Worldwide Business Information and Market Reports
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Hard hit by the economic recession at the start of
the 1990s, the fibre industry in the UK has grown moderately in revenue terms
over the last 2 years, and was estimated to be worth £2bn in 1996.
Fibres and textiles is now a truly global
marketplace, and one of the key factors shaping the development of the UK
industry in recent years has been the significant increase in productive
capacity in developing countries. UK companies are simply unable to compete
with the low production costs available in countries such as China and India,
and are increasingly shifting their own bulk manufacturing operations overseas.
As a result, the import penetration of fibre and textile products into the UK
has increased significantly over the last 10 years.
These developments have been taking place against
the background of the phasing-out of the Multi Fibre Arrangement (MFA). This
agreement is intended to provide for the full deregulation of the world trade
in textiles by 2004, but progress to date has been somewhat mixed. In
particular, the reluctance on the part of many of the developed nations to
phase-out the MFA has preserved excess productive capacity in the world fibre
and textiles market.
The intensity of global competition over the last
20 years has caused a major change in the structure of the fibre industry in
the UK. Size is becoming a pre-requisite for industrial success for a variety
of reasons. The industry is now highly capital-intensive, both in terms of
manufacturing capacity and technology, while unpredictable fluctuations in
demand and supply can put a severe strain on a company's working capital
requirements. Furthermore, the relative maturity of the UK market means that
companies are being forced to expand their international operations. With
economies of scale increasingly important, many of the smaller and less
efficient companies have left the industry.
The outlook for the fibre industry in the UK is mixed. Those companies which have already undertaken restructuring and continue to invest in new technology are better placed than many of their European rivals to compete on a world stage. They are also benefiting from the strong domestic economy, although their cost competitiveness has been undermined recently by the strength of sterling. On the other hand, producers of `traditional', low-value commodity-type items will continue to lose market share to overseas competitors.
Text © 1997 Key Note
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Last updated by Duncan Nottage 5th March 1999