After our story on reshoring of apparel manufacturing in the US, let’s now see how similar or different the scenario is in Europe. And, speaking of Europe, let’s talk about Italy first – after all it is one of the largest reshoring European countries. Like US, Italy too has been striving hard since the onset of the last decade to bring back apparel production from abroad – especially from Eastern Europe and Far East. Notably, apparels and footwear industry are the ones that are slowly seeing the trend of coming back to Italy with electronics not far behind – thereby making Italy today world’s second largest reshoring – or backshoring as it is called in Italy – nation after the US.
While economic reasons like fast rising labour costs and constraints of reaching the final destination are being cited as major factors driving apparel production back to Italy, the country states the marketing gains of ‘Made in Italy’ also as an important factor for apparel manufacturing to return home. Back in 2010, Uni-CLUB MoRe research centre was set up with the intent of bringing back full or part of production back to Italy. The centre worked in close co-ordination with experts of several Italian universities like Bologna, Udine and Catania, amongst others.
Notably, China accounts for 28 Italian comeback firms (35 per cent). This is followed by 22 Italian returning companies from Russia/Eastern Europe and 12 from Far-Eastern countries (27 per cent together). Besides, there’s some 13 per cent from Western Europe as well, in addition to some from America. What’s, however, notable is that nearly half – 46 per cent to be precise – of these Italian returning firms make apparels and footwear, while electronics is at distant second with 15 per cent. It is imperative to mention here that over 600,000 people are employed in Italy’s apparel manufacturing industry.
Talking of numbers, Italy’s total apparel import (knitted and woven) jumped from € 14,243 million in 2018 to € 14,851.01 million in 2019. As far as export numbers are concerned, it’s been a surge from € 19,829.54 million in 2018 to € 21,234.63 million in 2019.
The US, Japan, Hong Kong, China, Russia and Turkey are some of the largest exporting destinations for Italian apparel products. Apparels make up nearly 4 per cent of the total annual exports from the country. Womenswear is the largest segment in the apparel industry and is growing by 2.3 per cent year-on-year. In comparison, menswear has been increasing at 0.9 per cent.
Today, Italy stands on the world stage with nearly 14,000 textile firms and € 48 billion of combined production value in textile and apparel segments. Besides, there are little over 50,000 apparel firms in Italy. Italy’s apparel market was estimated to touch US $ 42 billion by the end of this year, though it now needs to be seen where the final figures will stand.
Made in Italy not only evokes patriotism but is also a brand in itself…
Any apparel – or for that matter any product – that has ‘Made in Italy’ written on it evokes patriotism for an Italian and probably the pandemic seems to have heightened those feelings. In fact according to an international advisory firm KPMR, the ‘Made in Italy’ stamp not only tells about the location where the apparel is produced, but importantly also tells everyone that it is a product brand.
In 2009, the Italian law stated that only products totally made in Italy (planning, manufacturing and packaging) are allowed to use the labels Made in Italy, 100% Made in Italy, 100% Italia, tutto italiano in every language, with or without the flag of Italy.
‘Made in Italy’ has over the years managed to gain a brand recognition that is arguably similar to – if not more – one attained by Coca Cola or VISA, with estimated values of this brand averaging somewhere around US $ 7.5 billion. And there are reasons for the same! While Italians have always been known for their impeccable skills at making clothes, they are also known to be ones who are adept at anything and everything that has something to do with fashion and style. Italian companies designing and producing luxury fashion apparels and accessories are today leaders on a global scale. In fact, the most famous ‘Made in Italy’ brands generate the vast majority of their revenues abroad and are well established in the leading markets for personal luxury goods. And they have names to prove it – from Gucci, Armani and Dolce to Prada, Roberto Cavalli, Moncler and Moschino, each one of them is a synonym of international fashion and style. Here it is worth stating that revenue in the fashion segment in 2019 was an estimated € 5.6 billion.
Although Milan, Rome and Florence are commonly regarded as the leading cities in Italian fashion, other cities, such as Venice, Vicenza, Turin, Naples and Bologna, are also important centres for Italian clothing design and industry. The Milan Fashion Week takes place twice a year after the London Fashion Week and before the Paris Fashion Week. It is even today one of the four leading global international ready-to-wear fashion weeks.
Coming back to apparel manufacturing, Italian manufacturing is already large, but what’s notable is that it is still growing at a decent 11.1 per cent every year, thereby making Italy one of the largest apparel manufacturers in Europe and globally. Niccolò Biondi, CEO, Roy Roger’s says that ‘Made in Italy’ is no longer only a synonym for quality, but also brings out a desire for rebirth as by purchasing a ‘Made in Italy’ apparel or any product, one supports Italian workers, and thereby rewards the country. He substantiates by saying “It is a form of greater protection for those who work with sacrifice and passion since generations. Roy Rogers’s has been a historical label of Italian fashion and style ever since 1970s.
With Made in Italy intensifying, Italy needs onshore apparel manufacturing
There are not one or two but multiple reasons to make clothes in Italy today. Firstly, as already discussed, there is the value of the ‘Made in Italy’ brand. Secondly, the immense talent that the country possesses in making quality apparels has made Italy a hub of fashion. Then one, of course, cannot overlook the rising costs in Asian countries including China. According to consulting firm AlixPartners, China’s average wages in manufacturing have jumped by as much as 364 per cent in 10 years (between 2004 and 2014). Now that’s a whopping jump!
However, one of the most important factors is Italy’s ability to ship to any part of the world in a short span of time. The country boasts of an excellent infrastructure with no additional administrative expenditure or taxes. Being a member of European Union (EU) only makes things better. Here it is important to mention that shipping from Asian countries, particularly China, takes lot of time, which has been a regular stumbling block for apparel and fashion firms, whose customers often want their products fast considering the rapid pace at which the apparels and fashion accessory products go out of sight and out of fashion.
As per a report published in American Journal of Industrial and Business Management, while about 18 per cent feel the social pressure of producing in the country of origin, 16 per cent want the apparel production back in Italy owing to the highest level of competences of the workers of the country of origin. Another 13 per cent want it due to reduction of difference in the cost of labour – not to mention the abundant job opportunities it is going to create.
As per the 2018 yearly report by the European Reshoring Monitor, Italy, France and the United Kingdom were the three most important Member States as far as reshoring was concerned. In terms of company size, large companies account for the majority of reshoring cases (about 60 per cent of all cases).
Several ‘Made in Italy’ apparel brands are carving a niche for themselves…
Amongst the several Italian apparel brands that have carved a niche for themselves over the years is Trend S.R.L – a casualwear firm that focuses on denim, RFD fabrics, eco-friendly fabrics and tencel. The company offers modelling, prototyping and production services for both men and women (all 100 per cent in Italy). Operating in countries in Europe and North America, Trend S.R.L. was set up in 1982 in Urbania, Italy and today boasts of several large, medium and small brands that include the likes of Amsterdenim and Cavallaro Napoli.
Then there’s Diadora, which mainly produces T-shirts and other products for sports activities (yet again 100 per cent Made in Italy). In 2017, Chairman Moretti Polegato had announced that the company intends to reshore to Italy 10 per cent of its high-end production activities over the next 3 years. The decision was taken so as to enhance the product innovation process and also bring the production and R&D closer to home. Additionally, the company was able to leverage the ‘Made in Italy’ label and reduce the environmental impact of its production network.
Besides, there’s been talk about Manifatture Mediterraneo S.r.l lately! With nearly 250 employees, the company has made a name for itself through its exquisite collections of coats, jackets, shorts and skirts. Another such firm is S.T.I. Sartoria Tessile Italiana, which was established in 1988. With around 50 employees, the company is known for its beautiful and fashionable jackets, coats, jeans and bridalwear.
Belee Milano is another clothing and knitwear manufacturer that has made a mark for itself through its coats, jackets, shorts, skirts and jeans – all 100 per cent ‘Made in Italy’. The company has a wide range of manufacturing processes from manual looms to flat knitting electronic machines from reputed technological firms like Shima Seiki, Stoll and Santoni.
And some of the firms in Italy are technologically ahead too….
If we talk about all sectors in Italy – including services and manufacturing – Italy remains one of the foremost European nations that has over 105,000 high-tech companies. That’s some number! Italy is also much above the European average in terms of production and use of industrial robots, and also in embracing 4.0 technologies such as the cloud, the Internet of Things (IoT) and machine-to-machine (M2M) communication. Not surprising considering the country boasts of some of the world’s best technological firms that include the likes of Macpi Group, ViBemac, IMA Spa, FK Group and Morgan Tecnica!
The onset of highly advanced technologies in apparel sector that has deep roots in Italian culture has been a slow and a non-linear linear process, though lately a number of developments have been commendable, with some even revolutionising the working methodologies of Italian fashion industry.
One such instance, which now has become a bit mundane, is that of design technologies based on computer-aided design (CAD) software and incorporated in value chains also including computer-aided manufacturing (CAM) systems, especially in the apparel sector. This means that the models are increasingly designed on computers, which are also used for all the tests on the materials, colours and combinations.
One of the most noteworthy cases – also one of the first in Italy – is the one used by Missoni for manufacturing its knitwear (www.missoni.com), based on patterns designed using CAD. Consequently, it was able to bring down the time to create the first samples from 2 months to a record 24 hours. As proved by Missoni, CAD-CAM technologies have been most successful where production and sales volumes are fairly high.
Similarly there’s Gruppo La Perla (https://www.laperla.com/)! Notably, Cisco Meraki technology has been implemented across the international chain of more than 120 stores of Gruppo La Perla. A renowned producer of lingerie, men’s and women’s underwear, in addition to making swimwear and other products, La Perla was started by Ada Masotti in Bologna back in 1954 and today has its wings spread across the globe. Besides France, Spain and Germany, La Perla has its stores in the US too.
The system now in use – thanks to Cisco – has made it possible for La Perla to link up and configure new stores in a short span of time. Now an expert technical staff is no longer required on-site, as the implementation of the system is carried out in the cloud in a very simple and intuitive way.
Earlier this year, Italian Marzotto Group, a leading textile company, had announced to collaborate with Sweden-based Polygiene to use ViralOff application in its natural fibre textiles. As per the partnership, the ViralOff treatment, offered by Polygiene, is to be used in wool, linen and cotton products of Marzotto Group with the intent to give a new life to Italian fashion and apparel sector.
However, there are many apparel brands in Italy whose clothes are made in China. We will explore that at length in one of our next series.
Some initiatives to promote Italian firms to pursue reshoring/backshoring…
Lately, there have been some initiatives to support Italian firms that are keen to pursue a reshoring strategy. Here let’s mention ‘Project reshoring’, which was born out of a close alliance between Sistema Moda Italia (SMI) and PwC Advisory, with a focus on creating required conditions to bring back apparel or any production back to Italy and to enhance the productivity especially in two pilot areas, Veneto and Apulia. Notably, Veneto alone produces 38 per cent of components of global fashion luxury products, while the remaining 90 per cent is produced in the rest of Italy.
SMI has built contacts with the manufacturing firms and also controls the state of the project so as to expand it to other regions. The district of the production chain relative to Veneto has been chosen for several companies to present both upstream and downstream of the sector: the production chain constitutes apparel and textile firms, third party companies, machinery and material suppliers as well as service suppliers.
Apulia, the first southern region in apparels and textiles, represents both the number of active firms (apparel in Bari, hosiery and clothing in Salento and footwear in Casarano) and the number of workers that boast of excellent handcrafted skills. The Apulia Fashion District aims, through Project reshoring, to contribute to backshore production in the region and activate a virtuous circle with a focus on expanding the project to other regions.
The Italian Government had also been allocating funds lately to promote its apparel and fashion industry abroad and in this context ITA President Michele Scannavini, said “The budget allocation by the Government helps serve to fund fashion trade shows, multichannel marketing and distribution, expanding ‘Made in Italy’ brands into the world’s most important department stores and e-commerce.”
Here one would like to mention a little about the excellent craftsmanship that is actually present in the blood of Italians. From footwear and apparels to home décor, the new era of luxury shopping – especially in Italy – is high-class craftsmanship that’s not only beautiful but also highly personalised and long-lasting. The demarcation that separates artisans from artists could be quite subtle in some cases. And it is not by chance that the Italian term ‘Maestro’ is used across the globe to describe a master of an art, or a craft too. In Italy, great artisanal knowledge has been nurtured through centuries, mainly through family traditions, developing into a high-level luxury craftsmanship that is the spine of ‘Made in Italy’ style. The most notable example is the Ferragamo brand that has always believed in the local craftsmanship potential, combined with the Italian innovation and creativity.
Today, the experts believe that Italian apparel companies are an added value to what the international markets offer. There is lot of awareness about technology and lots of efforts to blend that technology with creativity. The experts feel reshoring can happen and can also pick its pace if the Italian Government provides tax exemption for the manufacturing industry. It now needs to be seen when, and how sooner, it happens. However, despite all the challenges and constraints, Italian industrialists and business bigwigs are bold and ready to face the battle that will still take some months or years to be won.