News analysis: Innovation, enduring excellence behind recent recovery in Italy's textile industry

Italian textile industry is among those that have been most affected by globalization and economic crisis, but it now starts seeing the light at the end of the tunnel.

The sector showed clear signs of recovery in 2014, and this upturn was made possible thanks to its ability to react with strong innovation capacity and greater internationalization, yet preserving an enduring tradition of excellence, experts said.

Italian fabrics sales increased by 3.8 percent last year, with an overall turnover exceeding the 8-billion-euro threshold for the first time since 2011, according to a recent report by Italian association of textile and apparel manufacturers Sistema Moda Italia (SMI).

Exports grew by 3.3 percent to 4.4 billion euros, and domestic demand rose by 4.4 percent after years of either stagnation or decline.

The trade surplus of fabrics contributed 25 percent to the surplus of the whole textile-clothing-fashion industry, despite the sales of the branch represent 15.3 percent of the overall sales.

"After six long years of crisis, there are now several positive signs that make us look at the future with less concern," SMI director-general Giancarlo Di Natale told Xinhua in a recent interview.

According to him, a key factor in the recovery was that many companies focused on innovation, and created original products in terms of new shapes, colours, and fabrics to compete on the global market.

"Innovation has been crucial even for an industry like ours, which is used to reinventing itself every six months. Many manufacturers have not cut themselves off in the crisis, but invested in research and greater internationalization. This strategy is now bearing fruits," Di Natale said.

However, some analyses suggested the global crisis hit Italian textile-clothing industry hard, an industry that was already struggling with the challenges of globalization.

The country had 19,247 textile and over 52,200 clothing companies in 2009, according to a report by IULM University in Milan. The sector employed almost 548,000 people that year, Italian Statistics Institute (ISTAT) stated.

In 2012, SMI estimated the number of employees had dropped to some 423,000 and that of companies to just a little over 50,000. Production had drop by 26 percent in four years, according to ISTAT.

"Traditional Made in Italy productions such as fabrics and shoes had already registered a 25 percent and 55 percent decrease respectively in 2007, compared to the second half of the 1990s," the Bank of Italy noted in a mid-2013 report.

Yet the central Bank remained moderately optimistic, as it added: "There are good reasons to doubt the fate of Italian industry is marked. Its decline is not irreversible, provided that companies are able to transform themselves".

Looking at the 2014 performance, textile companies seemed to be succeeding in such a goal.

Manufacturers suggested that another factor helped the sector innovate.

"The innovation capacity did not result only from the efforts of each single company, but from an efficient interaction among all actors," Stefano Festa Marzotto, manager with FBS Apparel Company in Vicenza, told Xinhua.

"In Italy we have a whole supply chain: those producing high-quality fabrics and those printing them, we have refined tailors and packaging suppliers... All together, they create the final high-quality accessory. This is the great advantage of our industry, and the reason why it is famous worldwide," the manager said.

Although still moderate, the recovery may now meet favourable global market circumstances.

"The situation now is like a 'perfect storm', in a positive sense," Di Natale said.

"The United States, which is a key market for us, is recovering after being virtually unchanged since 2007-2008. Plus, the dollar has appreciated sharply against the euro, making our exports very competitive".

The SMI report confirmed fabric exports to the US increased by 10 percent in 2014, and those to the European Union (EU) by 4.7 percent.

This would compensate for 9.6 percent and 11.9 percent drop registered in Chinese mainland and Hong Kong respectively, which together represent the second market of reference for Italian exports.

However, experts also warned the industry should persevere with its enduring tradition of excellence in order to consolidate the recent recovery.

"Our production must maintain a very high quality. This allows our products to stand out in the global market," Di Natale said.

Italy is a solid reference point within the European Union (EU) market, with a 25 to 28 percent of the whole turnover in the sector, the expert said, and yet there are strong competitors such as China, Turkey, and Brazil to consider.

"These global competitors can 'hurt' us if we lower our quality standards and our prices. This is why we must always aim for excellence". (1 euro = 1.14 U.S. dollars) Enditem