Textile industry still promising despite fierce competition

By Marika Azzopardi

Despite the negative news recently emerging from Malta’s textile industry, government is remaining upbeat on the industry’s prospects and is adamant that, over the short to medium term, the future of the local clothing industry remains reasonably promising despite the fierce international competition.

Last week’s announcement of the imminent closure of Medwear Clothing, which has seen 200 employees heading toward redundancy, and the reduction of staff at Estro Clothing have highlighted the state of affairs permeating Malta’s flailing textiles industry.

Both Medwear and Estro Clothing had formed part of the regiment of textile firms that were established when labour intensive factories employed hundreds of workers on the island.

The 1970s had seen a boom in the textile industry, with foreign companies benefiting from the low wages prevalent at the time and the thriving industry had set the trend for flourishing trade relationships with the various European countries to which the industry had exported.

But over the past two decades, rising labour costs have prompted the government to undertake a re-shuffling programme through which the Malta’s industrial focus was placed on precision industries such as electronics manufacturing, precision engineering and electrical engineering.

Referring to the state of affairs, Ray Cachia Zammit from the Ministry for Economic Services explained, "If one goes back 10 years, one would notice a transition whereby a number of textile and clothing firms ceased their operations in Malta, while there has been an expansion in the output and employment within other sectors, especially in electronics.

"Nevertheless, if one looks at the latest Economic Survey one would notice that employment in the 'footwear, textiles, clothing' sector actually increased by 437 (10 percent) in the first over the first nine months of 2001 to reach the figure of 4,748 in September 2001. The production of jeans, in particular, is an activity that has experienced significant growth over the last year or so, with two companies in particular - VF Malta Ltd and Denim Sports Services - expanding their workforce even over the current year. Both companies have invested further in their operations in Malta and expanded their ancillary activities such as stone washing."

On the concern of textile workers who are finding it increasingly difficult to find alternative employment, Mr Cachia Zammit comments, "The picture is not as bleak as the recent closure of Meadwear might lead one to believe. The first indications are that most of the workforce shed by Medwear Clothing would be absorbed by other companies active within the sector. In fact, it should provide such firms with a boom of the trained and experienced personnel that they have often found difficult to recruit. In the short to medium term therefore, the future of the clothing industry in Malta remains reasonably promising, despite the fierce international competition.

The longer term is more difficult to predict although one expects living standards and wages in Malta to carry on rising; which will favour those industrial sectors with a high added value and where productivity can also be expected to rise, thereby keeping overall costs at a competitive level."

However, some circles are nevertheless concerned that workers are being laid off. Speaking to The Malta Financial & Business Times yesterday, Dr John Attard Montalto, Labour spokesman for Industry commented, "It is a very sad that Malta has lost an important firm like Medwear Clothing and a reduction in the workforce at Estro Clothing. The Opposition has always striven to have a non-partisan industrial policy but when Malta loses investment, the loss is for the whole country.

"It seems that the problem of disinvestment is hitting the clothing industry. One must accept that this is a vulnerable aspect of our industry and one must strive to make Malta more competitive, so as to retain these industries. I feel that although the Opposition did not hamper government when the Business Promotion Act was passed without a decision in parliament, it seems that this particular legislation has not been able to attract further investment and to retain those companies who are already manufacturing in Malta. In fact, the Opposition has already prepared legislation regarding manufacturing, which it will pass as soon as it attains power."