The economy and society are in the throes of a historic change that has long included the textile and clothing industry. What does this mean for Europe's predominantly small and medium-sized companies? What efforts do regulations, digitalisation and the search for skilled workers entail - and what opportunities do they open up?
Given its high CO2 emissions, intensive use of resources, land and water and the social issues encountered along the supply chain, the textile industry industry regularly faces criticism from ngos and the work of regulatory authorities. Globally, volun-tary commitments are increasingly being supple-mented by mandatory requirements aimed at improving environmental standards, production and working conditions, resource efficiency and trans-parency in the textile value chain. When it comes to sustainability and circularity, the textile industry is facing a number of special challenges because its complex and globally diversified supply chain makes implementation much more difficult. Moreover, digitalisation and new technologies such as artificial intelligence are bringing about far-reaching changes, while retailers and consumers are increasingly demanding more environmentally friendly and ethical alternatives.
Balancing everyday business and transformation
Many textile companies are facing a double challenge: on the one hand, they should – and want – to invest in sustainability, but on the other hand they need to remain competitive in economically tough times in increasingly volatile markets. For many of them, realising such a transformation while also managing their day-to-day business is a bit like carrying out open-heart surgery: while business operations must continue as usual, established structures need to be reorganised, workflows radically changed and new processes established to achieve progressively stricter sustainability goals.
This challenge affects companies of all sizes, but especially the small and medium-sized enterprises (SMEs) that have traditionally made up a large part of the textile industry. According to the European Apparel and Textile Confederation EURATEX, of the 197,000 companies in the European textile and apparel industry, just 0.3 per cent are large companies with more than 250 employees, while the vast majority, 99.7 per cent, are microenterprises and small and medium-sized companies. Often, these companies1 have only limited human, financial and time resources at their disposal to implement sustainable technologies and processes within the required swift timescales, let alone to restructure entire business models. However, the pressure to act is growing even for them.
Regulation as a driving force
It is primarily new regulations that are having a significant impact on market development and serving as the key driver of transformation. The European Union in particular is laying down far-reaching sustainability requirements for the textile industry. According to EURATEX, more than a dozen initiatives that are of relevance to the textile and clothing industry are currently being discussed at the EU level alone. These are aimed at introducing mandatory social and environmental standards, making textile products more robust, repairable and recyclable, integrating greater transparency and traceability into the textile supply chain and making production processes and processing operations more sustainable. The most important measures include the EU strategy for textiles as part of the Green Deal, which also provides for Extended Producer Responsibility (EPR) from 2025, plus the new EU Ecodesign regulation that incorporates the digital product passport, which is set to be introduced from 2025.
But it is not just the EU that is pursuing ambitious sustainability targets. The USA is also making a stand against forced labour in supply chains with its Uyghur Forced Labor Prevention Act (UFLPA) and important manufacturing countries such as China, India and Bangladesh are also working to improve their environmental and social standards. This regulatory dynamic now in place across the world is increasing pressure on the textile industry to transform. There is also the aspect that even national laws such as Germany’s Supply Chain Act (LkSG) could also have an impact on the entire life cycle of textiles, from production and transport to trade, usage and disposal, simply because of the fact that there is hardly any other industry that is as internationally intertwined as the textile industry is. In 2022, the textile trade was the seventh largest commercial sector in the world, worth a total value of 941 billion US dollars, accounting for around 4 per cent of world trade.2
Digitalisation as an enabler
Increasing documentation requirements, a direct consequence of all the legal requirements, are posing new challenges for textile companies. Enhanced obligations to provide evidence, such as those that will form part of the product passport, require companies to collate significantly more information about materials, production processes, working conditions and impact on the environment than previously. Companies in the textile industry must now play a more active role in their supply chains and have a much deeper understanding of them. In future, if all the stages from raw material suppliers (TIER 4) to retailers (TIER 0) must be documented transparently along the textile supply chain, this will result in huge amounts of data. In order to process these data efficiently, digitalisation will become an ‘enabler’ in the textile sustainability revolution: digital tools based on blockchain, the Internet of Things (IoT) and artificial intelligence (AI) can help to capture and analyse the millions of textile data points along the value chain. As such, they will form an important basis for the associated logistical requirements and facilitate targeted investments.
Changes to corporate structures and job profiles
In addition to regulatory and digital requirements, sustainable transformation also poses personnel challenges for textile companies. For a long time, sustainability was primarily an issue for the Corporate Social Responsibility (CSR) department, but the new environmental and social requirements now affect almost all company divisions, from design, finance and purchasing to marketing. In order to fulfil the new sustainability and supply chain obligations, all departments will have to work together more closely in future. This means that roles in companies will change – and there will be new job profiles in sustainability management, material development, change management and circular design. For these new positions, some existing staff will have to undergo more training or new staff will need to be recruited.
In addition to traditional textile professions in textile design, manufacturing and processing, new skilled workers will need to be recruited for certification issues, automation, digitalisation, AI and data analysis. For ‘non-textile’ skilled workers, the textile industry will be competing with other industries for the best talent. A major challenge – but also opportunity – for an industry in which many compa-nies are currently bemoaning the lack of staff due to demographic changes and the changing career interests of young people. Specifically, 30 per cent of the currently 1.3 million employees in the European textile industry are over 50 years old, according to information provided by EURATEX.3 There is therefore set to be a generational change in the near future. At the same time, many companies are finding it difficult to fill their vacancies. According to textil+mode, the Confederation of the German Textile and Fashion Industry, textile machine operators and product finishers are almost impossible to find in Germany.4 In light of the major transformation that is currently taking place, the textile industry has the opportunity here to reposition itself as an innovative, more sustainable and viable employer to young people.
In light of the major transformation, the textile industry has the opportunity here to reposition itself as an innovative, more sustainable and viable employer.
The major transformation as an opportunity
Technological innovations, digital solutions and new regulations are important driving forces in this major transformation. Changes in the textile industry, however, require a fundamental rethink on all levels. Transitioning to a sustainable textile economy will only be successful if consumption patterns and values also change. And a rethink is already taking place in this regard: more and more consumers are questioning concepts such as (ultra) fast fashion and seeking out long-lasting, more sustainable alterna¬tives. This is a development also reflected in the industry itself: an ever increasing number of both small and large textile companies are taking a critical look at their own impact on the environment, redesigning their supply chains, adapting their business models and integrating circular and regenerative approaches. Granted, many of these developments are still in their early stages, but an increasing number of companies are recognising that the major transformation will open up new markets, new business fields and promising opportunities for the future.
‘The transformation of the textile industry is a challenge that we can only master together. The textile processing industry is developing innovative and future-oriented technological solutions in the areas of digitalisation, automation and AI that should help us to strike a balance between economic success and environmental responsibility.’
Key Learnings
Sustainability and regulation as drivers Regulations, primarily those imposed by the EU, stipulate mandatory social and environmental standards, transparent supply chains and sustainable production processes in the textile and clothing industry.
Digitalisation as an enabler To meet new documentation requirements, digital technologies such as blockchain, IoT and AI will be crucial in capturing and evaluating large amounts of data along the supply chain.
Changes to corporate structures Sustainability requirements affect all corporate divisions and will lead to new job profiles. Demographic change and the shortage of skilled workers offer the industry an opportunity to reposition itself as an innovative and sustainable employer.
‘Texpertise Econogy’ Insights
The ‘Texpertise Econogy’ Insights provide answers to questions such as: which SDGs are particularly relevant to the industry? What are the top 5 transparency standards? How are natural and synthetic fibres faring in relation to one other? Which process standards are most widespread? Where does the industry currently stand when it comes to textile recycling?
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Sources:
1 Euratex, 2024, “Facts and Key Figures in the European Textile Industry 2024” 2 OEC Daten, 2023 3 Euratex, 2024, “Manifesto for the European Elections 2024” 4 Gesamtverband textil + mode, 2019, Blogbeitrag „Fachkräftemangel vorsorgen – Fachkräfteanwerbung aus der EU“
