NATIONAL: Concerns over falling protection for Australian fabric manufacturers appear to be warranted, with cheap imports contributing to strong revenue declines in the sector for the last five years.
According to figures from business information firm IBISWorld, revenue declined at an average rate of five per cent per annum during this period to $1.06 billion in 2009/10. This figure included revenue across textile fibre, yarn and woven fabric manufacturing.
Industry analyst Cathy Hewish said China was a major source of competing imports, accounting for 30.5 per cent of synthetic fibre textiles and 50.2 per cent of cotton textiles in 2008/09.
“In response to import competition, the industry is placing a greater focus on higher value, niche products,” she said.
“Nanotechnology is being used to produce textiles with specific properties such as being able to absorb odours, being water-resistant or having greater strength.”
However, industry groups recently warned these innovations could be hampered by the wind-up of a duty concession scheme in June. Under the Expanded Overseas Assembly Provisions scheme, imported garments which used Australian-made fabrics were granted tax concessions.
The Council for Textiles and Fashion Industries of Australia (TFIA) claimed garment manufacturers would now be penalised for using locally made fabrics in products assembled overseas. Executive director Jo Kellock argued the brunt of rising costs could not have come at a worse time.
“In effect, these manufacturers will be taxed twice for using Australian-made fabrics – first in the form of GST on the purchase of [these] fabrics and then again in the form of import duties on assembled garments that use the fabrics. The aim of the scheme was to encourage use of Australian-made fabrics and level the playing field.”
Importers which used fabrics produced overseas would only be charged a single 10 per cent on the assembled garment and pay no GST. This meant less of an incentive to support local providers, Kellock claimed.
“There is no justification for removing this concession for Australian garment manufacturers who are keen to use Australian fabrics. We should be using every lever to encourage them, not make it harder.”
Those affected by the wind-up included garment manufacturer Andorra Australia and fabric producer AMBT, which had collaborated over the past 15 years to create innovations such as ultra-light merino wool blends for thermal base wear and aloe vera-infused cotton-lycra blends for undergarments.
Products were designed and patterned here using locally made fabrics and then sent overseas to be assembled for major clients such as Target and Target Country.
Andorra Australia general manager Andrew Goulopoulos said the two companies had worked hard to develop new fabrics in response to market trends. “This partnership is now being threatened by the extra tax penalty we will incur for using an Australian product.”
By Assia Benmedjdoub