Clothes `Made in Ireland' may become collectors' items

 

The next time you find a Made in Ireland label on something hanging in your wardrobe it might be worth holding onto. Such is the outlook for the clothing sector over the next couple of years that Irish labels could become something of a rarity.

Despite the international success of Irish designers such as John Rocha, Louise Kennedy and Paul Costelloe, the indigenous rag trade has been almost brought to its knees.

The drip-feed of bad news from the sector has become familiar. Some 15 internationally-owned clothing manufacturers have closed their Irish operations over the past five years with the loss of 2,000 jobs. This week, the spotlight is on Fruit of the Loom, with fears that 700 jobs may be lost in its Co Donegal operations while 100 job losses have been announced at the Atlantic Mills jeanswear manufacturer in Longford.

The rag trade has never been for the faint hearted.

The fickle nature of high fashion has always created a high degree of uncertainty. But when a shirt, a blazer or a Tshirt can be produced in locations such as Morocco and Turkey for a tiny fraction of the cost in Ireland, it becomes increasingly more difficult for manufacturing facilities to survive here.

IDA Ireland, the agency charged with attracting international investment projects to the Republic, acknowledges that it has long since given up chasing clothing companies to entice them to set up here.

"We are not even trying. We don't feel they have a future here. It doesn't make commercial sense for them," a spokesman explains. Instead, the authority concentrates its efforts on supporting the 15,000 existing jobs in the sector and facing up to the inevitable closures as they happen. The IDA openly admits that it expects to lose something in the order of 2,000 jobs a year in the industry for the foreseeable future. It will gradually peter out.

Ireland's problem is shared by all EU member-states. Last week, Britain's biggest and most loyal retailer, Marks & Spencer, dealt a body blow to its suppliers telling them it would have to examine switching its manufacturing operations to cheaper overseas locations if it were to remain competitive.

In the US a similar pattern has emerged with companies like Fruit of the Loom shifting basic sewing and cutting operations to low-cost locations such as Mexico, Honduras and El Salvador.

Such moves have very obvious and highly lucrative attractions for any multinational company. They can readily recruit a workforce which is prepared to work six and seven days a week for as little as $20 (£13.50). Labour law tends to be either lacking or extremely loose and with a relatively low initial investment required, companies can quite easily move on to even cheaper locations virtually overnight without incurring any significant financial liabilities.

Some 13 multinational clothing manufacturers are currently operating in Ireland, employing 4,400 people. They account for aggregate sales of £220 million. Fruit of the Loom is the largest, employing more than 2,000 people on the Inishowen Peninsula. All are under enormous competitive pressure and the majority are regularly classified as "at risk".

A further 4,100 are employed by 49 Irish-owned clothing manufacturers which receive grant aid from Enterprise Ireland, while another 230 small operations support 4,500 jobs, mainly in Gaeltacht and remote areas. Around 10 per cent of these companies are doing extremely well, many with plans to recruit new workers in the coming months. But the majority find the going particularly tough.

Companies manufacturing garments under high fashion brand names, such as Lee Jeans in Ardee, Co Louth, are the most secure. Branded products can command a high price, protect financial margins and help to take the focus off labour costs. But the higher wages and social costs involved for companies operating in Ireland is undoubtedly the biggest deterrent for multinational groups. Other considerations include the requirement to import many raw materials, and the huge exposure to the British market.

The various currency crises have always highlighted the vulnerability of the clothing sector with huge fluctuations in the value of sterling against the pound placing an immediate threat over thousands of jobs and further depleting already dwindling profits.

Surviving in this type of environment leaves little money for reinvestment in new technology and processes. The sector's woes have been further compounded by a reluctance by Irish financial institutions to provide finance. Applications for funds to develop clothing firms tend to be viewed as relatively high risk, with banks either shying away or loading the cost of borrowing.

Ireland's peripherality means that transport costs to the main European markets are much higher than competitors.

The switch in industrial policy over the last decade to target high-skilled, high-technology type investments has been widely praised and resulted in record job creation. But the clothing sector has declined in parallel with the rise of the new industries.

Far from the heydays when companies such as Sunbeam and Glen Abbey employed thousands of people, most clothing companies typically employ hundreds. They are often situated in remoter areas, providing valuable employment where otherwise jobs would be in short supply. They are spread from Buncrana, Co Donegal, to Caherciveen, Co Kerry, manufacturing everything from socks and knitwear to sportswear, shirts, jeans and workwear.

IDA Ireland says that where jobs are lost in such locations, it will focus on finding replacement industries. But these are unlikely to be in the clothing sector.