Fashioning A Way Forward With Links Nov 07

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Political Issues Briefing Document

FA S H ION I NG A W AY F O RW A R D

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Contents

Introduction

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Executive Summary

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Industry Issues that policy needs to address

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The Industry Context

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The Economic Argument

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Cutting IT Evidence

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Conclusion

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Documents and Research

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Cutting IT, Newham College, CIPs, Boardman House, 64 Broadway, London E15 1NT www.newham.ac.uk [email protected] 3

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Introduction - the background to this briefing It was with concern that the Cutting IT Development Partners realised that there is no single representative body for the Fashion Industry. Without this, the government’s current focus on the Creative Industries, and the many opportunities to profile the issues impacting on the Fashion and Textile sector, are unlikely to be maximised. As a trans-national project looking at ‘adaptability’ issues within the fashion and textile sector, the ESF funded Cutting IT initiative has been well placed to draw together a profile of the issues and considerations for the fashion sector that should be addressed when formulating policy for the Creative Industries. As part of the project’s legacy this briefing seeks to inform, stimulate debate and support the development of policies to help overcome the issues faced by one of the most high profile of the creative industries – Fashion. Cutting IT is a unique collaboration of 13 partners representing several driving forces in the UK’s fashion design and manufacturing sector, including a diverse mix of suppliers, businesses, colleges and agencies. The 3 year £4.5million project, funded through the EQUAL programme, concludes in December 2007. Its outcomes include long term and innovative solutions to help overcome the economic development issues faced by small businesses employing less than 50 staff, which make up 90% of the clothing and textile sector. The focus has been to support and enable businesses to adapt to the impact of changing market conditions, identifying barriers to development and creating collaborative solutions to overcome issues. The outcome of this work is extensive, and as a result Cutting IT is in a unique position to highlight some of the issues facing the sector, by sharing some of the learning and opportunities for both business and sector development that have arisen. The project has already taken forward many of the ideas and recommendations made in previous reports, for example those in the 2003 report - A Study of the UK Designer Fashion Sector, detailed in this briefing. However more needs to be done to ensure that real change takes place in the sector, to ensure future flexibility and responsiveness to the complex marketplace that fashion operates within. This report draws together information and policy recommendations from four main sources. A Study of the UK Designer Fashion Sector, the Fashion Sector Investment Plan, the findings and research gathered by Professor John Pearson, University of Huddersfield and through the Cutting IT Development Partnership. Many others working within the sector have contributed statistics and information which have been drawn into the document wherever possible.

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Executive Summary This briefing seeks to explain the current background to the fashion industry and the opportunities to stimulate economic growth – particularly in relation to supporting Fashion Designers and Cut, Make and Trim businesses – and building the reputation of the UK for innovation in the creative development and delivery of Fashion on an international platform. There are four sections to the briefing; The first provides an overview of the issues that policy needs to address, primarily highlighting: •

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The lack of a single representative voice for the fashion and textile sector within the development of the Creative Industries. Organisations exist and represent specific aspects of the sector, however there is no national body representing the entire sector, including design and production, and informing government policy on how the sector is changing. The lack of robust and accurate comparative data. The mix of statistics does not clearly portray the true impact that the sector is having on the economics of the UK, Brand Britain, the supply chain or retail. For example there is disparity in figures regarding employment, with the Economics Estimates Bulletin stating that there are 3,400 employed in designer fashion, whilst the University of Huddersfield employment figure for design and designer fashion is 115,500. The need for national research into the sector to gain a true industry picture, and an assessment of the dynamics that are currently contributing to the fashion industry’s growth in certain parts of the supply chain. Disseminated through knowledge transfer and networks to those who have proved they can implement change, this is essential for long term growth and is something that short term funded initiatives cannot achieve. The impact sustainability and ethical trading has on the supply chain. Product origins and the economic opportunities this presents have to be addressed. Standardising the ‘ethical’ label for example, given that UK expenditure on clothing is increasing. Reducing carbon footprint is important, given that clothing and textiles produced up to 2million tonnes of waste in 2006, the majority going to UK landfill sites. UK Fashion Design has an international reputation. In developing the UK’s Creative Industries the value of the internationally high profile that the UK Fashion Design sector already enjoys should not be underestimated. The fashion industry is already a foundation stone of Brand Britain, and it has significant potential as a major contributor to the development of the UK’s Creative Industries agenda.

One of the most crucial considerations for policy is the fragility of the emerging infrastructure that sees designers and production working more closely together. The industry is evolving with its own momentum, driven by consumer and retail demand, the creativity of UK designers and the quality of UK production. More needs to be done to ensure that real change takes place allowing the sector the flexibility to respond effectively to the complex marketplace in which it operates. The second section of this briefing illustrates the significance of Fashion in the UK Economy setting the Industry context, as it is perceived by those working within it. Taking the design, manufacture, and sale of all apparel products, it is clear that global, European and national markets need to be considered together. The designer fashion sector alone had a 22.5% compound growth rate per year between 1990 and 2001. Whilst the market value of clothing and footwear has increased, the manufacturing output and employment figures have fallen by 42% - indicating the ongoing decline of traditional manufacturing in the face of stiff competition from overseas. However, it is also clear that with emerging new markets comes an opportunity for the UK to capitalise. The industry has already recognised and adapted to maximise on its strengths which are • Creating innovative, high-quality, high value-added products and services, and bringing them quickly and effectively to market.

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There is clearly a great opportunity to capitalise on this current organic growth in the Designer Fashion sector, with its demands for high quality, low quantity - with precise and innovative interpretation from design to finished product. The third section looks at the economic argument to support growth within the Fashion and Textile sector and considers the findings of various reports. These estimate the value of designer sales, in order to assess their impact on the UK clothing industry and look at the rate at which the designer sector’s UK employment has grown - by 19% per year, whilst clothing industry employment has fallen (42%). Between 2000-2006 it can be demonstrated that clothing retail sales by value rose by 32% while retail in general only increased by 23%. Moreover, textile clothing rose in volume by 51% compared to retail which rose by 29.9%. Although indicative of the trend for cheap clothing, these figures should not be ignored – but incorporated into an overall policy to maximise the economic value of this sector. Brands and licensing also have a significant impact within the sector and co-ordinating the strategies for these with established fashion designers could be used to promote growth in the UK economy. The final section of this briefing details the work of the Cutting IT initiative and presents the research, activity and findings developed within this project. Cutting IT drew together 13 partners from many areas of the fashion industry. Between them they drew in expertise and delivery that has been representative of the sector as a whole. This has allowed the development of strategies that support skills and business development and progression; from managing the expectations of young people aspiring to work in the sector, to resolving aging workforce issues faced by certain areas of the industry, to supporting the introduction of innovative manufacturing techniques for the Cut, Make and Trim sector, and breaking down traditional communication barriers within the sector. The work of Cutting IT focused on developing strategies and pilots to address four key areas 1. Training and Skills 2. Workforce and Business Development 3. Mentoring and Networks 4. Production, including Lean Manufacturing Having achieved the targets and goals from a funding perspective, one of the most positive outcomes of the initiative has been the networks and collaborations created. The funding has allowed the promotion and support of partnership working – essential for sustainable, effective delivery but also a strong legacy. These networks and partnerships offer a substantial resource for the future. Adapting to change, plus becoming economically and commercially more efficient are essential qualities for most working within the fashion industry today. As a significant catalyst for change Cutting IT has created a legacy that continues in the work of all involved in the project and offers a major contribution to the economic development of the fashion industry in years to come.

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Industry Issues that policy needs to address Key areas that should be looked at by Government from the Cutting IT perspective are: •

The UK textile and clothing manufacturing industry is small in comparison to the global industry, accounting for approximately 0.37% of UK GDP, 2.6% of UK manufacturing (valued at £6.5 billion in 2005) and employing approximately 170,000. There is however, a lack of robust industry data on the fashion industry. For example there is no data to establish the value of incremental sales from the fashion designer sector into the retail, shoe and sunglasses, accessories, telecommunications or magazine sector and limited statistics that show the size of the growing fashion retail sector, which is a significant wealth generator and employer in fashion in the UK.

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There is very little robust sector specific UK wide, social or economic research into the changes within the sector and its potential – therefore the government has very little evidence to support the observations that practitioners in the sector are making, regarding potential for innovation and increased economic or GDP contribution.

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There is no single organisation representing the sector and supporting its development by identifying issues or opportunities and lobbying for policy support. The perception is that the British Fashion Council (BFC) does this – it doesn’t. Other organisations such as the British Clothing Industry Association (BCIA), British Apparel and Textile Confederation (BATC) and The Textile Institute and the Association of Suppliers to the British Clothing Industry (ASBCI) represent specific aspects of the sector but none draw together the components to accurately reflect or convey the issues affecting the changing face of the UK designer fashion industry.

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The fashion and textile design and manufacturing sector is an insular industry with little collaboration between industry and education. Historically the sector is very secretive and protective of information so it is hard for start up businesses to access information to help ensure success. Although understandable in an industry where copyright protection and brand integrity are so vital, this culture of self imposed isolation contributes to high numbers of failure amongst SME’s.

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There is no central resource for accessing information about the sector – a common issue for most of the creative industries and still unresolved in the fashion sector which does not have a sector wide representative body at a national level. Also, representation is needed at international level – fashion is a global business.

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Many new designers still leave College and University with level 4 qualifications but no practical production or business skills to turn their creative designs into successful businesses and little appreciation of the importance of these skills in the fashion industry.

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BRAND BRITAIN •

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The sector is not being supported or perceived yet as part of ‘Brand Britain’, currently being presented as a concept by Lord Digby Jones (Minister of State, Foreign and Commonwealth Office and DBERR). Despite huge international profile for Designer Fashion, its links with manufactured goods in the value added sector is not being exploited to the benefit of fashion and textile manufacturing and the development of apprenticeships in the UK. There is still an emphasis on science and innovation without any connection to the creative industries that are fundamental to science and innovation delivery. Copyright law is relevant to original designs but the businesses place a strong reliance on trademarks, on rapid and regular production, new designs and lines and on production and marketing measures to make copying more difficult, this issue has not been resolved through current intellectual property protection and more needs to be done to protect brands. Despite the overall decline in the fashion and textile manufacturing sector some companies are performing well and many CMT units are booming as they strengthen their relationships with British designers. This area of the industry is showing strong signs of potential growth. Design and production are crucial sides of the same coin but the traditional perception of large scale manufacturing still persists and manufacturing has never been closely linked to the survival of fashion designers. This is reflected in the Standard Industrial Classification Codes – with the two areas being analysed separately. Now marketing (showcasing), design and production are embedded in each others survival and, like the film industry, can make a significant contribution to the economy if they are supported together and if their joint contribution to the UK GDP is considered.

ETHICAL TRADING • • •

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Shortening supply chain and reducing a retailer or designer’s carbon footprint is a huge benefit in this era of ethical business practice. Improving quality can contribute to the sustainability of garments and the likelihood of recycling or long term use, in contrast to the throwaway attitude to clothing in recent years. The latest figures from DEFRA state that in 2006, UK clothing and textiles produced up to two million tonnes of waste, 3.1million tonnes of CO2 and 70million tonnes of waste water. Clothing imports into the EU as a whole now account for 42% of the global market. Huddersfield University figures for 2006 show UK expenditure on clothing as £45billion, and clothing imports £11.9billion, this expenditure is growing. Workers in developing counties who are producing for high street chains should be protected and labeling in the UK should convey a garment’s production origins in more detail. The equivalent of agriculture’s Fairtrade mark would help, as would standardisation of the term ethical.

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SUPPLY AND PRODUCTION •

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There are increasing sustainable development issues which suggests that some major changes in materials, products and production methods may be on their way particularly with trends towards fast fashion, rapid turnaround of goods or reduced lead times and carbon footprint issues. Retailers are increasingly getting involved in sourcing and product development, which means the requirements of the supply chain are changing. There is a shift in the supply chain that supports the revitalisation of CMT units, previously in decline and some manufacturers, traditionally set up to produce low cost high quantity are now turning to high cost low quantity production working closely with designers and retailers, effectively turning their businesses around. The UK CMT sector is using innovative lean manufacturing methods (well established in mainstream manufacturing in other sectors) for the first time to great effect. Flexible and quick response production is feasible for CMT units, particularly those adopting lean manufacturing techniques, and improves the ability of UK designers to produce garments fast according to the demands of the retail sector, this allows buyers to respond quickly to rapidly shifting market trends.

NEW BUSINESS SURVIVAL •

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Students traditionally are highly qualified in creative skills, however the fashion industry is changing eg with greater globalisation and international markets. There is a need to address these changes, utilising and encouraging collaboration and recognising the varied roles created by these changes within the industry, for example sourcing and distributing goods. Fashion is promoted as a high profile designer led sector, overlooking a vast array of potential careers within the sector resulting in a number of employment and skills gaps for employers across the sector. Generic business support is important but specialist fashion expertise is vital for the development of SMEs in this sector where 90% of textile clothing businesses employ less than 50 people. Mentoring is demonstrably beneficial, however there is no infrastructure for nationally accessible, consistent, standardised high quality delivery. Graduates often arrive into the sector with unrealistic expectations and a lack of practical production and business skills to support career development

WORKING WITH BUYERS/RETAILERS •

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London has built a reputation as a hot bed for unconventional cutting edge, ‘street’ design, which attracts students to its top colleges from all over the world. Their products result in admiration and influences global fashion, however a greater commercial support at the early stages of these individual businesses would lead to greater credibility with international buyers and would retain the talent in the UK. The numbers of independent retailers and designers selling through their own retail outlets has increased in recent years. Once established, growth for most fashion designers is dependent on effectively ‘cracking’ the international market, for which finance is essential. But most financiers see this as high risk investment due to its seasonality, the lack of business expertise in the SMEs in the sector and the huge up front costs to produce collections.

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The Industry Context SIGNIFICANCE TO THE UK ECONOMY The UK fashion industry comprises of the design, manufacture and sale of high value designer products, as well as wider ranging lower value apparel products. Though there are some commonalities amongst the two markets in terms of the issues they face and their contributions to the economy, there are also some differences worth noting.

Designer Fashion Industry The designer fashion market has become a highly significant component of the fashion sector in the UK economy, for London in particular. Designer fashion has outperformed the UK’s standard apparel market considerably with regard to international trade. In 2003, The Department of Trade and Industry and the British Fashion Council commissioned A Study of the UK Designer Fashion Sector. For the purpose of their study designer fashion was defined as: “Individuals or teams that combine creativity and originality to produce a clothing collection with a specific or ‘signature’ identity exemplified by, but not restricted to, the type of company that participates at international trade shows such as London Fashion Week and its equivalents. Fashion designers may produce diffusion lines in addition with their ‘flagship’ collections and range from established designers with an international reputation or ‘brand’ to ‘cutting edge’ newcomers.” The report highlighted the following trends: • Only 6% of designers employ 25 or more people, while 60% of designers employ 5 or fewer staff, and just under 20% are sole traders employing no staff; • Most employment created by designer fashion comes through indirect staffing, with some 45% of designers contracting between 1 and 10 outworkers and almost 25% contracting more than 25; • The designer fashion sector has grown from £75million in 1990 to £700million in 2001 (inclusive of wholesale, retail, and licensed income). This is a compound growth rate of 22.5% per year, significantly greater than the UK clothing market at large; • The sale of designer fashion manufactured in the UK provides for the employment for 8,500 people, the equivalent of 6% of UK clothing employment at large; • Although designer fashion accounts for less than 1% of the volume of the UK clothing market, it is worth 3.5% of the value of the UK clothing market; • Together with classic and contemporary brands and stand-alone designer businesses, these represent 14% of the UK market; • Designers and brands together generate £2billion of exports, which is 75% of all UK clothing exports.

The Wider Textile and Clothing Industry - Apparel Making it Happen, The National Strategy for the UK Textile and Clothing Industry produced in 2000 by the Textile and Clothing Strategy Group (TCSG) reported that the textile and clothing industry makes a major contribution to the UK economy. Statistics gathered by University of Huddersfield show that since the TCSG report, the sector has dropped from the 9th to the 10th largest manufacturing sector in the UK, with employment dropping to 114,000 across the country in June 2006 from 277,000 in 2001. Manufacturing has a significant presence in the North and East parts of London, as well as in the East Midlands, Yorkshire, the Scottish Borders and Northern Ireland. According to Key Note, a UK market intelligence company which compiles industry trends, the UK clothing and footwear market was worth £44billion at Retail selling prices in 2004, increasing to £48billion in 2006. The market has grown strongly in the early 2000s, exceeding the overall increase in consumer expenditure. Key Note forecasts slower growth for the market between 2005 and 2007 but with an acceleration towards the end of the forecast period.

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Apparel manufacturing experienced a sharp contraction in output (GVA) of 45% between 1998 and 2003, with employment falling even more steeply by 60%. The contraction in employment was heavily concentrated in the sewing machinist occupation, the largest single occupation in the industry, as labour intensive processes were transferred offshore. Wholesale activities grew by 9% (GVA) during the same period with employment in this sub sector rising by 8% possibly the result of wholesalers taking advantage of the low cost imports from overseas. Research by Huddersfield University shows that there was a continued but less severe decline in output (GVA) of 28% between 2002 and 2005, with employment from 2001 to 2006 falling by 42% in the same period.

National Issues and Strategy It is well documented that the fashion manufacturing industry in its traditional form is in decline, primarily due to increased globalisation that has brought about stiff competition with overseas producers, which pay lower wages. Efforts to compete directly with low labour cost manufacturers would likely prove fruitless, and given the recent increase in liberalisation in world trade even further competition from overseas economies is imminent. The 2005 Cox Review of Creativity in Business: building on the UK’s strengths report rightly recognises this increase of overseas competition as a serious threat, but also goes on to note: “The upside is that these rapidly expanding economies will stimulate global economic growth and will themselves provide major new markets. Moreover, the review revealed that there is still a window of opportunity – perhaps five or ten years- while the new economies develop the kinds of creative skills necessary to compete across the board. To take advantage of these opportunities and create a viable, attractive future for the UK economy, UK companies and industries will need to produce innovative, high-quality, high value-added products and services, and bring them quickly and effectively to market.” Similarly, in the National Strategy for the UK Textile & Clothing Industry, the TCSG asserts that: “The industry must respond quickly to these changing circumstances. If it does so, it will slow the pace and scale of its contraction and increase the chances of maintaining the critical mass necessary for the continuation of a viable UK textile and clothing industry.” The report suggests specifically that the key to future competitiveness for UK apparel manufacturing lies in focusing on: • Design and product innovation; • Marketing and branding; • Speed of response; • Capital Investment. To achieve in these areas the national strategy recommends the following: • Manufacturer or retailer co-operation for more efficient supply chains; • More effective use by the industry of UK design talent; • Better use of expertise and resources available in university and colleges; • Effective promotion of the industry’s reputation for quality and excellence; • Enhancing innovation by collaboration; • Improving and formalising training and career development; • Strengthening marketing skills; • Improving the image of the industry.

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London’s Fashion industry alone employs just under 21,000 people in 3,125 businesses in the textiles and clothing sector across London. Fashion plays an important role in London’s economy and its diversity, by employing markedly from the Black, Asian, and Minority Ethnic (BAME) communities particularly in the sub sectors of wholesale and manufacture. According to The Production Industries in London Strategy and Action Plan 2005 – 2008 produced by the LDA, manufacturing industries account for around 6% of total employment in London. All of London’s manufacturing sectors have lost jobs over the past two decades, with losses of 59,000 amongst the textiles, clothing and furnishings sectors. In terms of the remaining workforce, the report claims, “the weakest of London’s large sub-sectors is textiles and clothing, where productivity is below the national average.” In the 2004 GLA report, London’s Creative Sector, it is made clear that despite weaker productivity, “London is actually the region in which the clothing industry has declined the least. This is a lot to do with the growth of the designer fashion sector, which - as Italy’s success testifies requires a very different type of manufacturer; one that can produce a very precise kind of cloth for a very small range of outputs but with great flexibility and precision, to produce the precise effect that the designer requires for one particular item.” This slowing of decline is also verified by a recent Experian survey, which showed that of the 25 out of 34 industries reporting a decline in corporate failures, the textile and clothing sector had the brightest start to 2007 with a significant 30% drop in businesses going bust.

Redefining the sector The 2005 Creative Trends article “Measuring Trends in Creativity: A Case study in the UK’s Designer Fashion Sector”, published in June 2005 identifies the issues around sector definitions, clearly stating that many of the Regional Culture Data Framework’s recommendations, notably the adoption of a more comprehensive ‘supply-chain’ approach to documenting the cultural sector, make further demands upon the existing official structural classifications and the databases underpinning them. Even where all elements in the ‘supply chain’ are well documented, there are still questions about the validity of this approach. For example, should wholesale and retail distribution of creative industry products be regarded as part of the ‘Cultural Cycle’? In conclusion, the article suggests that the ‘official’ data has marked limitations in documenting the creative industries and does not realistically or adequately capture the more interesting and dynamic elements of an industry like ‘Designer Fashion’. This is disappointing in a context where central government has placed increasing emphasis upon evidence-based policy to support the development of the creative industries, and where the British ‘Designer Fashion’ sector has lamented the lack of central support in comparison with the French or Italian industries. It is suggested that a more customised approach to collecting data about the creative industries is needed if the results are to usefully inform the further development and profile of these sectors. Unfortunately this does not appear to have been addressed in the 2007 revision of the SIC codes in question. The possibility still remains that if the production and CMT element of the sector were calculated into the economic impact of the design sector, then the contribution from this creative industry would be substantial. To do this, the categories of designer fashion, manufacturing of apparel etc would need to be re-allocated and the statistics used together. Without this type of consideration in place there is no current means of capturing the true export value of designer fashion, which means that this contribution is not effectively recorded in the Creative industries Economic Estimates, Statistical Bulletins.

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The fundamental lack of understanding of the workings of the fashion industry is also apparent in The Creative Industries Economic Estimates Bulletin which states that its statistics differ significantly from those produced alongside National Statistics Input-Output analysis, which is based on products rather than industries, for the following reason: “The most significant difference occurs from the input-output analysis not taking account of the fact that large proportions of data produced under the standard classification systems are not the result of creative activity. This causes some overestimation, for example since ‘Clothing’ is used in place of ‘Designer Fashion’.” A worrying statement when clearly neither clothing nor designer fashion could be produced without creativity, nor an element of production, something that is clearly not regarded as a creative activity where statistics are concerned. A good example sees the 2006 Economic Estimates Bulletin report stating that employment for designer fashion 2005 is only 3,400, with other figures for the same period from the Design Council at 5,884 (number of fashion and textile design businesses) and figures from the University of Huddersfield at 115,500 (design and designer fashion employment in the sector), demonstrating clearly the potential inaccuracy of the data being used. Another is the way that seamstresses appear to be pooled together under the Visual Arts classification 74.87/2 where their main function is regarded as Creation as opposed to standard manufacturing (classification 18.24). Again two different classifications are being used here: SIC (standard industrial classification) and SOC (standard occupational classification), although there appears to be some overlap. To this end, it is essential that the industry has a stronger voice and speaks with one voice on a policy level, to ensure that Government have a clear and accurate image of the needs and contribution of a clearly defined sector and understand how they can adapt policy accordingly.

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The Economic Argument The growing potential for the UK fashion industry is emphasised in A Study for the UK Designer Fashion Sector for the DTI and the BFC in 2003. One of the aspects of the study was to estimate the value of designer sales, in order to assess their impact on the UK clothing industry. Designer sales are made in the UK, in export markets and through licensing. Independent designer businesses’ turnovers are a mix of sales made: • direct to retailers/franchisees at wholesale (manufacturer) prices; • direct to the end consumer through their own shops at retail prices; • via licence deals for which they obtain a small % of total sales value, which itself could be either at wholesale or retail prices. In 1991, a survey of the UK Fashion Designer Industry was undertaken by Kurt Salmon Associates for the BFC. It concluded that, in 1990 UK designers’ total worldwide turnover was £75million. Using the same methods, that figure is estimated in 2003 at £700million, a compound growth of 22.5% per year. In 1998 the DTI commissioned a report, which included an evaluation of the UK designer industry for 1996. It valued the UK designer industry at £600million at manufacturers’ (wholesale) prices and directly compared it to the £185million in the 1991 KSA study. The consultants re-calculated this on the same basis as 2001 and 1990 and derived a figure of around £500million. Throughout the nineties, clothing inflation had been negligible and then negative, as shown in Mintel Research “deflators index”, which uses government statistics for clothing and footwear. This index shows that: • prices did not rise at all between 1992 and 1999; • prices fell by 3.4% between 1999 and 2002. This means that real growth was pretty much the same as money growth. Designer prices had almost certainly outstripped average clothing prices, i.e. risen. However, the significant increase in designer sales suggests that the designer industry, regardless of where the product is being made has easily outstripped the UK clothing market and generated big sales increases for UK plc. Since this period the figures from the University of Huddersfield show that between 2000-2006 textiles and clothing retail sales by value rose by 32.1% compared with retailing in general, which rose by 23.4%. Compare with volume – textiles clothing rose by 51.3% compared to retail in general – 29.9% indicative of the trend for cheap clothing and its impact on the high street. The point about sales and where the product is made is important. UK designers’ direct sales are made both in the UK and offshore. Licensed sales are almost certainly made offshore. There are inferences that can be drawn from these sales estimates concerning the employment created in the UK by designers. It is likely that half of UK designer sales are produced in the UK. Only 20% of total UK clothing sales are produced in the UK. In 2003 it is estimated that designer sales in total provide employment to around 6000 sewing machinists and another 2500 overhead or administration workers. This compares with the estimate made for 1990 of employment in the UK created by designers of 1200. This means that the designer sector UK employment had grown by 19% per year whilst clothing industry employment had fallen. Designer created employment accounted for a minimum of 6% of the UK clothing workforce in 2003. As already mentioned, according to the most recent figures (04-05) from The Design Council there are 5,884 fashion and textile design businesses in the UK, and the University of Huddersfield figure for employment for design and designer fashion was 115,500 in 2005, an increase based on their data, of 43% since 1997.

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The value of the designer sector to the clothing industry and to the UK plc or Brand Britain as it is currently described, is perhaps best explained by its record in exports as detailed in A Study for the UK Designer Fashion Sector in 2003. First, for independent designer businesses: • Export sales at a mix of wholesale and retail prices are £390million; • This is 14% of all UK clothing export sales, a significant value from a small group of people. But export success is not confined to designers managing their own businesses. Many work in UK classic and contemporary brands. Using this broader base of designers and brands together, the business income attributable to them is £3.9billion. The export sales of the broader base of designers and brands is £2billion (almost 75% of all UK clothing exports). Designers and brands are vital to the UK’s international trade in clothing. Although sales are not directly relatable to UK employment, it is worth noting that: • worldwide income of UK designers and brands is £3.9billion; • worldwide exports of UK designers and brands are £2billion; • worldwide sales of product bearing the name of UK designers is estimated at £1225million. That of brands is estimated at £4800million. Together, sales of merchandise bearing either a UK designer or UK brand name are around £6billion. The objective set in the terms of reference for the 2003 study was to “assess the impact of the UK designer industry on the wider textile and clothing industry”. There is no doubt that for the decade since 1990: • UK designer sales have risen world wide significantly; • UK designer sales have taken a larger share of the UK clothing market; • UK designers’ creation of UK manufacturing employment has risen, whilst general clothing industry employment for product manufactured in the UK has fallen. It is worth noting that UK clothing designer names also “spin off ” business into other creative industries, such as home textiles and porcelain. This is real business, although it may substitute the designer range for the classic brand (i.e. Jasper Conran for Wedgwood). However, whilst designer businesses in clothing have definitely succeeded, classic brands have faltered, although there are no estimates for 1990 to compare with 2001. However, the combination of UK designers and brands have become a more important part of: • The UK clothing market; • The UK clothing export industry. The impact of both has been positive, and in a world industry where middle and lower priced product is being manufactured offshore, is an important route to safeguard UK manufacturing employment in the clothing industry. The UK is a relatively high cost economy. Clothing manufacture is labour intensive. The supply of clothing is global, and will get more so as tariff and quota barriers decrease. Mass market clothing manufacture will continue to gravitate to low labour cost countries. The historic decline of UK clothing manufacturing over the last 30 years, the rise of imports, and the recent spate of closures of large manufacturing units bear this out. The TCSG has recognised this, and correctly said that the niche selling proposition for the UK clothing industry lies in creativity, design and high quality niche product manufacturing in a fast response fashion environment.

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In this context, the performance of the UK designer sector has been excellent, growing in terms of designers’ turnover from: 1990 £75million 1996 £500million 2001 £700million. This represents compound growth per annum of 22.5% and as clothing inflation has been virtually zero, real growth is the same percentage. Designer clothing sales that are produced in the UK, provided employment for 8500 people (2003). This is 6% of the clothing industry workforce, and is quite out of proportion (greater) than the designer share of the market. When classic brands and top end contemporary brands are added to the designer figures, they account for 14.1% of the UK retail clothing industry. These brands employ or use designers. The brands and independent designer labels also account for 75% of UK clothing exports worth £2billion a year. For retailers to be encouraged to buy more British rather than international designers, this requires an environment where UK designers work commercially to the retailers’ timetable. In preparing this policy briefing document it is obvious that there is a desperate need for the findings in the many reports cited at the end of this document, to be brought up to date and for an accurate and overarching picture of the issues and needs of the sector to be drawn.

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Cutting IT Evidence The UK fashion, design and production industry is undergoing a period of change and restructure. Within the past year there has been a tangible shift in both attitude and behaviour from all the main players within the industry: designers, manufacturers, CMT units and retailers – led in part by various different factors: • Consumer demand • Sustainability developments • New funding regimes • Government policy • Changing skills agendas • Changing partnerships • Economics – global, national and regional On a more regional level, there are pockets of development that are leading the way. For example: • Newcastle College have structured their Foundation Degree in Fashion and Textiles to be modular, reflecting industry needs, and where anyone needing specific skills can apply to specific modules of learning, emphasising the support of skills development. • In the Midlands there is a consortium of four apparel manufacturing companies that represent 7000 employees who have developed a level 2 accredited, in-house training programme that is recognised in all four companies, improving the standard and the flexibility of employment options within the Midlands. • The London manufacturing and design sector has developed collaborative and effective partnerships, which are affecting change - supported in part through the EQUAL funding with the investment of £4.5million through the Cutting IT project. These in roads and best practice need to be recognised and supported nationally in order to make any long lasting impact. The end goal is a more robust sector, commercially, creatively and with an international focus. Manufacturing, retail and design have all created new niche markets and there are lots of examples of individual success stories where adapting to change, and becoming economically and commercially more efficient are available. Having said this, there is a real and desperate need for the sector to influence policy decisions within the creative economy. Fashion textile and apparel is currently measured almost entirely on its designers. With just these figures it is a multi million pound industry. However, production has become integral to the changes and therefore cannot be ignored. Long term sustainability of the sector has to be through successful partnerships and collaboration, throughout all levels – from haute couture to the new generation designers and from the pattern cutters through to the manufacturer owners. Business Support Organisations would need representation too. Other creative sectors have examples of good practice in effective partnerships that can be drawn on. Cutting IT has been able to research and innovate with the funding received in such a way as to gather comprehensive data and information not only historically but on new initiatives and activities. Through challenging the current perceptions of the industry both internally and externally, the project has made some in roads to changing the attitudes and culture of the industry. However, Cutting IT is a short term project with a long term goal which can only be continued through political support and effective partnerships.

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The project worked in 4 key areas: 1. SKILLS AND TRAINING Key Issues: • Access to appropriate, flexible training was limited within the sector, with the issue not around creative learning but practical skills development across all age groups. • A lack of skilled workers was significantly affecting recruitment and business survival within the sector. • Need for increased employer engagement in the creation of relevant, flexible, sector specific and appropriate training and skills development. • Need for review and rationalisation of the curriculum and funding structure of fashion design courses nationally – with employer and education provider buy in. Activity Development of new qualifications based on a modular framework – bite sized, accessible and appropriate training packages. These are employer led and designed in collaboration with the industry, training providers and partners. Two strands of activity have evolved. 1. The first, at national further education level, involves activity by the Lead Provider Network, a partnership led by the Sector Skills Council Skillfast-UK and including the Learning and Skills Council (LSC) and lead training providers nationally, representing fashion based curriculum delivery. The Lead Provider Network has driven forward the modular based training, Framework for Achievement model, sharing resources and best practice throughout the sector. The current activity involves national curriculum reviews, with rationalisation to reflect current sector requirements with employer engagement and LSC buy in, and responding to the Leitch Review recommendations. This will now be rolled out as a model to develop activity within the HE environment. 2. The second tier of activity involves development and delivery of new sector specific qualifications and vocational training including; a) 14 – 24 age group • Specialised 14-19 Diplomas in Manufacturing, Apparel, Creative and Media developed through Skillfast-UK, as part of the national 14- 19 policy agenda. • Pre-Apprentice/Apprentices – piloted with Savile Row. The pre-apprentice programme provides skills development bridging opportunities and support employment issues linked to an aging workforce. Developed to take low skilled workers and the unemployed to the skills levels where employment and further training through apprenticeships are viable options for employers. Working in partnership with employers and training providers to ensure viability of government strategy for apprentice programmes. The Savile Row model has been replicated with Jewellery Sector (Holts Jewellery) and is being developed for the theatrical costume and shoe sectors. Fashion Futures - a programme of Saturday and summer schools targeting 14 -19’s bridging the gap between industry and education, developing awareness of the skills requirements and the diversity of employment options available within the sector, also supporting strategies to engage or re-engage talented young people to continue learning. b) 24+ age group • A programme of short, bite sized industry relevant courses has been developed that includes training for all, regardless of previous experience, from small sole traders to large-scale production or retail organisations. The emphasis on training is dominated by three key areas: 1) Practical construction skills – eg pattern cutting, grading, tailoring etc; 2) ICT and IT skills – eg Prima Print, Kaledo, CAD/CAM, etc; 3) Business development and understanding, eg supply chain management, marketing, branding etc;

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Using the unique NewCAD units (currently OCN accredited and soon to be on the NQF) the units are flexible according to the needs of the industry whilst maintaining funding through the LSC. There has be a concentration on Framework For Achievement modular courses in bite sized, accessible and flexible formats that have developed year on year – the demand outweighing supply. Cutting IT has funded the development of new learning hubs at London Apparel and the Fashion and Textile Museum increasing access with sustainability via accredited courses. The development of new learning, employer led training has been incredibly successful however it has not been taken in isolation. Progression, career development and continual professional development have all been taken into account through the other main areas of the Cutting IT programme. 2. BUSINESS AND WORKFORCE DEVELOPMENT The Key Issues • Lack of access to existing resources, support and information, in particular opportunities for career and skill progression, career development or business expansion. • Ensuring access to sustainable business and workforce development resources. • Few focused or effective sector specific networks to support the above and encourage collaboration between design, production, manufacturing and retail. Activity Progression and career development: All training created in consultation with employers was regarded as an entry point into a career within the sector and therefore the entry and exit routes to all personal and business development was analysed during the development of any activity. Eg the 14-19 year training led into on going education – whether skill based, HE or FE, or into employment as either an apprentice or employee. This approach led to a clearer image of progression through the sector, making potential career paths more obvious. Skillfast-UK are combining this with their work profiling specific job requirements across the whole sector, incorporating both design and production elements of the sector, to open up access and increase understanding for both established companies and individuals and those entering the industry for the first time. Business Development Business development for recent graduates was highlighted as an immediate issue within the sector as a high number of graduates are still leaving their courses without the skills needed to succeed in their chosen careers. This was addressed with the sector specific short courses outlined above. These have been developed in conjunction with access to networks or peers, through seminars, training and online, and individuals are encouraged to collaborate with others improving peer to peer support. This technique was particularly successful with design businesses improving their chances of thriving and assisting them through the historically difficult establishment phase. Where manufacturers and production units were concerned access for any business development organisation attempting to offer business growth and skills support, was much harder. Historically this sector has not engaged with public funded bodies of any kind. Skillfast-UK research confirmed that this group would not, as a rule, undergo training or development programmes. Over the last three years however, a lot of negotiation and work has been undertaken with manufacturing units to build trust and demonstrate the positive impact that business development intervention can have on their potential for survival. This is culminating in the introduction of lean production (see below) amongst many fashion and textile manufacturers and production units with mutually beneficial relationships being established between manufacturer and buyers (retail) and between manufacturers and designers (in-house collections). This change in culture and attitude has been under way for some time, however, Cutting IT has been fortunate to support London Apparel and Fashion-Enter to ensure specific activities focused on this change in culture. 19

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Knowledge transfer Business support organisations (BSO’s) working within the fashion, textile and apparel sector are also in a period of change as the industry changes too. The mapping exercise of mentoring and support services available nationally has proved decisive for Cutting IT, confirming that there are services and mentoring opportunities for support nationally that would cover most business needs. However, access to these services is limited by a lack of knowledge transfer, a lack of shared knowledge accessibility and by regional or postcode limiting funding. The Stakeholder Forum - a national network of business support organisations, that could inform government policy and funders, offers an opportunity to centralise information and business support accessibility throughout the UK. The future of this forum is being negotiated, its sustainability at the time of publishing this briefing is currently insecure, however the importance of this Forum is recognised and ideas to help sustain the momentum of this group are being investigated. Through the Stakeholder Forum, a holistic support programme could become viable for all entering and working within the sector, however, this forum would need on going support and development beyond the life of the Cutting IT project. There needs to be transparency of access to resources and longer term, perhaps an online portal clearly outlining these options. There are huge in-roads into achieving much of this work currently underway, but sustaining them beyond the life of Cutting IT or partner projects is an issue. 3. MENTORING The Key Issues • The accessibility of appropriate, strategic sector-specific business support within a sustainable environment. • Developing trust plus transparency and ease of access to resources, including clarity regarding progression and business development routes. Entrants to the sector have learnt historically though mistakes and business failure. There is no formal, national mentoring structure for fashion designers. Without this support, true talent stands little chance of developing unless they have the correct contacts within the established couture circuit, an elite that doesn’t always accurately reflect the diverse needs of the sector. It is also clear that one size does not fit all and designers’ support needs will be different at different stages of their careers. Activity The importance of mentoring was clearly demonstrated through a pilot programme, but it also established that mentoring in a one to one format is not financially sustainable. Peer to peer and mentoring networks represent greater flexibility. Cutting IT developed a unique partnership with the large majority of national BSO’s within the fashion design and manufacturing sector - The Stakeholder Forum - this is now in a position to discuss frankly and openly the current environment and options for change. The creation of a Fashion Business Support Guide as a source of reference for the BSO’s and designers and manufacturers seeking information and support, indicates that not only is there very little repetition of services available to designers nationally, it appears there is a natural and apparently smooth progression route available, limited only by ability to access it. The Support Guide is being developed in an interactive electronic format that will sit on a number of Fashion Industry websites.

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4. LEAN MANUFACTURING The Key Issues • Small production units dominate London’s clothing manufacturing industry. • Difficult to reach audience with a distrust of government or agency support. • Two barriers to commercial success are: - the need to encourage and support structural and cultural change; - and to access business support organisations who can offer tangible economic benefits for increased long term financial viability. Activity Extensive background networking and negotiating with different groups of manufacturers is on-going. Cutting IT has also worked with a pilot group of manufacturers with further interesting developments, such as: • The Production and Innovation Centre (PIC), which is training sample machinists to be multiskilled in a lean manufacturing environment. This supports both designers and manufacturers to break down communication barriers and improve collaboration and business effectiveness; • London Apparel supports manufacturers through structural change, offering training and mentoring. This is coupled with referrals for sample or production runs from designers who have also worked with the PIC unit. Access to manufacturers and production units has been improved through the development of the Manufacturers Online Showcase creating a comprehensive online register of over 50 manufacturing businesses within the sector, improving access for designers, meaning new business opportunities and collaborations for the production units and increasing awareness of UK production. Initiatives include introducing lean manufacturing in partnership with the Manufacturing Advisory Service (MAS), and the development of courses such as Perfect Production and Creative Thinking to train-up and then demonstrate the advantages of using multi-skilled sample machinists in the lean manufacturing environment of the PIC. This approach is encouraging structural and cultural change to adapt to the changing needs of designers, retail, production and manufacturing within the sector.

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Conclusion Clearly this Policy Briefing has limitations, it does not profess to be an absolute assessment of the sector – that is an exercise that should be undertaken in a very thorough manner, extending beyond the lines of enquiry in the preparation of this briefing. However there are a number of issues which repeatedly arise, particularly in respect of the value chain, networks, relationships, the lack of clustering, lack of information, the paucity of public sector grant aid, markets and customers, qualifications and levels, financial investment, as well as the comparison of primary data with secondary sources. It is essential that the sector is better understood by those aiming to develop policy to steer its economic survival and development as a major element of the Creative Industries agenda. Research into the sector at a national level is a logical step and would be welcomed by many. Engaging participation and cooperation may be improved by advertising the benefits gained for the sector by participating and engaging with the networks of Business Support Organisations working within the sector and by developing Knowledge Transfer Network activity, to encourage and ease the sharing of information within the sector. This could be undertaken by advertising prior to contacting participants for research purposes and by widely publishing the findings, publicising initiatives that are developed as a result of the research. Further studies in detail on a regional basis engaging RDA’s and encouraging creative clusters would strengthen the data and begin to generate benchmarks that can then be applied on a national basis, steering funding for the future, avoiding overlap and improving clarity and accessibility. Furthermore any network and relationship analysis would provide a useful comparative picture of the industry and could indicate the best way forward for developing a mechanism or organisation that provides a voice to the sector as a whole. There is clearly substantial evidence to suggest that this is now essential to ensure the designer fashion sector survival in certain areas, particularly with the growing number of SME’s and self employed within the fashion industry, the high number of hard to reach communities working in the sector, the problematic and complicated dynamics associated with employment and skills gaps, and the intricacies of dealing with suppliers and customer relationships. It is also the case that this research based approach enables the SIC and SOC codes to be fleshed out with the sector and utilised to greater effect, providing an accurate statistical evidence base to supplement the large quantity of anecdotal evidence. There is no doubt that there are many positive impacts to be gained from investment into this vibrant industry for both the Creative Industries agenda and the UK economy. Serious consideration of the policies that will support and exploit the potential of the fashion industry is essential if the undisputed design talent, innovation and production creativity that the UK is known for is to be fully exploited to the benefit of the Brand Britain of the future.

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DOCUMENTS AND RESEARCH EVIDENCE FOR THE KEY AREAS: Skills and Training

Mentoring

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NewCAD – Modernising Curriculum and Qualifications (2004)

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Skillfast-UK Design Net – original proposal – 2006

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Newham College- CoVE mentoring report

Framework for Achievement - a framework of qualifications defined by only two dimensions - the level of the qualification, and its size- www.qca.org.uk

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Newham College mentoring and matrix report Jan 07

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Clutterbuck Associates research

Leitch Report – Dec 06 - Prosperity for all in the global economy - world class skills

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Stakeholder Forum meeting minutes

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Fashion Awareness Direct evaluation reports

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• •

Lead Provider Network (Skillfast-UK)

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Sector Qualifications Strategy 2006 (Skillfast-UK)

Production – lean manufacturing

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Business Case for IT Final Report Survey and Case Studies - Skillfast-UK, Sector Skills Council for Apparel, Footwear, Textiles and Related Businesses Mark Clayton, March, 2005

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London Apparel reports – various

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Manufacturing Sector Support Programme (MSSSP) (City Fringe Partnership)

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Fashion Enter – Manufacturers online showroom evaluation and findings

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14-19 Diplomas (Skillfast-UK)

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Sector Skills Agreements (Skillfast-UK)

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Manufacturing Advisory Service

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Pre-Apprentice in Tailoring – Savile Row Bespoke Ltd – Report Sept 06 (Newham College)

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The Production Industries in London Strategy and Action Plan 2005 – 2008 – The LDA

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Newham College /Cutting IT Course Evaluation and Findings

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Fashion Awareness Direct course evaluation reports

Well Dressed? The Present and Future Sustainability of Clothing and Textiles in the UK– (The Institute of Manufacturing)

Business and Workforce Development

Other resources

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Sector Skills Agreements – as above

DEFRA

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Matrix and mapping report final – Jan 07 – (Newham College Cutting IT)

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The Office of National Statistics

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The Design Council

Knowledge Transfer Creative Industries Development Plan (Technology Strategy Board)

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Malcolm Newbery – The Malcolm Newbery Consultancy

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Professor John Pearson – Huddersfield University

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London College of Fashion – Sustainability research team

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Experian

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Fashion Sector Investment Plan (City Fringe Partnership)

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National Skills Academy Bid (Newham College and Skillfast-UK)

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The Stakeholder Forum (Cutting IT)

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Measuring Trends in Creativity: A Case Study in the UK’s Designer Fashion Sector – Creative Trends 2005 (Malcolm Newbery)

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Staying Ahead – The Economic Performance of the UK’s Creative Industries – 2007 (DCMS)

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Industry Summit Briefing Paper – April 2007, Creative Economy Green Paper (DCMS)

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Textile and Clothing Strategy Group (TCSG) Report of 2000: - A National Strategy for the UK Textile and Clothing Industry.

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2005 Cox Review of Creativity in Business: building on the UK’s strengths

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Essential Facts: The Nature of Designer Fashion and Its Markets, Report of 2003 - Professor Simon Roodhouse (Bolton Institute of Higher Education)

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DTI and British Fashion Council report of 2003 A Study of the UK Fashion Design Sector

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2004 GLA report, London’s Creative Sector 23

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