Industry endures struggles; explores possibilities for growth.
By Christopher Nolan
Editorâ€™s note: Since this article was published in the July issue of Specialty Fabrics Review, updated industry data from the Australian Bureau of Statistics has been issued. Christopher Nolan supplied us with the new figures in July 2012, which are reflected in this copy.
In a social environment, the question “And just how is business?” is inevitably asked of, or by, those of us who run one. For all its casualness as a conversation piece, the answer is always given one’s full attention as a barometer of the trading environment. Some businesses do better than others because of better management skills, sales and marketing, brands or competitiveness, and sometimes sheer serendipity. Nonetheless, their relative fortunes have always been primarily dependent on the state of the economy at large, and on the industry within which they operate.
The last three years have been extraordinarily difficult for the textile industry in Australia, with the protracted global financial crisis (GFC) fallout exacerbated by consecutive cool and wet summers, which have adversely affected demand for outdoor fabrics. According to IBISWorld, a company that analyses Australian Bureau of Statistics data and consolidates it into industry reports, turnover in textile product manufacturing fell 10.3 percent in 2008-09, and declined a further 13.0 percent in each of the succeeding two years. Through June 2012, another decline of 5.2 percent is forecast.
Other industries that use outdoor textiles, such as marine and camper trailers, have fared no better, and sometimes worse. Turnover in the boat manufacturing sector fell by 14.5 percent in 2008-09, and by a further 27.6 percent in 2009-10; in the motor vehicle body manufacturing sector, turnover fell by 22.5 and 3.8 percent during those periods. Recovery in both areas has been substantially impeded by the high Australian dollar, and imports are a major factor in these sectors.
It’s hardly surprising then if the performance of your own textile business over the last three years reflects these industry trends. There have certainly been casualties in the Australian textile industry. Again according to IBISWorld, the number of business establishments has declined by 530, or 16.9 percent, over this same period. Our own experience at Nolan.UDA suggests that this figure is a reasonable estimate, as a significant number of the smaller establishments on our books have simply exited the industry. These are typically ‘mom and pop’ operations with turnover of $500,000 or less—a figure which incidentally characterizes 93 percent of our industry.
The difficulties posed by the GFC and its legacy pale into insignificance compared to long-term trends. Textile product manufacturing in Australia is well and truly on the decline. The current $1.4 billion industry comprising household textile goods, tents, awnings, blinds, tarpaulins, flags, banners and related products has contracted by a staggering $1,200 million, or 45 percent in real terms, since 2002. This average 4.5 percent annual decline is in stark contrast to the 3.0 percent GDP growth over the same period. The number of business establishments has fallen by 22 percent, and employment by more than a third. Surprisingly, imports have not grown at rates one might expect, averaging just 2.6 percent growth per annum over the same period; but they have surged over the last two years, and now account for 55 percent of domestic demand.
Further market contraction is forecast, and increased import competition from finished goods is inevitable. To date, most of the contraction has occurred upstream in the production chain, and with few exceptions, fabric weaving and finishing, coating and laminating have all moved offshore. Now the blowtorch of import competition is aimed, not fairly but certainly squarely, at the textile convertor.
It’s critical that our industry find ways to revitalize itself, and generate downstream demand with new and innovative products. There are three obvious opportunities—automation, shade structures and architectural fabrics—all driven by environmental or social issues.
Possibilities for growth
The recent R + T Show in Stuttgart, Germany, clearly showed that automation of blinds and awnings is a rapidly growing trend, driven by both user convenience and the demand for energy efficiency. The use of blinds and shutters on any scale to manage heat transfer in buildings can only be achieved effectively if their operation is linked to sensors responding to changes in solar intensity, external temperature and atmospheric conditions. This is particularly pertinent in the context of the European Union target for all new buildings to be energy self-sufficient by 2020.
Also driving automation is the issue of child safety. The tragic death of a toddler, strangled after being caught in a blind cord, was reported in the March 1 London Daily Mail as being the eleventh such case in the U.K. over the last two years, and the twenty-second occurrence since 1999. There are regulations in place in Australia for warning labels and safety linkages, and have been for some time, but the avowed preference of the Australian Competition and Consumer Affairs Commission is for cordless systems.
Another area of opportunity is outdoor shade structures, but the accidental deaths of teenagers Kelly Organ (late 1999) and Jack Foy (March 2009), both resulting from falls from shade sail structures, have raised issues of safety that remain unanswered by the industry in terms of the development of appropriate standards. This, coupled with manifest problems of vandalism, has meant that shade sail structures are top-of-mind with public influencers, such as regulators, government procurement officers and school boards. Nonetheless, the increasing awareness of the risks of sunburn and skin cancer, together with the manifest simplicity of the solution, remains a potential driver of growth.
‘Green building’ concepts now dominate architectural design, and membrane structures score high in this context. Their environmental footprint is intrinsically low, because in practical terms the self-weight of the membrane is negligible. Hence, the ratio of applied load to self weight, an inherent measure of the efficiency of material usage, is many times higher than for conventional buildings. By far the majority of membrane structures are fabricated from PVC-coated polyester, which is intrinsically recyclable, energy- and resource-efficient to manufacture, and is a low consumer of non-renewable resources.
New technology and the development of smart fabrics and interactive textiles (SFIT) will also provide new opportunities; for example, fabrics that incorporate features such as controlled fluorescence, advanced water-resistant, breathable finishes, and ‘memory’ for shape. To date, innovations such as these have been mostly limited to clothing and specialized medical applications, but as the technology becomes more commercialized and less expensive, its use will expand in outdoor textile product manufacturing.
More than ever before, the industry needs a strong association to represent its collective interests, particularly for government advocacy. Unlike the U.S., Australia does not have a single industry association like IFAI, and the disparate interests of the industry are represented independently by organizations such as The Specialty Textiles Association, Blind Manufacturers Association of Australia and the Lightweight Structures Association of Australia. An amalgamated structure with a divisional model similar to IFAI, organized to support specific market niches, has greater potential to advocate in its own right, without reliance on (as third-party mediators) the larger industry collectives with which some are affiliated. Unless this occurs, the outdoor textile industry will never garner the respect and attention it deserves from government, and will always rank third in its statistical category “Textiles, Clothing and Footwear.”