Fashion manufacturing increasingly returning to Europe, finds report

Fashion production is increasingly returning to Europe, according to a new study published on Tuesday by consulting firm McKinsey, the Institut für Textiltechnik of RWTH Aachen University, and the Digital Capability Center Aachen.

The low wages for factory workers in China and Southeast Asia turned the region into an unrivalled market for fashion production over the last decade, the report said. But things are starting to change: denim produced in Turkey costs currently 3% less than in China when considering transport and import costs. “For individual garments with low-cost production, it is already worth bringing production back to Europe,” said McKinsey expert Karl-Hendrik Magnus.

But even more important for the trend towards European production is the significant reduction in delivery times: it allows fashion companies to react much faster to trends, the expert said. A garment from Southeast Asia needs to travel up to 30 days by ship before arriving in Western markets. For example, transport from Turkey to Germany, on the other hand, takes only three to six days. Faster reaction times are a “must” to remain competitive in the age of Instagram, said Achim Berg, senior partner at McKinsey.

Automation is also pushing for production to return to Europe, according to the experts. In the next ten years, automation is expected to cut production times by 40% (for more complicated pieces) and 70% (for simpler designs), resulting in lower costs. This means that producing a simple pair of jeans could take 11 minutes instead of the usual 36.