Walpole Editorial | Scottish Textiles: A resilient industry navigates a perfect storm by Simon Cotton, CEO of Johnstons of Elgin

It’s only when the seas are rough and the winds are whipping in every direction, that you realise how strong or speak the boat you have built really is.  In this, most destructive year, we have found out that the Scottish textile industry is incredibly robust and resilient.

It’s only when the seas are rough and the winds are whipping in every direction, that you realise how strong or speak the boat you have built really is.  In this, most destructive year, we have found out that the Scottish textile industry is incredibly robust and resilient.

Even before COVID shook the world, the industry started 2020 with some serious headwinds.  As a result of a dispute between Boeing and Airbus, completed unrelated to textiles, we faced 25% additional tariffs on Scottish wool and cashmere knitwear being sold into the world’s largest luxury market, the United States. To maintain hard-won market positions, most Scottish companies including Johnstons of Elgin had little choice but to absorb these stinging taxes.

As Covid-19 hit markets in Asia in the first quarter we saw, like many industries, sales fall in Asian markets and in important worldwide markets like London, Paris, Milan and Hong Kong, which have become increasingly driven by international shoppers from China and Japan. By March and April retail markets across Europe were shutting down and our own factories where forced to close.  Despite government support, closed factories leak money in every direction and a buoyant industry, now found its bank accounts draining and its financial capital reducing.

Despite all these challenges the industry turned its attention to what it can do for the community.  From making masks to providing scrubs free of charge for hospitals, health centres and care homes, every company looked to what it can do and put its shoulder to the wheel.

As lockdown continued and companies prepared to reopen safely the industry came together in the spirit of mutual cooperation which so often characterises how our industry deals with crisis.   Ideas were exchanged and experiences shared on how to keep our craftspeople safe and provide reassurance while delivering the quality and service for which we are renowned the world over.

The pain of closed retail stores and reduced sales meant restructuring for many companies, including ours, was inevitable.  In an industry where mills are so often intrinsic to the local communities these decisions were emotionally difficult, indeed painful.  Where families and neighbours often work side by side, losing staff is particularly hard.

We now face a challenging winter.  The spectre of a “no deal” Brexit brings with it the risks of duties under WTO rules, which would be the highest faced by any sector.  The international businesses which we have built, exporting our goods to the top of every market in the world, mean our businesses will be challenged once more if a deal cannot be found.

At the same time other political decisions are adding new risks.  The abolition of VAT-free status for sales to international shoppers will deeply damage the stores which we sell to and sell through.  This decision, which will clearly reduce the revenues for HMRC, is hard to understand.  At the same time, with our international trade shows closed, we have been denied access to the pre-approved funding support for the new, digital shows which have sprung up in their place.  As frustrating and hard to understand as these decisions are, the industry will surely overcome these obstacles as well.

Why is the industry so resilient?  The textile industry which remains in Scotland has been battle-hardened by almost a century of challenges.  If we can carve out such successful global businesses against international competition where throw-away garments are frequently made in atrocious conditions, with scant regard for environmental conditions, then to be honest, we can survive everything.  Normally privately owned, we have built our businesses for resilience, funded from profits rather than borrowing and committed to excellence rather than fast returns.

The future will bring its challenges.  While our resilience has been proved again, balance sheets have been hit and deb incurred to survive this unprecedented challenge.  With Industry 4.0 bringing unique challenges and opportunities, investment now is essential.  We will look for the care and help of government administrations in London and Edinburgh to help us move into this “brave new world” even stronger and to take the opportunities which are within our grasp.

We now face a world which in so many ways has come to appreciate what we offer.  We see consumers who care about sustainability and the way things are made.  We see a renewed interest in ensuring that workers are paid fairly and treated with dignity.  This new world is one set with challenges but also full of opportunities which we can and will embrace.  Having seen how this industry has survived this bizarre year, I am more convinced than ever that it will move from strength to strength in the years that follow.

Simon Cotton
CEO of Johnstons of Elgin and Chair of the Scottish Textiles Industry Leadership Group

This article was originally published on Simon’s LinkedIn page. Click here to read the original.

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