• Just Style

TPP demise helps propel fabric mills to Ethiopia

Textile investment is pouring into Ethiopia, helped by the shared vision of brands, manufacturers and fabric mills, government support, preferential trade deals, investments in infrastructure, low costs – and an unexpected windfall from the end of the Trans-Pacific Partnership (TPP).

Ethiopia's vision is to create a fully integrated vertical supply chain from the ground up, from garment factories to fabric mills, accessories producers, spinning mills and all the way back to high quality cotton plantation.

And it's an approach designed to bring multiple benefits.

First and foremost, it is seen as key to the sector's long-term prospects. An industry based on sewing factories alone is likely to be fickle, with buyers and suppliers upping sticks to the next low-cost destination as they chase cheaper and cheaper products around the globe. It is also likely to be slow and inflexible, hampered by longer lead-times as materials and inputs have to be imported.

But an industry where all of the input materials are locally produced is likely to stay put and remain viable into the future. Verticalisation creates value, it creates more jobs, it improves competitiveness – and above all it gives companies an edge when it comes to being fast and flexible.

Price is no longer the driver of strategic sourcing decisions; the retail imperative in this day and age is speed to market. That's the one thing that brings a competitive advantage to any supply chain.

Garment manufacturers are already setting up bases in Ethiopia, drawn by the country's emerging industrial parks model where facilities are built to international building, fire and electrical safety standards, with a focus on sustainability, industry-specific facilities, located along key economic corridors and with easy reach of large pools of labour and education and training schools.

The model also gives priority to high profile brands and retailers – currently led by H&M and PVH, owner of the Calvin Klein and Tommy Hilfiger labels – who then attract their own best-in-class suppliers into manufacturing clusters.

But the next wave of investment already has some of the world's largest textile mills waiting in the wings.