Nearshoring to Europe: textile machinery manufacturers see rising demand

European manufacturers of equipment ranging from embroidery machines to textile cutters are seeing a growing interest in nearshoring from apparel producers. Strained global supply chains are prompting some to bring back production closer to Europe.

"People are looking for capacity close by. Factories around Europe, North Africa and in the Middle East are trying to build up and modernise their capacities," said Artur Kitta, head of sales for Europe and Africa at Dürkopp Adler GmbH.

The sewing machine manufacturer from Bielefeld, Germany, is itself surprised by demand from the garment sector in and around Europe, as well as the Middle East, which currently even exceeds that of the tech sector, Kitta said at the Texprocess trade fair in Frankfurt at the end of June.

More local and flexible

Since the beginning of the pandemic, supply chains have been in turmoil and the situation hasn't calmed down so far. Shipping container prices remain elevated and fashion companies are struggling with the uncertainty of how much merchandise to pre-produce when speedy replenishment and delivery are no longer guaranteed. These uncertainties are prompting some to look into producing closer to demand and also with more flexibility - that is, quickly and in smaller quantities.

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These developments emerged even before the outbreak of the pandemic, but have gained in urgency again over the past two years.

"In the fashion sector, the trend towards made-to-measure, that is, the individualisation of garment sizes, continues unabated," said Rolf Köppel, Segment Manager Textiles at the cutting machine manufacturer Zünd Systemtechnik AG.

At the same time, there is a trend towards nearshoring, which can be explained by the unstable supply chains between Asia and Europe. Many companies are looking for technologies that enable them to produce more efficiently and automatically in Europe or America, Köppel said. "Such trends also trigger corresponding investments in digital cutting technology."

Technical innovations are reducing costs

The nearshoring is facilitated by technical innovations. Increasing automation makes it possible to produce faster and with fewer workers. Machine builders are also advertising this fact.

The machines from Zünd from Altstätten, Switzerland, are an example: the D3 cutter has two heads to cut the laid-on textiles and can thus finish more in the same amount of time. The cutter automatically supplies the rolls of fabric, while the cutting heads control the textiles with the help of a robot. In the apparel sector, it is mainly sportswear manufacturers and companies specialising in made-to-measure that use the single-layer cutters from Zünd. They are more precise and can handle and cut a wide variety of textiles.

The machines from the Krefeld-based company ZSK Stickmaschinen GmbH are also becoming more efficient. At Texprocess, an embroidery machine is on display that can stitch thick sewing threads and thin embroidery threads in one single process. One machine has thus replaced the two that were previously necessary. The stand also features a prototype that will not be released until the end of the year: an embroidery machine whose patented technology allows 2,000 stitches a minute, twice the current market standard.

"This means we can produce things faster in Germany and no longer have to send them to Asia," said Frank Giessmann, Sales Director USA, at ZSK Embroidery Machines. "We have a lot of customers coming back now, from Turkey or Asia, to Germany." But he did not want to reveal more about the names of the manufacturers in conversation, yet.

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A recovery in demand

When the coronavirus broke out in 2020, there was strong demand from textile manufacturers from Zünd because they switched to mask production, Köppel said. Later, demand subsided during the pandemic, but at Zünd, business was booming in the interior and home decoration segment because many people were redecorating their homes with sofas, curtains and other textiles. But now Köppel is observing more demand from the fashion industry again.

Business for textile machinery manufacturers has been recovering since last year, according to figures from the German Engineering Federation (Verband Deutscher Maschinen- und Anlagenbau e.V.). Between May 2021 and April 2022, new orders for German producers rose by 66 percent, and sales by 0.1 percent. Exports grew by eight percent to 442 million euros. Italian machinery manufacturers also recorded a 12 percent increase in exports to 271 million euros.

"Stable new orders after the pandemic-related slumps give reason for hope," Elgar Straub, chief executive of the VDMA Textile Care, Fabric and Leather Technologies trade association, said in a statement. "However, the consequences of the war in Ukraine, which are still unforeseeable, represent a major factor of uncertainty." He added that a relaxation of the situation was not yet in sight given rising raw material prices, massive delivery delays and difficult transport conditions.

Slow shift

Garment companies are also still holding back from investing in new equipment. "Our customers are all busy, however, they are not buying new, but revamping the machines they have," said Giessmann. "We see that in spare parts sales, which have gone up in the past two years, but rather fewer new machine sales."

Among fashion companies, the willingness to invest is increasing, but orders have yet to come in. "People are coming and showing specific interest, and many are expecting an offer in the week after the fair," said Kitta. It remains to be seen, however, how many orders will come in.

Machine makers are betting on the trend towards nearshoring, but they also know that this development will take time. "The topic is very important, that's where business is emerging," said Köppel. He notes a high willingness to invest within the fashion sector, but it is not yet "the big change" that upholstery manufacturers may be already in the midst of.

Hesitations

It is not only the apparel industry that is hesitant. More than 70 supply chain managers of leading companies were surveyed by the consulting firm McKinsey at the end of 2020. 40 percent said they were planning to shift to a more local supplier base, but only 15 percent had put the plan into action a year later.

One of the few, but prominent, clothing manufacturers that have moved their production back is the apparel company C&A, which is once again producing jeans in Mönchengladbach. But the fashion industry is still a long way from widespread manufacturing repatriation. Even if production at C&A in Mönchengladbach reaches full capacity, it would only account for three percent of the denim sold in Europe.

"It is an illusion to assume that the companies will all return to Europe in the next five years, there are simply not the people to do it," said Köppel. "But you see them buying individual lines and reconfiguring manufacturing - here in Europe and North Africa you see investments being made in the new technologies."

Longer delivery times

The outbreak of the coronavirus first led to a drop in orders from apparel companies, and now the surge in demand is already causing longer delivery times for some.

"The pandemic really brought us to our knees in the clothing sector, so we were lucky that the automotive sector stayed up and running," said Kitta. "And now we realise that we can't even keep up with the orders in terms of delivery times."

The order backlog at Dürkopp Adler is currently increasing so rapidly that the company cannot increase its capacities as quickly, which were reduced during the pandemic. This is due to the surprisingly high order volumes, but also due to delivery problems, noted the sales manager.

The waiting time differs depending on the product, but it is currently between three and twelve months. Before, the average was three months.