How resilient is the fashion and textile industry?

Sophie: Welcome everyone to the Leeds Institute of Textile and Colour Podcast. My name is Dr Sophie Bowman, and I'm a researcher in the School of Design at the University of Leeds. In today's episode, we'll be exploring the impacts of Brexit, COVID 19 and climate change on the UK fashion and textile industry.

tiles and Technology in their: 2021

In this current project, in-depth insight into the present state and attitudes towards the future of companies, entrepreneurs and professionals in the UK fashion, textiles, and technology sector has been gathered through a survey and in-depth interviews from case studies with businesses. In today's podcast, we will hear from two of the industry case studies, Maes from London and Abraham Moons from Guisely in West Yorkshire, who will expand upon some of the topics discussed in the interviews.

We are also joined by Dr. Francesca Bonetti from UAL and Professor Steve Toms from Leeds University Business School. This leads me to ask our excellent panel of speakers to introduce themselves. Professor Steve Toms, would you like to go first?

Steve: Hello everyone. My name is Steve Toms. I'm professor of accounting at Leeds University Business School, and I have a strong research interest in the textile industry. I recently published a book and title financing Cotton, which gives some perspectives, long run perspectives on many of the issues currently faced by the textile industry.

Sophie: Francesca, how about yourself?

Francesca: Hi everyone. Great to be here with you today to discuss these very current issues in fashion and the textile industry. My name is Francesca Bontti and I'm a Senior Lecturer or Associate Professor in marketing at the London College of Fashion, and I'm a visiting scholar at University of Southern California.

I've been researching in this area for the past few years in terms of technological and trend innovations between the UK, the US, and European market within the fashion and creative industries.

Sophie: Thank you Francesca and Diana at Maes.

Diana: Hi. My name is Diana. I'm a fashion designer by trade, but I decided to start a manufacturing studio here in London, one of the most expensive cities in the world to cater to luxury fashion designers, not only just in the UK, but global designers.

Originally, I'm from India, so I've born and brought up around manufacturing from where I am from but I'm a first generation manufacturer. no one in my family comes from it. So to say that I'm passionate about creating a change between designers and manufacturer is true because everything that I'm doing is to propel the mission of making sure that designers are more connected to the makers and understand the craft and value associated with textile and fashion in general.

Sophie: Thank you, Diana. That's lovely to hear and John, how about yourself at Moons?

John: Hello everybody. My name's John I work for Abraham Moon. I am the Operations Manager for the Supply Chain. And production at Moon. We've obviously through Covid experienced a lot of different sort of challenges that we didn't expect. I'm really pleased to be on this podcast to understand everybody else's experience and gain some insight from their view.

Sophie: Thank you, John. And thank you everybody for those lovely introductions it's wonderful to be joined with you all today. To get things started, I'd like to ask Steve, to give us some context to the research that we've been conducting and maybe a little insight into some of the findings.

Steve: Well, we wanted to examine the impacts of Brexit and Covid as disruptive events on the textile ecosystem. We used a survey and interviews to do that. It's interesting to contrast Brexit and Covid. Superficially, I guess they have certain similarities. But it's, it's interesting to note that the response to Brexit has been mostly adaptive.

So adaptive to things like changes in processes and procedures. Whereas Covid has generated more of a strategic response, it's sparked more innovation and it created a stronger shift towards sustainability. Particularly through accessing new markets via digitization. I think a surprising result of the research is that neither event seems to have impacted strategies for reshoring to the UK. So Brexit has increased demand for UK production in certain sub-sectors but the problem there is supply remains fragmented, capacity constrained, and slow to respond. Where firms are engaged in reshoring they tend to be doing that for reasons unconnected to Brexit, really for broader and ongoing reasons related to their marketing strategies reorientation of supply chains, risk management objectives, and the ongoing shifts towards sustainability.

Sophie: Thank you, Steve. That really sets the scene for the discussion today, and there certainly is some very interesting initial findings coming out there in relation to what we're discussing. Diana, in your interview with our researchers you mentioned that. 90 to 95% of your staff come from Eastern Europe. Has Brexit had an impact on retaining those staff or enabling you to recruit more?

Diana: Yes. So we've got since I interview, our team has expanded and our maker's staff, 90 to 95% of the makers come from Eastern Europe. The skill that they bring to our company is exponentially high because the rest of the team is multdiverse. So, In a team of 30 people we have approximately 15 countries and we have nine languages that we speak in our company, which makes it quite challenging to get a project through.

But I guess like what Steve said is a perfect storm. We need to have the right capacity to deliver the product to our designers and designers need to have the right demand to have these guys employed in the country. Where we are funding as a struggle is to recruit more people because Brexit has inhibited them to probably not come back to the country after they moved back during Covid or for whatever reasons the cost of living in the UK is not working out for them and they probably have more purpose driven and they've gone back to the countries. This has created a perfect storm, particularly for us because what that skill has already moved back to Eastern Europe, where they come from, but now they've gone and set a factories back there and they have clients from the UK. So the demand, which was actually coming into our business or our industry is now getting diverted back to EU because we don't have the staff. So you just don't know when to start balancing the act a little bit here. I still believe, I think, Steve, you mentioned those brands or those clients who are deciding to reshore or onshore UK Manufacturing they need to be aware of the demand to be consistent in the UK because I worry if everyone starts looking out of UK, the industry's just going to come to a standstill and we need to keep on investing in the country to keep it going.

Sophie: Thank you Diana. It's so wonderful to hear that you've got such a diverse workforce and you have actually been able to retain many of your staff. I know. You know, that's been very difficult for other companies. And as you were saying, it does seem that there is certainly a lack of talent and skill now within the industry, which has been created by, you know, both Brexit and Covid It seems. John though, during our interview you mentioned that Moons are also finding it difficult to recruit workers into the business. How is Moons tackling that issue?

John: Yeah, very difficult. I mean, we increased all rates to try and be competitive, obviously within the, the labour market rather than just textile to see if that could attract other people we put in refer a friend schemes so we tried to get obviously people who are either friends or family that wanted to join the business.

A lot of social media, so we've tried to advertise Moon out there. So in rather than just base ourselves on the existing pool that sits within textiles, we wanted to look at training people and diversify. We've recently, as an example of that, we've taken on a chemistry graduate to start working within our dye house. We try to sell from a moon point of view as a good, strong organization with the industry career to those individuals who can hopefully see a career for life.

Sophie: Thank you, John. Yeah. It, it seems that both yourself at Moons and Maes are really investing heavily in your staff and apprenticeship schemes and other forms of training and education, which is wonderful to hear.Francesca though, as part of this research, we also conducted several interviews with different companies, and you yourself, did those, have you found challenges in recruiting skilled labour post Brexit, a common experience for other companies?

Francesca: Yes, we did conduct several interviews with different UK businesses operating to different scales. What we found across most of our participants is again, in line with both what Diana and John were mentioning manufacturing demands in the UK has increased, but the supply has not increased. This is due to the fact that recruiting skilled workers has become more difficult since Brexit, since as the other people here were saying many skilled workers were actually coming from the European Union. So this has made things more difficult.

So also in line with other participants that we interviewed as part of this research project it's been quite difficult to hire staff from the European Union and finding skilled UK workers, which of course has had an impact on business growth and has led to a loss of European Union stuff.

Also what we have seen is a reduction in applications from the European Union despite being based in a cosmopolitan city such as London, which has definitely had an impact on attracting talent and has led to an increase, in staffing cost due to lack of supply. So what we have seen overall is that the UK production has been challenging due to a lack of skilled UK workers.

Sophie: Thank you, Francesca. Yeah, and I think another reason for that is that, there is that lack of skill here and therefore the competition is now so high. To be able to recruit those workers because the demand has increased, which means that, you know, workers can then demand increased rates of pay and not every company can offer that so it makes it even more difficult. Which leads me to ask how the impact of Covid 19 pandemic has affected the UK fashion and textile businesses. From our interview so far, some businesses have suffered detrimental impacts, whereas others have found opportunities amongst those disruptions.

Diana, you mentioned that Covid the pandemic has had a positive impact on the way Maes operates. Would you say that's true or could you expand on this a little?

ilient through covid so March: 2020

how we approached the challenge. Personally, I was in shock the whole of March and then when we realized that actually the businesses were going to be closed for a couple of months I did have to come up with a smarter idea of navigating the challenge because I had all my life savings invested in the business. You know, we, it's not it's a self-funded business. It was a sink or swim situation for us, and what it made us do was it made us look at what resources we had around us and how we could use it purposefully. We saw that as a threat of actually losing the business, and while we were ducking our heads in sand, we decided to take a little bit of a risk. We found out a few factories were going under around us, so we absorbed their staff and their machines, but instead of actually hosting them in a very tiny studio, because we couldn't, because of the two meter social distancing rules. We set up studios for them at home and we used to run courier services between I guess our main headquarters and them working from home, and that was the first time where I felt like most of my friends and their friends were able to work from home. So why was manufacturing as an industry not able to do that and protect their livelihood at the same time. And we were, we were pretty proud of the way we run those systems. This not only just helped us keep the cash flow running in the business, but it also helped the mental health of our employees because when they was working at home for this when they were staying at home without work for those first six weeks, They came back as if they had come back from a war zone, you know, and they like, they were gray and pale. There was no passion left in them for the industry. So when this opportunity came up and I said like, if you can create a little bit of space, set up a machine, I'm going to run and make making sure that you'll have enough work, you'll have a livelihood. They could see my commitment in them, and that has really helped us create a staff loyalty and high staff retention rate.

That has been the best positive impact on our business. So yes, covid was challenging we were resourceful, we were resilient. The way we navigated the situation helped us retain some really loyal staff who saw that we needed them as much as they need us. Because we kept our staff, we kept our clients because they didn't have to go elsewhere to get the production don. You know, you say like, one thing led to another thing and that helped us grow quite a bit during Covid. That's why we are now in a 5,000 square foot in London in year five. So it's, it is a phenomenal growth for.

Sophie: Diana, thank you. What a wonderful thing to hear, that you you've embraced the opportunities and ways of working, particularly now allowing your staff to work from home. Particularly as a manufacturing business, that must have been very challenging but the fact that you found ways to do it, it's clearly empowered your staff and provided you with a new way of working that seems to be benefiting the company, so that's fantastic. John, I understand that the pandemic also provided Abraham Moons with an opportunity to reflect on current business model and strategy as well as the way it operates. Could you elaborate a little bit on this.

John: I can, so we looked at obviously global shipping which was affecting, I think, all industries at the time. So we looked at because it was taking 16 weeks through shipping to get fabric our solid fiber to our site and our operation. I then engage with suppliers and we different ways. So for example, we source out of Mauritius, and Mauritius give a subsidy to the local company. So it was actually cheaper to get things by air freight than by shipping. So reduce the lead times down to eight weeks. We then looked at you know, the delivery costs and extended lead times as what we could do and change to get better lead times to our customer base.

We adapted to increase internal capacity. So we've tried to bring things in house and utilize what we've got internally. We also looked at looking at continuity supply. So if we were stuck getting supply from the likes of Mauritius, we started to engage with somebody in Europe, which was much closer and could, could offer a better range.

So one of the examples of that, which is slightly going off record is the fact that this week Mauritius were hit by a cyclone. Now we'd already, because of the events of Covid and Brexit, et cetera, we'd already made these changes. So it's had no impact on us whatsoever. Even if supply had stopped due to the cyclone we are now engaged with this, the alternative supplier that we would've, would've had continuative supply. Being agile and moving with it is actually we're getting better at adapting to the things that are going on around us.

Sophie: That's great to hear. John andI think it's, it's really surprising to hear that you were able to secure air freight cheaper than shipping freight because I know that a lot of companies have struggled with that.

John: It was probably the, the fact that historically it would be one supplier and, and, and that supplier, the supplier would just go on and nobody would challenge anything. We were in a position where we had to challenge coming out of certainly coming out of covid we had a short supply of labour. We had customers that needed fabric and needed it, you know, it, it really went through the roof in terms of what they're required.So we were pushing and pushing to get things done at a time. You know, lead times because we've got excessive sales coming at us. Lead times were hitting us all the time and things were starting to spiral out of control. So we, we took a, a stand to say, we need to change, we need to do something that will long lasting. So they, we engaged with every supplier and brought all lead times with within seven to eight weeks, we've learned from that in terms of being in adaptive and agile to situations.

Sophie: Excellent. It's really, really encouraging to hear how two manufacturing businesses have found ways to adapt and build a better system of working since the pandemic. Steve, would you say this is a common theme emerging from the data we have gathered?

Steve: It's certainly the case that several interviewees commented on strategies of a adaptation making adjustments to the new conditions, and it's very encouraging to see that flexibility. That's even, even more the case when you reflect on some of the other evidence that's coming through where firms have experienced problems, and of course given the interactions within the supply chain this may lead certain firms to be forced into further strategies of adaptation. So there are examples, particular pressure points on the supply chain that I think are worth flagging. Where there have been substantial difficulties where businesses certain businesses seem to be overexposed to delays, for example, on very large orders. if you've got a large order coming in and there's going to be some kind of delay at the ports, or through customs, then obviously that's going to magnify your risk quite significantly. The same seems to be true where firms are importing machinery and other high value items. So the risk there is seeing fairly substantial and potentially more difficult to manage and are being compounded really by fragmentation in the supply chain and its fragility and really just the general higher costs of doing business in the new climate.

Sophie: Thank you, Steve. Yes, I agree. There certainly are other areas where businesses have had setbacks, and in some cases these have had significant effects on how businesses continue to operate today. However, I do believe that companies have, in some cases used the events of the pandemic to reinvent their ways of thinking and running of the business, which perhaps has also made them consider other elements such as the impacts on the environment and potentially the ways in which digitalization can optimize the business. Francesca, could you provide a little more context on this and any distinct findings that are emerging from the research?

Francesca: What we have seen across our panel of participants is that many businesses have had to become even more sustainable and they have had to digitally innovate due to issues related to climate change and of course a higher consumer awareness and changing consumer habits and trends in the way they think approach brands purchase and so on.

What is interesting is that this has emerged across both the suppliers and the client companies across entrance brands as well as established incumbent companies. So we see these kind of positive aspects of emerging out of the covid and Brexit issues which again included businesses adaptation and diversification of their strategies to become more resilient towards the digitalization and with a higher focus on sustainability

so what we have seen on one side is an increased demand for UK production since Brexit which dovetails with reducing carbon footprints. We see a lot of businesses but still try to reduce their carbon footprint and them, trying to be more environmentally friendly.

I was really positively surprised to see how very established UK brands have been really experimenting with the digital element and platforms across different angles of their supply chain, all the way to the distribution, communication with the consumer and also in their relationships with the suppliers. At the same time how they started to embrace the environmental issues, and I think here is also a broader question as to whether this is more of a marketing activity versus something that employs company DNA transformation. Which of course would be kind of easier for the new companies that come in with a new playground rather than having to innovate all their legacies and established ways of doing things. But still, it's been great to see businesses adaptation and transformation here.

Sophie: Thank you, Francesca. Yeah, I, I agree. Diana, we know that digitalization that is something that Maes has invested in. Could you share with the listeners what you have invested in and how this investment has had a positive impact on your business?

Diana: As a manufacturer we are quite forward thinking in the way we are approaching manufacturing, and we believe that manufacturing should be much more transparent in terms of how we can empower not just our customer, but their customers, that's the end user to know where things are being made or where things are coming from.

I'm of that inherent belief as a founder that we need to embrace technology and digitalization to make that message slightly more transparent. So as a self-funded business, we need to really watch where we are spending that money. Because we are not a large scale manufacturer, we are a small scale manufacturer.

When we are investing in technology, the first thing that we've decided to invest in as as a digitalization, is a Goba machine, which is an AutoCAD machine. This means that the patterns that we were making by hand are now being made on a computer, which is saving paper, which is creating time, efficiencies, and eventually, hopefully making it more sustainable because now we are not printing paper or we are not actually sending a paper pattern or a card pattern to another client by courier It's just an email. So that's our first commitment towards Gerber and our digitalization. But the other side that you know we are really proud of is the way we communicate with our clients. The communication is using Slack or using WhatsApp, which basically means that the conversations during the manufacturing process is really lenient and really, really transparent. So decisions are being made faster. There's no need for someone to come into the factory to actually approve something. These are the small things that we feel are reducing the carbon footprint apart from the fact that we are local, reducing the carbon footprint of something of a garment that we are making.

Sophie: I think, one of the key things that's definitely come out from Covid is this way that we communicate and the relationships we're now having with our customers has changed and you are right in, in the fact that we do have less meetings on site and more things are done over WhatsApp or Tteams. I hadn't thought about it too much, but yes, it really will be cutting down the environmental impact we are having so it's great to hear. John Abraham Moons is are very conscious of their impact on climate change and the environment. Can you explain what policies or practices moons incorporates into the running of the business to ensure you limit this impact?

John: Yeah, sure. Obviously we're conscious of waste streams and the waste that we generate. So we've actively looked at recycling for a circular economy the waste streams that we do generate. So about 95% of our waste streams go through a second process and become thermal insulation, so they're compacted and going to roof felting, et cetera, and rather than landfill and incineration. We're constantly looking at carbon footprint and just as a side of this one of options that we're looking at as well is potentially how we engage with British Wool in the UK. When we're looking at where we source from New Zealand. We had recently a, a conversation in New Zealand where one of the agents had told us that about five years ago there was 70 million sheep in New Zealand and as it stands today, there's 20 million. So the markets out there are changing all the time. So we're very aware of that and tried to adapt and look at how we become more self controlled in terms of supply chain. And as I say, looking at things that are more locals that we're trying to reduce any unnecessary movement. We feel that the carbon footprint if not here today, is just around the corner in terms of what the expectation will be from the government.

Sophie: Thank you John. It, it's great to hear that the impacts that Moon is also trying to make and how you're really considering the environment as well and implementing all the right practices to ensure those effects are limited. To finish Diana and John I'd like to ask if you feel that the business you have today post Brexit and covid is more or less resilient, and if so, why?

has been my word since March,: 2020

Sophie: I think that's wonderful words of advice and, and really nice to hear your analogy of the last four years from 2020 and the different words you used to describe it, John, how would you say that you feel as a business? Are you more resilient or, or not? What's your thoughts on that?

John: A lot more resilient than, than we were before Covid. One of the things I think as, as I mentioned when we discussed before Sophie, was the fact that we're going through change anyway as a business. We're restructuring what we're doing. We're refining everything that we do. We're getting more visibility in what we do as well. 12 months on, we're probably completely different to what we were, and you can see that in most things that we do. We look again out there and it forces us to look at the market and what's going on and take different sort of decisions in our strategic thinking.

We're trying to anticipate and mitigate but also take opportunities where we can because that's, that's the world today. You know, it's about availability. It's about customer and it's about cost, the direction that we've gone through is investing in technology so we're introducing SAP into what we do. We're doing digital design out to the customer rather than sending physical samples, et cetera, to a lot, a lot more things in the background going on. Certainly from our point of view, our view is that our people are our main resource. We bring and attract people into this industry. So even just on top of that, we don't advertise textile operative, if I've got something in our yarn store, we say warehouse operative, because that's out in the market, what people recognize. So textile is I think there's a bit of a stigma to the name of textile. So we're inviting people in to join Moon as a business, be part of the trying to convert roles into things that people recognize.

Sophie: I think that's really interesting. Say they're about the way that you are advertising jobs and inviting them into the family of moons. I'm sure it's very similar in the case of Maes, you all seem to really empower and, and look after your people, which is key. I'd like to thank you all for computing contributing in the podcast today. And we hope that the listeners have found it interesting and thought-provoking and that some of the discussions may help to support other businesses through these challenging times.

If you are interested, then I would say keep an eye on the LITAC webpage for further information surrounding our research and resources that may help, but once again, thank you to all our speakers for joining us today.