Culture, Media and Sport CommitteeWritten evidence submitted by the Designer Manufacturer Innovation Support Centre (DISC) and Centre for Fashion Enterprise (CFE)
Background
1. We would like to express views on behalf of CFE and DISC—two SME (small and medium-sized enterprise) business growth projects based at the London College of Fashion in Hackney, and both currently funded via ERDF (European Regional Development Fund). Both projects are respected within the fashion business community and particularly amongst the high-end fashion SMEs they support. They express the views in this paper from an informed point of view having a unique insight into sector, having supported over 300 SMEs in the past 10 years.
2. The Centre for Fashion Enterprise (CFE) is London’s pioneering strategic business development initiative that incubates, supports and develops leading emerging designer labels in the luxury and high end fashion sectors. It has an unrivalled place in the fashion sector. The CFE’s team of industry specialists deliver bespoke support to fashion designers in London, who they consider to be the “engine” of global fashion retail, fashion and lifestyle industries. Since 2003 the CFE has been London’s strategic business development platform for the high end fashion designer sectors and has worked with 275 designers. These designers are recognised for their global reach, their sustainable businesses and press value, consistently pushing the boundaries and influencing the international fashion agenda. The CFE offers a unique 360° business growth support model which includes studio accommodation and resources, expert mentoring teams, legal and financial advice, marketing and international trading assistance. This includes advice on strategic business planning, financial projections, brand development, range planning, production, legal issues, costing, sales and finance.
3. The Designer—Manufacturer Innovation Support Centre (DISC) is only one year old, although three years in the making. The CFE was commissioned by DCMS to carry out a feasibility study on high end fashion manufacturing in 2009 which led to the recommendations for DISC to be established. Since DISC’s recent launch, it has already established a network of manufacturers of high end fashion, and its aim is to reach out to the full 150 specialist manufacturers in London, thereby building a good manufacturing supply base that supplies high end fashion designers in London, populated by people with serious intent that we can endorse. The vision is for London to produce premium high value designer fashion garments that will compete on a global retail platform on quality and reliability.
4. Therefore CFE and DISC are coming to these issues for the creative economy with an informed point of view, evidence and case studies, as well as anecdotal data from our 10 years working directly with the industry.
5. DISC and CFE wish to highlight to the DCMS that high end fashion manufacturing is a critical part of the creative economy, in order to support the high growth of London’s designer businesses. There are around 17,000 jobs in designer fashion manufacturing in the UK (around 8,500 in London), and fashion manufacturing on clothing and footwear contributed £1.1 billion to UK GDP in 2010 on a turnover of £3.2 billion. As much as 75% of UK designers’ products is being manufactured overseas, potentially valued at £241.5 million; and a significant target for the sector to slice into. There is support needed to address barriers to growth and other issues, our views on which we will express in this paper.
6. DISC and CFE (being part of the London College of Fashion) are in an ideal situation to deliver solutions due to the reputation of the university as reliable, informed and trusted. LCF (London College of Fashion) has a vested interest to retain the sector in order to protect its position.
Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector
7. The high-end fashion sector sees anywhere between an estimated 20 and 50 new UK designer/wholesale labels looking to break into the market each year. The sector is high profile and if the label has the right champions/connectors behind it, can achieve rapid international sales and there are many successful case studies to support this. Some designers supported by the CFE have achieved £2 million p.a. turnover within four years of their label’s launch. This high growth is only achievable by approx 10% of the designer labels. The barriers to growth for the other 90% include:
(a)
(b)
(c)
(d)
8. Conversely, there are very few new suppliers into the manufacturing side of the supply chain. There are three significant barriers to entry for these manufacturers. These barriers are also impeding the sustainability and growth of existing suppliers (manufacturers):
(a)
(b)
(c)
9. To support the development and growth of the creative economy, our view is that skilled machinists and pattern cutters are needed for the industry (to be discussed later on in this paper) as well as those trained on digital technologies. Open access to digital technologies is required to allow designers and manufacturers to see the benefits of digital equipment and be able to “have a go”. UK manufacturers need good, well-functioning equipment that is upgraded on a regular basis if they are to compete with French and Italian manufacturers who are some of the market leaders and renowned for high quality. Furthermore, UK manufacturers need to be encouraged to recognise the long-term benefits of investment in research and development activities and the positive impact that such investment can have on maintaining and improving workforce skills. 50% of manufacturers recently surveyed by LCF (August 2012) said they felt that CAD and IT skills would benefit their staff.
10. The majority of London based high-end manufacturing SMEs rely on traditional techniques which are inefficient and uncompetitive, especially compared to continental European manufacturers who often integrate traditional hand craft techniques with cutting edge technology. The aspiration has to be to bring the UK’s high-end fashion manufacturing sector up to world class standards.
11. Availability of facilities where shared digital equipment could be showcased and available for open access, plus funding for investment into new digital technologies could help encourage digital growth in this industry. Tax breaks and training facilities to allow companies to see the worth of these technologies would also encourage investment. Tax breaks exist for investors, but a more equitable scheme where the tax break is shared across investor and investee could reap greater ROI for the government.
The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament)
12. IP (Intellectual Property) is an issue for many designers that the CFE and DISC are currently engaged with, especially in the Far East. A number of designers have found that domain names have been registered in China without their permission and are sold back at inflated prices. Designers’ names have been registered as trademarks which has resulted in designers having to deal with counterfeit items, issues with design right infringements, and inability to trade in their own name. This is impeding their ability to capitalise on the massive luxury export potential in China. Chinese stores are categorically selecting to not do business with UK labels who have not registered their trademarks.
13. Lobbying is required to ensure that more support is provided to protect designers names, trademarks and designs in China and the Far East. By offering more support to designers in terms of protection and putting pressure on governments abroad to adhere to reasonable IP regulations will assist designers to export their designs and their production without fear of infringement or loosing control of their brand name.
The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget
14. As previously mentioned, tax breaks for investors, incentivise these investors to be more receptive to high risk sectors and businesses such as those in the creative industries. However, what is needed is for these tax breaks to be more equitably shared across investor and investee. This will positively increase SMEs attitude to considering being invested in, and will increase the monies into their business.
Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this
15. The development of projects such as the CFE and DISC within university environments are critical. They have built up enviable trusted relationships within their sectors and have vested interests in ensuring they are given the right tools and knowhow to grow and flourish. These projects have access to experts who are able to identify skills shortages and develop fit for purpose skills acquisition mechanisms.
16. At DISC they have identified that skilled machinists and pattern cutters are needed for the industry, to sustain the growth of designers as discussed earlier in this document. LCF have submitted a BIS AMSCI (Advanced Manufacturing Supply Chain Initiative) bid proposing to set up a Training Factory/School capable of developing 15 (later 30) trainees p.a. to become competent sewing machinists or cutters ready for the industry to employ. This will safeguard existing manufacturing businesses and provide a sustainable succession plan for up to 30 SMEs. The Training Factory would be incubated by LCF through its DISC department at the college’s east London campus, at the heart of where the UK’s high-end fashion supply chain is located. It will draw on the successful Savile Row Tailoring and Burberry leather crafted products model.
17. The Training Factory/School could be rolled out across London after this pilot. This will lead to the sector adopting apprenticeship schemes via other funding routes, and are part of the project’s legacy which includes the formation of a group training association (GTA), which would alongside LCF be responsible for the future running of the Training Factory.
18. Digitisation: SMEs need to know how and where to access digital skills. Accessing digital bureaus is cost prohibitive for most SMEs. Adoption is often dependant on size of the businesses, but 2D technology is perceived to give competitive advantage. As discussed earlier in this paper, open access to digital technologies is required to allow designers and manufacturers to see the benefits of digital equipment and to build skills to allow designers to be able to innovate and prototype.
19. Management/entrepreneurial skills: with high end manufacturers, normally the company is managed by the owners. Typically, it is a multi style, multi customer, low volume business. If we accept that regardless of order size the time taken to administrate an order will be the same, then the total administration time will be proportionately higher in comparison to other high volume manufacturers. Everything is done manually, using spreadsheets and written format, the average administration time required for our sample manufacturers is 60 hours per week. It is important to note that activities will not be equally spread over the year, there will be certain times in the year when the manufacturers are overwhelmed, to the point were it will not be possible for all activities to be completed on time. This could lead to shortcuts and certain non critical activities being overlooked on a regular basis. An example of such activities would be planning and progress reporting.
20. DISC is currently assisting a small number of manufacturers with planning tools to assist them with managing their businesses but further work is needed beyond the life of the DISC project in order to roll out these management tools to manufacturers in London.
The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication
21. There is already evidence that the clustering approach works in fashion, as evidenced by the distribution of businesses across London and models such as CFE. As fashion businesses in the high end are typically small, more work could be done in facilitating clustering of both designers and manufacturers.
22. Fabric minimums are an issue to designers. The minimums can prevent designers being more innovative and gaining best costs. A clustering approach for designers could allow greater negotiations with suppliers (manufacturers and fabrics/trims) where minimums are currently too great for many small designer businesses.
23. For manufacturers, the seasonality and constant changes in workload means that capacity can be an issue at pivotal times. This means potentially turning work away, or using freelance staff (where quality might be an “unknown quantity”) who move to other factories at times when capacity is underused. If manufacturers could work more closely as a cluster, workload could potentially be more evenly spread allowing factories to run all year (potentially), retain their good quality workforce and plan for capacity issues more effectively.
24. Clustering of manufacturers will help in terms of skills and employees—if manufacturers cluster they could form a GTA which could eventually manage a machinists training school. Clustering of businesses may drive up standards and working practices as comparisons with neighbouring businesses becomes more transparent. Clustering models could be produced which could be replicated across the UK, best practice and case studies could be used to inform other clustered fashion industries outside of London or the High End.
25. DISC could act as an anchor for the industry and help with the set up, marketing and management of this clustered model. If there was an appetite from designers/manufacturers, DISC could provide assistance in the logistics of setting up a cluster, help with marketing the scheme to relevant interested parties, assistance with steering the clusters and the legal implications of any contractual agreements. DISC input would need to be substantial in terms of assistance and research to assist with this. Businesses with an appetite would also need to be identified before work could start on clustering.
26. New workshop unit at Somerset House under Estethica is encouraging upcycling of fabrics and will be working with Topshop. Up cycling assists sustainability, reduce waste and costs.
27. Jewellery and garment designer collaborations help foster innovation as the overlap and differences of techniques, equipment and design stimulate advanced thinking and design which draws from both industries.
November 2012