Tunisian garment industry regains its confidence

14 August 2007 | Source: just-style.com

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In stark contrast to the declining shipments of its key garment categories reported this time last year, Tunisia's textile and clothing industry is now riding high on rising exports, significant new foreign investments and public sector projects. Jozef De Coster looks at what a difference a year makes.

The mood among Tunisian garment manufacturers and government officials at last month's Texmed 2007 trade fair was markedly different from that of the year before.

In just 12 months, a solid optimism has replaced the profound uneasiness that reigned during the first half of 2006. Government officials and textile associations now point to rising export graphs, significant new foreign investments in the sector and important public textile infrastructure projects.

Additionally, several exhibitors at Texmed 2007 confirmed that some of their customers are shifting orders from China and new EUmember states Romania and Bulgaria to Tunisia.

Last year, the Tunisian government and organisations like Cepex (export promotion), FIPA (promotion of foreign investment) and Cettex (technical textile centre) had serious reasons to worry about the future of the Tunisian apparel industry.

The sector, which is the country's main industrial employer by far (providing more than 200,000 jobs) as well as its main exporter - EUR2.64bn (US$3.6bn) in 2006 - showed a gradual decline in 2005 and during the first months of 2006.

Of particular concern was the fact that exports of Tunisia's top apparel products decreased during the first four months of 2006 (jeans down 19.5% in value terms, workwear -17.8% and lingerie -1.7%) and that total apparel exports to key markets like France (-4.7%) and Germany (-16.0%) showed a downward trend.

The chorus of pessimists, who in 2004 had predicted that the end of quotason trade between World_Trade_Organizationmembers would herald the end of Tunisia and most other Euromed countries as leading garment suppliers to the EU, seemed to get it right.

Exports on the up
However, as far as Tunisia is concerned, recent statistics clearly prove that the end is not nigh. Tunisian textile and apparel exports of the first five months of 2007 increased in value by 19.5% compared to the same period of 2006.

With the exception of lingerie (up by 8.3%), the recent export performances of Tunisia's leading products has been in double figures: jeans +18.8% in the first five months of 2007, workwear + 16.9%, shirts +22.0%, pullovers +20.5%.

Several foreign groups - such as Brunardi, Damartexand Aubade - which in 2005 shifted a big share of their production to Asia and Eastern Europe, recently returned to Tunisia.

Ramzi Karker, commercial director of the apparel production group Le Cavalier, which boasts a production capacity of 21,000 pieces per day, mainly jeans, says: "Do you know why customers are coming back from China?

"Chinese factories turn down orders of less than 5,000 pants, while we on the other hand have decreased the minimum level from 1,000 to 500 pants."

More foreign investment
A number of foreign investors have recently demonstrated their firm belief in the future of Tunisia as a production location.

In 2006, 126 investment projects were approved in the textile and apparel sector, with a value of EUR42m (up from EUR34m in 2005).

Early in 2006, the Belgian lingerie producer Van_de_Velde(owner of the Marie_Jobrand), doubled its Tunisian production capacity near Sousse, with an investment of EUR2.5m. From 300 workers in 2005, employment has risen to 600 today and will reach 800 by the end of 2008.

The Tunisian authorities are obviously delighted that Van de Velde favoured Tunisia above China and Hungary, competing countries where the Belgian group also has production units.

They also point to Benetton, for many years the biggest exporter of clothing from Tunisia, which recently announced a EUR13m investment in new finishing capacities and the creation, before the end of 2009, of 10 new manufacturing units in Tunisia.

Philippe Heckenbenner, director for Tunisia and North Europe at the French CAD/CAM company Lectra, remarks that Tunisian garment companies increasingly buy sophisticated systems.

He says: "Tunisia is climbing the added value ladder more quickly than China, and that's why some customers are returning from China. Also, the proximity to the EU market and the fluency of Tunisians in French, Italian and English are appreciated."

Nejib Karafi, director general of Cettex, stresses that Tunisia's export success has not come unaided. For the past three years, the Tunisian apparel sector, with support from the government, has been trying to transform itself from an industry that was almost totally dependent on CMT (cut, make and trim) orders to a producer of self-designed, self-sourced and self-finished clothing collections.

The Texmed 2007 fashion show put several companies on the stage, like Maille Club (brand 'Mabrouk'), Fuchi-Ka, TFCE, Soprodite, Moncef Barcous, Particolari - all of whom successfully export fashion to European countries.

However, as Ali Nakai, general director of the textile and apparel association Fenatex, points out, for many years to come CMT will still remain an important activity for the Tunisian garment industry.

Comparative advantages
Tunisia enjoys several comparative advantages, such as low labour cost and proximity to the EU market.

According to the 2007 textile labour cost comparison by Werner International, the average cost per operator hour in the Tunisian industry (US$2.01) is significantly lower than in Morocco (US$2.62) and Turkey (US$2.96).

A 2004 study carried out by Zurich-based textile industry consultant Gherzi, indicated that average delivery times from Tunisia to EU countries (2-4 weeks) tend to be shorter than those from Turkey and Poland (3-4 weeks) and definitely beat those from India and China (12-20 weeks).

In spite of the signature of a free trade arrangement with Turkey in November 2005, which allows Tunisian garment manufacturers to use Turkish fabrics and accessories to qualify for zero duty exports to the EU, the lack of a well-developed domestic textile industry is still a handicap for Tunisian apparel exporters. For Tunisian clothing made from Asian fabrics, EU import duties amount to 12%.

Visitors from new markets
An analysis of EU imports of the top three Tunisian products (pants, T-shirts and pullovers) in 2006 shows that France, Italy, Germany, Belgium and the UK are the most important destinations.

So it's not surprising that Texmed 2007 mainly attracted buyers from these countries, and especially from France (Decathlon, Pimkie, Etam, La_Redoute, Monoprix, Morgan).

However, as Habib Bedhiafi, commissioner of Texmed, pointed out, a surprisingly high number of foreign buyers also originated from new markets like Greece, Spain and Libya.