Clothing trade trying to recover from rough times

Press, 31 August 1977, Page 21

Clothing trade trying to recover from rough times

By

FELICITY PRICE

When the economy is I tight, one of the first items of expenditure that the pub- 1 lie is likely to cut down on ! is clothing, and retail trading figures this year have borne this out. Clothing stores proved to be the worst affected by the economic slump when the , total monthly turnovers for I the first quarter of this year (were compared with those ’of last year. According to figures released by the De- ' partment of Statistics, apparel stores increased their dollar turnover by only 2.7 per cent in the two quarters — the lowest increase for any of the store groups. Retail sales across all store-type groups in the statistics for the first quarterly period in 1977 compared with the same three ■ months in 1976 increased I 14.2 per cent from SIOO9M , to 81153 M. But because inflation was set at 13.7 per cent for that period, the retailers were only just keeping up their turnover. For clothing retailers, therefore, with only a 2.7 per cent increase in turnover for the period, inflation • would suggest a fall of at least 10 per cent in real (terms — and possible even I more. | It would seem that people i are being more careful about ; their spending patterns. As ithey face up to the reality of belt-tightening and diminished spending power, they are finding that clothing can be made to last longer and (that the purchase of new . garments, whatever the season, can be postponed in- ( definitely until the necessary cash comes to hand. Then,

perhaps, only the most essentia! items will be bought. I Another likelihood is that people are buying their clothing from a lower price range; shopping down, in 1 fact. I As if the problems in the ' retail clothing industry are ( not enough, clothing manufacturers have also had a : rough time as a result of the effective cutbacks in apparel , exports to Australia, with : ' the inclusion of New Zealand in global quotas by the ' i Australians. Until May, under the New . Zealand and Australian Free Trade Agreement, our clothHing exporters were exempted from the global quotas that ! affected Australia’s other ( trading partners. ! i But when the Australians ' to include New Zealand in the global quotas, r they restricted clothing * exports to four million gar--1 ments for the year to March, 1978 — about S2OM ’ worth. Until the restriction, > it had been estimated that ; New Zealand’s clothing exports to Australia would have been as high as S4OM, ■ so the quota effectively cuts j back our clothing exports across the Tasman by as 1 much as a half for the comi ing year. 1 New Zealand clothing 1 manufacturers, especially the ones who have expanded ■ into “cut, make and trim” 1 production, have been ’I caught full stride, committed ’ i to further growth, and a cer- ' (tain number of lay-offs and ’ I reuse of plant potential has 1 been necessary. J The quota announcement, 'caught Millers, Ltd, of . I Christchurch, with 8200,000 ,'worth of clothing about to be sent to Australia, and it ’ I was not shipped out until ! mid-July on the Australian importers’ global quota. i Liquidity problems must have ensued. Although the 'company has a large domestic market with its own j clothing retail outlets, it was (still deemed necessary for 1C' 1 Millers twilight workers to be laid off. Lane Walker Rudkin, Ltd, which is also a Christ-church-based clothing manufa 'ing firm, was also hit by the Australian quotas. Plans to open a new factory in Invercargill were shelved, meaning the loss of 120 jobs for Invercargill people. The managing director, Mr | Noel Rudkin, has estimated that unemployment through-1 out New Zealand could ( reach 2000 to 2600 because 1 of the quotas. “Our exports to Australia j in the first six months of business to December 1976 i exceeded 80.8 M,” Mr Rudkin said, “For the year to June j 1977 they w'ouid have been 52.3 M and it was predicted that for the year to June 11978 the total would rise to 86.5 M.” . I Mr Rudkin has been criti•cal of the New Zealand Government’s attitude to manuI facturers caught in the Aus-

itrahan quota system: “Mil-1 1 lions of dollars have been: 1 involved in financing this:' export drive, which has also ' been associated with regio- ; nal development. Our reward!' has been to have our market! 1 ; slashed.” ’n building up exports,]' firms were committed top heavy expenditure in prem-N ises, plant and materials, he said. “It looks very much as though we and the New Zea- ■ land garment trade generally 1 are ’ ”t holding the baby.” .’ Ithough his firm’s export . trade had taken a bad knock ! through negotiations under I N.A.F.T.A., the exports rep- . i resented only a small part I : of the firm’s business, he ! sr J. .! “Our profit in recent! . ! times has been too low to I jprovide 'mds to meet the! ( > demands of our present level j of activity, let alone finance /development as we have [jknown it in the past,” Mr Rudkin said! “Broadly, we t have to realise that the good ■ old days and w'ays are over I and the trade can no longer , rely on a captive or stable i market.” i> To overcome immediate! > i problems caused by the quota announcement and the state of the clothing trade 'I gene lly, Lane Walker Rud- !: kin, Ltd, has devised certain I structural changes, con’(centrating on strengths and II separating itself into a ; 11 series of independent but I -! cl- sely-related companies. V Cut, make and trim factories, around New Zealand! I which were set up solely to! •cater for the expanding! exp market in Australia/ L have been hardest hit by the >; cutbacks. ■! most of them are small! I i business enterprises, set up! • in : ull towns to encourage ! ! employment and regional i /development, and their very -‘ nature of business dictated I I that they w'ould have little ! cash to spare until their | exporting business was i firmly established. These firms have had to! try to exist while shipments i of clotl g, worth thousands of dollars, have been sitting in dispatch for weeks, earning them nothing, while the Australians have decided onj the quotas — that is, what! companies are allowed to send clothing for the Australian market, a: • how much. I It is a possibility that the I quotas may result in a glut I of clothing, originally meant for export, on the New Zea- • land market, with intense ! competition to get rid of (garments at sacrifice prices before they go out of fash-! ion. Already there have been! i! factory sales, including at ; ■•least one in Christchurch, I ijdirect to the public to get! I rid of some of the extra! ■ i clothing. 1 ! People in the rag trade 'are no doubt hoping that the industry will soon settle back to its old up-and-down 'seasonal formula, with those (bitten by the export bug

looking for markets elsewhere, such as the Unted States. Most people in the industry seem to think that this summer’s business will be better than last. Once the quotas to Australia are sorted out and the apparel starts flowing across the Tasman again, the S2OM worth of exports allowed will, it is hoped, tide the industry over until new export markets can be found. After all, the New Zealand clothing industry can hardly squeal at the Australians protecting their own rag trade when they themselves have been complaining that they need protection from oeverseas importers. From a previously privileged position, excluded from their global quotas. New Zealand grabbed the lion’s share of Australia’s imported clothing market. From about 87.3 M in the seven months to June 1976, New Zealand’s clothing exports across the Tasman doubled to $14.6M in the following seven months. This year, they might have made up about 30 or 40 per cent of the total Australian imports. New Zealand clothing manufacturers were able, before the new quotas, to buy

up cheap cloth in from Asia, i design and manufacture it ( here — where the average; i weekly wage is nearly half what it is in Australia —' and export to Australia free; of the quotas imposed onj other countries in a less' privileged position. Consid-i erable resistance to this I grew in Australia, among! (consumers and clothing! 'manufacturers, as well as] 'outside Australia, among her; (other trading partners.

J Warning of this resistance! reached New Zealand as! j early as March, but clothing • exporters here did nothing! (about it. The director of the! (Textile Council of Australia; i (Mr John Burgess) who was ; I giving his annual report in | Canberra in March, was re- ( ported in “The Press” on (.March 21 as saying that thej j imbalance of the textile! (trade with New Zealand was ' “intolerable.” “Unless some action is (taken in the very near fut-j ! ure we will see such a; build-up of trade from low-! cost Asian countries coming' to Australia through New! Zealand, to the detriment of! our industry, that it will be j difficult to turn back the! I clock without considerable ( (embarrassment to both coun-j tries’ Governments,” he said. I Obviously some voluntary I cutbacks on the part of Newj Zealand garment exports! was required. But, in the! face of Australian manufac-j turers advertising heavily ,n j this country for cut, make' and trim businesses to i handle turnover of up to • I half a million dollars in i ! their first year, and claiming! (they wanted to expand! “operations into the lucr- • alive New Zealand market,”; 'who can blame our clothing! manufacturers for turning a ( blind eye to depressingj developments across ’ the; Tasman and concentrating I on what appeared to be a bright future here in the' export business.