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The textile industry is the world’s oldest branch of consumer goods manufacturing and covers the entire production chain of transforming natural and chemical fibers (such as cotton, wool, and oil) into end-user goods, including garments, household goods, and industrial textiles. In the twelfth century China already produced cotton and fabrics. In the early seventeenth century India and Japan had domestic cotton industries. Modern textile manufacturing originated in Great Britain during the Industrial Revolution around 1780. The mechanization of spinning and weaving alongside a rising demand for clothing from the colonies contributed to the growth of “king cotton.” In the early nineteenth century textile production spread from Britain over western Europe and the United States. Ever since that time, the textile industry has been one of the most competitive and geographically dispersed industries across the world.
Accounting for 5.6 percent of world trade flows and employing at least twenty million workers worldwide, the modern textile industry is a significant economic sector. Despite its geographical dispersion, large concentrations of textile production can be found in China, followed by India, the United States, the Russian Federation, Japan, and western Europe. Since the 1970s a gradual shift of production has taken place to newly industrializing countries in East and Southeast Asia, Latin America, eastern Europe, and North Africa.
The textile industry is typically the leading sector of industrialization. Usually, textiles manufacturing is labor intensive and employs relatively low skills and simple technologies. Moreover the capital investment needed is only modest in comparison with other types of industry. Some developing countries also benefit from local supplies of raw materials (e.g., cotton) that foster the development of textiles production. Thanks to low labor costs, the newly industrializing countries have become fierce competitors for producers in Europe and North America. This rivalry, combined with saturated home markets, has induced corporate restructuring in the European Union and the United States, making the textile industry progressively an industry of large, transnational corporations.
Growing competitive pressure has led to a variety of corporate strategies in American and European textiles. Some companies attempt to cut costs by producing standardized goods that benefit from economies of scale. Other firms pursue offshore strategies and relocate part of their operations to low-labor-cost countries. Most producers, however, choose for focused differentiation: They search for market niches where specialized goods can be sold for a premium price. For that purpose many textile firms invest in quality improvement, innovation, design, marketing, and retailing. Some of the firms also focus on the production of technical textiles (e.g., artificial grass). All these differentiation strategies ask for sophisticated skills, knowledge of local markets, and flexible production facilities. Textile firms increasingly have to cope with a trade-off between labor costs and the need for market proximity.
Since the 1960s governments in western Europe and America have protected domestic textile producers by means of trade arrangements. After the Long-Term Arrangement in 1962, the Multi-Fibre Agreement was negotiated in 1973. The aim of both agreements was to create an “orderly” development of global textiles trade— not only for developed but also for developing countries—by restricting imports that “disrupted” domestic markets. In practice merely the European and North American nations profited from the rules, because in most cases the cheap exports from developing countries were considered to be disruptive for the matured textile industry in the developed world. However, thanks to World Trade Organization (WTO) rules, which aim for nondis-crimination between all trading partners, and following a ten-year transition period (1995-2004), the global textile industry is liberalizing more and more. The protectionist strategies of older, established textile nations and the lack of attention of transnational firms for good labor and environmental circumstances at offshore locations are often criticized. Further liberalization should contribute to an improvement of these conditions in the textile industry across the globe.
Bibliography:
- Abernathy, William, John Dunlop, John Hammond, and David Weil. 1999. A Stitch in Time: Lean Retailing and the Transformation of Manufacturing: Lessons from the Apparel and Textile Industries. New York: Oxford University Press.
- Dicken, Peter. 2003. Global Shift: Reshaping the Global Economic Map in the Twenty-first Century. 4th ed. London: Sage.
- World Trade Organization. 2005. International Trade Statistics 2004. Geneva, Switzerland: World Trade Organization.
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