Sectoral Report of Bank Austria Economics Department:
Austrian textile industry picks up momentum
- In 2013 the textile industry generated growth in sales revenue of 1 percent in nominal terms, reaching a provisional figure of just under EUR 1.5 billion for the sector as a whole
- The textile industry should grow somewhat faster in 2014; driven by the recovery of capital goods activity in key sales markets, production growth is expected to total at least 3 percent
- In spite of the ongoing structural change, the textile industry is particularly open to innovation
- High-quality Austrian textiles strengthen competitiveness of the sector
Austria's textile industry enjoyed a very successful financial year in 2013, performing better than the industrial average. The provisional production output of the sector rose by 2 percent, with sales revenue increasing by roughly 1 percent in nominal terms to nearly EUR 1.5 billion, as revealed by the current sectoral report published by the economists at Bank Austria. "Last year's result confirms the competitiveness and the strong growth of part of Austria's textile industry, but also highlights the still unresolved structural problems of the sector. The sector is still around 10 percent short of its pre-crisis results, while industry as a whole has managed to converge on its 2008 production output level", said Bank Austria economist Günter Wolf.
Sector picks up momentum in 2014
Economic activity in the textile sector was volatile in 2013 with constant pressure on prices the whole year. Incoming orders to the sector slowed again from the third quarter onwards. Given the moderate decline in producer prices based on the annual average, the growth in sales revenue fell short of the increase in production totalling roughly 2 percent. While there is no notable easing of textile prices on the horizon for 2014, demand should stabilise, particularly in respect of textiles used for technical applications. The driving force behind these trends is the anticipated recovery in capital goods activity in key sales markets, first and foremost in Austria itself and in Germany. The textile industry still generates half of its revenues in these markets. All told, production is expected to grow by at least 3 percent in 2014, coupled with modest price hikes and therefore a somewhat higher increase in sales revenue.
Textile industry particularly open to innovation, despite ongoing structural change
It remains to be seen whether the reduction in jobs can be reversed in 2014 after employment during the last two years fell by an average of 3 percent per annum. Bank Austria economist Günter Wolf: "At any rate, the continued decline in employment is an indication that the structural change in the textile industry has yet to be completed". The sector in Austria has shed one third of its production output since the mid-1990s, and lost nearly 40 percent of its employment capacity. Even though we cannot rule out more closures and the continued outsourcing of production in the textile industry beyond Austria's borders, the textile industry is focusing on economically viable and promising areas in the field of technical textiles and textile innovations. Looking at the whole sector, many textile manufacturers in Austria are very open to innovation and concentrate on manufacturing innovative products. According to the European innovation survey in 2010, a total of 59 percent of companies in the Austrian textile and clothing industry were classified as "actively innovative"; this is not just more companies in relative terms than the Austrian industrial average, which boasts a corresponding ratio of 57 percent, but also demonstrates a much higher proportion of innovative textile companies than the EU-15 sector average (47 percent).
High-quality Austrian textiles strengthen competitiveness of the sector
The innovation in the sector lays the foundations for a gradual increase in quality of textile products, and has ultimately boosted the competitiveness of the sector. The higher quality of textiles from Austria in comparison to rival products reveals the change in product values in foreign trade: over the last ten years, the correlation between export and import unit values in the textile trade has risen almost continuously. Bank Austria economist Wolf: "In comparison with the European sector, the competitive strength of the Austrian textile industry primarily comes to the fore in two key areas: On the one hand, production in the sector has fallen more slowly over the last ten years – by 33 percent in Austria compared to 38 percent in the EU-27. On the other hand, the success is also evident in the export surpluses of certain areas, for example, in trade with knitted fabrics, embroidery and special yarns and woven fabrics. In 2013 the provisional foreign trade surplus in these segments amounted to just under EUR 300 million". To sum up, following a record surplus in 2002, Austria's foreign trade surplus in textiles deteriorated again and slipped into a deficit from 2008, mainly as a result of the growing import pressure from China. However, the deficit was maintained at a moderate level and even reduced in recent years – settling at a provisional EUR 15 million in 2013.
Enquiries: Bank Austria Economics & Market Analysis Austria
Günter Wolf, Tel.: +43 (0) 50505 - 41954