as there is no quick and easy solution, they get the ball rolling and will hopefully lead to lasting change, not least in the attitudes of everyone concerned. Before we will conclude our sourcing series with the last installment on Thursday, we’d like to invite you once more to send us your comments and feedback at news@fashionunited.com.

Simone Preuss

Image: Bargain bins at a market in Madrid, Spain / Alex Ristea