Rebalancing the Economy: Trade and Investment - Business, Innovation and Skills Committee Contents


Written evidence from the UK Fashion & Textile Association (UKFT)

INTRODUCTION TO UKFT

The UK Fashion & Textile Association (UKFT) is a trade association set up by the industry for the industry to represent the fashion and textile industry. Its membership covers designer and mainstream fashion and accessories, textiles and freelance designers but it also extends to fashion and textile related bodies at regional and national level including the British Fashion Council, organisers of London Fashion Week.

INDUSTRY OVERVIEW

The key strength of the UK fashion and textile industry lies with its innovative designers. This design talent is the product of our world-leading fashion and design colleges. They act as a magnet for international talent. Students are attracted to the UK, and especially to London, and after graduation many of them stay here to launch their own designer businesses. With the demise of much of UK manufacturing and the dominance of value players in the UK high street, most designers choose to set up on their own, with all the incumbent problems with implies.

A key challenge for these designers, but also for most fashion and textile companies is that the key route to market is trade shows. Most buyers do not travel to the UK to buy but travel to key international events. More than 85% of all trade fair activity in these sectors is in France, Italy and Germany. These countries attract buyers worldwide from all countries including all of the BRICs. Attendance can vary from 40% international attendance outside the host country to as much as 80%, with the average being around 60%. These shows, supported by direct contact and a good agent or distributor are the main route to market for most companies in these sectors. The high cost of travelling to and within the UK as well as the limited number of companies which can be seen at some key shows in the UK mean that buyers rarely come to the UK to buy, preferring to visit Paris, Milan, Florence and New York for easy access and a wider choice of product. The BRICs companies prefer to visit these shows also.

GOVERNMENT SUPPORT

According to the Sponsors Alliance and some Government departments, the ratio of return on TAP (Trade Show Access Programme) is approximately £37 pounds of revenue to the UK for every £1 of investment. TAP is one of the most highly regulated and constantly amended programmes. As usual, it is subject to review and constant cuts. The Fashion and Textile budget is one of the largest, probably in excess of 15% but it is consistently oversubscribed. By contrast, our EU neighbour's equivalents of TAP have remained largely unchanged for much of the past 20 or 30 years, are handled by industry associations who enjoy a greater degree of discretion in the way they invest the money. Whether centralised or regionalised, funded by industry levies (France for example) or discretionary budgets handled through national trade fairs and their related associations (Italy for example) most of them aim to provide between 50% and 75% support on the direct and indirect costs of space, construction, travel, accommodation. The UK currently offers six participations of £1,000, £1,200, £1,400 or £1,800 which probably cover less than 25% of the stand costs. The UK programme in 2010 across industry was estimated at around £8 million. The German scheme is estimated to cost around £22 million.

An additional problem is the virtual withdrawal of sectoral trade missions. These missions play an important role in helping companies which have made an initial start in a market or series of markets at a trade fair to target and develop their business in markets further from home. Until some years ago, these missions were run very successfully by Trade Associations but they have since been put into the hands of the regions (UKTI ITAs) who limit the number of companies which can take part. Initially, these were low cost events organised by Trade Associations working directly with Embassies and Consulates with a small contribution towards costs from the companies themselves and a mode travel grant of up to £700 per company. More recently they were put out to tender in such a way that increased the costs associated with them with Embassies charging several thousand pounds for groups to visit. This year, using the rationale of cost cutting, these missions have been taken into public hands and their numbers have been cut. We used to run up to three missions a year, now there is only one to Japan and this is run by GLE. We need to be able to encourage companies to look at new markets and missions would enable us to do this.

Exports are key to the survival of fashion and textile companies. The main reasons for this is the a lack of a supportive domestic market in the UK (compared with countries like Italy and Germany which have a greater percentage of smaller boutiques which consume higher priced merchandise and can help a designer business to grow). This can also be expressed as an extremely open and price conscious UK market which looks to cheap foreign imports for a large percentage of its product contrasted with limited appetite for quality product in some of the emerging markets, especially China. Made in the UK business is being lost to overseas competitors whose regulatory framework is not as robust or exacting as the UK's or where their government provides substantial support to the industry (Italy is the most often cited example for fashion and textiles but China through its currency situation has been allowed to undercut almost every other manufacturing market and has pursued an aggressive policy of fashion and textile domination).

KEY ISSUES

  1. Trade associations and other not for profit industry support organisations are excluded from a number of Government schemes and relationships and would like to work more closely with government to help it to deliver "more with less".
  2. UK manufacturers are faced with unfair completion for procurement (eg MOD and possibly the Olympics) where price is the only factor quoted. HJ Hall in Leicestershire recently lost its MOD sock contract to a Northern Irish-based company employing a handful of administration staff in the UK but manufacturing everything in China. Job losses are imminent. It would be unthinkable that a Chinese company would lose out on a similar contract in China.
  3. Government has spent much of the past 13 years deregulating and encouraging banks and insurance companies and has not given consumer goods the attention and support they need. To pay for schools and hospitals, we need exports of product and design. However, in too many cases, the export of design has purely been in the form of knowledge transfer (as well as jobs, social problems and environment issues) to China.

PROPOSALS

  1. Trade Associations like UKFT are potentially a great area of support and strategy for industry and new designers, especially as they start out. Over the past 13 years these private not-for-profit organisations have been marginalised and excluded during the expansion of UKTI and many are struggling to survive as government (regionally and nationally) has sought to take an increasingly dominant role on export marketing and promotion, often in direct competition to them. In these times of limited funding, a better working relationship between government and Trade Associations could lead to a better Trade Association network which would, in turn, support the industry better, work with emerging talents and help Government to ensure that key outputs are achieved with less investment required from Government.
  2. Build on the success of the existing TAP scheme to encourage more companies designer companies to sell to new and existing export markets.
  3. Encourage larger companies to be part of TAP (this used to be known as "Godfathering" and it was hugely successful. The larger companies received a small grant or a free flight to attend an event in return for which they helped the emerging talents with contacts and support and the benefit of their experience.
  4. Realign the mission budget on a national level to ensure that limited resources are more effectively used.
  5. Enable ATOs (Accredited Trade Organisations) to work directly with Embassies and Posts to organise independent missions even if additional grant funding is not available. If Posts could work on missions without charging for their OMIS time, this would be a better inducement for the private sector and companies.
  6. Incentivise ATOs/Trade Associations to promote other UKTI activities (missions, Passport, Gateway etc). Recreate a strong relationship between the industry associations and the Embassies and Consulates.
  7. Rebuild the Commercial Officer network in every key market and use local trade teams to connect with local buyers and contacts to feed export leads back to companies in the UK. In recent years, Posts have had less time to do this and when they have done so, the information has been communicated poorly on the UKTI site. UKFT would also be happy to circulate information to the industry and would be able to send feedback on the status and quality of the leads to Posts who frequently do not get any feedback under the current system.

22 February 2011



 
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Prepared 19 July 2011