Pulling the wool

Pulling the wool

While some in the rag trade talk up a UK revival, many are battling against record wool prices. BQ asks what the future holds for a once great Yorkshire industry.

Sue Blacker, like Harry her adopted sheep, comes from good stock. While her black-faced Gotland’s breed dates back to the days of the Vikings, Ms Blacker is the descendant of one of Yorkshire’s most prominent textiles families. And, although her wool-spinning company is today based in Cornwall, the great-granddaughter of Bradford’s mill tycoon, John Ambler, believes the Yorkshire’s textile industry could be set for a revival.

“Given the way the economic power of the world is switching from Europe and the US to Asia, there is a possibility that Britain’s wool industry will be presented with an opportunity that could trigger a revival, provided there are enough trained engineers to do the job,” she told the press ahead of the national Wool Week event.

And speaking to BQ, she added that her company, The Natural Fibre, is looking to build its links with both Yorkshire farmers and textiles companies as the demand for her services continues to soar. She is also looking to tap into Yorkshire’s skilled textiles experts who she hopes to employ in a training capacity to preserve many traditional textile techniques which may be dying out. But is a revival really on the cards?

With wool prices at their highest level since 1989, having surged by 58% in the last year, textiles businesses are being increasingly squeezed by rapidly growing raw material overheads. Like many manufacturing-based industries, the emergence of cheaper labour markets in parts of Asia and Eastern Europe has also played a significant part in UK decline in recent decades. With textile and garment firms in China facing an impending liquidity shortage, of course those markets are far from immune from the financial turmoil which has dogged the West.

However, for Michael Flanagan, CEO of clothing industry body Clothesource, talk of a textiles revival in Yorkshire is extremely premature. In fact, Mr Flanagan, whose organisation supplies apparel buyers and sellers with key industry data, analysis and advice, believes that as long as Asian labour markets remain cheaper than the UK, there is unlikely to be much of an upturn in the fortunes of Yorkshire’s textile sector.

He says: “I’d love to hear any real evidence of any serious ‘signs of revival’ among Yorkshire’s textile manufacturers – as opposed to non-manufacturers making more money from design and marketing, or economically trivial boutique businesses.

“But I really don’t believe the movement of low-wage manufacturing to countries will be reversed until wages in China rise to UK levels from their current levels, which roughly equal those of the average Albanian. And even then, only if the UK offers equal logistics, energy costs and security, local infrastructure availability and equal access to skilled labour.”

In terms of wool prices, there are a number of factors driving up the cost. In the UK, wool production has reduced dramatically over the last decade, falling from 46 million kg per year in 2000 to 29 million kg in 2010. Similar reductions have been endured in New Zealand and even Australia – which saw a 65% drop in wool production between 2000 and 2010. At the same time, demand has been intensified by the fact that many man-made alternatives to wool have become more expensive due to rising oil prices. Meanwhile, as an environmentally-friendly, natural fibre, wool’s green factor has also played its part.

Add to this the fact that recent price rises followed several years of decline, causing many farmers to reduce their flock size or switch entirely to meat produce, and textile firms are facing what fashion behemoth Next describes as a ‘perfect storm’ of cost issues.

According to Mark Powell, chief wool marketing officer of the British Wool Marketing Board, the outlook for wool prices is not good for textile bosses looking to cut their cloth accordingly.

“In 2010 the average sales price was 145 p/kg and for 2011 it is projected to be approximately 170/175 p/kg and we do not see why this price should not be maintained for the next 2-3 years, or may even increased to 180/185 p/kg,” he said.

“In addition to this there is the five-year global Campaign for Wool, headed up by HRH The Prince of Wales, which aims to raise the profile of wool in the market place and this will, of course, have some impact in increasing prices.”

Leeds-based carpet giant Victoria plc is a company which operates at the mercy of fluctuations in wool prices. “We are expecting trading conditions in the year ahead to be tough, with raw material price increases remaining a challenge,” the company said in the summer as the firm revealed it is winning the battle against tough conditions with a 35% rise in operating profits to £2.42m.

“[We] have managed to pass on raw material prices and also keep our product ranges fresh and innovative - over the years we have invested in plant and equipment to allow us to produce products that meet customer demand,” a company spokesperson told BQ.

Perhaps such innovation and diversification includes the company’s foray into the luxury vinyl flooring market made through its acquisition of Devon-based C & H Distribution for around £400,000.

Westex Carpets, which operates from Cleckheaton in West Yorkshire is another company which faces a daily battle to manage raw material prices. And, like Victoria, it believes its business model is robust enough to successfully sidestep the worst of the fallout from the soaring costs.

Director John Shirt said: “Clearly a proportion of the wool price increase has to be passed on, but to simply pass on all the increase is not possible, particularly during a recession when levels of retail sales are reduced.

“At Westex we have had to closely examine all of our costs and look to make further improvements in efficiencies in order to mitigate the effects of the increase in wool price. Many of our competitors have introduced carpet ranges which are either 100% synthetic or contain a higher proportion of synthetic fibre in order to avoid higher wool prices.

“At Westex we believe that wool is still the best fibre from which to make luxury carpets and accordingly we will continue to manufacture using a minimum of 80% wool in all of our carpets. We genuinely believe that further ongoing rises in wool prices will be at a more modest level and hopefully look forward to a period of price stability in order that manufacturers can look forward to the future with confidence.”

While it remains to be seen how long companies like Westex can fight off the effects from rising wool prices, it appears it could be some time before Sue Blacker and her trusty side-kick Harry can celebrate a textiles industry revival in Yorkshire or, indeed, anywhere in the UK.