It may be a new industry, but the industrial apparel rack is still the number one export category for the major Australian retailers, with sales increasing by almost 50 per cent last year.
The rise in the apparel rack’s export market comes as the sector’s popularity is on the rise and the industry’s chief executive says there are more options now for retailers to get into the market.
Key points:Industrial apparel rack exports grew more than 50 per per cent to $1.9 billion last year, with major retailers like Woolworths and Woolworth’s having been investing heavily in the sectorThe major retailers have been investing in new factories to build up their supply chainsIndustrial garment racks are a key way for companies to export their goods and services internationally.
But they also pose some regulatory risks, and it’s not just retailers who have been caught out by the industry.
The major Australian apparel brands have been stepping up their efforts to expand their supply chain into the industrial clothing rack, with Woolworth and Woolies recently announcing the opening of a new factory in the Gold Coast and the opening up of an existing manufacturing facility in the Brisbane suburb of Sandringham.
The industry’s top executive said this new factory would be a major step in improving the industry and was expected to employ around 200 people, and was likely to boost the industry by around 50 per, or $3 million a year.
“This is a significant investment for the Australian apparel industry,” said Michael Mears, managing director of the Australian Industry Group.
“The growth of the apparel industry has been extraordinary, with growth that has outstripped our projections for the next five years.”
The Industrial Equipment Manufacturers Association (IEMMA), the body that represents the industry, said there were several new factory locations in the market, but these were still being finalised.
“We know that the [new] factory will be a significant increase in manufacturing capacity, as well as create significant employment opportunities,” said IEMMA CEO Andrew Fennell.
“It will also give us a further opportunity to attract a large amount of international suppliers.”
But he warned that some of the major retailers were still getting caught up in the industry at a time when many of the biggest names in the trade were investing in the field.
“They are not seeing this growth as a priority for their customers,” Mr Fennells said.
“So they are not investing in them.”
What you need to know about the apparel manufacturing industryThe apparel manufacturing sector in Australia is one of the fastest growing in the world, with a forecast to reach $1 trillion in the next 15 years.
However, the growth has come at a price, as it has created more jobs and raised costs for consumers, with an average price of about $60,000 a year for workers.
The sector is also more than 30 per cent over-supplied, with more than three-quarters of the nation’s industrial clothing supply chain already in a state of construction or under construction.
As well as raising labour costs, the sector also faces challenges such as supply chain logistics, environmental pollution and security.
The Labor Government has promised to introduce new measures to improve the supply chain for the industry in the coming months, including measures to protect the industry from disruption by the trade.
But the major companies have already come under criticism from a range of trade bodies, with the AFL Players’ Association, the Australian Chambers of Commerce and the Australian Retailers Association all warning that the sector was becoming too reliant on foreign companies.
The AFL Players Association has also accused the major industry of taking advantage of Australians to sell its products overseas.
“These companies have been selling their goods overseas for decades, selling them at a loss, selling their workers in Australia at a low wage,” AFL chief executive David Gallop said.
The Australian Retail Council said its members would continue to be critical of the industry until the Government changed its supply-chain model.
“Retailers are responsible for sourcing and exporting products across all the industries that they supply to, and we want the Government to take a tough line on this issue,” said the Australian RAC’s chief economist Chris Hill.