Marcolin: «A reform plan for fashion»

«The perfect storm». This is how Cirillo Marcolin, President of Confindustria Moda, defined the succession of events that have swept through the world economy: from Covid-19 to the increase in the cost of raw materials and energy, to the war between Russia and Ukraine. From 2020 to today, the Italian fashion system has gone through a series of vicissitudes that have seriously compromised the survival of SMEs, the true lifeblood of the country, the companies in the area on which the competitiveness of the textile-clothing and accessory sectors is based, brought together by the federation, focusing now more than ever on the synergies and the acceleration of green and digital processes to support Made-in-Italy SMEs. «Because alone you cannot do anything,» Marcolin stressed in this interview with MFF.

How is the economic picture evolving for the textile-fashion-accessories macro sector?

In 2020, we lost 30 billion euros out of the 100 billion euros in production value. 2021 was a year characterized by a full-fledged recovery that was confirmed at the end of the year, with a recovery of around 22% on pre-Covid-19 figures and the achievement of 90 billion euros in turnover. Some segments had reached pre-Covid-19 levels. For 2022, we still do not have reliable data. Based on the estimates, we know that the first quarter started well, there was a recovery even on 2021, estimated at around 14%, giving us hope for a return to pre-Covid-19 levels. In light of today, we have to say that the situation has changed. At the end of last year, both I and many members of Confindustria, starting with President Andrea Bonomi, had already pointed out the critical nature of certain issues, such as the increase in the cost of raw materials, the difficulty in finding them and the increase in energy costs. Everything has been emphasized in this perfect storm by the crisis caused by the Russia-Ukraine conflict.

How much is the war weighing on Made-in-Italy luxury?

We often tend to downplay the magnitude of the conflict because we look at Confindustria data on the fashion world where the incidence of exports to the Russian and Ukrainian markets does not exceed 2.2%. However, we cannot forget that there are different realities, such as the footwear industry. There are districts, such as Brenta or Marche, where some companies had focused on the creation of ad hoc products for the Russian market and now the expected loss in turnover is over 50%.

So, are there any sectors that are suffering the most?

Footwear, but jewelry is also suffering because they need a series of materials coming from Russia. In textiles, there are derivatives of some combustible products: for tanning a lot of hides were imported from Ukraine. The situation could benefit some non-EU competitors by eroding market share in our sector. If the conflict should continue, there will be a high number of companies that will be forced to close down.

Why?

For now, they are trying to digest the increase in costs and the reduction in margins, but we cannot forget that the companies represented by Confindustria Moda are small/medium sized and have already gone through Covid-19. They do not have an adequate patrimonial and financial structure to sustain investments in production and in new collections, and they would find themselves having to pass on the price increase downstream. However, the consumer could give up on buying, leading to a reduction in consumption, a recession, a reduction in GDP... Some even talk of stagflation.

What is your position on sanctions?

Confindustria's position is that they are fair and must be tightened. This is certainly not to the advantage of the companies and associations I represent, but we must say that the humanitarian crisis is the most disastrous part of the overall picture. If we all aim for peace, we will also favour a restart from the economic point of view.

As an association, what direction are you moving in?

The government should continue to work on the most urgent things, starting with major structural reforms. We have medium-long term problems, as demonstrated by the energy policy adopted that make us dependent on Russia, the difficulties in starting with renewables and no clear vision facilitating those who support initiatives in favor of the circular economy. The first step should be to push for the government to undertake a strong policy and be a guide for businesses. The second point made by President Bonomi is aiming at a ceiling on the cost of energy to encourage companies in continuing their work. We should move towards a production that is as green as possible. Customers are asking for it. Looking from upstream in the supply chain, the big brands downstream are asking for it; looking from the point of view of the companies I represent, it is the final consumer asking for it.

In terms of green processes, what actions should be taken?

SMEs are struggling to implement this process and a system policy is necessary involving, on the one hand, companies willing to invest in transforming their production processes and, on the other hand, the associations and the federation I represent, careful to accompany them in this process of important transformation. Last but not least, the government should adopt tax exemption and contribution policies to support companies that are willing to transform their production, samples and products.

Can you give concrete examples?

Recently, SMI created Retex Green, a consortium formed exclusively by Italian producers to handle textile waste. There is a European regulation that foresees the separate collection of textile waste from 2025 and Italy and France have already started the process. Confindustria Moda should focus on the SMEs that do not have the capital and the skills to meet the big brands’ demands. In this regard, I was pleased about the creation of a new cluster of subcontractors led by Matteo Marzotto, willing to create a system and propose an integrated product to the big luxury brands. Finally, the Chamber of Deputies has recently decided to support the growth of production chains by granting requests for a series of initiatives to obtain raw materials from sources other than the traditional ones, to encourage and accelerate ecological transition through tax exemption and to strengthen the fight against counterfeiting which debases the product.

What about digitalization?

I think it can be, and has already been during the pandemic, a great solution for big brands and it should be so for small businesses as well, which will need to be supported to access it at a low cost.

Did you record any real growth in the US market?

I think it is a pretty natural reaction. With the Russian situation and the slowdown in tourism from this country, US has become once again a reference point. It is an ambitious and aggressive country with consumers who have high purchasing power. Therefore, it can represent the first step towards recovery.

What message do you want to send out?

Alone you cannot do anything, what is both small and beautiful does no longer exist. I believe that unity is strength and that associations alone are no longer sufficient. The federation that I represent today brings together 60,000 companies, 100,000 employees, it generates a turnover of 90 billion euros, and I believe that creating a system is the solution to these problems, together with trade unions and government, to look to the future with greater optimism. (All rights reserved)