d7.1 exploitation and i p -...

D7.1 EXPLOITATION AND IMPACT PLAN

RELEASE 1 AFTER SET-UP PHASE

TCBL 646133 DELIVERABLE 7.1

30 JUNE 2016

DELIVERABLE

PROJECT ACRONYM: TCBL

GRANT AGREEMENT NUMBER: 646133

PROJECT TITLE: TEXTILE & CLOTHING BUSINESS LABS

D 7.1 EXPLOITATION AND IMPACT PLAN

RELEASE 1 AFTER SET-UP PHASE

V1.11 2016.07.08

AUTHORS:

Simon Delaere (iMinds)

Enrico Ferro (ISMB)

Paolo Guarnieri (Prato)

REVIEWERS:

Francesco Molinari (CCA)

Marco Paini (SKILL)

Takis Lybereas (HCIA)

CO-FUNDED BY THE EUROPEAN COMMISSION IN THE TCBL: TEXTILES & CLOTHING BUSINESS LABS, GRANT AGREEMENT N. 646133

DISSEMINATION LEVEL

PU Public

3

EXECUTIVE SUMMARY

This Deliverable reports on the activities carried out within TCBL’s Work Package 7,

“Exploitation and impact”. The objectives of this Work Package, as described in the project’s

DoA, are to explore “the sustainability of different classes of organisations and businesses

within the TCBL ecosystem. While the main focus is on business planning for key project

partners, attention is also paid to those operating in semi-market or non-market environments.

In addition, the capacity of the TCBL ecosystem to attract new businesses and generate start-

ups is also explored.”

This generic description is clarified by the different tasks the Workpackage is composed of.

These are:

T7.1 Market analysis and trends: carries out a multi-faceted market analysis of the

economic environment of the main TCBL actors;

T7.2 Policy environment: looks at the policy environment at the regional, national and

EU levels. The aim of the activity is to gain a deep understanding of how policy

actions taken at different administrative levels may affect the sustainability potential of

TCBL actors either through the generation of opportunities or a limitation in the scope

of action.

T7.3 New business incubation: accompanies the neo-entrepreneurs selected in the

two Calls for Expression of Interest for Start-ups with a range of coaching services

T7.4 Associate service SME engagement: integrates the service SMEs selected in the

calls for expression of interest into the TCBL ecosystem, by providing the community

building between these SMEs, providing them with business support and offering

them the technical support needed.

T7.5 IPR & exploitation arrangements: defines the IPR and exploitation arrangements

for those partners or groups of partners for whom the sustainability of their role in the

TCBL ecosystem involves the market launch of a specific product or service within the

TCBL ecosystem.

This deliverable will have four releases, containing the results of the tasks active in the period

preceding the submission. For this first, M12 release, only tasks 7.1 and 7.2 have been active,

therefore, this document focuses on the market and policy analyses performed within TCBL. It

starts with an overview of the economic environment, industry structure and major market

trends of the T&C sector, revealing the complexity, inter-relatedness and diverse nature of all

the components, phases, activities and sectors that form the T&C value chain today. The

figures in this section indicate a medium- to long-term tendency of T&C to consolidate

(contract) and simultaneously grow in scale (mass production by global players). On the other

hand, the sector shows a more recent tendency to fight the decline by diversifying and

specialising the production, in order to explore new markets both in the EU and in third

countries (China, India, Brazil, Russia, etc.), where a new middle class is emerging, endowed

with an increasing purchasing power.

The section also identifies some 50 major market trends under 9 different domains, and

evaluates to which extent these may positively contribute to TCBL’s main objectives (return of

delocalised manufacturing to Europe, reduction in the environmental footprint, creation of a

novel supply network and creation of new embedded services supporting the customer driven

supply chain). This analysis demonstrates that TCBL’s objective to reshore manufacturing

capacity can be favoured by increasing the T&C focus on end-users’ needs, customisation,

niche products, cost-effectiveness, smart solutions, design, service, etc. On the other hand, EU

D 7.1: Exploitation and Impact Plan: Release 1

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Textile & Clothing Business Labs

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Textile & Clothing is at loss when it falls in the commodity trap1, i.e. when it tries to compete on

costs, low quality products, fast fashion, commoditization, etc. Moreover, such hampering

factors like fragmentation, subcontracting pitfalls, restricted market presence, etc. should be

avoided, while success factors and strategies that too often stay hidden should be evidenced

and disseminated among T&C actors for smarter innovation and competitiveness.

A summary of the analysis, showing the trends that are most favourable and unfavourable to

TCLB objectives, is represented by the figures below:

1 This means being positioned in a market segment where entry barriers are low, opportunities of

differentiation are less and competition is mainly based on costs. Firms are stuck in a segment where they

have little competitive advantage. To get out of the commodity trap, innovation in design and service,

vertical integration and economies of scale should be pursued.


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Section 3 provides an overview of the TCBL EU policy environment, and subsequently identifies

and discusses Social Innovation, Circular Economy, Smart Specialisation and Industry 4.0 as

four overarching concepts underlying current EU policies and affecting TCBL objectives and

activities. It then assesses the favourability of these concepts to TCBL viability, again concluding

the analysis by mapping the concepts to the TCBL core objectives. The analysis concludes that

TCBL appears to be in a favourable situation to exploit the presence of existing forces sustaining

the type of socio-economic changes the ecosystem is trying to promote both within the demand

and the offer side of the T&C industry. Regarding the driving policy concepts, the analysis

concludes that measures towards a Circular Economy are mostly in line with TCBL objectives,

and Social Innovation and Smart Specialisation strategies also bring potential contributions in

terms of creation of novel supply chains and reduction of the environmental footprint. For what

concerns Industry 4.0, there seems to be partial (but not full) alignment with project objectives

especially for what concerns the exploitation of technology for the creation of new services for

a customer driven-supply chain. The figure below provides an overview of these conclusions.

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CONTENTS

EXECUTIVE SUMMARY ............................................................................................................ 3

CONTENTS ................................................................................................................................. 6

1. INTRODUCTION ................................................................................................................. 8

2. MARKET ANALYSIS AND TRENDS ............................................................................... 10

2.1 ECONOMIC ENVIRONMENT ........................................................................................... 10

2.2 THE INDUSTRY ............................................................................................................ 11

Geographical Spread in the EU ........................................................................................ 13

The T&C Economy ............................................................................................................ 13

The Market ........................................................................................................................ 15

Key Figures ....................................................................................................................... 17

2.3 MARKET TRENDS ......................................................................................................... 23

Consumption ..................................................................................................................... 24

Emerging Markets ............................................................................................................. 25

Relocalisation .................................................................................................................... 27

Business Models ............................................................................................................... 29

Network Based Production ................................................................................................ 33

Consolidation ..................................................................................................................... 35

Fragmentation ................................................................................................................... 36

Commodity and Subcontractor Traps ............................................................................... 38

2.4 CONCLUSIONS ............................................................................................................. 40

3. TCBL POLICY OUTLOOK ............................................................................................... 43

3.1 TCBL POLICY ENVIRONMENT OVERVIEW ...................................................................... 44

Europe 2020 ...................................................................................................................... 44

Textile Regulation (EU) N. 1007/2011 .............................................................................. 48

EU Ecolabel for Textile Products ...................................................................................... 49

3.2 THE POLICY ENVIRONMENT AND TCBL’S VIABILITY ....................................................... 50

Social innovation ............................................................................................................... 52

Circular Economy .............................................................................................................. 53

Smart Specialisation ......................................................................................................... 56

Industry 4.0 ........................................................................................................................ 64

3.3 CONCLUDING REMARKS ............................................................................................... 66

4. GENERAL CONCLUSIONS AND NEXT STEPS ............................................................. 68


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BIBLIOGRAPHY ....................................................................................................................... 69

LIST OF FIGURES ................................................................................................................... 71

LIST OF TABLES ..................................................................................................................... 72

DOCUMENT INFORMATION ................................................................................................... 73

REVISION HISTORY .................................................................................................................. 73

STATEMENT OF ORIGINALITY .................................................................................................... 73

COPYRIGHT ............................................................................................................................. 73

DISCLAIMER ............................................................................................................................ 74

ACKNOWLEDGEMENTS ............................................................................................................. 74

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1. INTRODUCTION

This Deliverable reports on the activities carried out within TCBL’s Work Package 7,

“Exploitation and impact”. The objectives of this Work Package, as described in the project’s

DoA, are to explore “the sustainability of different classes of organisations and businesses

within the TCBL ecosystem. While the main focus is on business planning for key project

partners, attention is also paid to those operating in semi-market or non-market environments.

In addition, the capacity of the TCBL ecosystem to attract new businesses and generate start-

ups is also explored.”

This generic description is clarified by the different tasks the Work Package is composed of.

These are:

T7.1 Market analysis and trends: carries out a multi-faceted market analysis of the

economic environment of the main TCBL actors;

T7.2 Policy environment: looks at the policy environment at the regional, national and

EU levels. The aim of the activity is to gain a deep understanding of how policy

actions taken at different administrative levels may affect the sustainability potential of

TCBL actors either through the generation of opportunities or a limitation in the scope

of action.

T7.3 New business incubation: accompanies the neo-entrepreneurs selected in the

two Calls for Expression of Interest for Start-ups with a range of coaching services

T7.4 Associate service SME engagement: integrates the service SMEs selected in the

calls for expression of interest into the TCBL ecosystem, by providing the community

building between these SMEs, providing them with business support and offering

them the technical support needed.

T7.5 IPR & exploitation arrangements: defines the IPR and exploitation arrangements

for those partners or groups of partners for whom the sustainability of their role in the

TCBL ecosystem involves the market launch of a specific product or service within the

TCBL ecosystem.

The various tasks follow a logic of internal coherence. While the first two set the scene for

sustainable development within TCBL by keeping track of relevant market and policy

developments, the latter three give support to the development of three different market

concepts developed within the project:

New value chains will probably give rise to new market opportunities for services that

may not even be imagined today. This will be explored by T7.3;

TCBL will open new markets for existing services (especially IT services that are

normally targeting big enterprises). T7.4 will provide assistance to these;

Some of the existing TCBL partners are developing services that can become

marketable, such as Business Lab service concepts, Knowledge as a Service (WP1),

and the Business Services on the cloud (WP5 and parts of WP6). Task 7.5 codifies

and explores these.

Hence, while this Work Package, and the deliverables that represent it, contributes to the

sustainability and impact of TCBL in a number of ways, it will not cover every aspect of the

project’s efforts towards sustainable exploitation – in this sense, the title of this deliverable

might be somewhat confusing. For example, the sustainability of the TCBL ecosystem in itself,

is studied within Task 6.5 (Business ecosystem governance), while Task 6.4 (Value modelling

and scaling scenarios) evaluates the value propositions and scaling trajectories of the different

ecosystem components, T6.3 (Process and impact evaluation) carries out the benchmark and

process evaluation required to make a reliable estimate of the longer term impacts of the


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project, T4.2 (Transition models, drivers and paths) performs an iterative evaluation of the

business model transitions undertaken by the business pilots and, finally Tasks 3.5 and 4.5

undertake activities to engage and integrate the Associate Labs and Associate Pilots

respectively.

This deliverable will have four releases, containing the results of the tasks active in the period

preceding the submission. For this first, M12 release, only tasks 7.1 and 7.2 have been active,

therefore, this document focuses on the market and policy analyses performed within TCBL. It

is structured as follows: Section 2 first presents an analysis of the current T&C market,

providing an overview of the overall economic environment, a characterisation of the industry

as well as a number of key figures. It subsequently identifies some 50 major market trends in 9

different domains, and analyses which of these most positively contribute to TCBL’s

objectives, while also pointing out the current macro-economic trends running counter to the

project’s goals. Section 3 then provides an overview of the TCBL policy environment. In doing

this, it focuses mainly on the European level, since it is not possible to provide a detailed

analysis of relevant national, regional and sub-regional policies for the 28 EU Member States.

Following this, the Section identifies and discusses four overarching concepts underlying EU

policies, and assesses the connection of these concepts to TCBL viability, concluding its

analysis by performing the same mapping to TCBL core objectives as Section 2. Section 4

summarizes the document’s conclusions and explores this Work Package’s next steps.

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2. MARKET ANALYSIS AND TRENDS

2.1 ECONOMIC ENVIRONMENT

Textile & Clothing (T&C) has over the last two decades become a globalised industry as a

result of radical changes in the global political and economic context. Significant economic and

social changes in T&C production have occurred both in industrialised and developing

countries. Advanced countries have experienced significant changes in retail distribution,

generally moving towards an increasing concentration of market shares by mostly international

retail chains. This trend has occurred all over the EU, with the share of independent stores

dropping below 20% in Northern and Western Europe, and the same trend accelerating in

Eastern and Southern Europe as well2.

Apart from traditional department stores and branded clothing chains general retailers (e.g.

Carrefour, Tesco) and hard discount retailers have become major actors in clothing retail,

leading to a concentrated purchasing power on the distribution side of the business and

enabling access to lower cost manufacturing locations thanks to global sourcing, transport and

logistics that these large companies can set up. Such concentration in distribution is not

reflected by an analogous consolidation of manufacturing, which remains highly fragmented

and mostly dominated by SMEs. In the EU, the average clothing firm has less than 20

employees, and the average textile-producing firm some 25 employees. This strong imbalance

of market power between retail and manufacturing explains why distribution very much sets

the ‘rule of the game’ and reaps a much larger share of the economic value generated by the

T&C the supply chain.

On the other hand, developing and emerging countries have become preferred clothing

manufacturing locations as their economic and financial systems got updated, their industry

and logistics was developed and massive migration of rural work force to development areas

provided an abundance of cheap manual labour for T&C manufacturing, which does not

require very high levels of skill and knowledge from its workers. Clothing manufacturing in

several countries like China, India, Pakistan and Turkey has also benefited from abundant

local supplies of textiles thanks to the significant increase of textile production from fibre –

mostly cotton and synthetic fibres such as polyester – often led by government-owned or

private firms benefiting from privileged access to public funds.

Globally sourcing retailers and wholesalers have massively exploited this opportunity for

significantly reducing purchasing prices to the detriment of T&C manufacturers in

industrialised regions such as the EU. Due to higher costs – of labour, capital, energy,

environmental and consumer-protection compliance, etc. – the latter have been increasingly

unable to match prices offered by developing countries. This has led to increasingly shrinking

margins, firm shutdowns and job losses over the last two decades.

Nevertheless, the EU T&C industry in 2014 still has a turnover of 165 billion €, with around

173.000 companies employing 1.6 million workers in the sector (down from 2.5 million

employees, 160,000 companies and a combined annual turnover in excess of 210 billion € in

2007).

In order to stay competitive, companies are undergoing continuous restructuring and

modernisation processes. This entails significant investments in technology, research, product

2 This paragraph draws from reflections developed within the Leapfrog Project (http://www.leapfrog-

eu.org/).


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development and innovation capacities, as well as adopting new business concepts and

models to enter new higher added-value markets, through increasingly accelerated

productivity growth.

Nowadays, the EU still occupies a prominent market position among the world’s biggest

exporters of both textiles and clothing. While the US and Japan have significantly declined in

the last 15 years, and emerging countries like China have won growing shares of the global

T&C market, the EU has been able to keep its global position. As of 2014 the EU is the

second world exporter (after China) in textiles as well as in clothing, with respectively 24% and

26% of world sales. 3

While radical changes have occurred in the global political and economic scenarios, the same

has not happened in other T&C dimensions – e.g. manufacturing technology. While in textile

production, technologies for such core processes as spinning, weaving, knitting, dyeing,

printing and finishing have seen significant developments resulting in massive productivity

gains over the last decades, the same is not true for clothing manufacturing where the

technological pivot of production – the sewing machine – has not undergone any revolutionary

change since its invention in mid-19th century. This has resulted in a large productivity gap

between the textile and the clothing sectors of about 2 to 1.

While several semi- or fully automated technologies have been introduced on the garment

manufacturing shop floor such as spreading, nesting, marker making and cutting systems, as

well as to a certain degree in the ironing and garment finishing processes, major steps of the

handling and joining processes remain highly manual labour intensive, thereby making the

garment making process uncompetitive in countries with high labour costs.

The shift of manufacturing to low labour cost countries has in turn introduced further

complexities, risks and costs such as long lead times, challenging logistics and quality

assurance procedures, lowly skilled work force, etc. The related costs and risks limit the

adoption of new business models that could provide:

faster response to market changes linked to consumer needs, tastes, sensitivity etc.;

increased involvement of consumers in product customisation and personalisation;

smarter networks of actors through open value chains and business ecosystems;

leverage of advanced internet-based business channels and technologies.

Even traditional T&C players are becoming more sensitive to new emerging business models,

as these greatly improve the ability to contribute to significant economic value creation in an

ever more segmented, fragmented and fast moving market. On the other hand the supply chain

of T&C industry (in particular clothing industry) is changing not only because of globalisation of

manufacturers and suppliers, but also because of globalisation of customers and market

channels (in-franchise shops, outlets, e-commerce, the so-called omnichannel, etc.). All these

new ways of selling products today is deeply stressing the supply chain and the planning of

clothing industries, and consequently of their suppliers (the textile industry).

2.2 THE INDUSTRY

T&C is a diverse and heterogeneous industry which covers a great number of activities from

the transformation of raw materials into fibres, yarns and fabrics that in turn enter into the

3 EURATEX Annual Report 2014


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production of e.g. hi-tech synthetic textiles, wool, bed-linen, industrial filters, geo-textiles, and

clothing and are used in multiple applications e.g. garments, sports and household equipment,

furniture, civil engineering products (construction, automobiles and aircrafts), and medical

textiles. Textile products range from yarns of natural and man-made origin to fabrics, to

household textiles, carpets and textile fabrics that are used in industrial applications. Raw

materials such as cotton, wool, jute, flax and silk fall under this broad categorisation but are

not considered as textile products as such.

The production chain is very varied in that the same raw material can end up in a broad range

of different final products. At the bottom of the production chain a raw material, natural or man-

made, is converted into a fibre, then spun or extracted to yield a yarn or filament that then

undergoes a manufacturing process such as knitting, felting or weaving. The intermediate

product is a fabric. This fabric then can undergo different finishing operations (tainting, coating,

bleaching, cutting, printing etc.) before being converted into a finished product, e.g. a garment,

a household textile or a technical textile.

Figure 1. The textile industry (Source: European Textile Technology Platform (www.textile-platform.eu).

While the entire production chain still remains in the EU, recent trends indicate that the

European T&C sector is concentrating increasingly on research and development, finishing

and innovation activities. To date, in general, the finishing operations remain within the EU.

Processing of raw materials, production of yarns and fabrics and their transformation into

garments are being outsourced. This development is particularly prominent in the clothing sub-

sectors that are more labour and less capital intensive. The production chain has become

increasingly global - the production chain of a garment designed in Europe can be spread

worldwide where Pakistani cotton is transformed into yarn and woven fabric in India, finished

(e.g. dyed, cut and sown) in Bangladesh and then shipped via Malaysia to the EU.

Such a wide geographical spread is less prominent in the textile sector. The textile sub-sectors

require greater investments in machinery and are less labour intensive. The production costs


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can be comparable to the ones in the EU market and delocalisation of individual production

steps is less economically interesting. The trend to outsource production is less prominent.

GEOGRAPHICAL SPREAD IN THE EU

In the EU, the biggest producers in the T&C industry are the five most populated countries, i.e.

Italy, Germany, France, Spain and the United Kingdom accounting for about three quarters of

production of T&C. In some other countries, the sector plays an important role in the national

economy accounting for 5% to 15% of employment and up to 10% of total exports of

manufactured products (Portugal, Greece, Lithuania, Poland, Slovakia, Romania, Bulgaria,

and Czech Republic).

Southern countries such as Italy, Greece and Portugal, some of the new Member States such

as Romania and Poland and, to a lesser extent, Spain and France contribute more to total

clothing production, while northern countries such as the United Kingdom, Germany, Belgium,

the Netherlands, Austria and Sweden contribute relatively more to total textile production.

Figure 2. Foreign value added embodied in domestic demand for textiles and apparel, by source region,

2011 (As a percentage of total final demand for textiles and apparel) (source: OECD Science,

Technology And Industry Scoreboard 2015)

THE T&C ECONOMY4

In 2010 the EU T&C industry realised a turnover of € 172 Billion and employed 1.9 Million

people in more than 127 000 companies. The industry is highly export oriented since it

represents a total value of € 34 billion. The size of the industry declined substantially between

2000 and 2010: turnover decreased by 25% (slightly more in textiles) while employment went

down by 50% (equal in textiles and clothing). This also means that the average employment

and turnover by company declined. In the clothing sector, the turnover by companies

remained almost stable. Nevertheless, the T&C industry is more fragmented than it was in

4 Scheffer, M.R. (2012). In-depth assessment of the situation of the T&C sector in the EU and prospects

(prepared for the European Commission, DG Enterprise and Industry).

http://ec.europa.eu/DocsRoom/documents/10482/attachments/1/translations/en/renditions/native


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2000. The financial crisis starting in 2008/09 accelerated the decline on all indicators. In 2010

there were some signs of recovery in some Member States.

In terms of demand the clothing and home textiles market in Europe is by and large slowly

growing in volume and stable in value. Overall retail demand for textiles and clothing grew by

28% between 2000 and 2010. Demand for technical textiles grew by 10% a year between

2000 and 2007 but was stable after 2008. Decline in the northern and southern member states

is only partially compensated by growth in the eastern member states. The financial crisis led

to a sudden drop in demand for textile and clothing products, followed by a small recovery only

in Northwest Europe and Poland. In general, changing consumption patterns and the impact of

imports leads to a favour for lower priced items. While the luxury and high-end section

performs rather well, there is mainly a squeeze in the middle of the market. Technical textiles

has been growing since 2000 at an average pace of 10% a year, and technical textiles is a

growing part of the industry. This growth has not compensated the decline of clothing and

home textiles, and this growth is often driven by companies in other industrial sectors.

The European industry is at a disadvantage when it comes to supply lower and middle parts of

the market. Cost competition favours third countries (especially China) and the European

industry is no longer competitive in volume markets, also because of fragmentation of the

industry. In the middle market Europe is still competitive when small batches or a very flexible

response to the market are demanded. In the high-end and luxury markets Europe still has a

strong potential, but the skills required in design and branding as well as in manufacturing are

barriers (as well as protection). Especially the luxury segment has shown excellent export

potential; however, the speed at which third markets are being exploited is much lower than

the speed at which import volumes increase into the European markets. Besides the

organizational difficulties in developing markets, the difficulties created by trade barriers

restrict exports to the most enduring firms with clear assets such as a strong brand appeal.

Hence, while globalisation is a threat and an opportunity, for textiles and clothing the period

2000-2010 has mainly realised the threats, while the opportunities, though certain and

demonstrated, take more time to take up.

The period 2000-2010 also demonstrates the potential of new technology. The textile sector is

well aware of new opportunities presented by new material technologies, new process

technologies and ICT. These technologies offer new opportunities now that the advances of

organic chemistry and mechanisation are being industrialised. In addition, and more recently,

there is the perception among industrialists of the potential of a more sustainable

industrialization based on materials made from bio-resources and processed with

biotechnology. The consumer is more and more conscious of the environmental footprint and

specific industrial markets are pulling innovation, also as a consequence of European

regulations. However, the paradigm change towards technology and sustainability is still in an

early stage. A real breakthrough is hampered by the major costs of commercialisation and

industrialisation, high standards demanded for product quality, fragmentation of supply chains

and initiatives and, ultimately, lack of financial resources following the financial crisis.

The financial crisis indeed represents a break and possibly a catalyst of change in the

industry. Especially at the beginning, the crisis was seen as a temporary setback. Actually, it

led to a long-term decline in consumption, a substantial drop in profitability and a general

weakening of the financial reserves of companies, resulting in a shake out of companies. The

recovery in 2009/2010 was beneficial to the more progressive part of the industry, such as

export-oriented luxury fashion manufacturers (and their suppliers/subcontractors). But

companies remaining in commodities and acting as subcontractors remained vulnerable. By


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mid 2012 the crisis had been lasting too long and the perspective on new opportunities was

becoming less clear. European demand was not picking up, exports were growing but were

hampered by trade barriers and difficult access to export credit or insurance. The potential of

new technologies was hampered by the reduction of public budgets for research and

innovation and also demand pressure in industrial markets. The financial crisis has also been

limiting the resources available for mid-term and long-term innovation. The problem of

fragmentation is compounding a more structured approach towards sustainability. The

potential still stands, but the uncertainties in the business environment limit commitment and

may lead many industrialists to withdraw to markets offering a sure cash flow in the short term.

THE MARKET

Trade policy measures have had a major impact on production and investment decisions in

textiles and clothing and on trade flows. The elimination of quantitative restrictions at the end

of December 2004 marks the end of the industry dependency on the former trade regime that

protected the sector longer than other industrial sectors from international competition, through

the Multifibre Agreement in 1974 and the following Multilateral Agreement on Textiles and

Clothing. The liberalisation of the T&C market started in 2005, one year after the last import

quotas had been phased out. This liberalisation has increasingly globalised the T&C economy,

with production and marketing activities depending on business decisions that reflect

competitive opportunities around the world. It has heightened the pressure on firms to adapt

their production mix to meet changing consumer requirements in terms of design, quality and

prices, while implementing efficient production methods that minimise production costs. This is

particularly true for some companies (e.g. Inditex) which completely revolutionized the T&C

supply chain by totally skipping the production phase: the company creates the design and

then buys the final product from its suppliers, cutting the production costs and focusing more

strongly on the distribution phase. In the same wake, many companies are outsourcing their

productions (either totally or partially), attracted by the savings of this business model.

While traditional producers have suffered from intensified low-cost competition, China has

been the great winner of restructuring in T&C industries. It became the number one producer

of wearing apparel with a share of one quarter of world exports (2008).

With labour costs less than one third of the competitors in Europe and the United States,

Chinese producers were able to attract rising market shares. The country established regional


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clusters of textile and clothing production with thousands of firms and millions of employees.

These clusters are strongly export-oriented. Production chains have been optimised to provide

all functions from fibres to garments, confection, and finishing. Rail and sea transport systems

have been developed. China’s products were at the lower end of the price spectrum for some

time.

Figure 3. Global demand for Textiles and apparel, percentage shares of total, 1995 and 2011 (Source:

OECD Science, Technology And Industry Scoreboard 2015)

This changed in recent years as China’s exports in both textiles and clothing were moving up.

Regarding product values, the structure of Chinese textiles exports to Germany has come

closer to that of Italy or Poland. Exports of clothing products have become similar to those of

Belgium, Italy or the Netherlands in 2007. This means that China is on the way to approaching

high price markets where European producers – until now – felt to be sheltered. China is

moving into more capital intensive and technology intensive product segments and is

improving the quality of exported goods. Export strategies are becoming more broadly based

and lead to a declining degree of specialisation. Countries like India or Mexico also adjusted

their export structures and have taken efforts to improve their competitiveness.

Figure 4. Regional demand for Textiles and apparel, 1995 and 2011 (By country or region of value added

origin) (Source: OECD Science, Technology And Industry Scoreboard 2015)


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KEY FIGURES

TURNOVER5

Figure 5. T&C importance in the EU value chain, 2014.

As of 2014, with a household consumption of nearly 500 Billion €, the EU-28 is the largest

world market for textile and clothing products. In 2014, the EU Textile & Clothing industry

reached a turnover of 165 billion €. In the EU, there are some 173,000 companies in the

industry employing 1.6 million workers. The EU is the second world exporter (after China) in

textiles as well as in clothing with respectively 24% and 26% of world sales. World clothing

consumption represents 75% of total T&C consumption (estimates). The average size of

companies is relatively low which explains why they principally trade within the internal market,

with intra-EU exports representing 72% of EU trade to the world6.

5 Data and pictures as provided by EURATEX Reports and Surveys, 2014-2015

6 Euratex Annual Report 2014


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RETAIL SALES

In 2014 the retail sales evolution in the T&C industry turned positive and was up 1.9%, thanks

to EU consumption and activities’ revival, and to a stabilisation of consumer prices. The retail

activity expanded strongly in most Eastern European Countries as well as in the Southern

European countries. Finland, Denmark, Bulgaria and the Netherlands were the only Member

States that registered decreasing sales over the period.

Figure 6. T&C Retail turnover evolution.

In 2015, retail sales growth remains on an upward trajectory, adding to signs of a

strengthening EU economy. The retail sales evolution in the T&C industry was up 2.4% in

2015, fuelled by a stabilisation of consumer prices. The retail activity expanded strongly in

most EU countries with the exception of: France, Germany and Austria, where the activity

remained almost stable and of Finland, Bulgaria and the Netherlands where sales decreased

in 2015.

PRODUCTION

In 2015, contrary to the retail sales, European T&C production was lower than in the previous

year, despite better performances during the second part of 2015. Textiles’ output declined by

-0.7%. Production in the MMF industry went down by -0.4%. The -1.5% slowdown in clothing

production, despite a surge in turnover and exports, suggests a weakening of domestic

demand for European clothing products.


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In 2014, the European T&C production was 0.7% higher than in the previous year, despite

weaker performances during the second part of the year. The textiles’ output rose by +2.6%,

outpacing again the manufacturing industry growth. Production in the MMF industry went up

by +0.9%. The slowdown in clothing production (-1.7%), despite a surge in exports, suggests

a weakening of domestic demand for European clothing products.

Figure 7. EU T&C volume index of production.

EVOLUTION OF THE SECTOR IN DIFFERENT EU COUNTRIES

During 2015, several Member States experienced an output decrease either in Textile or

Clothing or both, with the exception of Poland and the Czech Republic, as compared with

2014. In the previous year (2014) the majority of Member States experienced output growth,

with the exception of Austria, Denmark, Greece, Latvia, Portugal, Spain and the UK where

production fell, as compared with 2013.

Figure 8. Evolution of T&C production in the EU Member States, 2015.


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Among sub-sectors, all (man-made fibres, woven fabrics, technical textiles, finishing, yarns,

made-up textiles, knitted and crocheted fabrics, etc.) performed badly in 2015, except M&W

outerwear, underwear and non-woven clothes.

Figure 9. Evolution of T&C production, by type, 2015.

INTRA & EXTRA EU TRADE

The repartition of EU external and internal trade reflects how the sector depends partly on

internal and partly on external demand. The decline starting in 2007 due to the effects of the

economic crisis in 2008 and 2009 was linked to a decrease in demand within the EU and in

important third country markets such as the USA and Russia. The sector has then slowly

recovered since the end of 2009. The relative growth rates in traditional export markets have

been slower than in emerging economies. This explains the growing relevance of market

access in third countries.

Figure 10. T&C extra-EU trade evolution.

In 2015 EU T&C exporters moderately increased their market shares in Third countries

(+3.6%). Extra-EU imports evolution was 3 times higher than for exports: with an increase of

+8.4% (T) and +10% (C). As a result, imports reached € 109 billion in 2015 and exports € 44


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billion. This evolution impacted the overall trade balance of the EU whose deficit deteriorated

again in value by +14%.

During 2014, T&C extra-EU imports picked up by +8.5% in value terms and by +9% in volume,

following sharp increases from some Asian countries (as Bangladesh, Cambodia, Pakistan

and Vietnam). Extra-EU exports recorded a modest growth as compared with imports (+3.5%).

Intra-EU exports grew by +7% in value, but decreased in volume (-1.3%), reflecting an

increase of higher priced products due to a change in product mix. In price terms, the average

export prices went 1.5% up, while import prices slightly decreased by -0.6%.

IMPORT EVOLUTION WITH KEY EU SUPPLIERS

EU imports went up due to sharp increases from some Asian countries. On the contrary,

imports from the Mediterranean area realized a modest growth or even decreased over the

period. (NB: the % represents the 2015 evolution, and the size of the bubbles are determined

by the import values).

Figure 11. EU imports evolution of T&C to main customers.

Considering T&C separately:

Textile imports coming from EU top-15 suppliers were all up, except from Egypt &

Thailand. The US witnessed the highest growth (+19%), followed by Pakistan, China

& Vietnam (+11%).

Clothing imports coming from EU top-15 suppliers were all up except from Tunisia &

Thailand. Bangladesh, Cambodia, Vietnam, Pakistan, Hong Kong and the US

recorded growth rates above 24%.

EXPORT EVOLUTION WITH KEY EU CUSTOMERS

Exports went up due to sharp increases on the US, EU’s top market, supported by a

favourable exchange rate. This positive evolution was partially offset by the slump in Russia

and Ukraine, as the economy remains depressed.

Textiles’ sales to the U.S., recorded a +16% increase, as well as exports to South Korea,

Mexico and India (+16% on average). On the contrary, exports to Russia and Ukraine slipped

back again by respectively -27% and -1%.


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Figure 12. EU exports evolution of T&C to main customers.

Clothing exports data shows a sustained growth in the U.S., Hong Kong, South Korea,

Canada and China (with rates between +19% and +22%), which made the US the 2nd largest

EU customer. Exports to the Saudi Arabian and Mexican markets also revealed a significant

expansion (with respectively +17% and +15%). Russia and Ukraine on the other hand

declined by -28%.

MARKET SUMMARY

Figure 13. Market evolution overview: 2015/2014.

T&C activity in the EU gained some momentum in particular towards the end of 2015.

However, T&C production is lagging behind despite economic recovery and declined by -0.7%

(Textile) and -1.5% (Clothing), as output growth achieved during the last quarter did not

manage to offset the severe drop recorded in the 1st Q of 2015.

Companies’ turnover evolution went up in both T&C by respectively +1.3% and +2.7%,

outpacing the total manufacturing growth. The situation of EU employment continues to

improve with job creation in both sectors. Pricing conditions were acceptable with moderate


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growth in domestic producer prices. Finally, retail sales went up by 2.4% and from Extra-EU

exports, which provided a limited but still positive impetus to activity.

ECONOMIC PROSPECTS FOR 2016

The global economic activity starts to rebound; positive effects should be felt later in 2016. The

global activity should be boosted by the EU progressive recovery and export growth, due to

lagging effects from the € past depreciation, and a gradual increase in foreign demand.

Short-term prospects diverge among the T&C pipeline:

In Textile: Manager’s business expectations worsened, even if their views on export

expectations improved;

In Clothing: Managers are less pessimistic regarding their activity for the months

ahead.

2.3 MARKET TRENDS7

The following Section provides an overview of the major trends of the T&C market in Europe.

These trends include conditions, strategies, or issues that the T&C SMEs and actors have

experienced in the last 5-10 years, particularly as a consequence of the financial crisis in

2007-2008, and changes in the global political and economic context. These trends, albeit of a

macro nature, are important as they provide the overall framework in which the TCBL

ecosystem operates.

Nine aspects of the T&C market have been taken into account:

1. Consumption

2. Emerging Markets

3. Relocalisation

4. Business Models

5. Networked Production

6. Consolidation

7. Fragmentation

8. Commoditization

9. Subcontracting

Each of these presents several trends or behaviours that may either favour or hamper the

achievement of the TCBL expected impacts, as described in the DoA (2.1 Expected Impacts):

Return of delocalised manufacturing to Europe, in the order of at least 5% of the total

manufacturing capacity, in the application area targeted by the project, within 5 years

after the end of project.

Reduction in the environmental footprint compared to products produced in the

traditional value chains by 20% through less stock, less waste, and less

transportation.

7 This paragraph is based on more than 300 interviews of a qualitative nature as reported in “Study on

the in-depth assessment of the situation of the T&C sector in the EU and prospects” available at:

http://ec.europa.eu/growth/sectors/fashion/textiles-clothing/publications/index_en.htm


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Creation of a novel supply network involving at least 100 organisations and individuals

at the end of the project and 1000 organisations and individuals within 5 years after

the end of project.

Creation of new embedded services supporting the customer-driven supply chain.

For each of the nine aspects, a visual representation of how trends can influence (favour or

hamper) TCBL objectives is provided8.

CONSUMPTION

Figure 14. Influence of Consumption Trends on TCBL impacts.

MARKET TREND: DECLINING DEMAND

Consumer demand in the EU and USA is likely to stagnate or even decline under the impact of

higher unemployment, fiscal measures (e.g. VAT increase), limited credit and higher savings.

European consumption is likely to be depressed in all main segments: clothing, interior textiles

and technical textiles.

MARKET TREND: REACTIVE DEMAND

Clothing markets are often the first to adjust downward at time of crisis, as has happened in

2008. It is also the first market to pick up when signs of recovery show up. After a pick up in

the second half of 2009, this market is now very volatile. In 2010 clothing markets recovered

only in Northern Europe; in 2011 and 2012 there was a decline in almost all EU countries.

MARKET TREND: (SMART) LOWER COST SOLUTIONS

Opportunities for growth in textiles might be found in offering lower cost solution/substitutes to

other materials/solutions. According to market forecasts the share of textiles in automotive and

air transport is likely to grow. This is also the case in markets where total cost of ownership is

8 influence rating: 5 = strong, 4 = positive, 3 = neutral, 2 = negative, 1 = very negative


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relevant and advanced procurement methods are used (Design, Build and Maintain – DBM –

or Design, Build, Finance and Maintain – DBFM).

MARKET TREND: INTEGRATED SOLUTIONS

Integral contracts combining design, supply, maintenance and repair are gaining market

share. In many technical textiles markets but also in interior textiles for projects, these kinds of

product service systems are increasingly in demand.

MARKET TREND: RESTRICTED MARKET

The stagnant domestic market is a significant challenge for the European industry. The

overwhelming majority of European firms do only cater for the EU market. A significant

number of firms do not even export to other EU countries. However, many companies are

exporting indirectly as suppliers or subcontractors of exporting brands. Further restructuring is

likely to affect mostly companies only oriented to their national market and firms only exporting

to some EU countries.

EMERGING MARKETS

Figure 15. Influence of Emerging Market Trends on TCBL impacts.

MARKET TREND: POSITIONING ON EMERGING MARKETS

The importance of emerging markets as vector for growth is a consistent strategy of the

European Union, both in opening up third markets (since the Marrakech agreement in 1994)

and in fostering conditions for export. Member states have also played their role in fostering

export promotion and improving export credit.

MARKET TREND: GROWTH OF EMERGING MIDDLE CLASS MARKETS (LUXURY AND PREMIUM

PRODUCTS)

Demand in emerging markets is likely to grow although the global economic uncertainty will

possibly lead to lower growth figures (rather near 5% than near 10% of growth). Many


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economic projections point to growth through consumption in emerging markets, like in China,

India and Brazil. The composition of growth in demand is of relevance: Europe is still a global

leader in luxury and premium products and profits mainly from the transition from middle to

high income social groups and less of the transition of low to medium incomes. In fact in China

the middle class will represent the major part of all consumption in 10-20 years.

MARKET TREND: PROTECTIONISM

Protectionist tendencies have been reported in some emerging markets. Some emerging

markets have still very high import tariffs (i.e. 35% for some products in the Mercosur); also

technical barriers are often mentioned in relation to consumer protection and safety: many

emerging market are adopting regulations with high standards comparable to EU (which is a

benefit for EU companies; however, the enforcement procedures still require physical

inspection or even laboratory tests at import (e.g. in Brazil and India). Some countries have a

still very long import procedure (Russia and Brazil) which is a relevant problem for seasonal

products such as fashion items. Technical textiles export to emerging countries is hampered

by public procurement regulation demanding local content (mentioned for India and China);

moreover, in countries where the expanding infrastructures create a potent new market for

technical textiles, a thorough understanding of the institutional context is demanded. In

medical textiles, understanding of product admission and re-imbursement is required, which

demands a local presence.

MARKET TREND: DIRECT INVESTMENT IN EMERGING MARKETS

Export to emerging markets can be replaced by direct investment as market entry approach.

Moreover, high-end brands may have less hindrance of high import duties, since their brand

proposition is strong. However, for SMEs with less established brands, high import duties may

be prohibitive.

MARKET TREND: INCREASED GLOBAL DEMAND FOR TECHNICAL TEXTILES

Europe also profits from growth in products requiring textiles as components. The demand for

technical textiles is also growing on a global scale. For demand of technical products in niche

markets with high competitive barriers of entry, demand in emerging markets may benefit

production in Europe. However, in more bulk products demand can or shall be covered by

local production (possibly made by subsidiaries of EU firms). We have found several cases

where growth in emerging markets was met by larger companies by setting up production in

the local market (e.g. carpets in China and Brazil) or close to sources of raw materials

(geotextiles in the Middle-East). The first trend leads possibly to additional capacities. The

second trend goes at the expense of production in Europe.

MARKET TREND: INCREASED EXPORT TO EMERGING MARKETS

Export to emerging markets is an important factor of growth. At this moment, a small minority

of (larger) firms do export outside the EU. Based on presence on trade fairs we estimate this

number as far below 5% of all firms. Slightly more firms are possibly indirectly exporting as

suppliers or subcontractors to exporting firms. Enlarging the circle of firms involved in exports

should be an important objective to limit the impact of restructuring. Over the last years,

companies have reported tightening of export credit as a factor limiting the ability to tap their

export potential.


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RELOCALISATION9

Figure 16. Influence of Relocalisation Trends on TCBL impacts.

MARKET TREND: RESHORING

If it is unlikely that demand (all other factors being equal) in industrialized countries will act as

a leverage for growth and/or recovery, relocalisation of production is a possible trend. Regular

anecdotal evidence suggests that "production is coming back to Europe"10. It is also striking

that only very few companies consider a further delocalization of production. In most instances

companies justify further delocalization in order to be close to emerging markets rather than

reducing costs.

MARKET TREND: MASS CUSTOMISATION

The trend of relocalisation is, when mentioned in policy documents such as the vision of the

HLG11, rather wishful thinking. It did not happen between 2004 and 2009. A possible

relocalisation of production relates to a breakthrough in automation of clothing production. This

has not occurred over the last eight years, mainly for lack of progress in automation of sewing.

However, we have witnessed a relocalisation of printing because of digital printing as well as a

breakthrough in mass-customisation concepts in menswear, which also has an impact on

weavers. These are as yet niches, but proof of the argument.

9 Intended as moving production back to Europe, as opposed to delocalisation.

10 See e.g. RESHORING: MYTH OR REALITY? (27-Jan-2016)

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DSTI/IND(2015)8/FINAL&docLa

nguage=En (last retrieved 16 June 2016)

11 High Level Group for textiles and clothing set up by the EU Commission to formulate recommendations

on concrete proposals and measures to improve the conditions for the competitiveness of the European

textiles and clothing industry.


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MARKET TREND: FAST FASHION

In many cases textiles companies in Italy or Portugal reported the trend of receiving orders

that were in the past placed to Asian producers. In most instances, the shift was led to generic

factors such as uncertain demand, keeping stocks low and constraints of retailers in working

capital. Some clothing subcontractors in Lithuania, Romania, and Bulgaria also mentioned an

increase in orders. However, some did also mention that stability and sometimes increase in

order books was the consequence of the shake out of weaker competitors in 2008/09. The

growth in Prato of a dense network of Chinese subcontractors also was a response to growing

demand of fast fashion, partly based on processing of imported fabrics. The Prato case is the

only reported case in this study where demand for fast fashion is met by a sweat-shop sector

operating at the edges of the formal economy.

MARKET TREND: TWO-STRING STRATEGY (COMBINED PRODUCTION IN ASIA AND EUROPE)

Also companies subcontracting their production (based in Denmark or the Netherlands)

reported to increase their sourcing in Europe inside their so-called “two-string strategy”. This

business model combines production in Asia with production in Europe. This was also

reflected in the Romanian, Lithuanian and Portuguese case where subcontractors sensed that

orders were placed since 2009 for products that were before sourced or subcontracted outside

Europe. In all the cases, the relocation seems to point to a better use of existing or remaining

production capacities. We have found no single indication of production growth by relocation

of factories, by creation of new production capacities or by expansion of productive capacities.

In some instances, e.g. in the Dutch carpet industry, the resilience of production and in some

instances a growth in production was combined with a rationalization of the number of plants.

MARKET TREND: LOW WORKING CAPITAL, SHORT LEAD TIMES AND LOW STOCKS

Relocalisation (or a slowing down of delocalization) of production at times of economic crisis is

not a new phenomenon. This is similar to a trend in the 1980s: in that case relocalisation or

resilience of European production was mainly associated to a lack of commercial credit

available to retailers, uncertainty in the market and hence a wish of retailers to keep working

capital low, lead times short and stocks low. This leads to an acceptance of rather higher

prices associated with EU production in which retailers accept lower profit in relation to

turnover, in exchange of a higher profit ratio in relation to working capital.

MARKET TREND: INCREASING PRODUCTION COSTS IN CHINA

A second important factor is the exchange ratio of the Euro against other currencies. The

resilience of the 1980s was also associated with a high dollar value against European

currencies. A new phenomenon is also the increasing costs of manufacturing in China

because of gradual appreciation of the Yuan against western currencies. In addition, labour

costs as well as other production costs are increasing in China. This leads on behalf of large

retailers and brands to a search for alternative production locations as China is seen as a less

sustainable source.

MARKET TREND: CHINESE MANUFACTURERS ESCAPING THE SUBCONTRACTORS’ TRAP

However, while the Chinese manufacturers competing only on costs are weakened, those

evolving out of the subcontractor’s trap by engaging in design, adding service are more

resilient and able to compensate for increasing costs.


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MARKET TREND: INCREASED DEMAND FOR DESIGN OR SERVICES

The eroding cost competitiveness of China leads to a search for alternatives in Asia – mainly

when cost factors are dominant and when the buyer can sustain rather long lead times. When

cash flow is essential and when more design involvement or service is demanded,

manufacturers in the pan-European zone are more in demand. However, in that instance the

subcontractors have indeed to offer more services especially in design and logistics.

MARKET TREND: HYBRID MODEL (SUB-CONTRACTING + OWN BRAND)

We have found that subcontractors in France, Spain, Portugal, Lithuania and sometimes

Slovakia have been able to develop these services and have managed to position the

business model into a more hybrid model, where private label coexists with own brand

production, profiting from design and trend analysis skills. However, in Romania and Bulgaria

many clothing firms have more often remained pure cut-make and trim operations and cannot

service without further investment and learning these “re-localising clients”. Hence, the two-

string strategy rather benefits those firms that have developed into co-makers before the

2008/09 crisis.

BUSINESS MODELS

Figure 17. Influence of Business Model Trends on TCBL impacts.

MARKET TREND: VALUE CHAIN CONTROL / VERTICAL INTEGRATION

Increased competition inside the EU and the commercial innovation required to tap into the

potential of emerging markets, point to a trend of vertical integration.

A successful business model is indeed to aim at controlling the value chain. This strategy has

taken shape in clothing by downstream investment into retailing, whereas retailing is closely

associated with branding strategies. Verticalisation, as it was called, had become a significant

strategy by 2000 and is a dominant strategy for brands in 2010. The strategy of verticalisation

had strategic and financial motives and was enabled by technological factors and regulatory

factors. Strategically retailing was motivated by creating a reliable turnover growth and


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controlling the value of the brand as well as stimulating faster feed-back from sales into

product development and production.

Verticalisation was also a defensive strategy as brands were faced with retailers not

communicating sales information, not optimizing sales and price integrity and eroding the

brand equity. The financial consequence is closely related, by integrating into retailing the

clothing firms could control more value added, working capital could be lower and turnover

time of capital could be shortened. Finally, besides shorter payment lags, retailing offered

better control over credit. At times of tighter access to credit, vertical integration combined with

quick response production is a successful formula.

MARKET TREND: RETAILING ON EMERGING MARKETS

The strategic and financial benefit of retailing was most relevant in countries without a well-

developed retail structure, such as Southern and Eastern Europe. It is also an instrumental

part of a strategy to open emerging markets. Indeed, leading European brands combine the

development of exports with opening stores. A new addition to verticalisation is to open an

internet sale channel, which is a feature of most European brands. A strategy of vertical

integration and of internet retailing requires an adequate ICT backbone and excellent logistics.

This is still a challenge for most SMEs in Europe.

MARKET TREND: SPECIALISATION

A possible consequence of verticalisation is that it is weakening the position of smaller brands

without owned stores that rely on multi-brand retailers. Hence, verticalisation by brands and on

the other hand the increasing market share of large retailers makes the potential market share

for smaller brands much smaller. Manufacturers having a distinct style or offer service or being

specialist in a niche may survive. Manufacturers unable to keep a foothold in the market may

transform into co-makers or subcontractors, but in view of the difficulties of subcontractors this

is probably not a potent strategy.

The relative success of vertical integration in the textile industry over the last ten years is in

countertendency with the past. Interviews pointed to the increased benefit of vertical

integration after the 2008/09 for reasons of financial independence and control over working

capital. We have witnessed vertical integration in the carpet industry in Flanders and the

Netherlands but also in technical textiles in Germany, Greece and Italy.

MARKET TREND: TAKEOVERS

Vertically integrated textile companies have been more resistant in the financial crisis than

single stage firms. However, the number of vertically integrated companies has not grown. It is

rather the number of single stage companies that has declined. Some companies have indeed

taken over suppliers, mainly for defending their business as a crucial supplier was at risk of

disappearing. The takeover of distributors has been noticed in a few cases, e.g. in North

Portugal, also for strategic reasons, as a way of controlling the access to final consumer.

Sometimes several clients of a textile firm engaged themselves in assuring the survival of a

strategic supplier. This occurred in 2008/2009 when the Prato-based spinner Linea Più (Italy),

came into financial difficulties.

Even if the process of acquiring assets out of a bankruptcy or of companies is now lower than

before 2008, the costs of acquiring a company and the costs of integrating are substantial and

can only be borne by the few companies maintaining a healthy financial position. Hence, the

strategy of backward vertical integration is hardly transferable or replicable in different


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contexts. In France and Belgium government took a very active role until the 1980s to support

such restructuring, often supporting a restructuring of debts or by providing bank guarantees.

This type of intervention is rare since 2000, also due to a stricter state aid framework.

MARKET TREND: NICHE MARKET CONTROL

The niche market control logic refers to specialization and niche market control business

model. Specialization into niche markets is the dominant and successful strategy in companies

in the northern and southern member states. Through research and/or innovation companies

develop specific technologies and skills, protect their intellectual property and carve for

themselves a market niche with high barriers of entry. This is typically a strategy followed in

technical textiles. But also in industries with very specific technologies and engrained skills;

the difficult transmission of tacit knowledge creates the conditions for niches. A gradual shake

out has led to the survival of a limited number of specialists that have become survivors in

niches with high entry barriers; examples are the printers in Como, or the wool weavers in

Biella, the lace makers in Caudry, or the interior textile firms in the Benelux and Herning,

Denmark. These firms often represent a unique cultural heritage rooted in centuries of

industrialization. The preservation of those types of industries is not only a challenge in terms

of jobs, but also the defence of an artistic and industrial tradition and the availability of specific

products is at stake.

The niche market logic is a strategy ideally suited for SMEs. However, it is also a strategy that

demands a long-term strategic commitment, the development of specific skills, a deep

embedding in demanding markets and an active policy in developing and protecting

intellectual property rights. In general, a niche market strategy requires a dynamic export

policy since a niche is usually (too) small at the level of one single country to attain critical

mass. Niche players have had over the last 15 years the benefit of a deepening and widening

internal market. If niche players had attained a commanding position in the enlarged EU, they

could leverage their lead to a global market.

MARKET TREND: FRAGMENTATION AND SMALL SCALE PRODUCTION

However, if at first sight the strengthening of a single market seems to foster these niche

players, fragmentation also has protective benefits. The cultural diversity in Europe but also

the fragmentation of markets fosters small-scale production and thus creates niches for SMEs.

Harmonization of norms and convergence in procurement rules may foster niche players in

attaining critical mass but may also lead to consolidation favouring the development of large

companies.

MARKET TREND: EMBEDDING IN END-USER COMMUNITIES

In the sector of personal protective equipment, the terms of reference for police and fire-

uniforms differ widely between member states and often also within member states. However,

some SMEs have mentioned that a thorough understanding of these differences and a strong

embedding in the end-user community is a source of competitiveness compared to large

global players. The example of the medical and health care market barriers to entrance, is

also a good example on how legislation, differences in health insurance and procurement

systems and specific demands can have a protective effect on a niche market.


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MARKET TREND: ADVANCED CUSTOMIZATION

In some sectors, it is the fragmentation of distribution and differences in taste that create

niches. The companies in interior textiles point to a very fragmented distribution system, the

prevalence of bespoke (made to order) sales model in the upper middle and high end of the

market that protects jacquard weavers as well as printers in Italy. The same logic is also to be

found in the luxury clothing sector were a high level of customization is demanded. However,

luxury markets can be very cyclical and a downside of the high barriers of entry.

MARKET TREND: MASS CUSTOMIZATION

A growing niche segment is mass-customization. This segment has developed a new

generation of start-ups especially in Italy, the Netherlands and Belgium (see the Bivolino

company case) but is also mainstreaming in the clothing industry. It has possibly a positive

impact of clothing subcontractors – especially in the eastern member states- that specialize in

made to measure production. Also the wool weavers and the shirting weavers are adjusting

their service to this niche. We expect this niche to grow partly as an effect of growing

dissatisfaction of ageing consumers with the too narrow offer of retailers, especially regarding

fit. P&R, a case in North of Portugal, shows the importance of body scanning in fitting, not only

as a service, but also a an important way towards improved fitting performance in clothing for

sports application sell on regular retail channels. In such a case, the niche is all the more

potent that the sector as a whole is unable to improve its sizing system.

MARKET TREND: W ITHDRAWAL FROM COMMODITY MARKETS

Ultimately, the perspective for the entire industry is to become specialized in niches. This

means however that the industry withdraws from commodity markets and this segment is left

to imports. This is for financially solid firms a gradual redeployment of assets and personnel.

For less solid firms this may imply a restructuring with in the short term a job loss.

For subcontractors we consider the evolution into co-contractors as an intermediate step.

Getting integrated as a subcontractor into specialized value chains is a step towards niche

market positioning. This is also a strategy requiring years of implementation and learning.


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NETWORK BASED PRODUCTION

Figure 18. Influence of Network based Production Trends on TCBL impacts.

MARKET TREND: PRODUCTION NETWORKS (INDUSTRIAL DISTRICTS)

The network based production model is epitomized in the regional districts with intense

subcontracting relations. In this study we have found district type structures in Italy, both in

Como and in Prato, but also Cholet in Portugal/Galicia around Inditex and even for other

business models in Baden-Wurttemberg around the automotive industry. However, regional

clusters can be a source of resistance and innovation, but emulation in clusters can also be

conservative and protectionist.

Networks are stronger when end-user involvement is sought after (and organized), when end

users take the lead (as Inditex or Airbus do), and when these networks have an international

outlook. Networks are often reinforced by activities or organizations (the Pôle de Compétitivité

UPTEX) or programs to strengthen human capital. It seems to be that networks with an

external orientation or with a service base are stronger than the more classic districts based

on socializing practices.

MARKET TREND: LEADING CUSTOMERS

Some networks also have intensive relations but are not limited to a region. In very specific

segments this is likely to become a more pervasive form of organization that can be boosted

by thematic networks or initiatives under the umbrella of the lead market initiative. These

networks seem to be stronger when a strong leading customer is present (e.g. EADS for

composites). At the moment only composites have such a launching customer. Other sectors

are too fragmented to deliver strong networks. In general, the challenge of the industry, with a

declining number of companies, is to organize specialized networks at a European scale

rather than at the regional or national scale.


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MARKET TREND: COMPETITIVE ENVIRONMENT (E.G. RESEARCH INSTITUTES)

Some districts are showing geographical nearness without intensive input/output relations. In

Belgium and the Netherlands, the concentration of carpet and interior textiles is probably more

related to external economies of scale or an appropriate competitive environment. Education

or research institutes or industry associations (e.g. in Belgium) often perform the role of linking

pin. It can also be a common institutional framework such as a sectorial pension fund or an

energy covenant (in the Netherlands). Common institutions and regulations can be a source of

resilience, as the growing flexibility of labour law in the Netherlands is. They can also be a

source of rigidity, though, as the rules for paying cotton growers and the mode of application of

the Common Agricultural Policy in Greece does.

In regions with a prevalence of subcontractors such as Southern Bulgaria or Romania, the

concentration of companies with similar structure and strategy does not point to a district or

even a cluster. It is rather the outcome of convergence in strategies because of common

external constraints. Whereas networking and clustering, or the sharing of common institutions

is as a positive element, the geographical concentration of companies in an identical

(vulnerable) competitive situation is rather a risk. In this situation, we see the combined impact

of lock-in factors. Equipment and business models are oriented towards a narrow

specialization.

MARKET TREND: HIDDEN INNOVATION

The knowledge base and mindset can also entrench conservatism. Innovators are often

operating unseen from the dominant type of companies in regions. This means that best

practices are often not visible to the majority of firms and therefore difficult to emulate. Hence,

institutional lock-ins enforce the functional and cognitive lock-ins. This is often reflected in a

lack of full appraisal of trends in the industry (especially in end user markets) lack of vision and

lack of collective action.

MARKET TREND: INTER-REGIONAL CLUSTERS

A trend is that regional clusters exchange and develop best practices in the context of

projects. Examples are the Organza Interreg IVC project, the Interreg IVA North Portugal –

Galicia project Euroclustex, the FP7 ERA-NET project Crosstexnet or 2Bfuntex (an FP7

Coordination Action).

MARKET TREND: FOCUS ON CREATIVE INDUSTRIES, DESIGN

These transnational networks seem to focus either on creative industries, with the aim to

connect designers better to manufacturing, or on technical textiles. In the latter case they

seem to be fostered by transnational research funding as provided by Crosstexnet, some

Interreg projects, or an arrangement of reciprocity of funding as established between the

German – speaking countries Germany, Austria and Switzerland.

In some sectors private organizations have taken the lead to bring players together. A

magazine associated with a trade fair (JEC composites) hosts the annual fair in composites

and also offers networking activities the year round. In technical textiles Techtextil, organized

by Messe Frankfurt, is the leading networking event. However, these rather more commercial

approaches need to be underpinned by a business model based on subscriptions, square-

meters exhibitions space or advertising.


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CONSOLIDATION

Figure 19. Influence of Consolidation Trends on TCBL impacts.

MARKET TREND: CONSOLIDATION

Consolidation is an important trend in the T&C industry. External factors foster some scale

such as the costs of development in technical textiles, the brand power to export, the trend

towards verticalisation into retailing. Consolidation trends were already visible prior to the

financial crisis and continued after the 2008/09 crisis.

MARKET TREND: FLEXIBILITY

On the other hand, the complexity of some supply chains, the variability of fashion also lead to

benefits of being small; especially at the level of manufacturing smaller companies are more

flexible.

MARKET TREND: SPECIFIC PRODUCT/MARKET COMBINATIONS

Diversified companies were still of substantial importance in 2001 but no longer in 2009. The

larger firms of 2009 have mainly grown from internal resources albeit sometimes with external

equity (e.g. Hugo Boss under Permira or G-Star with ABN-Amro Participations). In 2009 multi

brand and single brand companies dominated the ranking. Especially the larger companies in

clothing have grown by pursuing a policy of internal growth around brands, integration of

retailing and internationalization. Acquisitions are actively integrated and managed by the

acquiring firm. In textiles acquisition (but also disposals) is a more salient feature and the

dominant trend is to seek market share in specific product/market combinations.

MARKET TREND: GLOBAL LEADERSHIP

Thus, in textiles more focused and more international companies at a substantially smaller

scale than in the 1990s have emerged. These companies have emerged more from internal

growth than through acquisitions, they are often based on a narrow portfolio of brands or

product market combinations. They derive their identity from a mission and strategy rather


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than a national base and/or a financial management approach. They do not aim at national

dominance but rather at leadership in a niche at European scale (until 2000) or global scale

(from 2000 onwards). Their scale is rather between 100 and 500 Mln turnover. If larger they

have clearly a global outlook and their growth is mainly in the USA and Asia.

MARKET TREND: STRATEGIC BRANDING

In the clothing industry the major trend has been one of internal growth around core brands

with a downstream investment in retailing. Only in luxury clothing multi-brand companies

thrived, most notably LVMH and PPR groups. This model has also inspired companies like

Diesel to develop into a producer of brands.

MARKET TREND: PRODUCTION OUTSOURCING

Also of relevance is that the 20 largest clothing firms in 2010 are mainly not industrial. They

are large in turnover and in commercial influence, but they contract out a substantial part of

production. A very large number of suppliers and subcontractors depend on them, mainly in

Italy but also in the Eastern Member States.

Consolidation has happened and also created companies with actual or potential leadership.

However, consolidation has hardly attracted new investors or reduced dependency on banks.

The industry as a whole has not consolidated. The overall characteristic of the industry is to

remain fragmented.

FRAGMENTATION

Figure 20. Influence of Fragmentation Trends on TCBL impacts.

MARKET TREND: FRAGMENTATION

Against consolidation, which is mainly a logic amongst medium size and larger companies,

fragmentation of the industry is still a salient feature. Fragmentation is one of the major

handicaps of the industry. Fragmentation is a consequence of low entry barriers such as the

occurrence of subcontracting, low capital requirements and fragmented (geographically,


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distribution and taste) markets. Fragmentation can only be overcome by raising entry barriers,

and could go then along a major shake out of the industry.

In 2010, 197.000 companies are registered as being engaged in textiles and clothing

production. The average size of companies in employment terms is below 10 people. The

trends gathered out of Eurostat and Orbis data point rather to a decline than an increase in

average size. Fragmentation may be the result of different trends. In subcontracting regions,

the average size of companies is declining, both as the sector downsizes and companies split

up in smaller units to be industrially more flexible and to attain smaller overheads. In

design/brand oriented regions also small companies dominate the manufacturing sector.

MARKET TREND: SELF-EMPLOYMENT

However, self-employment is also emerging for technical specialists that prefer to work as

independent contractors (e.g. in the Netherlands), rather than being employed. Finally, the

Prato case gives a glimpse of marginalization as many smaller Chinese owned companies

operate in a twilight zone. This situation is not unique to Prato, although it is now the most

mediatised.

MARKET TREND: CREATIVE MICRO-ENTERPRISES

The focus on creativity, and in some countries the large number of graduates coming out of

design schools, as well as new forms of distribution constitutes a new segment of micro-

enterprises often integrating design, production and distribution. In the Dutch city of Arnhem

around 200 of these firms have been identified. But also in London, Porto, Vilnius, Milano,

clusters of small companies are oriented towards specialised niches or try to offer products

and brands that are distinct from the retail offer.

MARKET TREND: CUSTOMIZATION, SPECIALISATION

These firms also try to offer customized products, for consumers not catered for by the

dominant retailers (e.g. consumers with handicaps), and also for products made of sustainable

materials. In Tuscany we have also found small manufacturers that through stores or city

markets stands serve directly the large segment of tourists visiting the region. This trend of

small specialized firms seems to be emerging but in terms of total turnover it remains small.

The life expectancy of firms is short and very few are able to grow reaching a sizeable

operation especially because of a lack of management skills, lack of financial resources and

often a lack of adequate production environment.

The fragmentation of the sector creates flexibility but also less transparency, difficulty to

comply with regulations and difficulty to get in touch with agencies and organizations assisting

in education and innovation. The degree of organization, expressed in membership of industry

associations, is substantially lower in the micro-enterprises. Hence industrial organizations

lose members because of consolidation at the top and fragmentation among small companies.

MARKET TREND: CREDIT CRUNCH

Fragmentation of the industry is both a cause and a consequence of difficulty in access to

financial markets. Many forms of capital increase are out of reach to SMEs such as equity

through stock exchange. Venture capital is only accessible for sectors with high growth

potential, and textiles is not among them. Starting designers may benefit from informal

investors, but their subcontractors not. Hence companies depend on the family capital base


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and on commercial credit. Credit is needed for financing buying of materials and credit to

retailers, while machines are increasingly obtained on a leasing basis.

SMEs suffer most from the image of the T&C industry but also for being industry and SME.

The transition to fact based credit system drove by the Basel accords gives less appreciation

for the specific niche position, skills, design or brand excellence. Alternative financial (mutual)

systems have not yet been developed, or identified in the study. Forms of information

exchange or collective financial services do however exist in the Netherlands and in Lithuania.

Collective organization may overcome fragmentation and enable SMEs to possibly improve

their standing in the financial market.

COMMODITY AND SUBCONTRACTOR TRAPS

Figure 21. Influence of Commoditization and Subcontracting Trends on TCBL impacts.

MARKET TREND: COMMODITIZATION

One of the dangers that were highlighted in several regional cases is the commodity trap. The

commodity trap means that “not all companies shall survive enhanced global competition, only

those with special skills and competitive advantages will survive”. This can be escaped

through technical and design leadership associated with specialisation and exports.

The commodity trap means being positioned in a market segment where barriers of entry have

declined, opportunities of product or service differentiation have dwindled and competition on

cost has become paramount. The commodity trap means that European firms are stuck in a

segment where Europe has little competitive advantage. There are methods to get out of the

commodity trap, mainly through design and service innovation or by vertical integration and

attaining economies of scale. The carpet industry in Europe is rather successful in maintaining

its position in a commodity, but indeed by combining all the elements mentioned. Hellenic

Fabrics is an example of vertical integration combined with design leadership. In North

Portugal, some clothing manufacturing companies had successfully evolved to a hybrid model,

investing in own brands creation and production, which helps to reduce the dependence on


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subcontracting models. Success stories of shifting into more technical products allowing

market control have also been reported.

Commoditization also occurs when too many companies diversify into a niche. Many

companies shifting from home textiles or clothing textiles into technical textiles have often the

effect of increasing competition in that segment with the effect of reducing prices and profits.

Established companies then seek to upgrade into sub-segments with higher barriers.

MARKET TREND: SUBCONTRACTOR VULNERABILITY

The subcontractor trap means to be consigned in a position of subcontractor with little visibility

on the end-user, little added-value other than providing labour and a very vulnerable financial

model. Subcontractors form a very large but vulnerable part of the industry. Subcontractors

themselves acknowledge this vulnerability and aim at developing into co-contractors (offering

more services) or hybrids (developing own brands). On the other hand, the design, fashion

and luxury leadership of Europe depends on the basis of a vibrant subcontractor sector as in

Cholet and Lombardy. Hence, they can contribute and benefit from an export driven strategy

for Europe.

Subcontractors form a large share of companies in the clothing industry and also form a

majority of firms in textile finishing. The share of subcontractors in knitting has declined and

the prevalence of subcontractors in spinning and weaving is low.

MARKET TREND: SUBCONTRACTOR SPECIALISATION

Some subcontractors bring very special skills or equipment and can be important in an industrial

district as key input for the district. For example, in the Calais case, the only company providing

dyeing and finishing services for the lace makers is of key importance to the district as a whole.

In this case but also in similar instances (e.g. in Prato) clients took a share in the subcontractor

in order to secure its survival.

A growing demand for specialty fibre extrusion in a subcontracting model is reported. In some

cases, the supply of small quantities even by research and development centres is seen as an

opportunity to provide SMEs with interesting relatively small quantities of specialty extruded

fibres. One company in the Netherlands has now developed a customized extrusion production.

In Nordrhein-Westfalen and in West-Sweden such an outfit is under discussion as a joint venture

between several weavers. A specialized industry of “mini-mills” such as existing in metal

production or in making master batches of plastics has yet to emerge.

MARKET TREND: COMPETITIVE DISTRICTS

In other instances, the formation of a district of subcontractors around a key client (Inditex in

Northern Portugal) or a set of clients with comparable requirements (the luxury clothing

makers in Cholet or the digital printers in Como), create a specific competitive advantage. This

is not only an advantage for them but also for the system as a whole. Inditex relies on the

capacities of quick response (in trend matching, design and production) of a cluster of

subcontractors and their textile suppliers in North Portugal and Galicia. The luxury fashion

houses in Paris and Milan depend for their creativity, quality and flexibility on subcontractors in

Cholet, Como and Prato. However, for the overwhelming majority of firms the subcontracting

position is a problematic position as was witnessed in several regions, as in Southern Bulgaria

and Slovakia.


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2.4 CONCLUSIONS

This Section has provided an overview of the economic environment, industry structure and

major market trends of the T&C sector. The first part on the Economic Environment brings to

light the “milieu” where the T&C industry operates. The description of the Industry reveals the

complexity, inter-relatedness and diverse nature of all the components, phases, activities and

sectors that form the T&C value chain today. The figures in this Section indicate a medium- to

long-term tendency of T&C to consolidate (contract) and simultaneously grow in scale (mass

production by global players). On the other hand, the sector shows a more recent tendency to

fight the decline by diversifying and specialising the production, in order to explore new

markets both in the EU and in third countries (China, India, Brazil, Russia, etc.), where a new

middle class is emerging, endowed with an increasing purchasing power.

The last part focusing on Market Trends provided insights into the macro-scale dynamics of

the T&C industry, and is meant to serve as a baseline for drafting a sound strategy to steer the

sector toward greater innovativeness, adaptability, responsibility, sustainability, etc. This

analysis identified some 50 major market trends under 9 different domains:

1. Consumption

2. Emerging Markets

3. Relocalisation

4. Business Models

5. Networked Production

6. Consolidation

7. Fragmentation

8. Commoditization

9. Subcontracting

Out of these 50, it is important to figure out which trends most positively contribute to TCBL’s

objectives as stated in the DoA12:

Return of delocalised manufacturing to Europe, in the order of at least 5% of the total

manufacturing capacity, in the application area targeted by the project, within 5 years

after the end of project.

Reduction in the environmental footprint compared to products produced in the

traditional value chains by 20% through less stock, less waste, and less

transportation.

Creation of a novel supply network involving at least 100 organisations and individuals

at the end of the project and 1000 organisations and individuals within 5 years after

the end of project.

Creation of new embedded services supporting the customer-driven supply chain.

According to a synthetic index taking into account objectives 1-4 above, the most favourable

and unfavourable trends are pictured in Figures 22 and 23 respectively (see below)13.

12 TCBL DoA - 2.1 “Expected Impacts”

13 influence rating: 5 = strong, 4 = positive, 3 = neutral, 2 = negative, 1 = very negative


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According to these maps, it is evident that TCBL’s objective to reshore manufacturing capacity

can be favoured by increasing the T&C focus on end-users’ needs, customisation, niche

products, cost-effectiveness, smart solutions, design, service, etc. (Figure 22). On the other

hand (Figure 23), EU Textile & Clothing is at loss when it falls in the commodity trap14, i.e.

when it tries to compete on costs, low quality products, fast fashion, commoditization, etc.

Moreover, such hampering factors like fragmentation, subcontracting pitfalls, restricted market

presence, etc. should be avoided, while success factors and strategies that too often stay

hidden should be evidenced and disseminated among T&C actors for smarter innovation and

competitiveness.

Figure 22. Favourable trends for TCBL objectives.

14 This means being positioned in a market segment where entry barriers are low, opportunities of

differentiation are less and competition is mainly based on costs. Firms are stuck in a segment where they

have little competitive advantage. To get out of the commodity trap, innovation in design and service,

vertical integration and economies of scale should be pursued.


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Figure 23. Unfavourable trends for TCBL objectives.

43

3. TCBL POLICY OUTLOOK

In this Section of the deliverable, the focus of our analysis will shift to the policy environment in

which TCBL operates. The overall aim of this activity is to gain a deep understanding of how

policy actions in different domains and taken at different administrative levels may affect the

sustainability potential of the TCBL innovation ecosystem either through the generation of

opportunities or a limitation in the scope of action. The rationale behind such activity may be

found in the dependence of innovation on a large number of systemic factors, including the

incentives and obstacles set by existing regulatory frameworks. As stated in the conclusions of

a recent CEPS study15:

EU regulation matters at all stages of the innovation process from R&D to

commercialisation. Individuals, firms and governments, when deciding on whether to engage

with innovation, incorporate in their decisions general rules that shape the business

environment, rules affecting market size (including, critically, also free movement, directly

from the treaty), innovation-specific rules, but also sectorial rules and even rules that affect

the later stages of the innovation process, e.g. rules on consumer protection'.

More specifically, the objective of this first version of the deliverable is to set the boundaries of

the policy domains that have been identified as relevant for the survival of the TCBL

ecosystem at its current stage of development. As a matter of fact, the ecosystem of actors

created by TCBL represents a living entity that is expected to expand, change and mature in

the course of the project and beyond.

TCBL aspires to become a reference innovation ecosystem promoting a profound and long

lasting change in the European textile and clothing industry. The key feature that characterizes

its approach is the concurrent and combined presence of technological, business model and

social innovation aimed at generating an inclusive and sustainable socio-economic system.

For what concerns the ability of the ecosystem to expand and thrive beyond the possibilities

offered by the EU grant, two core aspects have been identified as critical:

1. The survival of existing Business Labs combined with the birth of new ones in Member

States not currently represented by the consortium;

2. The market fit of TCBL-enabled innovations: in other words, their appeal for a wide

audience of final consumers.

The following analysis will thus look at the policy environment from the two perspectives

above. The first one will allow to understand if TBCL labs - that are often virtuous examples of

public-private partnerships - may find a conducive environment in the years to come and

across different European regions; the second one, instead, will permit to ponder the extent to

which public regulations are working for the creation of a system of incentives in the business

world and for the birth of new sensitivities among final customers that are in line with the

values of sustainability, ethics and inclusion promoted by the TCBL ecosystem.

15 J. Pelkmans & A. Renda (2014). Does EU regulation hinder or stimulate innovation? CEPS Special

Report No. 96, November 2014.

https://www.ceps.eu/system/files/No%2096%20EU%20Legislation%20and%20Innovation.pdf


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The remainder of the Section will first present a brief description of the salient aspects of the

key policy environment and, subsequently, offer some reflections on their relationship with the

TCBL ecosystem.

3.1 TCBL POLICY ENVIRONMENT OVERVIEW

EUROPE 2020

The European Union has been working hard to move beyond the crisis and create the

conditions for a more competitive economy with higher employment. The Europe 2020 plan,

which depicts the European Union’s ten-year growth strategy, is about more than just

overcoming the crisis. It aims at creating the conditions for a different type of socioeconomic

development that is smarter, more sustainable and more inclusive.

The strategy sets five key targets for: (1) employment; (2) education; (3) research and

innovation; (4) social inclusion and poverty reduction; and (5) and climate/energy16, that the

EU should meet by the end of the decade.

To ensure that the Europe 2020 strategy delivers, a strong and effective system of economic

governance has been set up to coordinate policy actions between the EU and national levels.

The Europe 2020 Strategy has identified new drivers to boost growth and jobs in seven

specific areas, for which measures have been embedded in seven flagship initiatives, which

aim to make the EU economy more efficient (a resource-efficient Europe, an industrial policy

for the globalisation era), foster innovation (a Digital Agenda for Europe, Innovation Union)

and fight unemployment and exclusion (Youth on the Move, an Agenda for New Skills and

Jobs, European Platform against Poverty).

The seven flagship initiatives are the first and most important initiatives since their purpose is

the direct implementation of the Commission’s long-term strategy to secure smart, sustainable

and inclusive growth. Below each of the initiative is briefly summarised.

RESOURCE-EFFICIENT EUROPE

The Resource-Efficient Europe flagship initiative, which supports the shift towards a resource-

efficient and low-carbon economy, provides a long-term framework for embedding the smarter

use of resources as a principle in the design of economic and social policies. A major societal

challenge is the transformation of the European energy system into an almost CO2-emission

free economy (-80/-95 %), which the EU aims to achieve by 2050. A 20% improvement in

energy efficiency is one of the ambitious energy and climate change objectives for 2020.

Bringing about this profound change involves making energy policy an integral part of other

policies and establishing new planning and management approaches in order to harvest the

full potential of innovative energy concepts.

This objective is framed into a long-term policy framework up to 2050, which includes four

major roadmaps (moving to a competitive low-carbon economy, a Single European transport

16 European Commission (2011). Europe 2020 Targets. http://ec.europa.eu/europe2020/targets/eu-

targets/index_en.htm

http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/priorities/economic-governance/index_en.htm

http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/priorities/economic-governance/index_en.htm


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area and a resource-efficient transport system, and the energy and resource-efficient Europe

roadmaps)17 and a shorter term policy framework for climate and energy related to the period

from 2020 to 203018.

From a TCBL perspective, an interesting aspect in the implementation of this flagship initiative

is its reliance on the cooperation of stakeholders, starting with consumers and the ongoing

efforts made to design proper indicators to monitor improvements in the use of resources in a

manner that can drive policy developments.

AN INDUSTRIAL POLICY FOR THE GLOBALISATION ERA

This initiative seeks to fight the inefficiencies in European and national policymaking that have

made it difficult for industry, innovators, workers and consumers to fully exploit the benefits

that an international economy can generate.

The 70 actions implemented as a result of this initiative include a number that are oriented

towards the support of SMEs in terms of access to finance and internationalisation, as well

as standard setting, streamlining legislation.

In addition, the Industrial Policy flagship initiative emphasises workplace innovation, which is

an integral part of the broader concept of social innovation that TCBL labs may contribute to

promote and on design as a source of innovation.

THE DIGITAL AGENDA FOR EUROPE

The Digital Agenda for Europe (DAE) aims to develop innovative solutions that challenge

traditional ways of doing things, like moving from closed innovation models to open and

collaborative innovation that allows to tap on the power of social production and collective

intelligence. This distribution of power is at the heart of the ‘empowerment’ element that drives

the type of innovation that TCBL aspires to enable.

The predecessor to the digital agenda had been structured around developing technology and

framing legislation but in 2010 the time had come to concentrate on using the latest digital

technologies to address the mainstream challenges of demographic ageing and global

competition in order to unleash digital potential and spread the digital culture across the EU.

The digital agenda highlights the importance of providing a better equipped (infrastructure),

more secure (regulatory environment, protection of property) and knowledge-based (digital

skills and jobs) digital environment. It also manages to give the digital economy the necessary

political attention. It gave rise to the cooperation and commitment of various Commission

services around a common agenda and contributed to a collaborative approach in order to

address challenges in a participatory way. In such a context, social innovation complements

traditional technological innovation methods and is one of the three main dimensions of

emerging forms of innovation, together with technological innovation and business model

innovation. These are three distinctive ingredients of the TCBL holistic approach to innovation,

that to be properly implemented requires the presence of a technological and human capital

infrastructure, that is: connections and skills, which the implementation of the digital agenda at

local level is contributing to make available.

17 COM(2011) 112,144, 885, 571, 244. See bibliography for full reference.

18 COM(2014 )15. See bibliography for full reference.


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INNOVATION UNION

This flagship initiative is probably the most explicit advocate for TCBL-like innovation19. It is a

comprehensive package of actions aimed at achieving an innovation-friendly environment

within the EU. Innovation is taken in its widest meaning: ‘our future standard of living depends

on our ability to drive innovation in products, services, business and social processes and

models’. The Innovation Union flagship initiative aims at tackling unfavourable framework

conditions such as: low availability of private investment in research and innovation, ideas

prevented from reaching the market by poor availability of finance, costly patenting, market

fragmentation, outdated regulations and procedures, slow standard-setting and the failure to

use public procurement strategically. Moreover, barriers in the single market make it more

difficult for different players to work together across borders, using and sharing knowledge

from all sources, which is increasingly how successful innovations are developed.

In addition, the initiative attempts to single out a Europe specific approach to innovation

characterized by:

A focus on innovations that address the major societal challenges. Innovation must

become a key element in EU policies and the EU must use the strong potential of the

public sector in areas such as energy and water, health, public transport and

education, to bring new solutions to the market.

Pursuing a broad concept of innovation, both research-driven innovation and

innovation in business models, design, branding and services that add value for users

and where Europe has unique talents. The creativity and diversity of our people and

the strength of European creative industries, offer huge potential for new growth and

jobs through innovation, especially for SMEs

Involving all actors and all regions in the innovation cycle: not only major companies

but also SMEs in all sectors, including the public sector, the social economy and

citizens themselves ('social innovation'); not only a few high-tech areas, but all regions

in Europe and every Member State, each focusing on its own strengths ("smart

specialisation") with Europe, Member States and regions acting in partnership.

YOUTH ON THE MOVE

This initiative was designed as a comprehensive package of policy measures on education

and employment for young people in Europe. It aims to improve young people’s education and

employability, to reduce high youth unemployment and to increase the youth-employment rate.

This initiative is focused on the Europe 2020 objectives of reducing early school leaving and

achieving a 75 % employment rate for the working-age population (20-64 years). It has

adopted an all-encompassing approach by bringing together the issues of education and

employment and creating bridges between these issues and the stakeholders.

This initiative, through its focus on young people, has brought together a set of EU actions

which have put youth issues and concerns high on the European and National agendas. The

four pillars of the initiative are: reduce early school leaving, modernise higher education,

19 Europe 2020 Flagship Initiative Innovation Union, SEC(2010) http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0546:FIN:EN:PDF


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encourage mobility (through the European Skills passport or the ‘your first EURES job’

scheme) and encourage youth employment (through youth guarantees20).

Young people’s needs and their participation in the design of measures have been a primary

focus to make education and training more relevant to them; to encourage more of them to

take advantage of EU grants to study or train in another country; to encourage countries to

simplify the transition from education to work and to offer concrete support and helping

education and employment systems in Member States to learn from each other. Universities

have been encouraged to improve the quality of the courses they offer by making them more

responsive to student’s needs; opportunities to learn later in life and early school leavers have

focused a lot of attention and youth unemployment is also being tackled through more

workplace and entrepreneurial learning experiences and more possibilities for self-

employment.

Considering the very high level of youth unemployment as a consequence of the crisis, actions

for youth have been given extensive political and financial attention, reinforcing the means of

action of this flagship initiative. The attraction of young people to meaningful employment

makes a case for developing a sustainable framework for social enterprises and social

innovation initiatives. Moreover, youth creativity is now seen as a crucial source of

competitiveness in the fastest growing innovative sector of the global economy.

THE AGENDA FOR NEW SKILLS AND JOBS

This flagship initiative’s main objective is to help the EU reach its employment target for 2020

of having 75 % of working-age women and men (aged 20-64) in employment.

The agenda also contributes to achieving the EU’s targets to get the early school-leaving rate

below 10 % and more young people in higher education or equivalent vocational education (at

least 40 %), as well as to have at least 20 million fewer people in or at risk of poverty and

social exclusion by 2020. The agenda presents a set of concrete actions to step up reforms to

improve flexibility and security in the labour market, to equip people with the right skills for the

jobs of today and tomorrow, to improve the quality of jobs and ensure better working

conditions and improve the conditions for job creation.

It is important to point out that instruments that are designed to improve education and training

systems also indirectly contribute to wider social innovation. This aspect has been developed

in the Communication Rethinking Education - Investing in skills for better socio-economic

outcomes, adopted in November 2012, which looks at areas such as: learner-centred models

involving personalised and interdisciplinary learning, soft-skills and platforms for knowledge,

especially in ICT, Massive Open Online Courses (MOOCs), cloud schools or Open

Educational Resources (OER). In this context, two recent studies will also provide further

insights: Innovation in Higher Education (November 2013) and Measuring the impact of

university-business cooperation.

20 Youth guarantees ensure that all young people under the age of 25 receive good quality employment

opportunities, continued education, apprenticeship or a traineeship within a period of four months of

becoming unemployed or leaving formal education.


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The Council Recommendation on the validation of non-formal and informal learning21 also

makes an essential contribution to the Europe 2020 Strategy goals by increasing the

opportunities for skills acquired outside formal education and training systems to be

recognised and validated, and for establishing national systems for the validation of non-

formal and informal learning.

THE EUROPEAN PLATFORM AGAINST POVERTY AND SOCIAL EXCLUSION

The most important objective of this flagship initiative is to help Member States to ensure

economic, social and territorial cohesion. The European objective agreed for 2020 is to get 20

million people out of poverty via an integrated approach that involves economic, fiscal, social

and Single Market policies. Innovation is seen as a tool that can reveal and address some of

the new causes of poverty, help to establish the dignity of people experiencing poverty by

recognising their specific expertise and facilitate a partnership approach between stakeholders

(civil society, social partners, Member States).

This flagship initiative identified commitments for the Commission in five areas:

Delivering actions across the whole policy spectrum such as the labour market,

minimum income support, healthcare, education, housing and access to basic banking

accounts.

Better use of EU funds to support social inclusion. The Commission has proposed that

20% of the European Social Fund be earmarked for fighting poverty and social

exclusion.

Promoting robust evidence of what does and does not work in social policy

innovations before implementing them more widely.

Working in partnership with civil society to support more effectively the implementation

of social policy reforms. The participation of people experiencing poverty is now

acknowledged as a catalyst for inclusion strategies.

Enhanced policy coordination among EU countries has been established through the

use of the open method of coordination for social protection and social inclusion

(Social OMC) and the Social Protection Committee in particular.

TEXTILE REGULATION (EU) N. 1007/2011

The need to align legislation on textile names in Member States was recognised by the

European Commission over forty years ago. This was due to the fact that differences in textile

fibre names across Member States created a technical barrier to trade in the European single

market and hindered consumer interests. In 1971, a Directive was adopted to harmonise the

names of textile products and their labelling on the items themselves and in marketing

documents.

The Directive was subsequently consolidated into the so-called Textile Directives:

2008/121/EC on textile names, 96/73/EC on certain methods for the quantitative analysis of

binary textile fibre mixtures, and 73/44/EEC on the quantitative analysis of ternary fibre

mixtures.

21 European Council (2012). Council Recommendation of 20 December 2012 on the validation of non-

formal and informal learning. (OJ C 398). http://eur-lex.europa.eu/legal-

content/EN/ALL/?uri=celex:32012H1222(01)

http://ec.europa.eu/social/main.jsp?catId=754&langId=en


http://ec.europa.eu/internal_market/finservices-retail/inclusion/index_en.htm

http://ec.europa.eu/internal_market/finservices-retail/inclusion/index_en.htm


http://ec.europa.eu/esf/home.jsp?langId=en



http://ec.europa.eu/social/main.jsp?langId=en&catId=85

http://europa.eu/legislation_summaries/employment_and_social_policy/social_inclusion_fight_against_poverty/em0011_en.htm



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In 2006, the Commission decided to revise legislation on textile names again to introduce

more flexibility to keep up with the technological developments expected in the industry. In

2009, the Commission adopted a proposal for a new regulation on textile names that would

replace the Textile Directives.

The new Textile Regulation (EU) No 1007/2011 on textile fibre names and related labelling

and marking of the fibre composition of textile products was adopted in September 2011 and

became applicable on 8 May 2012. It repealed and replaced the previous Textile Directives.

The main elements are of the new directive are briefly summarised below:

General obligation to state the full fibre composition of textile products;

Minimum technical requirements for applications for a new fibre name;

Requirement to indicate the presence of non-textile parts of animal origin;

Exemption applicable to customised products made by self-employed tailors;

Empowerment of the European Commission to adopt delegated acts amending the

technical Annexes of the Regulation, in line with Article 290 of the Treaty on the

Functioning of the European Union;

Reporting on the implementation, review clause, and study on hazardous substances

to be undertaken by the Commission.

In terms of scope, instead, the Regulation prescribes that textile products have to be labelled

or marked whenever they are available on the market. The indication of the fibre composition

of a product is mandatory at all stages of the industrial processing and commercial distribution

of that product. All products containing at least 80% by weight of textile fibres, including raw,

semi-worked, worked, semi-manufactured, semi-made, and made-up products are covered by

the Regulation. The Regulation does not cover size, country of origin, or wash/care labelling.

EU ECOLABEL FOR TEXTILE PRODUCTS

The EU Ecolabel seeks to minimise the various environmental impacts at each stage of a

product’s life. A number of criteria have been set at levels that promote products that have a

lower overall environmental impact. In particular, the criteria aim to promote textile products,

which are:

sourced from more sustainable forms of agriculture and forestry,

manufactured using resources and energy more efficiently,

manufactured using cleaner, less polluting processes,

manufactured using less hazardous substances,

designed and specified to be of high quality and durable.

These criteria have also been made available to be used on a voluntary basis by public

administrations in the public procurement process. Public purchases weights between 15-20%

of the EU GDP22. Thus making even a small improvement in terms of sustainability in such

process may contribute to generate significant environmental impacts.

22 http://ec.europa.eu/trade/policy/accessing-markets/public-procurement


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3.2 THE POLICY ENVIRONMENT AND TCBL’S VIABILITY

The global fashion industry has a significant environmental footprint: to grow and process

fibres, textiles and garments can require >20,000 litres of water per garment, while processing

can require combinations of up to 8,000 sector-registered chemicals. Wearable, unsold

garments are discarded into landfill at alarming rates23.

As underlined in Section 2 of this deliverable, the textile and clothing is one of the major

manufacturing industries of the EU-28 in terms of production volumes, added-value and jobs.

This sector has been heavily hit by the recent crisis and has steadily lost competitiveness in

the last few years. The fashion industry is characterized by highly diffused networks of small

and micro firms alongside complex global supply chains of multinational brands. The former

are under increasing pressure to reduce costs while the latter maintain their position as

‘holders’ resistant to emergent trends yet sensitive to real market shifts.

In such a scenario, the TCBL project intends to be one tile in a wider industrial policy mosaic,

offering a potential new development path relying on a recipe composed of social, business

model and technological innovation oriented towards triple sustainability (environmental,

social, economic).

This is operationalized through the creation, or rather the elicitation, of an international

ecosystem of business labs and service points collaborating with T&C enterprises of all

dimensions (from home workers to large enterprises) to explore new avenues of value

creation, appropriation and distribution.

Like every community, the TCBL ecosystem is characterised by a set of shared principles that

are employed to select its members and guide its innovation activities towards a more

desirable future. Such principles have been described extensively in other deliverables (in

particular, D 6.5) and will be just briefly mentioned below as a useful reminder for the reader to

better understand the reflections on the potential synergies between the TCBL core activities

and the priorities set by the policy context identified.

Table 1. TCBL core principles.

23 WWF (1999) The Impact of Cotton on Freshwater Resources and Ecosystems


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As stated in the opening of this Section, the preliminary evidence of a potential viability beyond

the grant period for the TCBL ecosystem should be looked for in the possibility for business

Description

1. Curiosity Creative exploration of new paths, roles, social constructs and business

models. Learning-driven action research as a way of life, including

learning by errors and mistakes. Learning as both an individual and

collective process of knowledge creation. Reframing and rethinking what

exists, respect for different disciplines and methods. Trying new

experiences, playfulness, randomness, having the courage to try radically

new approaches.

2. Viability Things should stand on their own feet, but can do so by equally increasing

the prosperity of businesses and the well being of communities; this is our

ultimate goal. Importance of both monetary and non-monetary

transactions.

3. Durability Commitment to the environment, towards circular economy and zero km.

Above all, reduce consumption and a consumption-driven culture, work

towards sustainable fashion. Reduce waste, design for durable relations,

focus on reuse and recycling, save water, reduce emissions (atmosphere

and toxic waste). Durable and resilient systems.

4. Multiplicity Value of different cultures, traditions, opinions. Roles for both

professionals and amateurs, different labour specialisations. Designing for

diversity of needs and tastes. Allowing for multiple business models to co-

exist and complement each other.

5. Openness Trusting others by sharing of resources and information. Search for

common processes, platforms and standards: interoperability.

Participatory decision-making, using social media, connecting with others.

Transparency of practices, supply chains, cost structures, etc. Sharing of

new insights and information. Recognition of the contributions of all (age,

gender, etc.) overcoming marginality.

6. Respect Protection of privacy, authorship, and IP. Dignity of the individual, power

of social knowledge. Value of place and territories. Caring for things,

establishing emotional links with the clothes we wear and looking after

them. Respect for those who make the things we have. Equity of business

relations, payment of a Fair Price. Capacity building wherever we go.

7. Responsibility Commitment to reliable, trustworthy, professional behaviour.

Accountability for the consequences of our actions. Responsible design,

responsible production, responsible selling, responsible consumption.

Responsible choices of who we work with. Ensuring the right human and

physical resources are available and good working conditions within our

own organisations. Stable management and accountability.


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labs to expand and survive over time as well as in the alignment of the ecosystem mission and

principles with a more generalized shift of the European economy towards a more

environmentally sustainable, socially inclusive and ‘glocal’ economic context (i.e., capable of

turning local traditions as well as international trade into development opportunities). For this

reason the following discussion will address the favourability of the policy environment,

through a number of lenses that touch upon the different policy domains outlined above. Such

lenses have been selected among the most prominent cross-industry trends currently shaping

the evolution of the overall European economy: social innovation, circular economy, smart

specialization and industries 4.0. In briefly discussing these four trends, we will to highlight

how they relate to the T&C industry as well as to what extent they may play a positive and

supportive role in fostering a long term sustainability of the TCBL ecosystem.

SOCIAL INNOVATION

Social innovations are both social in their ends and in their means. So, the social is both in the

how, the process, and in the why, the social and societal goals you want to reach. The

usefulness and popularity of the term social innovation is derived from the fact that it can serve

as an umbrella concept for inventing and incubating solutions to modern time challenges in a

creative and positive way.

Social innovation is present in a whole range of policy initiatives of the European Commission:

the European platform against poverty and social exclusion, the Innovation Union, the Social

Business Initiative, the Employment and Social Investment packages, the Digital Agenda, the

new industrial policy, the Innovation Partnership for Active and Healthy Ageing, and the

Cohesion Policy. A very good account of how social innovation intertwines with different policy

measures and domains may be found in the “Guide to Social Innovation”24 published in 2013

by the European Commission (Directorate General Regional and Urban Policy).

In our view, the emergence of the notion of social innovation is strictly related to two long term

trends. The first trend has to do with an evolution process undertaken by the private sector

over the last century. It initially involved a shift from a mere focus on shareholders’ interests to

a wider approach based on the notion of stakeholders (any entity that may influence or may be

influenced by the company core business). Subsequently it led to the birth of the so called

benefit corporations25, i.e. profit companies that include positive impact on society, workers,

the community and the environment in addition to profit as its legally defined goals. More

recently, it highlighted the “invisible heart of markets”26 through the emergence of impact

investment practices. The second trend has to do with the gradual shrinking of public budgets

coupled with the effects of a long lasting economic crisis. The combined influence of the two

phenomena contributed to a significant change characterized by a reduction of the public

24 European Commission (2013). Guide to social innovation.

http://s3platform.jrc.ec.europa.eu/documents/20182/84453/Guide_to_Social_Innovation.pdf

25 https://en.wikipedia.org/wiki/Benefit_corporation

26 The phrase “invisible heart of the markets” has been coined by the UK G8 task force on impact

investments in order to underline the roles of capital and of the market in addressing pressing societal

needs without having to forego a economic return on the investment made. Further information on the

topic are available in the following report: G8 Social Investment Task Force (2014) “Social Investment:

The Invisible Heart of Markets”.


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sector perimeter and a concurrent blurring of the boundaries between the public and the

private sector27 resulting in higher level of interaction among public agencies, enterprises and

civil society under the coordination of the ‘enabling state’28.

Christian Bason, in his book on public sector innovation29, has identified a list of actions that

the public sector may put in place to become an enabler of social innovation:

A shift from random innovation to a conscious and systematic approach to public

sector renewal;

A shift from managing human resources to building innovation capacity at all levels of

government;

A shift from running tasks and projects to orchestrating processes of co-creation,

creating new solutions with people, not for them;

And finally, a shift from administrating public organisations to courageously leading

innovation across and beyond the public sector.

As a matter of fact, social innovators can come from all walks of life and social innovation can

take place in public, private and third sector organisations. Often the most fruitful sources of

new ideas take place in collaborations across sectors. They can operate at the level of new

ideas and pilots, of implementation and scaling, but also at the level of policymaking.

We believe that the context described above may represent a fertile soil for TCBL business

labs, often resulting from unstructured or structured public-private collaborations (e.g. the

Prato Lab). Labs constitute potentially attractive places where to test, implement or diffuse

social and environmentally conscious innovations in the textile and clothing sector. An initiative

such as “Made in Carcere”30, an Italian based company employing detained women for the

production of clothes accessories using scrap fabric from large corporations, may offer a good

exemplification of the type of social innovation that TCBL labs could enable or a best practice

started in a member state that could reach a European scale thanks to the support and the

collaboration of a series of actors belonging to the TCBL ecosystem.

CIRCULAR ECONOMY

The European socioeconomic model has been successful in creating and distributing income

to people. But like the world economy, the European economy operates in a linear take-make-

dispose resource model that generates significant waste.

As of 2012, in value terms, Europe lost 95 percent of the material and energy value, while

material recycling and waste-based energy recovery captured only 5 percent of the original

raw material value.1 Even recycling success stories like steel, PET, and paper lose 30-75

27 Lienert I. (2009) “Where Does the Public Sector End and the Private Sector Begin?” IMF paper

28 Wallace, J. (2013). The rise of the enabling state. Carnegie UK Trust.

http://www.carnegieuktrust.org.uk/carnegieuktrust/wp-

content/uploads/sites/64/2016/02/pub14550114991.pdf

29 Bason C. (2010) “Leading Public Sector Innovation: Co-creation for a better society” Policy Press.

30 http://www.madeincarcere.it/


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percent of the material value in the first use cycle. On average, Europe uses materials only

once31.

The circular economy ambition goes well beyond recycling as it advocates the creation of a

restorative industrial system aimed at designing out waste. A study from the Ellen MacArthur

Foundation32 shows how recycling is an 'outer circle' of the circular economy, requiring more

energy input than the 'inner circles' of repair, reuse and remanufacture as the goal is not just

to design for better end-of-life recovery, but to minimise energy use.

The business case for a circular economy has been recently argued in an report jointly

authored by McKinsey, the McArthur Foundation and SUN (Stiftungsfonds für

Umweltökonomie und Nachhaltigkeit GmbH) titled “Growth Within: A Circular Economy Vision

for a Competitive Europe”33. The analysis estimates that shifting towards circularity could add

$1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five

years. The European Union could benefit from an annual productivity improvement of 3

percent and a 7 percent GDP growth with respect to current development scenarios.

The implementation of a circular economy paradigm could qualify as the next major European

political economy project that could generate great benefits for the environment and boost

competitiveness and resilience of the European socio-economic system.

At the end of 2015 the European Commission adopted a circular economy package that

defines an action plan with measures covering the whole cycle: from production and

consumption to waste management and the market for secondary raw materials. Also the

Resource Efficient Europe flagship and the Eco-label initiative work in the direction of

sustainability and resource efficiency. This transition will initially be supported financially by the

European Structural & Investment Funds (ESIF), which include €5.5 billion for waste

management. In addition, support will be provided by €650 million under Horizon 2020 (the EU

funding programme for research and innovation) and investments in the circular economy at

national level. This package surely represents an important first step nevertheless a

successful outcome will require focus, endurance, smartness and financial commitment for

many years to come by European institutions at all administrative levels.

As a matter of fact, the relationship consumers currently have with products and services they

purchase could undergo a paradigm shift under a circular economy. What if they did not buy

the goods they use, but instead favoured access and performance over ownership? The 'pay

per use' contractual agreements associated with smartphones for example could be extended

to standard goods such as washing machines, clothes and DIY equipment. In the textile and

clothing sector companies such Mud Jeans34 are already piloting product-as-service models,

which would see us become users rather than consumers. Such a shift would not only allow

31 This material value retention ratio is defined as the estimated material and energy output of the European

waste management and recycling sector, divided by the output of the raw material sector (adjusted for net

primary resource imports and 30 percent embedded resource value in net imported products).

32 https://www.ellenmacarthurfoundation.org/circular-economy/interactive-diagram

33 https://www.ellenmacarthurfoundation.org/publications/growth-within-a-circular-economy-vision-for-a-

competitive-europe

34 http://www.mudjeans.eu/lease-a-jeans/

https://www.ellenmacarthurfoundation.org/publications/growth-within-a-circular-economy-vision-for-a-competitive-europe

https://www.ellenmacarthurfoundation.org/publications/growth-within-a-circular-economy-vision-for-a-competitive-europe


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companies to retain product ownership for easier repair, reuse and remanufacture, but might

result in producer responsibility obligations towards sustainability.

In this respect, there are ongoing discussions regarding Extended Producer Responsibility

(EPR), which implies that producers need to take greater responsibility of their products

becoming resource efficient, free from dangerous substances, recyclable and reusable35. In

France, since 2006 clothing companies have been responsible by law to ensure recycling and

reuse of their products. The companies can fulfil the requirements either by self-organized

programs approved by French authorities, or by contributing financially to organizations

accredited by the authorities. Since the implementation of mandatory EPR systems in France

the collection quantities have increased with 8% per year. As companies using textiles with

more than 15% recycled fibres not have to contribute as much financially to the organizations

providing collective systems, this EPR system is considered to promote positive upstream

effects through an increased usage of recycled fibres36.

Moving to TCBL, the principles the project adopted as guiding lights for the attainment of its

ambitious goals in terms of socio-economic and environmental impact (viability, durability,

responsibility and respect), are very much in line with the vision of a circular economy. In this

respect a quicker and a more widespread diffusion of such paradigm across European

markets would significantly contribute to increase the market fit of TCBL-enabled innovations,

thus providing a robust foundation on which to base their business rationale. In addition the

presence of initiatives such as the Innovation Deals37 promoted by the European Commission

may represent a fast track for systemic impact generation thanks to a quicker yet responsible

opportunity to overcome potential regulatory barriers to societal transformation. Innovation

Deals intend to enable innovators to swiftly address legislative obstacles, shortening the time

between moment of inspiration and market uptake. They take the form of voluntary

cooperation between the EU, innovators, and national, regional and local authorities and are

aimed at an in-depth understanding and clarification of how an EU rule or regulation applies. If

a rule or regulation is confirmed as an obstacle to innovations that could bring wider societal

benefits, the deal will make it visible and feed into possible further action38.

Finally, from a human capital perspective, making the transition to a circular economy will be

complex as it requires a pressing need for new skills, not just within the STEM (Science,

Technology, Engineering, Maths) subjects, but across the creative disciplines of: design,

advertising, digital, systems thinking and business modelling. In this respect, the capacity

building activities conducted by the ecosystem of design, make and place labs within TCBL

will contribute to offer a complementary contribution in terms of professional education to the

important education outreach work that will need to be conducted by universities and

secondary schools.

35 Augustsson Y. (2013) Textil och textilavfall– förslag till nytt etappmål i miljömålssystemet

36 Watson D., et al. (2014) EPR systems and new business models. Norden.

37 https://ec.europa.eu/research/innovation-deals/index.cfm

38 https://ec.europa.eu/research/innovation-deals/index.cfm


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SMART SPECIALISATION

The Research and Innovation Smart Specialisation Strategy (RIS3) is a refinement and

upgrading of the existing methodology for Structural Funds programming. It is based on 15

years of experience in supporting innovation strategies in the regions, and on frontline

economic thinking by major international institutions such as the World Bank, the OECD and

the IMF. The most advanced regions have been engaging in similar strategic exercises for a

long time, as highlighted by the Regions for Economic Change initiative39 or the Regional

Innovation Monitor.40

Smart specialisation is about identifying the unique characteristics and assets of each country

and region, highlighting each region’s competitive advantages, and rallying regional

stakeholders and resources around an excellence-driven vision of their future. It also means

strengthening regional innovation systems, maximising knowledge flows and spreading the

benefits of innovation throughout the entire regional economy.

The RIS3 ex-ante conditionality requires EU Member States and regions to identify the

knowledge specialisations that best fit their innovation potential, based on their assets and

capabilities.

They must do this through a process of ‘entrepreneurial discovery’, i.e. involving key

innovation stakeholders and businesses. Thus, rather than being a strategy imposed from

above, smart specialisation involves businesses, research centres and universities working

together to identify a Member State or region’s most promising areas of specialisation, but

also the weaknesses that hamper innovation there41.

The national or regional authorities are required to draft a document outlining the proposed

strategy for that country or region and, in particular, the planned public and private

investments including from Structural Funds in research, technology development and

innovation.

This strategy is not supposed to be built on and/or aim at regional scientific excellence but

also support practice-based (‘non-technological’) innovation and include the adoption and

diffusion of knowledge and innovation.

The rationale behind the need for a specialization has to be found in the shrinking pool of

resources available for public budgets and at the same time the need to guarantee a higher

value for money to taxpayers whose financial support may not be a solution to all problems,

thus the need for careful selection.

From a textile and clothing sector perspective, it is interesting to investigate how the smart

specialisation strategy approach prompted by the European Commission has impacted on the

industry presence among the selected development priorities of European regions and, as a

consequence, on T&C companies’ ability to leverage public investments to enhance or sustain

their competitiveness.

A research conducted within TCBL and made available on the project knowledge space offers

a bird’s eye view on which European regions have listed the T&C sector as one of their RIS3

39 http://europa.eu/legislation_summaries/regional_policy/review_and_future/g24240_en.htm

40 http://www.rim-europa.eu

41 http://ec.europa.eu/invest-in-research/monitoring/knowledge_en.htm


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priorities. The analysis relied on the EYE@RIS3 visualisation tool42 (which may not be fully

updated at the time data was retrieved, mid-February 2016, however it can be considered as

the single, and perhaps only, official site including enough data and information at EU level)

As the following map shows, there are currently 10 regions in Europe, belonging to 6 different

countries, with an explicit RIS3 priority in favour of the T&C sector. As stated, this can either

be related to the poor degree of specialisation in that sector, or to the fact that the latter is

considered strong enough to survive in global competition without an explicit need for public

financial support. We tend to think in these terms as the experience of e.g. Prato in Tuscany,

IT or Lille in France, North Pas de Calais are notably missing.

Table 2. EU Regions with the T&C industry as a RIS3 priority.

Country

Code

Region Name &

Code Keyword(s)

Country

Code

Region Name &

Code Keyword(s)

DE Berlin [DE3] Fashion

Week

IT Piemonte [ITC1] Textile,

Fashion

EL Kentriki Makedonia

[EL12]

Fashion,

Clothing

Valle d’Aosta / Vallée

d’Aoste [ITC2]

Clothing,

Equipment

ES Galicia [ES11] Textile,

Footwear

Molise [ITF2] Fashion

Castilla-La Mancha

[ES42]

Textile,

Footwear

PL Lódzkie [PL11] Textile,

Fashion

Cataluña [ES51] Textile,

Garment,

Leather,

Footwear

PT Norte [PT11] Fashion

42 http://s3platform.jrc.ec.europa.eu/eye-ris3

http://s3platform.jrc.ec.europa.eu/eye-ris3


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Figure 24 - EU Regions with the T&C industry as a RIS3 priority

There can be, however, another explanation for such relatively modest outcome: namely that

the T&C industry priorities have been subsumed within the more encompassing (and

fashionable) keywords of “design industry” or “creative industries”. In fact, if we repeat the

same analysis using “design” as a search word, we now identify 19 regions (and 5 countries:

Denmark, Luxembourg, Malta, Romania and Slovenia) having such RIS3 priority. Likewise,

using the search word “creative”, the number ascends to 51 regions (of which: 9 from Norway,

an associated country to the EU) and 7 member states (namely: Bulgaria, Denmark again,

Lithuania, Poland, Portugal, and Romania and Slovenia again) with their national RIS3

priorities.

Table 3. EU Regions with “Design industry” as a RIS3 priority

Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

BE Flemish Region

[BE2]

FR Centre [FR24] LU = (whole country)

DE Niedersachsen

[DE9]

Nord-Pas-de-

Calais [FR30]

MT = (whole country)


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Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

DK = (whole country) Pays de la Loire

[FR51]

PL Lódzkie [PL11]

EL Dytiki Ellada [EL3] Bretagne [FR52] Wielkopolskie

[PL41]

ES

Cantabria [ES13] IT Piemonte [ITC1] Opolskie [PL52]

Comunidad de

Madrid [ES30]

Basilicata [ITF5] Warminsko-

Mazurskie [PL62]

Cataluña [ES51] Provincia

autonoma di

Bolzano / Bozen

[ITH1]

RO = (whole country)

Comunidad

Valenciana [ES52]

SE Dalarnas län

[SE312]

SI = (whole country)


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Figure 25. EU Regions with “Design industry” as a RIS3 priority


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Table 4. EU Regions with “Creative industries” as a RIS3 priority.

Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

BE Flemish Region

[BE2]

FR Nord-Pas-de-

Calais [FR30]

NO Nord-Trøndelag

[NO062]

Walloon Region

[BE3]

Pays de la Loire

[FR51]

Nordland [NO071]

BG = (whole country) Bretagne [FR52] Finnmark [NO073]

CZ Praha [CZ01] Languedoc-

Roussillon [FR81]

PL = (whole country)

DE Nordrhein-

Westfalen [DEA]

Guadeloupe

[FR91]

Malopolskie

[PL21]

Sachsen-Anhalt

[DEE]

IT Lombardia [ITC4] Zachnodiopomors

kie [PL42]

Thüringen [DEG] Molise [ITF2] Kujawsko-

Pomorskie [PL61]

Baden-

Württemberg

[DE1]

Puglia [ITF4] PT = (whole country)

Berlin [DE3] Provincia

autonoma di

Bolzano / Bozen

[ITH1]

Lisboa [PT17]

Brandenburg

[DE4]

Alentejo [PT18]

Bremen [DE5] Veneto [ITH3] RO = (whole country)

Hessen [DE7] Emilia-Romagna

[ITH5]

SE Hallands län

[SE231]

Niedersachsen

[DE9]

Lazio [IT14] Dalarnas län

[SE312]

DK = (whole country) LT = (whole country) Övre Norrland

[SE33]

EL Thessalia [EL14] NO Hedmark [NO021] Västerbottens län

[SE331]


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Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

Country

Code

Region Name &

Code

Ipeiros [EL21] Oppland [NO022] SI = (whole country)

Ionia Nisia [EL22] Østfold [NO031] UK Kent [UKJ4]

Peloponnisos

[EL25]

Aust-Agder

[NO041]

Cornwall and Isles

of Scilly [UKK3]

ES Andalucía [ES61] Vest-Agder

[NO042]

Cataluña [ES51] Sør-Trøndelag

[NO061]

Scotland [UKM]


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Figure 26. EU Regions with “Creative industries” as a RIS3 priority.

An additional possible interpretation, applicable to other regions (especially in the Central and

Eastern European Member States) in which the T&C sector failed to be recognised as a

priority domain for innovation support, may be linked to the fragmented SME-dominated

nature of this industry, its generally traditional image or simply by the lack of interactions

between the sector’s representatives and regional authorities.

To improve this situation, EURATEX and the European Textile Technology Platform decided

to facilitate a dialogue among regional authorities, industry representatives and innovation

enablers to develop the best strategies to enhance textile innovation.

As a result, the RegioTex initiative was recently launched in April 2016 during the conference

‘Boosting Regional Textile Innovation in Europe’ held at the Committee of the Regions in

Brussels. Six regions have committed to lead RegioTex at this starting stage: Catalonia (ES),

Nord Pas de Calais (FR), Norte Portugal (PT), North-East Romania (RO), Valencia (ES) and

West-Flanders (BE). More than ten other regions from important textile producing countries

such as Italy, Germany or the UK were also involved in RegioTex creation and may formally

join the initiative.

http://euratex.eu/index.php

http://www.textile-platform.eu/


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The main goals of RegioTex are to strengthen regional innovation structures and capacities

and to establish effective European collaboration between regional actors. The initiative will

focus on a number of key innovation themes for this industry such as advanced materials and

manufacturing technologies, creativity and design-based innovation. Digitisation of supply

chains and business models and sustainable business operations are the other priority topics.

From a TCBL perspective, the RIS3 policy resonates extremely well with the concept of Place

Labs and the notion of a place-based approach to innovation. In fact, the attempt to seize the

opportunities offered by the internationalization of trade may not be decoupled from a deep

understanding and a cunning valorisation of the heritage ingrained in the culture and the

industrial tradition present in the different European regions. On the one hand, this is due to

the fact that path dependence plays a significant role in the management of innovation

systems at city and regional level43. Moreover, the creation of the necessary ecosystemic

conditions for an innovation to thrive (in terms of human capital, reputation, value chains,

industry-specific competences, etc..) require a wide range of public and private investments

that may only bear fruit over a long period of time. On the other hand, international commerce

entails fiercer competition and requires the presence of strong competitive advantages that

may be defendable over time. Culture-based differential value propositions may represent a

significant source of competitive advantage as they rely on complex and often tacit knowledge

that is very difficult to codify and hence to copy. In addition, such advantages are very much

connected to well circumscribed geographical areas offering the opportunity to implement

origin-based brands protection mechanisms (e.g. Made in Italy).

INDUSTRY 4.0

The European economy has lost a third of its industrial base over the past 40 years. By the

third quarter of 2014, the value added by manufacturing to the economy in the EU represented

only 15.3% of total value added, a decline of 1.2 percentage points since the beginning of

200844. In 2012, in response to this decline in the relative importance of industry, the

European Commission set a target that manufacturing should represent 20% of total value

added in the EU by 2020.

Industry 4.0 is a term applied to a group of rapid transformations in the design, manufacture,

operation and service of manufacturing systems and products.

The term Industry 4.0 originated in Germany, but the concept largely overlaps developments

that, in other European countries, may variously be labelled: Smart factories, Smart

Manufacturing, the Industrial Internet of Things, Smart industry, or Advanced manufacturing.

Industry 4.0 depends on a number of new and innovative technological developments:

The application of information and communication technology (ICT) to digitise

information and integrate systems at all stages of product creation and use (including

logistics and supply), both inside companies and across company boundaries;

43 Marin R., Simmie J., (2008) “Path Dependence and Local Innovation Systems in City-Regions”

Innovation: Management, Policy and Practice Vol. 10 Issue 2-3, pp. 183-196

44 European Parliamentary Research Service (2015). Briefing on Industry 4.0: digitalization for

productivity and growth.

http://www.europarl.europa.eu/RegData/etudes/BRIE/2015/568337/EPRS_BRI(2015)568337_EN.pdf


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Cyber-physical systems that use ICTs to monitor and control physical processes and

systems. These may involve embedded sensors, intelligent robots that can configure

themselves to suit the immediate product to be created, or additive manufacturing (3D

printing) devices;

Network communications including wireless and internet technologies that serve to

link machines, work products, systems and people, both within the manufacturing

plant, and with suppliers and distributors;

Simulation, modelling and virtualisation in the design of products and the

establishment of manufacturing processes;

Collection of vast quantities of data, and their analysis and exploitation, either

immediately on the factory floor, or through big data analysis and cloud computing;

Greater ICT-based support for human workers, including robots, augmented reality

and intelligent tools.

Industry 4.0 is a very cross-sectional topic touching upon a number of the policy domains

identified in the previous Section (the Resource-efficient Europe, the Innovation Union, H2020,

An Industrial Policy for the Globalisation Era, etc.)

The need for investment, changing business models, data issues, legal questions of liability

and intellectual property, standards, and skills mismatches are among the challenges that

must be met if benefits are to be gained from new manufacturing and industrial technologies. If

these obstacles can be overcome, Industry 4.0 may help to reverse the past decline in

industrialisation and increase total value added from manufacturing to a targeted 20% of all

value added by 2020.

However, Industry 4.0 is not only about opportunities for the economy. It may also be about

opportunities for society. To begin with, Industry 4.0 could represent a potential chance to keep

production jobs in developed regions such as Europe. If a shirt is manufactured by a smart

machine in an automated process, it can be produced anywhere at the same costs. Companies

won’t start to employ Europeans to sew. But if Industry 4.0 becomes a success, Europeans

could be employed to create, maintain and modify the machines. Moreover, it must be

considered that machines are not able to fully substitute the human operator in some job roles:

for instance, when a decision has to be taken, the machine can help the operator to choose the

right way to follow, by showing information, documentation and suggestions. This will lead to

the need to create a more skilled workforce.

The digitisation of industry may also be good for the environment. With modern technologies,

companies will be able to optimise their production processes in energy and resource

consumption. They may be able to produce them right where clients need them, without the

cost and effort of shipping. Some companies may even be able to set up 'lights out' factories

where automated robots continue production without light or heat after staff has gone home. In

addition, an improved planning of production will allow to avoid the generation of unsold

quantities and waste.

Finally, Industry 4.0 is an opportunity to adapt the economy to a growing world population

because of its flexibility and efficiency. In Europe, where society is aging, digitisation can create

jobs that are not physically demanding. In this way, Industry 4.0 improves the working

environment in companies and offers opportunities for older employees to contribute to the work

process. The precondition is that we begin to prepare the workforce in time for their new

challenges, and teach workers IT and engineering skills.


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From a TCBL point of view, Industry 4.0 present some points of contact and some significant

differences with the overall project philosophy.

On the one side, TCBL is eager to exploit the opportunities offered by information and

communication technologies (sensors, virtual & augmented reality, digitisation of

manufacturing and suppy chain, data-driven innovation, etc.) as well as by additive

manufacturing. At the same time, it also treasures some of the lessons that the last two

decades of innovation management have offered about the risk of placing too much faith in the

ability of technology to be the silver bullet for the solution of societal problems. For this reason,

TCBL places technology on the same level as other important complementary aspects having

to do with design, business modelling, community management and capacity building. In

addition, the vision that TBCL interprets the role of 3D manufacturing as a potential enabler of

a new paradigm of distributed production rather than a tool to make production lines more

flexible in large manufacturing plants.

The economic rationale of Industry 4.0 is clear and - to a certain extent - embraceable as an

attempt to level up the production costs between Europe and Asia in order to bring back

production related jobs to Western economies. Nevertheless, the adoption of a strategy

favouring capital intensity versus labour intensity may not be fully in line with the project

principles and objectives in terms of triple sustainability. Finally, although Industry 4.0 may

contribute to promote some improvements in terms of environmental sustainability, it highly

relies on a paradigm of low cost and fast production that requires citizens to adopt a

consumption behaviour not revolving around the key sustainability principles of durability,

repair and reuse. As consequence, some doubts may arise as to the ability of such paradigm -

in its current interpretation - to truly face the serious and significant sustainability challenges

that our world will have to face in the decades to come.

3.3 CONCLUDING REMARKS

To provide a synthetic overview of the analysis carried out on the favourability of the European

policy context through the lenses of four cross-industry trends, a qualitative synoptic

representation has been created highlighting the relationship between the macro trends and

the TCBL intended impacts. As it may be noticed by looking at the spider diagram, TCBL

appears to be in a favourable situation as regards its ability to exploit the presence of existing

forces sustaining the type of socio-economic changes the ecosystem is trying to promote both

within the demand and the offer side of the T&C industry.


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67

Figure 27. Macro Policy Trend Contributions to TCBL Expected Impacts.

This is probably due to the fact that TCBL is itself the result of a European policy (Europe

2020 & H2020) and, as a consequence, it embodies the policy’s underlining principles (smart,

inclusive and sustainable growth).

Moving to the four different macro trends, the most prominent contribution to support the

project success and sustainability may be expected from the circular economy (assuming that

the targets identified in the policy documents will be reached in due time). Social innovation

practices and smart specialization strategies seem also to bring potential contributions in

terms of creation of novel supply chains and reduction of the environmental footprint. Finally,

for what concerns, Industry 4.0 there seem to be partial alignment with project objectives

especially for what concerns the exploitation of technology for the creation of new services for

a customer driven-supply chain.

68

4. GENERAL CONCLUSIONS AND NEXT STEPS

This first release of D7.1 contained the results of the Market and Policy analyses performed

within tasks 7.1 and 7.2. It started with an overview of the economic environment, industry

structure and major market trends of the T&C sector, revealing the complexity, inter-

relatedness and diverse nature of all the components, phases, activities and sectors that form

the T&C value chain today. The figures in this Section indicate a medium- to long-term

tendency of T&C to consolidate (contract) and simultaneously grow in scale (mass production

by global players). On the other hand, the sector shows a more recent tendency to fight the

decline by diversifying and specialising the production, in order to explore new markets both in

the EU and in third countries (China, India, Brazil, Russia, etc.), where a new middle class is

emerging, endowed with an increasing purchasing power.

The Section also identified some 50 major market trends under 9 different domains, and

evaluated to which extent these may positively contribute to TCBL’s main objectives (return of

delocalised manufacturing to Europe, reduction in the environmental footprint, creation of a

novel supply network and creation of new embedded services supporting the customer driven

supply chain). This analysis demonstrated that TCBL’s objective to reshore manufacturing

capacity can be favoured by increasing the T&C focus on end-users’ needs, customisation,

niche products, cost-effectiveness, smart solutions, design, service, etc. On the other hand,

EU Textile & Clothing is at loss when it falls in the commodity trap, i.e. when it tries to compete

on costs, low quality products, fast fashion, commoditization, etc. Moreover, such hampering

factors like fragmentation, subcontracting pitfalls, restricted market presence, etc. should be

avoided, while success factors and strategies that too often stay hidden should be evidenced

and disseminated among T&C actors for smarter innovation and competitiveness.

Section 3 provided an overview of the TCBL EU policy environment, and subsequently

identified and discussed Social Innovation, Circular Economy, Smart Specialisation and

Industry 4.0 as four overarching concepts underlying current EU policies and affecting TCBL

objectives and activities. It then assessed they favourability of these concepts to TCBL

viability, again concluding the analysis by mapping the concepts to the TCBL core objectives.

The analysis concluded that TCBL appears to be in a favourable situation to exploit the

presence of existing forces sustaining the type of socio-economic changes the ecosystem is

trying to promote both within the demand and the offer side of the T&C industry. Regarding the

driving policy concepts, the analysis concluded that measures towards a Circular Economy

are mostly in line with TCBL objectives, and Social Innovation and Smart Specialisation

strategies also bring potential contributions in terms of creation of novel supply chains and

reduction of the environmental footprint. For what concerns Industry 4.0, there seems to be

partial (but not full) alignment with project objectives especially for what concerns the

exploitation of technology for the creation of new services for a customer driven-supply chain.

The next steps for both Tasks 7.1 and 7.2 are two-fold. Firstly, they will provide relevant

updates on both market and policy context where necessary. Secondly, they will start from the

overall insights and frameworks presented here and apply these to the labs and pilots initiated

by TCBL, assessing on the one hand whether these may influence market trends and

contribute to EU policy objectives, and on the other hand whether they may be positively or

negatively affected by market circumstances and policies. Besides this, future releases of this

deliverable will also report on the other tasks within WP7 when these become active.

69

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71

LIST OF FIGURES

Figure 1. The textile industry (Source: European Textile Technology Platform (www.textile-

platform.eu). .............................................................................................................................. 12

Figure 2. Foreign value added embodied in domestic demand for textiles and apparel, by

source region, 2011 (As a percentage of total final demand for textiles and) (source: OECD

Science, Technology And Industry Scoreboard 2015) ............................................................. 13

Figure 3. Global demand for Textiles and apparel, percentage shares of total, 1995 and 2011

(Source: OECD Science, Technology And Industry Scoreboard 2015) ................................... 16

Figure 4. Regional demand for Textiles and apparel, 1995 and 2011 (By country or region of

value added origin) (Source: OECD Science, Technology And Industry Scoreboard 2015).... 16

Figure 5. T&C importance in the EU value chain, 2014. ........................................................... 17

Figure 6. T&C Retail turnover evolution. ................................................................................... 18

Figure 7. EU T&C volume index of production. ......................................................................... 19

Figure 8. Evolution of T&C production in the EU Member States, 2015. ................................. 19

Figure 9. Evolution of T&C production, by type, 2015. ............................................................. 20

Figure 10. T&C extra-EU trade evolution. ................................................................................. 20

Figure 11. EU imports evolution of T&C to main customers. .................................................... 21

Figure 12. EU exports evolution of T&C to main customers. .................................................... 22

Figure 13. Market evolution overview: 2015/2014. ................................................................... 22

Figure 14. Influence of Consumption Trends on TCBL impacts. .............................................. 24

Figure 15. Influence of Emerging Market Trends on TCBL impacts. ........................................ 25

Figure 16. Influence of Relocalisation Trends on TCBL impacts. ............................................. 27

Figure 17. Influence of Business Model Trends on TCBL impacts. .......................................... 29

Figure 18. Influence of Network based Production Trends on TCBL impacts. ......................... 33

Figure 19. Influence of Consolidation Trends on TCBL impacts. ............................................. 35

Figure 20. Influence of Fragmentation Trends on TCBL impacts. ............................................ 36

Figure 21. Influence of Commoditization and Subcontracting Trends on TCBL impacts. ........ 38

Figure 22. Favourable trends for TCBL objectives. .................................................................. 41

Figure 23. Unfavourable trends for TCBL objectives. ............................................................... 42

Figure 24 - EU Regions with the T&C industry as a RIS3 priority ............................................ 58

Figure 25. EU Regions with “Design industry” as a RIS3 priority ............................................. 60

Figure 26. EU Regions with “Creative industries” as a RIS3 priority. ....................................... 63

Figure 27. Macro Policy Trend Contributions to TCBL Expected Impacts. .............................. 67

72

LIST OF TABLES

Table 1. TCBL core principles. .................................................................................................. 51

Table 2. EU Regions with the T&C industry as a RIS3 priority. ................................................ 57

Table 3. EU Regions with “Design industry” as a RIS3 priority ................................................ 58

Table 4. EU Regions with “Creative industries” as a RIS3 priority. .......................................... 61

73

DOCUMENT INFORMATION

REVISION HISTORY

REVISION DATE AUTHOR ORGANISATION DESCRIPTION

V0.1 24.05.2016 Enrico Ferro/Paolo

Guarnieri

ISMB/Prato First written contributions

submitted, structure

agreed.

V0.2 10.06.2016 Simon

Delaere/Enrico

Ferro/Paolo

Guarnieri

iMinds/ISMB/

Prato

Complete contributions for

subsections received and

integrated

V0.3 21.06.2016 Simon

Delaere/Enrico

Ferro/Paolo

Guarnieri

iMinds/ISMB/

Prato

Refinements, conclusions

provided, integrated

V1.0 01.07.2016 Simon Delaere iMinds First full draft

V1.1 03.07.2016 Jesse Marsh Prato Graphics and layout

V1.2 04.07.2016 Francesco Molinari CCA Review and edits

V1.3 05.07.2016 Marco Paini SKILL Review and edits

V1.4 06.07.2016 Takis Lybereas HCIA Review

V1.5 06.07.2016 Jesse Marsh Prato Further graphics

V1.10 07.07.2016 Simon Delaere iMinds Second full draft

V1.11 08.07.2016 Simon Delaere iMinds Final draft after

improvements from ISMB

and Prato

STATEMENT OF ORIGINALITY

This deliverable contains original unpublished work except where clearly indicated otherwise.

Acknowledgement of previously published material and of the work of others has been made

through appropriate citation, quotation or both.

COPYRIGHT

This work is licensed by the TCBL Consortium under a Creative Commons

Attribution-ShareAlike 4.0 International License, 2015. For details, see

http://creativecommons.org/licenses/by-sa/4.0/

The TCBL Consortium, consisting of: Municipality of Prato (PRATO) Italy; German Institutes

for Textile and Fiber Research - Center for Management Research (DITF) Germany; Istituto

Superiore Mario Boella (ISMB) Italy; Skillaware (SKILL) Italy; The Open University (OU) UK;

iMinds (iMINDS) Belgium; Tavistock Institute (TAVI) UK; Materials Industrial Research &


646133 - TCBL


74

Technology Center S.A. (MIRTEC) Greece; Waag Society (WAAG) Netherlands; Huddersfield

& District Textile Training Company Ltd (TCOE) UK; eZavod (eZAVOD) Slovenia; Consorzio

Arca (ARCA) Italy; Unioncamere del Veneto (UCV) Italy; Hellenic Clothing Industry

Association (HCIA) Greece; Sanjotec - Centro Empresarial e Tecnológico (SANJO) Portugal;

Clear Communication Associates Ltd (CCA) UK.

DISCLAIMER

All information included in this document is subject to change without notice. The Members of

the TCBL Consortium make no warranty of any kind with regard to this document, including,

but not limited to, the implied warranties of merchantability and fitness for a particular purpose.

The Members of the TCBL Consortium shall not be held liable for errors contained herein or

direct, indirect, special, incidental or consequential damages in connection with the furnishing,

performance, or use of this material.

ACKNOWLEDGEMENTS

The TCBL project has received funding from the European Union's Horizon 2020 Programme

for research, technology development, and innovation under Grant Agreement n.646133.

d7.1 exploitation and i p -...

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