Threats to the UK's used textiles sector

Written by: Alan Wheeler of the Textile Recycling Association | Published:

The value of used clothing remains depressed, partly due to UK textile bank operators facing much higher charges than their continental counterparts. But one major issue stands out – the push in East Africa to ban clothing imports in a misguided attempt to protect the area’s textile industry. Alan Wheeler of the Textile Recycling Association reports

Those of you with a direct interest in the value of UK used clothing will be aware of their decline over the past few years. There are a number of causal factors which I have alluded to in the market reports I present to the Bureau of International Recycling and through the media – including my last report for RWW in August 2014.

Are things looking up?

Has the state of the market changed significantly since my last report?

Well, the answer is both 'no' and 'yes'. It is 'no' insofar as the market remains depressed.

The rate at which the values are falling has slowed and may have even bottomed out, but there are still significant downward pressures on values. Collectors are trying to target higher-value collections and retract their physical collection areas in an attempt to maintain a workable profit. For some charity shops in more rural areas this means that they are struggling to find collectors.

For local authorities that are about to go to tender for textile bank contracts, they really must ensure that the headline weight per tonne is given a much lower weighting when evaluating contract bids than many authorities do at the moment. Service levels have got to take a higher priority to ensure higher profitability for the local authorities.

To put it bluntly, there is no point in offering a contract to a bidder that is offering what is clearly well above the market rate, if they then don't empty the banks regularly enough.

Knock-on effect

Not only do the local authorities concerned receive less income directly as less clothing is being collected, but also costs for clearing up overflows and sending them for disposal may also have to be paid.

Through WRAP's sustainable clothing action plan we intend to produce some guidance for local authorities on how they might wish to draw up their clothing collection contracts going forward, which should help them address these pitfalls.

Despite this, the fact is that even with our depressed market, UK textile bank operators are still paying around double the amount that their counterparts on the continent have to pay their local authority or charity partners.

Ever-decreasing values

As the continental collectors export to the same global markets, this can only mean that values are more likely to go down in this country. Coupled with the fact that the pound is continuing to strengthen against the euro, exporters from France, Germany, Belgium, the Netherlands etc will continue to be able to maintain their competitive advantage over UK sorters and still offer lower prices to wholesalers in Eastern Europe and Africa.

As prices look set to remain depressed, why did I also say 'yes' when considering whether the market has changed or not recently?

The reason is not good. We have been hit by a curve ball from East Africa which, if it comes to fruition, will be a tremendous blow to the global used clothing industry and devastating to the economies of the East African Community (EAC) member states (Kenya, Tanzania, Uganda, Rwanda and Burundi).

At the last EAC heads of state summit earlier this year, the council of ministers was instructed by the delegates "to study the modalities for the promotion of the textile

and leather industries in the region and stopping the importation of used clothes, shoes and other leather products from outside the region".

A wrong impression

This decision is based on a completely false assertion that used clothing is the main reason that some textile producers in Africa are struggling and that banning its import will resolve the problem.

This is complete nonsense, and unfortunately the real reasons are much harder for the governments of the EAC member states to deal with than they would care to admit.

The phasing out of the multi-fibre agreement (MFA) by the World Trade Organisation in 2005 is of far more significance. The MFA effectively placed stringent limits on the amount of clothing that Chinese producers could export to developed countries and allowed African producers to compete more effectively in the global market. It is a fact that before the abolition of the MFA, there were periods when textile production in Africa grew at the same time that used clothing imports were popular.

Since the abolition, many African textile producers have struggled to compete with the Chinese, while other countries such as Bangladesh are also doing well.

Another major issue is that of infrastructure. In many parts of Sub-Saharan Africa, it is woefully inadequate.

Large swathes of the continent are currently suffering from major power cuts. In some places, having one day with and the next without electricity is common.

The electricity producers are finding it increasingly difficult to meet demands and, with low amounts of rainfall in recent times, hydroelectric power stations have been struggling, notably in Uganda.

As a result of these unreliable supplies, many textile producers are either having to use generators which are expensive to run or to simply slow their production. The result is that relative costs of electricity for African textile producers are around twice as much as for Asian producers. Then even once the goods are made, the textile producers have to rely on the continent's poor transport infrastructure, which pushes up their costs further.

It is even more staggering to think that East African ministers are considering this ban, when they surely must know how important the used clothing industry is to the economies of their countries. A figure attributed to the Kenyan Institute of Public Policy (through the US Commercial Service) estimates that around 10 million people in Kenya rely on the used clothing industry for employment and income generation.

For us, Sub-Saharan Africa was by far the UK's biggest global export market by value in 2014 and Kenya alone was the third-biggest market in Africa. Collectively the countries that are members of the EAC are vital to the UK used clothing industry.

Threat to employment prospects

A ban on imports of used clothing to these countries would jeopardise the employment prospects for thousands of people in the UK and millions of people in the East African region.

Attaching the blame for the woes of some African textile producers on the success of the used clothing industry is a red herring. It is absolutely vital that EAC ministers do not use the industry as a scapegoat.

If they really want to promote the textile and leather industries in East Africa then the governments of those countries need to tackle the real issues head on. Banning used clothing imports will be about as much use to textile producers as giving a bicycle to a fish – perhaps even a herring? RWW

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