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Ingeborg Neumann: Lockdown goes to the existence

Ingeborg Neumann: Lockdown goes to the existence

Berlin - In an interview with the Tagesspiegel, the president of the textile association, Ingeborg Neumann, warns that a factory shutdown would be a "shock to the national economy from which we would not recover." Most recently, there have been calls to extend the Corona restrictions to other parts of the economy. The head of the association believes that the current approach is the right one. A third lockdown must be avoided at all costs. The current one is "threatening the very existence" of the companies.

Neumann also criticized the fact that the current aid programs put apparel manufacturers at a disadvantage compared to retailers. She demands equal treatment from the government in compensating hard-to-sell seasonal goods. jbi

Tagesspiegel - Independent Berlin Morning Newspaper, Tue Jan 26, 2021 Page 16

ECONOMY "We don't recover from factory closures".

Textile association head Ingeborg Neumann on the crisis facing fashion producers and the future of retailing

Ms. Neumann, back in May you said that the economy was on the brink. How is your industry doing now?

Many of our companies are now in free fall. The winter shutdown, which lasted until mid-February, is killing our companies. One fifth of the companies fear that they will not survive the crisis.

What is different from the spring?

Equity reserves have been depleted. Wherever they could, companies have reduced their costs, put their employees on short-time work, optimized their process chains. They obtained liquidity from KfW and their principal banks as quickly as possible - always with the promise in their ears that there would not be a second lockdown like in the spring. But then came the second hard lockdown for retailers in the middle of the otherwise high-turnover Christmas and New Year business. Manufacturers entered the year-end spurt in November with sales down 22 percent, but stores were still open then. Now we are slipping further into the red every month. Our medium-sized fashion industry is facing a shambles. If retailers aren't allowed to sell anything, they won't order any new merchandise from us, and that's already having consequences for us well into the year after next.

Politicians want to help companies absorb the losses caused by the lockdown financially. How well is that going right now?

Bridging aid III is an important step, and applications and payments are now to be simpler and faster. The aid is intended to help larger SMEs in particular, including many of the German textile companies. This was long overdue.

Textile retailers are now to recover most of the loss in value of seasonal merchandise through state aid. A good idea?

A good idea, but we as a domestic industry have been forgotten.

What does that mean?

The scheme is supposed to apply to retailers and not to manufacturers. In the process, our seasonal goods lose just as much value if retailers are not allowed to sell them. In addition, there are various contractual constellations with retailers in which we as manufacturers bear the sales risk. The goods are delivered to the retailers, but remain the property of the manufacturers, or we have so-called shop-in-shop models.

So the manufacturers are put at a disadvantage?

Yes, the goods in the store belong to us as manufacturers in these cases, so we bear the risk if they are not sold. And at the moment, it can't be sold because the stores have to stay closed. Therefore, we must also be given the opportunity to claim the loss in value of the seasonal goods.

The politicians apparently saw it differently.

We are in intensive talks about this. The Ministry of Economics has recognized the problem. Manufacturers and retailers must be treated equally when it comes to seasonal goods.

German manufacturers in particular sell a lot in stores and not on the Internet. 70 percent in the case of clothing, and for shoes it's as much as four-fifths.

Yes, and that has been the case for many years. Customers prefer to buy valuable fashion in stores because they want to try it on, see it and touch it. Our fashion companies were already digitally positioned with e-commerce and online stores before Corona. Nevertheless, online business does not begin to compensate for the lockdown in retail.

When do stores need to reopen?

For us, every day that stores are allowed to reopen is vital. That's why we say: as soon as possible. The federal and state governments must explore what is possible. The worst thing for all of us would be a third lockdown. We have to get out of this difficult phase now, so that we can also rekindle the desire for fashion with a corresponding spirit of optimism in the direction of spring.

Ten years from now, will we still be shopping in clothing stores at all?

Yes, definitely. I like to compare it to the cinema. We can also watch a movie at home. But we still go to the cinema because we want to go out, look for the communal experience, meet people. That's what e-commerce providers are also looking for when they go into stationary retail. But the stores of the future will look different and will dovetail even more closely with online sales channels. We also need retail to have attractive city centers.

The Ministry of Economics wants to promote innovative production processes with 160 million euros. Many people want a breathing mask that they can wash and wear again. But everyday masks don't protect as well as FFP2 masks. Does the industry have washable alternatives?

Our textile industry in Germany is highly innovative, so it is good that we are leading the way here with research and development. There are already a number of very good masks that can be reused, but not FFP2 masks, which are made of nonwovens. Incidentally, many of the nonwovens for FFP2 masks come from domestic production. Here, our nonwovens manufacturers have significantly expanded their production capacities since the outbreak of the Corona crisis. As early as the spring, moreover, around one third of our fashion brands entered the production of everyday masks at short notice when the world market ran dry with the outbreak of the pandemic.

Around the world, many sectors of the economy have shut down. How is this affecting German textile producers? You yourself produce in Saxony, the Czech Republic and in Romania.

We're not having any problems at the moment, things have settled down. None of our suppliers are in lockdown. In the spring, of course, we ordered goods in stock, like many others. Of course, we also had to go on short-time work in some cases with individual production sites, but otherwise everything continued to run. But we have to be extremely careful, because we don't know what's coming now.

Recently, there have been calls for the industry to cut back more. What would it mean for the industry if factories were also to be closed to prevent Corona infections?

That would be the super-GAU. People who think about that don't know what it means to shut down the entire economy. It takes forever to get the processes back up. Our industry has established extensive corona protection measures and hygiene plans. When I look into our factories, all employees have sufficient distance. They also keep this distance during breaks and wear mouth and nose protection in the corridors. We do corona tests, have fevers taken. We have about 650 employees and have hardly had any corona cases; the emergency plans have worked. Factory closures would be a shock to the economy from which we would not recover. The current path is the right one.

Right now, textile retailers' warehouses are overflowing. They are hoping that consumer spending will pick up again. But does that go hand in hand with sustainability?

Yes, if you focus on value and quality, like our German fashion brands. When I look in my closet, I also know that I have too much. But I always try to put my clothes back into circulation. According to the principle: one in, one out. When I buy something new, I give something away. But that only works if the quality is good and you take care of your clothes. The trend is clear: we need more products that come back into circulation and conserve resources.

Are the days of fast fashion, i.e. throwaway fashion, coming to an end?

That depends not only on our developments and products, but also on whether they are bought. In surveys, we all like to say that we want to reduce our ecological footprint; however, our purchasing decisions then speak a different language. My conviction is that conscious consumption can and should be fun. Thinking about our planet and our future doesn't mean losing your zest for life.

The interview was conducted by Jonas Bickelmann Ingeborg Neumann, 63, is president of the "textil+mode" association, which represents German manufacturers. Her company Peppermint Holding employs about 650 people

www.tagesspiegel.de/wirtschaft/textilhersteller-warnen-von-fabrikschliessungen-erholen-wir-uns-nicht
(German language)

Copyright Foto: phototek_Imo

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