TOWARDS NEW BORDERS TO GROW : DESTINATION MOROCCO TEXTILE & CLOTHING IN MOROCCO

TOWARDS NEW BORDERS TO GROW : DESTINATION MOROCCO TEXTILE & CLOTHING IN MOROCCO Milan, le 28 janvier 2014 SUMMARY 1 2 3 Textile and Clothing i...
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TOWARDS NEW BORDERS TO GROW : DESTINATION MOROCCO

TEXTILE & CLOTHING IN MOROCCO

Milan, le 28 janvier 2014

SUMMARY

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Textile and Clothing in Morocco : Key Figures Why Morocco is representing an alternative sourcing for several brands ?

15 mn

2025 Textile Plan

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Textile and Clothing in Morocco : Key Figures

One of the core sectors according to the economic and social development in Morocco

Contribution to industry employment

36%

• 1st employer in Morocco with more than 175 000 employees

Contribution to exports 20%

• 2013: 20% of exports of goods

Other information

Contribution to GDP 4%

*Exports of Goods

• Exports turnover is equal to 4 %*of the national GDP

• ~ 1600 companies • Manufacturing capacity of 1 billion articles (including 50% to be exported)

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Textile and Clothing in Morocco : Key Figures

① Textile and Clothing exports have shown a steady growth until 2008. Such trend is to be seen again since 2010. ② Southern Europe markets remain strategic : Spain 42%, France 31%, Italy 4% ③ In Morocco, short circuit, restocking and updating represent the main sourcing modes of international and particularly european fashion brands ④ A rich line (Middle high, middle and middle low) and wide range of products Moroccan textile and Clothing exports from 2003 to 2013 [MIs EUR ; K Tonnes ;03-13] Exports turnover [MIs EUR]

Destination countries of Moroccan textile and Clothing exports [Mls EUR; %; 2013]

Exports volume [K Tonnes] Export turnover in Textile & Clothing [Mls EUR; 13]

3 500 3 000

180 142

139

148

155

2 500

146

143

147 141

140

120 2748

2799 2656

2625

2602

1 500

160

2541

2742 2626

2567

5

Italy

110

4%

4

Germany

162

6%

3

U.K.

165

6%

2

France

850

31%

1

Spain

1 152

42%

140

2961

2 000

1 000

145

144

100 80 60

2424

% Export in Textile & Clothing [%; 13]

40 500

20

0 % Moroccan exports 1)

0 2003

2004

2005

2006

2007

2008

2009

2010

2011

2022

2013

35%

35%

34%

30%

30%

29%

24%

24%

23%

21%

20%

1) Exports of goods Source : Trademap – Office des Changes, AMITH,

∑ Europe: more than 93 % of textile and clothing exports

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Textile and Clothing in Morocco : Key Figures

Total : 64,1 Billion of euros in 2013:

-2% on 2012;

;-5% -5%onsur 2011 2011

-8% -8% +5% +5%

+4% +4%

-1% -1%

+8% +8%-5% -5% -

-

+23% +23% +10%

+10% -10%

-10%

Source IFM Source IFM

1. Correlation between the evolution of consumption and the evolution of imports. 2. Distribution favours more and more late purchases, re-ordering and updating (25%) and limits the risk-taking linked to long term orders (72%). 3. The Euromed started to recover in 2013 after a tough 2012 year (-2% in tonnage and +2% in value) which indicates less pressure on prices. 5

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Textile and Clothing in Morocco an alternative sourcing for several brands

Both the government and the private sector offer a complete and overimproving package Administrative and customs easiness  Tailored facility for major clients Investment and logistic infrastructures

 Preoccupation of clearance delays reduction

 Integrated Industrial Platforms and parks

 A competitive short delivery ensured towards every European destinations between 1 to 3 days and 2 days toward France

Communication / Profiling  Financial support for communication actions towards imported products from Morocco and distributed by the Group

 « Port Tanger Med » : dedicated way via specific customs regime: integrated logistic platforms, big ship capacity/rotation

Competitive delay (restocking and updating)

Government Private Mix

 Partners identification (ones can match the needs) and personalized meetings organization

« Public/Private » Package

Capacity, Quality, Competencies  Important manufacturing capacity

Competitive cost  A competitive production cost compared to cross-border countries

 Adaptation to norms and european standards  Sector organization towards structured and solid association « AMITH »

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Textile and Clothing in Morocco an alternative sourcing for several brands

Several brands operating in Morocco: professionalism, competition and know-how of the Moroccan textile and clothing industries

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Textile and Clothing in Morocco an alternative sourcing for several brands

Morocco may represent an alternative sourcing zone according to new sourcing strategy in restocking and updating… Competitive delay

Costs

Capacity, Quality, Competencies

France Algesira s Tanger

Competitive delivery

Production responsiveness

• Port Tangier Med allowed the Textile and Leather industry gained in reactivity: - Detaxing < 1h30 : approved ; 0% customs rights from the EU; - Dedicated way for major clients - Big ship capacity/rotation - Opening to corporations dedicated only to trucks transportation (RoRo) • TIR delivery towards every european destination between 1 to 3 days, et 2 days toward France

1 to 2 weeks if commodities import from Europe and Turkey Less than a week if local supply of commodities

Production - Logistic

A week of production in Morocco

Manufacturing

2 to 3 days if export in Europe

• Morocco is competitive in terms of production responsiveness and delivery, which matches the « Fast Fashion » short cycle of restocking and updating

Delivery

Total : 4 to 5 weeks

• Through the organization of supplying platforms and inputs manufacturors, Morocco wishes to reduce the delivery time of two weeks accross Europe (would be reduced by 50%) 8

Textile and Clothing in Morocco an alternative sourcing for several brands

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…and hereby offers competitive advantages in terms of delay and cost Competitive delay

Costs

Capacity, Quality, Competencies

Cost of workforce (1 hour) [Euro ]

Transportation delay - Western Europe [Days] 2)

12,57

25.0 6,46

Transportation cost [Euro/Kg] 0,27

20.0 20.0 17.5 0,20

0,19

3,13 2,92

0,11 2,22

5.0

0,94

Spa Port Pola Turk Slov

0,90 0,77

4.5

2.0

0,58 0,38 0,21

Mor Chi Egy Ind Pak Bang 1)

The cost of workforce remain competitive comparing with other nearby countries

Bang Chi Pak Ind Egy Turk

1.0

1.0

1.0

1.0

Mor Slov Spa Port Pola

Chi

Egy

Turk

Mor

The transportation delay and cost represent a very competitive advantage for Morocco

1) Estimated Cost in 2010 2) Average delay for product transportation towards the following countries: Germany, Austria, Belgium, France, Holland, Switzerland Source : CEDITH / Clothe source & Werner International / Textile Industry Labor Cost Comparisons : Study of ministère de l’Equipement et du Transport

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Textile and Clothing in Morocco an alternative sourcing for several brands

Textile and clothing products represent many advantages in terms of capacity, quality and competencies

Capacity, Quality

Competencies

Originality

Structure, Communication Ethics



Important global capacity of 1 billion/ year – Sub-contracting : 620 million – Co-contracting: 270 million – Own collections: 110 million



High quality according to European standards



Experienced sector operating for 50 years within European and American markets



Competencies improvement is at the very middle of the sector strategy: 2 000 engineers and 30 000 operators in 2015



Creation of “Ecole de Mode et de Design” in October 2010



SME’s Financial and operational assistance for originality development via dedicated funds (Moussanada, Imtiaz, Information Systems and Products development…)



Sector organization towards structured associations « AMITH », which regroup more than 90% of exports corporations within the sector



Communication and interaction with major clients (culture, language)



Moroccan legislation



International standards of sustainable development: adopted label

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Textile and Clothing in Morocco an alternative sourcing for several brands

Existing and given advantages to major clients made them increase their supply in Morocco Feed-back on major clients supplying choice (Study IFM* ; 2011)

Exemple of the trend of supply of a major client from Morocco [Millions of pieces]

 Time « Being close is everything. »  Quality « There are good fabrication units : they did acquire a good know-how and an acceptable level of flexibility, hence the presence of good suppliers. »

+22%

 Historic « Morocco is an experienced production system, in which we have experienced partners for 15 years. »  A right mix « We are only working on markets that offer the best delay/quality/cost ratio. We have such a right mix in Morocco. »

*French Fashion Institute Study 11

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The basis of the “2025 Textile Plan” But there are real opportunities to seize

Great capability of adaptation The Moroccan textile industry prooved a great capability of adaptation facing the effects of two consecutive crisis

A break from previous strategies in order to seize opportunities

Change of context and paradigm :  



However, constraints and challenges to get over related to the unbalance of the sector Manufacturers are operating in exports mainly on a CM/CMT basis. The market share and activities in the branches Technical Textiles and Home Textiles is still weak. Weak integration of the supply chain in its whole (raw materials, dying, printing) , the distribution system including the domestic market level

The domestic market, despite its great potential, remains marginalized

THE WILLPOWER of PRO ACTIVITY Define the position and the role of the Moroccan Textile Industry at the horizon of 2025 and determine the strategy of AMITH– PublicAuthorities that aims to support the actors in Textiles.

Manufacturer in Asia are reorientated to satisfy their domestic markets Begin of withdrawl of customers in favor of the mediterranean basin, because of logistic costs, environmental constraints, increase of costs. Only industries that are well prepared in terms of integration and competitivness will benefit of the withdrawl

Beside apparel and fashion, there are interesting opportunities/potentials for developpment,in exports as well as on the domestic market.

New economic context: the return to industrialisation is considered as a essential value Successful company models existe (i.e. upstream and distribution) and show the way An association more than ever mobilized next to the their partners.

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5 PILLARS of the « 2025 TEXTILE PLAN » : to develop an underdeveloped sector into a branch, that is well-balanced, horizontally integrated , innovative and competitive

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Balanced Balanced strategy strategy for for the the moroccan moroccan textile textile sector, sector, through through the the offensive offensive development development of of the the 33 poles poles (apparel/home (apparel/home textiles/technical textiles/technical textiles), textiles), that that reflects reflects the the competitivness competitivness of of Morocco Morocco

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11 big big gamble: gamble: industrialisation industrialisation to to improve improve the the competitivness competitivness of of the the morrocan morrocan offer offer (in (in exports exports and and domestic domestic markets) markets)

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A A responsable responsable and and innovative innovative approach approach to to solve solve the the difficulties difficulties with with the the informal informal sector, sector, focalized focalized on on strengthening strengthening the the competitivness competitivness of of the the actors actors in in the the formal formal sector sector

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Renewal Renewal of of the the actors actors within within aa balanced balanced approach: approach: between between attracting attracting new new actors actors (including (including foreign foreign investment) investment) and and reinforcing reinforcing the the existing existing industrials industrials (y.c. (y.c. PME) PME)

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Deployment Deployment of of aa new new offer offer of of support support for for the the textile textile sector sector (v.2.0), (v.2.0), that that is is long long terme terme orientated: orientated: in in breaking breaking with with the the past, past, with with actions actions that that are are coherent coherent with with the the strategic strategic interests interests of of the the sector sector 13

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POTENTIAL TO MULTIPLY PER 2 to 3 THE SIZE OF THE SECTOR AT THE HORIZON of 2025 – VISION CONSOLIDATED –

DIRECT EFFECTS

PIB Mds MAD

Labour force 000’ ETP 450-500

46-48

~200

16

2010

2025

Turnover Mds MAD

2010

2025

Exports Mds MAD 85-95

130-140

46

2010

29

2025

2010

2025

14 SOURCE: HCP, MCI, OC 14

Thank you for you interest!

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