The announced closures of companies such as Asahi and Klopman will have very serious ramifications for Killala and Tralee respectively. Apart from the loss of a significant number of well paid jobs, there are obvious knock-on effects for service companies in the hinterland of these factories in areas such as transport, catering and packaging.
So what are the future prospects for these sectors?
In 1996 (the latest year for which figures are available), there were 19,000 people employed in the 2 sectors (5,500 in textiles - including manmade fibres and 13,500 in clothing and knitwear) representing 8.5 per cent of total manufacturing employment. When compared to employment in other sectors, such as 18,300 in chemicals (excluding man-made fibres), 15,000 in paper and printing and 4,400 in drink, the importance of the textiles industry is put in perspective.
The other important factor in considering the employment contribution of the sector is its regional diversity. Unlike many of the newer investments in areas such as electronics and telemarketing, with the exception of Dublin where there has traditionally been a large clothing industry, the textile industry does not tend to be concentrated in the main cities. While Donegal would be strongly associated with textiles, there are many other rural areas and towns around where the local textile, knitting or clothing factory is the biggest employer in that vicinity.
Other contributions to the Irish economy include a combined output of some £850 million. Whilst there has been a traditional focus on the UK, there are also significant exports elsewhere. Indeed, knitwear and weaving companies have been noteworthy across all traditional manufacturing companies for diversification beyond the UK market, with widely spread exports to Europe, the USA, Japan and the Far East.
One of the main challenges facing Irish companies is competition from low cost countries such as India and China. Nearer to home eastern Europe and countries such as Morocco and Turkey also provide stiff competition.
Although intense global competition is not new to companies in the textile sector, it has been exacerbated by increasingly liberalised world trade through the 1995 GATT agreement, extremely tight margins in many market segments and rising manufacturing costs in Ireland.
The latter is the only factor within our own control. Consequently, for some time the Irish Clothing Manufacturers Federation and the Irish Textiles Federation have been vocal in seeking to improve the competitiveness of Irish manufacturers. Although recent reductions in employers' PRSI have been welcome, there are many other costs which influence the competitiveness of manufacturing in Ireland. Accordingly, competitively priced electricity, telecommunications and transport are all essential to the future well-being of textile and clothing companies.
Emerging skill and labour shortages across many sectors of the Irish economy are increasingly being felt within clothing and textile companies. The sector simply cannot afford any inflationary trend outside the parameters of Partnership 2000, given the intense international competition previously mentioned.
Despite this competition, there are many success stories within the Irish clothing and textile industry. Recent analysis indicates that many companies have been successful in moving into higher value added market segments since the currency crisis of 1992/3 and there are some noteable examples of clothing companies growing successful brands.
Where the traditional focus was on manufacturing costs, greater attention in now being directed to the roles of design, marketing and information technology in meeting competition from low cost countries.
Many companies have also begun to subcontract some production overseas when it is proven that it is not competitive to make certain products in Ireland. This is regrettable, given that it results in fewer Irish jobs. However, it helps to safeguard the future of many companies and outward processing will increasingly become a feature of the Irish trade.
In this trend, the Irish industry mirrors the experience in many other EU countries. Countries like Denmark and Germany have subcontracted some of their production for many years. Although resulting in net job losses, the sector has survived, generally with a greater proportion of higher value added jobs in area such as design, logistics and flexible production.
Having traditionally benchmarked against the UK industry, the Irish Clothing Manufacturers Federation has recently initiated a benchmarking exercise with Denmark, where the above trend is very apparent and where there has been a higher cost base for many years.
The Irish clothing and textile sectors are in a transition period, coming from a traditional low cost base through to a higher cost economy which is resulting in a restructuring of the industry in order to have a competitive future. Despite the current spate of closures, the textile and clothing sectors will continue to be an important part of Ireland's manufacturing base.
Ms Jacqueline Harrison, is Direc- tor of The Irish Clothing and Manufacturers Federation and The Irish Textile Federation of IBEC.
