Why ‘Made in Britain’ is back in fashion

In the company of the Princess Royal, the boss of Johnstons of Elgin found himself the toast of the room as he picked up the Scottish cashmere manufacturer’s third award for exports in as many years. The company, whose roots can be traced to 1797, has found its luxury garments becoming increasingly popular in emerging markets such as China.

Victory would have tasted particularly sweet for those craftsmen and women working at Johnstons’ two factories in Elgin and Hawick who remember that, not long ago, the Chinese were seeing off many of the firm’s Scottish rivals with cheap exports.

At Tuesday’s lavish awards lunch, also attended by industry bigwigs such as UK Vogue editor Alexandra Shulman and Harold Tillman, the tycoon who has revived Jaeger and Aquascutum, the talk was about how “Made in Britain” was back in fashion among UK retailers.

That morning, N Brown, the firm behind home shopping brands such as Simply Be and Figleaves, had emphasised the point, announcing it would “significantly” increase the amount of clothing it sources from UK manufacturers.

Between 5 and 10 per cent of the Manchester-based group’s products originate from the UK, compared with 65 per cent from the Far East.

Earlier this year, Sir Philip Green, whose Arcadia retail empire includes Topshop, Wallis, Dorothy Perkins and Bhs, also gave “brand Britain” a major boost when said he was “very supportive of seeing if we can open some UK factories”.

While there was great enthusiasm and support at Tuesday’s annual gathering for the efforts made by the likes of Green, N Brown and others to revive an industry once believed lost, few of the textile leaders attending had lost sight of the fact that some of those now spearheading the campaign to bring manufacturing home were the very ones who had led the charge offshore.

Although laudable, it’s an effort some believe has come too late. Dracup says it would be difficult to throw into reverse the drive up the value chain that has become the industry’s mantra. “If that manufacturing were to switch back here, are the capacity, the skills base and the infrastructure actually there to fulfil this demand?” he says. “They are a little bit too late in that this capacity has disappeared and is unlikely to return.”

Over the last 20 years, UK retailers have relentlessly moved sourcing to the Far East, in particular to China, where lower wages have been the main driver in cutting costs. This allowed them to boost gross margins even as consumer prices fell, which in turn let shop owners offset rising overheads such as increased rents, rates and salaries.

This had a well documented effect on domestic manufacturing, with traditional industries in Lancashire, Northampton and Yorkshire destroyed. In Scotland, where textile firms dominated the Borders, Tayside and Ayrshire economies, employment has fallen from a peak of 57,000 in 1984 to some 9,500 jobs today.

In keeping with industry magazine Drapers’ “Save Our Skills” campaign, Green and others have cited job creation when promoting domestic production. However, some sceptics say that revived interest in UK manufacturing is as pragmatic as it is altruistic.

Manufacturers in Asia have encountered a number of problems in recent years. There has been flooding in Pakistan, power cuts in India and strikes in Vietnam, Bangladesh and Cambodia. And according to researchers at Euromonitor, the manufacturing juggernaut of China reached its capacity for textiles last year.

At the same time, pay inflation across the country’s industry is running at about 15 per cent, adding to several years of surging wages.

The rising standard of living has translated into increased domestic demand for goods produced in China, cutting back on readily available production for UK retailers.

The overall impact has been a less reliable supply chain, and Primark and Next both experienced delivery delays last autumn. The time between placing an order and delivery is also growing, and Western retailers sourcing in large quantities are finding it harder to respond to the latest trends in fashion. Combined with rising shipping costs, such competitive disadvantages have forced retailers to consider the arduous task of shifting sourcing away from Asia. This will not, however, trigger an automatic default to domestic production, according to some.

Although Green has professed his interest in sourcing from the UK, he has also conceded that British-made goods will only ever represent a tiny fraction of Arcadia’s overall clothing stock. Large-volume production is more likely to shift to Turkey and eastern Europe, which are closer to home and offer cost advantages.

Leaders in Scotland’s textile industry suggest this is no bad thing, as the downsizing of recent decades has made it all but impossible to revive the mass production of high-street items that sell in the hundreds of thousands. That said, evidence is emerging of increased demand for smaller volumes of higher-value products.

Scottish Enterprise has been working closely with the Scottish Textile Industry Association to capitalise on these opportunities by sharpening marketing, sales and negotiating skills across the 640-odd companies operating in the sector.

Stewart Roxburgh, senior executive of the agency’s national textiles team, says the number of queries from buyers of specialist and luxury products has risen during the past eight to 12 months.

“It is a small start, but placing small orders and making enquiries on capacity at these mills is a step in the right direction,” he says.

Buyers in the main overseas markets of Russia, Japan and the US are placing more emphasis on the provenance of luxury products, and Saks Fifth Avenue and Brooks Brothers have both ordered key items of clothing from Scotland to lead the launch of their autumn lines in New York next month.

Roxburgh would like to see more of this kind of activity in the UK, where retailers have yet to match order levels coming in from elsewhere. “They are vocal in their support of British-made, but we are not yet really seeing that evidenced in terms of orders,” he says.

Although Johnstons has concentrated on the high end, Dracup says the company is beginning to detect encouraging signs from the UK “middle market” wanting to source more British goods. It is all part of a rising tide, although a flood of new factories is unlikely to follow. “Unfortunately, once they disappear, you can’t quickly get them back,” Dracup says. “It is a little bit like turning around an ocean liner.”