Why the UK’s Fashion and Textile Industry Is Bleeding

Summary

• Covid-19 disrupted the supply chains and cash flows of suppliers to big fashion brands.
• A study has found most working women who died from Covid-19 were sewing machinists.
• Around 400 companies have told PM Boris Johnson that Brexit-related changes could kill the thriving industry. 

The Covid-19 pandemic has crippled economic activities globally. Jobs were lost and several businesses did not have the wherewithal to withstand lockdowns. No sector was spared from its debilitating impact. From aviation to hospitality to fast-moving consumer goods (FMCG), the human cost of the pandemic has been unimaginable. The fashion and garments industry is no exception. An extremely labour-intensive sector, which is the backbone for huge fashion brands saw widescale disruptions that impacted their cash flow.

Lockdowns were imposed to control the spread of the pandemic. This resulted in brands cancelling orders over £12 billion. Suppliers cash flow was disrupted, resulting in workers remaining unpaid. Factories were shut temporarily, which made owners furlough workers with less pay. Many workers lost their jobs as well as the severance pay, they were entitled to.

Well-known fashion and sportswear brands like Primark a subsidiary of Associated British Foods (LON: ABF), Hennes & Mauritz AB (LON:0HBP) and Nike Inc (LON:0QZ6) were being campaigned to ensure that their supply chains did not face a cash shortage and payments to workers for production made before the pandemic begun, were made.

Activists and rights advocates have claimed clothing manufacturers who supply to big fashion players and retailers owed factory workers in billions of pounds in unpaid wages for what was produced before the pandemic began.

For the first three months of the pandemic, workers across Bangladesh, Indonesia and Pakistan were still to receive payments worth £2.46 to £4.46 billion. Primark had set up a fund to ensure that suppliers were able to pay their workers. In July 2020, after Primark stores re-opened, it had an order book worth £1.25 billion. Though Primark had pledged to honour the orders, it had to again shut half of its shops since then.

H&M, the world's second biggest fashion retailer, had said that a demand slowdown disrupted their production levels. In October 2020, it announced that the company planned to shut 250 stores globally due to change in the shopping pattern, which was largely online. For its fourth quarter results for 2020, the group posted a 10 per cent drop in net sales. H&M’s sales dropped to US $6.3 billion in the fourth quarter, from US $7.3 billion in the same period a year ago. Its net sales for the whole year dropped 18 per cent.

Also read: Job Cuts in the Retail Sector of the United Kingdom

Exposure to virus

If the monetary woes were not enough, an analysis by the Office for National Statistics has found that the highest rate of coronavirus-related deaths in UK’s women is among those with jobs in the garments industry, like sewing machinists.

Death rate among women sewing machinists was the highest, compared to the death rate in any other group of working women. The analysis pegs the death rate at about 65 deaths per 100,000.

It was reported last year that several garment factories across Leicester operated during the lockdown. These factories allegedly did not follow social distancing protocols. Boohoo Group Plc (LON:BOO) faced a huge backlash after accusations were made that some of these factories that supplied to Boohoo paid their workers below the minimum wage. It was also reported that to avoid being caught, these factories remained operational during night shifts with shutters down.

Brexit concerns

Not just Covid-19, the Brexit too has cast its shadow on the UK’s fashion and textile industry. As many as 400 signatories from the fashion industry earlier this month have signed an open letter to Prime Minister Boris Johnson saying that the increase in post-Brexit bureaucracy and travel curbs could finish their existence.

Signatories have said that the fashion sector contributes £35 billion to UK’s economy, employing as many as one million people, and because of complete changes in norms, several firms are already moving to the European Union (EU).

Also read: Fraser Group May Shut Down Stores Amid Covid-19 Crisis

Other sectors, like fisheries and music have also said that Brexit is threatening their lives and livelihoods. The letter said that fashion alone contributes more to the UK’s economy than fishing, motor industries and music combined.

Designer Katharine Hamnett said that there was an urgent need to relook at the customs arrangement, including the value-added tax on goods going into the EU or British brands would perish.