{"id":31476,"date":"2019-05-10T10:04:55","date_gmt":"2019-05-10T07:04:55","guid":{"rendered":"http:\/\/www.textilegence.com\/?p=31476"},"modified":"2019-07-25T14:16:02","modified_gmt":"2019-07-25T11:16:02","slug":"production-relocates-global-market","status":"publish","type":"post","link":"https:\/\/www.textilegence.com\/en\/production-relocates-global-market\/","title":{"rendered":"Production Relocates in Global Textile Market"},"content":{"rendered":"
\"Production
Production Relocates in Global Textile Market<\/figcaption><\/figure>\n

Production relocates in global textile market. There is a change in Asian-based supply system, preferred by major consumer markets for many years due to cheap costs. According to MGI’s report, large consumer markets are turning towards new and closer manufacturers. Turkey can increase its production power thanks to its geographical proximity, high-quality, and advanced automation system.<\/strong><\/p>\n

The market<\/a> balances of the global textile industry that have been known for many years are changing. McKinsey Global Institute’s (MGI<\/a>) research on apparel, luxury and fashion industries, \u201cIs Apparel Manufacturing Coming Home?\u201d reveals striking changes in global textile trade. In summary, the report shows that producing power shifts from Asia, which is considered to be the centre of cheap and wholesale production, to other regions.<\/p>\n

MGI’s research has reminded that U.S. and European apparel companies have long shifted most of their production to China and other Asian countries in order to benefit from low labour costs. However, it is stated that this model is not compatible with the speed requirement that has emerged in the markets. An average of 30 days of shipping time from Asia to the Western markets, eliminates the flexibility and differentiation of delivery time. Air transport is expensive and it is not an environmentally friendly option. The Far Asian market production model further reduces its benefits with geopolitical tensions that increase trade restrictions and uncertainty in exchange rates. According to the \u2018Is Apparel Manufacturing Coming Home?\u2019 research, the cost of taxes, which is around 9-12%, is another important factor.<\/p>\n

Production relocates in global textile market: \u2018Turkish textile industry could open a wider gap between itself and competitors\u2019<\/strong><\/h2>\n

McKinsey Turkey Country Director Can Kendi made an assessment about the \u2018Is Apparel Manufacturing Coming Home?\u2019 report. Kendi stated that the textile and apparel sector, which was based on raw materials and labour-intensive production in the past, has undergone a significant transformation in the recent period due to the effect of globalization, and that today, the main determinant of competition in the industry is technology, brand and design. Kendi also drew attention to the rapid increase in the share of geographic proximity and technology in the value chain, as the speed factor gained importance.<\/p>\n

Informing that products that are manufactured in Southeast Asia for the European market have a 30 days delivery time by ship from, whereas these products can be delivered between 3 and 6 days from Turkey, Kendi said that the production shift to Turkey is advantageous for Europe. Kendi continued his words as follows; \u201cTurkish textile and apparel industry exports to Africa reached up to highest level of all time in 2018, and increase by 13.5% to 1 billion dollars compared to a year earlier. Geographical proximity advantages of Turkey plays an important role in terms of developments in the African market, which is a strategic initiative in this industry\u201d.<\/p>\n

It is estimated that the apparel production time in the next 10 will be reduced by 40-70% thanks to automation according to Kendi; \u201cIt is possible that our textile industry can open the gap with its competitors in Asia, especially China, in timely realization of the necessary investments in automation by taking these projections into consideration\u201d.<\/p>\n

Production relocates in global textile market: <\/strong>What does the report show?<\/strong><\/h2>\n

The McKinsey Global Institute’s (MGI) \u2018Is Apparel Manufacturing Coming Home?\u2019 research provides important clues about the transformation of the textile and apparel industry in the coming period. According to the report, the U.S. and European high-production companies\u2019 outsourcing strategy is under pressure for many reasons. The strong demand in the past emanating from the Western developed markets for the apparel industry comes from other parts of the world today, mainly from the Far East and the Southern Hemisphere.<\/p>\n

Apparel sales in the Asian market are expected to increase by 6% each year; corresponding to about 40% of global sales expected to be in 2025. This increase in demand in the Asian market will change the direction of production capacity and increase production for the local market.<\/p>\n

The position that has been advantageous in the Far East for the last 20 years will no longer be valid. Labour wages and production costs are increasing across the region. In 2005, for example, the cost of labour in China was one-tenth of the cost in the US; but today it is one-third. Mexico, which is close to the gigantic U.S. market, now offers lower labour costs than China. Although the costs of manufacturers close to the European market are still higher than China, this difference is decreasing. Labour costs in Turkey were five times higher than in China in 2005; this difference decreased to 1.6 times as of 2017. Geographical proximity also brings significant savings in transportation, bringing production costs to lower levels.<\/p>\n

A margin improvement of between 3-4%<\/strong><\/h2>\n

The change in the market is clearly visible on product basis. For example, an U.S. apparel company that carries denim production from Bangladesh and China to Mexico; can thus retain and even increase profit margins. European companies can gain 3% in production costs, in turn, when they provide denim from Turkey instead of China. Automation of denim production in Turkey is expected to provide between 1:30 to 2 dollars cost savings per piece. Turkey’s proximity to the European market is expected to create cost advantages that can be further developed with automation. For example, the shift of production to Turkey instead of Bangladesh, can provide a margin improvement of between 3-4%; after production automation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Production relocates in global textile market. There is a change in Asian-based supply system, preferred by major consumer markets for many years due to cheap costs. According to MGI’s report, large consumer markets are turning towards new and closer manufacturers. Turkey can increase its production power thanks to its geographical proximity, high-quality, and advanced automation […]<\/p>\n","protected":false},"author":2,"featured_media":31472,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9859],"tags":[9886,11510],"class_list":{"0":"post-31476","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-topical","8":"tag-ready-to-wear","9":"tag-report-en"},"yoast_head":"\nProduction Relocates in Global Textile Market - Textilegence<\/title>\n<meta name=\"description\" content=\"Production relocates in global textile market. 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Engin Buz halen ba\u015fta tekstil ve dijital bask\u0131 end\u00fcstrileri olmak \u00fczere ekonomi haberleri haz\u0131rlamaktad\u0131r.","sameAs":["https:\/\/www.textilegence.com","https:\/\/www.facebook.com\/TextilegenceMagazine","https:\/\/www.instagram.com\/textilegence\/","https:\/\/www.linkedin.com\/in\/engin-buz-6190799a\/","https:\/\/x.com\/https:\/\/twitter.com\/textilegence"],"url":"https:\/\/www.textilegence.com\/en\/author\/engin-buz\/"}]}},"_links":{"self":[{"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/posts\/31476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/comments?post=31476"}],"version-history":[{"count":0,"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/posts\/31476\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/media\/31472"}],"wp:attachment":[{"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/media?parent=31476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/categories?post=31476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.textilegence.com\/en\/wp-json\/wp\/v2\/tags?post=31476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}