This is not about the importance of denim in 2023, nor whether China will increase market share. It is not even about improving logistics through reshoring. It is rather about the changes that will occur in the post-pandemic world for the apparel industry. In this regard, we are not even asking the right questions.

Start with the obvious, about which we can all agree:

1. The pandemic brought about massive unemployment everywhere.

2. On the customer side, recently, economies have improved, and consumer demand increased. Nevertheless, a substantial number of workers are not returning to their previous jobs.

The key pandemic questions the apparel industry needs to ask

We must ask, are these related? If so, are they both the result of the pandemic?

If we agree that they are related and came about through the pandemic, we must understand the underlying causes and their effects not only on our little industry but on the global economy.

We are told the failure of workers to return to their pre-existing jobs has two causes.

1. The elderly have opted out. Think about this. Only a few years ago, these same people claimed they could never afford to retire. In the post-pandemic era, that problem has now mysteriously disappeared.

2. Young people are not returning to their old jobs and many are taking new jobs even at lower pay.

One point is clear. Rising wages although long overdue, have not solved the problem.

The return of populism

I suggest that somewhere along the way during fears about the pandemic and repeated lockdowns, ordinary people had a revelation:

Standard of living does not equate to quality of life.

People, particularly young people, are now demanding the right to control their lives.

If this is correct, the virus has brought an end to a 60-plus year system of elites and the return to populism.

Management has always assumed that workers could never be independent. As a result, the company controlled them and naturally took advantage of their power. Restaurants and hotels began to add service charges of 10% to 20% to their customers' bills, with the result that wages actually paid by the company fell, in some cases to US$0. However, a service charge makes sense only if someone is there to perform the service. What will hotel management do if, for example, the maids do not show up to clean the rooms? I suggest the more appropriate question is, where have all the maids gone?

The answer to that question is found in the second problem.

For the last 40 years, companies have looked to technology to replace their workers. The post-virus has turned this upside down. The former hotel maid has gone online to offer her services to clean people’s apartments on a part-time basis. She has been joined by the housepainter, electrician, accountant, lawyer, and university professor.

Under the pre-virus system, those who actually did the work were considered to be of little importance to the operation. The real power and money went to the administrators, sales, marketing, and promotion specialists who had little knowledge and less interest in the actual work.

In this new populist world, those who do the work, make the product and/or provide the service do not need the administration, marketing, or promotion. Indeed, they did not need the company that previously employed them. They could meet the needs of their customers better, at a fraction of the cost, and more importantly for the first time, have a life.

Where is this new populism taking the apparel industry?

Answer: I do not know

But I can guess.

The new post-pandemic apparel industry will no longer depend on sales and marketing — the need to persuade the consumer to buy what the company is selling. It will rather depend on delivering what the consumer wants. To put it another way, it will discard the sales, marketing, and promotion specialists and replace them with the influencer whose job will be to tell the supplier what the consumer actually wants.

The new post-virus industry will no longer depend on brand leveraging. Those of my generation are in love with the great fashion brands. We have confidence that Gucci — a leather shoe and handbag company — has the best sunglasses; and that Chanel — that great designer of women’s suits — offers the most elegant perfume. We are also enthralled with the status. We will pay a fortune for a Birken handbag, not because it is better but because ownership gives us status. What is true of Gucci sunglasses, Chanel perfume and Birken handbags is equally true of a Harvard University MBA degree. In the old world, the value of a product became meaningless, it was the name on the package that counted.

This new populism began in the face and body care sector. Women of my generation looking to maintain their bodies were attracted to the great labels — La Mer, Le Prairie, and Este Lauder — where for a few hundred dollars together with a little cosmetic surgery would keep their looks. In the new populist world, we have influencers who advise women who want to keep their looks about diet, exercise, and where for a tenth of the price they can buy products with the same or better active ingredients.

All of this leads back to the original question? How will this affect the apparel industry?

Our greatest problem is a failure of perspective. We all know that we are now operating in a consumer-driven economy, where to survive, we must all meet consumer demands. However, “knowing” and “believing” are not the same.

The concept of change-from-the-bottom boggles the mind. The shift from the 'average consumer is stupid' to 'we better do what they tell us to do' is all too often beyond our comprehension. Of course, if we consider the history of the tobacco or fur industries, we might see the power of the consumer.

If the legacy retailers are going broke and are being replaced by small fashion e-commerce start-ups it is because the start-ups are doing a better job at delivering what the consumer wants, not only more interesting goods at a lower price but also something more ethical and more sustainable.

At the end of the day, the pandemic did not bring about the change, but was rather a catalyst that accelerated the transition from the old elitist to the new populist culture.

Last month Just Style reported on the brands focusing on new direct-to-consumer (DTC) strategies and whether it marks the end of the traditional wholesale selling strategy.

On 24 April the world commemorated the ninth anniversary of the Rana Plaza disaster in Bangladesh — a catastrophe in corporate history. The eight-storey Rana Plaza building contained five garment factories with 5,000 workers making clothes for Benetton, Matalan, Mango, Primark and other major brands. On the morning of 23 April 2013, two-inch-deep cracks appeared in three factory pillars. The following day, 24 April, distressed workers who had seen the cracks in the pillars tried to refuse to start work. The building owner ‘forced’ them to enter the building and work. Later that day, the building collapsed, killing more than 1,100 garment workers.

Social audits and forced labour: Have factory working conditions changed since Rana Plaza?

Growing up in Dhaka, I was surrounded by densely packed garment factories supplying global retailers. Seeing tired workers leaving factories late at night gradually inspired me to be a researcher in corporate accountability and transparency in relation to the lives of those who work in garment factories in Bangladesh for Western buyers. Over the past 16 years I have investigated corporate transparency mechanisms such as social audits and social responsibility disclosures (what retailers and suppliers say and do in their accounts about factory working conditions within the global supply chains operating in Bangladesh). My research with colleagues has found that, despite the social audits that retailers use, workers’ economic and human rights have not improved, while retailers’ revenues balloon and factory owners get rich.

In our prior research, we took a close look at the roles social/factory audits played before and after the Tazreen fire incident (which killed 112 workers in 2012) and the Rana Plaza disaster (2013). During these two major disasters, social audits had been carried out but failed to save workers from factory fire or collapse. Just before the Tazreen fire, US retail giant Walmart had performed an audit that flagged ‘violations’ of its code of conduct but, despite this, it continued to source products from Tazreen until the fire occurred. Until the Rana Plaza collapse, the structural problem of the factory building was less likely to be part of the social audits, and building safety was often overlooked and neglected by the auditors in their audit process. Though the retailers sourcing from factories at Rana Plaza had social audit mechanisms in place, these did not protect the workers from a factory owner who forced them to work in an unsafe building. Our research has found that global retailers and their suppliers often use social audits as symbolic and ritual strategies that help maintain existing inequalities rather than protecting the welfare of workers .

Soon after the Rana Plaza collapse, the global community desperately started fixing factory structure problems and worker safety issues. Two international bodies—Accord on Fire and Building Safety in Bangladesh and Alliance for Bangladesh Worker Safety — have been set up, in collaboration with a number of multinational retailers, to improve the safety of garment factories in Bangladesh. These two bodies have arguably succeeded in putting in place a binding process, with their structural and fire safety inspections. But a serious problem that has remained fairly untouched is forced labour, which is an aspect of modern-day slavery. 

Many have ignored the inconvenient truth that forced labour was one of the real causes of the deaths at Rana Plaza. Factory owners forced frightened workers to go into a building in which major, structural cracks had been discovered. The parties responsible for the structural problems of the building were also violators of basic human rights through forced labour. If the garment workers had not been forced into the building, the building would still have collapsed, but fewer workers would have lost their lives. Taking a closer look at the everyday journey of workers at both Tazreen and Rana Plaza, it is obvious that deaths and human sufferings could have been prevented if forced labour (modern-day slavery) had been eliminated.

Over the past 16 years, and long before the Rana Plaza incident, I observed major buyers, including H&M and Walmart, adopt clear codes of conduct and audit tools suggesting 'zero tolerance' of forced labour, but such codes and audit mechanisms fail to protect workers. If the forced labour condition was audited well, workers' freedoms could be ensured and the casualty lists following man-made disasters might be shorter. Unfortunately, forced labour persists and it is responsible for killing and injuring many workers in garment factories.

Forced labour conditions during the pandemic and social audits

Amidst the Covid pandemic, many global retailers (including major UK retailers) started cancelling orders, putting the employment of millions of garment workers at risk in Bangladesh. Factory owners sacked thousands of workers, violating employment contracts. Thousands of workers remained vulnerable and suffered hunger, with little government or international support. In fact, during the pandemic, workers who managed to hold on to their jobs found scope to demand fair pay and advocate for their rights significantly reduced.

How female workers were affected by the pandemic 

Our research in collaboration with Traidcraft Exchange, commissioned by the Modern Slavery PEC with the funding of the Arts and Humanities Research Council (AHRC), investigated the impact of Covid on women workers in Bangladeshi garment sectors and found UK retailers’ unfair practices, including cancellations of orders during the pandemic, stimulated exploitation and the forced labour of women workers. The retailers’ cancellation of orders exacerbated interrelated vulnerabilities in economic security, job security, food security, housing security and health and wellbeing, resulting in women workers struggling to support themselves and their families. We also found there was an increase in sexual and verbal abuse and symbolic violence, mainly from line supervisors pushing women to work faster to meet unrealistic production targets.

In relation to social audits, our research found social auditors did not always include women’s rights issues in their audits. We found that around a fifth of auditors had not checked for one or more issues relating to women workers rights. These included compliance with the law on maternity leave, checking if the factories had policies on violence against women, verbal abuse or sexual abuse that were being implemented and verifying if factories had Complaints Committees carrying out their legal duties. In fact, 40% of auditors surveyed did not audit the right to trade union recognition.

What do the findings from the pandemic and Rana Plaza mean for the apparel industry today? 

Our findings challenge the existing social audit practices by retailers for improving working conditions in clothing supply chains, as these have failed to protect female workers’ vulnerability, particularly during the Covid pandemic. Social audits as a conventional and voluntary tool can only be regarded as a sticking plaster and not a long-term solution to the poor protection enforced by the Bangladesh state.

In a crisis, whether an accidental fire, a building collapse or a pandemic, forced labour is something that is difficult to audit. Moreover, no audit can change a situation; only when the audit result is acted upon can change occur. 

Our research findings show that retailers’ or suppliers’ voluntary social audit mechanisms alone are not helpful to tackle forced labour and uphold workers’ rights. Forced labour and abusive purchasing practices result from the high level of power that big retailers and brands have relative to their suppliers. Our research suggests the UK Government should consider introducing a fair purchasing regulator, a Fashion Watchdog, which could investigate and fine brands and retailers if they were found to breach a statutory fair purchasing code (including human rights code) in their dealings with garment manufacturers, particularly located in the Global South (Latin America, Asia and Africa).  

The digitised apparel supply chain defines the steps in the apparel process. The process begins with the product-design concept: Step 1: First Designer Sketch, and can end at various predetermined steps such as production completed, in-store delivery, or even to the point when the final stock garment is sold.

I am sure the actual supply chain does indeed exist somewhere out in the ether. We cannot see it. We cannot even imagine it. What we have is our best effort to create a picture of the steps in the process, which in itself is neither complete nor accurate and therefore of very little practical use.

Our current supply-chain picture is linear, limited to a series of distinct and separate steps, where all movement is unidirectional — step 1 followed by step 2 which in turn is followed by step 3 all the way up to some predetermined end, where step 321 is followed by step 322.

What are the problems when working with a digitised apparel supply chain

The first problem is that reality is not clear cut and indeed can be quite messy. Every day, operational professionals must deal in a dynamic world where very little is fixed, and much is by nature unforeseen. For example:

The sample has been approved but, more often than not this leads to a series of problems, none of which appear in the supply chain such as:

The Free On Board (FOB) Price is outside the target

The selected factory cannot make the garment

At this point, we would expect the work to return to the product-development phase, for necessary redesign to eliminate the problems.

However, under the supply chain regime, this is no longer possible. Management expects two solutions, neither of which makes sense.

Go to a cheaper factory

Go to a better factory

The result is that a merchandiser working in a branch office in Chittagong will all too often work with the local factory to change the design thus removing both the cost and quality assurance problems. Management is pleased the buying office has once again operated within the confines of the supply chain but fails to recognise that 20 weeks of the product development process is now out the window.

This is but the first problem. The second and far greater problem occurs when we try to digitise the supply chain, by calculating precise times and costs.

Think of a supply chain as a detailed picture. Imagine a still-life painting of vegetables hanging on the wall, where each piece is exact —The celery, carrots, lettuce, etc. are each painted so realistically that you would think they are real. Now imagine taking the painting off the wall and chopping it up into little pieces to make a salad.
Pictures are not real. Reality is real. To put it another way pictures are static and reality is dynamic.

Take the simplest step in the supply chain: Buying Zippers. This might be a single step such as:

Or broken-down into a series of steps:

When digitised we have specific data:

Lead Time: Based on past experience, YKK the designated zipper supplier would take 3-4 days maximum.

Cost: Factory purchase order, YKK invoice, Factory payment record and the price is set in stone as it must be US$0.10 per piece (or $10.00 per piece).

99.9% of the time reality and the supply chain coincide. The problem is with the 0.1%. This is where reality diverges from the picture.

For example:
200 machine factory located in El Salvador
Step 89: Receives order: FOB price and delivery date agreed.
Step 90: Requires zippers in four colours

The process begins:

Day 3: Only three colours received and colour blue 497 is not in stock.
This isn't a problem as you can check with YKK branches in Honduras, Guatemala and Nicaragua
Day 6: Blue 497 is unavailable in the Caribbean area
This isn't a problem as you can check with YKK Regional Headquarters Mexico
Day 9: Blue 497 is unavailable so must be dyed
Dyeing Time is 21 days + 3 days transport
Day 33: Blue 497 arrives at factory

To understand the severity of the problem, we must return to step 89. The 200 machine factory has guaranteed delivery and is now 30 days late. The factory contacts the customer’s global buying office in Hong Kong who in turn contacts head office in New York.

At this point the parent company is faced with two equally bad options:

1. They can accept 30 days late shipment, which will result in increased markdowns.
2. They can cancel, which will result in consequential losses, plus losses arising from the cost of the unused fabric.

More importantly, neither option will prevent future problems because neither option deals with the cause: Zipper cost. Indeed, because of the nature of the digitised supply chain, the price of the zipper must remain at $0.10 per piece, when in fact the cost of that same zipper now exceeds $10.00 per piece.

The good news is this disaster will only occur once in one-thousand orders. The bad news is that the problem is not limited to just the zipper. It carries over to all trim (sub-materials + packing) products. Every garment requires trim, as few as 5 (basic T-shirts) to as many as 25 (lined overcoats).

What started as a problem involving a single trim item has now increased 5-25 fold.

What is the solution when working with a digitised apparel supply chain

As with the 24 year old merchandiser in Chittagong, in practice the buying does have a solution:

Go back to the beginning. The problem is neither markdowns nor consequential loss. It is the zipper: Specifically blue 497.

We must ask ourselves, when was the buying office first notified that going forward, blue 497 would be a colour?
In almost all companies the selection of colours is made long before the beginning of the garment design process.

Since the supply chain begins with the garment design, the buying office will almost invariably receive colour standards prior to step 1 in the supply chain.

Once we abandon the picture and move to reality, the solution is relatively simple:

Zipper colour approvals take place between YKK and the Customer’s global buying
office long before garment design takes place. The global buying office orders the zippers before the factory has been selected, leaving the factory selected to produce the order to issue a purchase order. The best news is that well managed buying offices sensibly do not rely on the supply chain for their decision making process.

How to escape from the digitised apparel supply chain trap

The apparel supply chain has two fundamental flaws. The first is almost universally recognised: The “steps” in the supply chain are not fixed, discrete or separate as they are based on interrelated variable factories. Changes in
any one step will affect other steps, which in turn changes yet more steps until every link in entire process is constantly in a state of flux. As any working professional can tell you, the job of everyone in the buying office and at the supplying factory is crisis-management. Rather than a simple linear chain, it is a complex multidimensional process.

What was once defined as a single step...

...Is now a far more complex series, virtually none of which appears in the supply chain:

The second is of primary concern but regrettably still not understood: Price does not equal cost. In fact, the two are totally unrelated. The need to conflate cost with price distorts the entire decision making process.

As we can see from the zipper example, the price of the zipper was $0.10 per piece, which is undeniably true. However, as in the example above, the cost was $10.00 per piece, which is also undeniably true. Because of our misconception that price = cost, we spend our time trying to reduce the price as listed in the digitised supply
chain from $0.10 to $0.08 without even recognising the real problem — which does not appear anywhere in the supply chain —the $10.00 cost, which is 100 times more important.

We are caught up in a problem that has plagued the apparel industry for generations. Our decision-making process is flawed. We concentrate our time, efforts and capital, in an effort to save pennies rather than dollars.

The strategy to digitise the supply chain is simply the latest in a long line of flawed concepts.

In an exclusive feature Just Style reveals the 3D tools helping to streamline the apparel supply chain.

1. Will inflation remain high?

2. Will economic growth remain uneven?

3. Will reshoring or near-shoring become a permanent thing?

4. Will China remain the largest exporter of apparel?

5. What will the pandemic have in store for us?

6. Will the "Big Quit" continue?

7. What will be key government trade policies?

8. Will sustainability remain relevant?

9. How will global sourcing change?

10. Will supply chain snags continue to plague the industry?

China stands accused of genocide, or at the very least ethnic cleansing. The victims are the country's 13.5 million Uyghurs based in the Xinjiang region, as well as other Muslim and ethnic minorities. 

Beijing denies all allegations, but more than one million Uyghurs have been sent to extrajudicial detention facilities since 2017, where they have undergone ideological training at 're-education' camps in the name of 'anti-terrorism'.

As part of this, the Chinese government has forced tens of thousands of Uyghurs to work in cotton fields over the past three to four years, according to numerous investigative reports from the likes of the BBC. 

In recent months, big names such as H&M have made headlines for their use of Xinjiang cotton, which makes up one-fifth of the global industry. These fashion brands have ramped up international attention on the Uyghur situation, since clothing is such a visible consumer good (a sad testimony to the limitations of human empathy). Nonetheless, Western businesses have been slow to act.

Decision makers are quite happily discombobulated

The above atrocities are not new. That Western clothing brands might be sourcing unethically produced Xinjiang cotton has been a concern since at least 2019. Afraid to lose favour with Beijing and Chinese consumers, the private sector's response has been tepid at best. 

In a March 2020 report, the Australian Strategic Policy Institute drew unavoidable press to the situation by identifying 82 companies that were potentially using, directly or indirectly, forced labour in Xinjiang. Some of the largest players on the list, such as Nike and H&M, put out statements saying 'they prohibit forced labour in their Xinjiang supply chains'.

Meanwhile, only the largest foreign companies actually operating factories in Xinjiang (namely Germany's Volkswagen and BASF) have come out and said that their plants are 'free from abuses'. Thus far, no company has pledged to divest their operations in the region. In their defence, it is not clear how feasible or productive such a move would be, even if all Western business acted in unison – but this dilemma has proved a pretty convenient excuse for inaction. Let's-see-if-things-blow-over is the spirit.

In the great geopolitical chess game, Western politicians (especially those in Washington) have been all too eager to call out China's human rights abuses. Paradoxically, they have struggled to decide what to do about them. In short, economic concerns have dampened political vigour.

For example, Nike and Coca-Cola have lobbied hard against the US's proposed Xinjiang Forced Labor Bill (which has now been delayed), while the UK government has dragged its feet with regards to a Trade Bill amendment that would take a stronger stance against human rights abuses abroad. Yes, both governments have deemed the Uyghur situation a 'genocide', but this remains wordplay, not action. 

"I don't think a company should politicise its economic behaviour," said a spokesperson from the Chinese government in March 2021. On the other hand, Western governments seem unsure if they should 'economise' their political behaviour, so to speak. 

Do we care less about forced labour in smaller economies?

Forced labour in China is nothing new. In fact, before 2018 it received remarkably little attention. 

That it has only now caught the world's attention is testimony to the horrors of the Uyghur situation coming to light, but also the sheer politicisation of the issue within the US-China trade war and broader West versus China feud. 

Human rights abuses in the world's second-largest economy warrant attention, especially when they involves potential genocide, but by the same logic, human rights abuses in geopolitically less significant economies will receive less attention (and therefore action). Just how much less is the problem. 

It is estimated that 25 million people globally are victims of forced labour, generating approximately $150m in illegal profits in the private economy, according to the UN's International Labour Organization. These figures are likely to get worse since Covid-19 is pushing millions more into poverty, where they are more likely to be exploited.

The US government's Bureau of International Labor Affairs (ILAB) maintains a list of goods produced by child labour or forced labour, with its latest version (from 2020) made up of 155 products from 77 countries. Even a cursory glance shows that, while China is the main culprit, many other countries are guilty. 

Alongside China, cotton goods from Azerbaijan, Argentina, Benin, Brazil, Egypt, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan, Uzbekistan and Zambia belong on ILAB's list. 

Due to the visibility of the fashion and clothing industry, abuses in the cotton sector get a lot more attention than, say, the lobster market. Even still, most of the aforementioned countries have received much less attention than China, both in terms of media and political action. Why? Because their economies are smaller and/or less geopolitically significant. 

Companies operating or trading cotton in those countries are, therefore, under less scrutiny to ensure that their supply chains or factories are abuse-free. The problem is even worse with regards to less high-profile goods, such as bricks or cumin. 

Similarly, Western businesses trading with Xinjinag's less visible markets, such as sugar beet, have also come under far less pressure than clothing brands. The same can be said about various cross-country university partnerships in the region. 

In short, labour abuse in the world's less significant sectors or countries should not be neglected. When taken in sum, they may even form the greatest part.

This article first appeared on just-style's sister site Investment Monitor.

Over the past four decades the world's largest manufacturers have globalised and offshored their operations, mainly to low-cost locations – but a paradigm shift is under way. 

Covid-19 has rehashed the dangers of long supply chains, while the rise of automation (or Industry 4.0) over the past ten years has made it cheaper to produce goods in less labour-intensive factories (and therefore be less reliant on low-cost countries).

The result? More and more multinational manufacturers are looking to regionalise their operations and be closer to the consumer – 'sell where you make'. Subsequently, the world is increasingly breaking up into production mega-regions – Asia, Europe, etc – while 'reshoring' or 'nearshoring' is growing in popularity, especially if a company's consumer base is closer to its home country. Shorter supply chains entail less risk and quicker, more reliable delivery to consumers. 

According to an April 2020 Thomas survey that interviewed 878 North American industrial sector professionals, manufacturing was the industry that reported the most interest in nearshoring, with 28% of respondents saying they were 'extremely likely' to bring more production and sourcing back to North America following the pandemic.

Less-developed nations will lose the most

For decades, opening factories in low-cost locations was the top priority for manufacturers. The driving logic was economies of scale: the bigger the plant, the cheaper the cost. The aforementioned trends (especially automation) are changing this. 

The days of big, cheap factories are numbered, and their loss in the coming decades could have devastating effects on developing countries.

To clarify once more, this does not mean that Western manufacturers will be bringing all their production 'back home'. Some will, but many are likely to prioritise key markets that neighbour the world's largest economies, such as Vietnam for China, Mexico for the US, and Romania or Morocco for western Europe. 

More specifically, they are likely to prioritise markets that have a strong consumer base of their own, as well as the infrastructure and skills for Industry 4.0. 

Changes in the automotive industry are very much a harbinger of things to come, not least because it is arguably the most globalised section of the manufacturing world. One anonymous executive from a global automotive company put it to me clearly: "The more we can automate, the more simple tasks and jobs will disappear from poorer countries.

"Regionalisation will apply this effect. Over the next 20 years, manufacturing will happen closer to consumers. So why would I want to have a factory in Botswana or Algeria where there is not enough purchasing power? The least-developed countries are going to be the biggest losers in this game." 

The economies of many of the world's poorest nations are hugely dependent on the opening of large-scale plants by foreign companies. However, the days of big, cheap factories are numbered, and their loss in the coming decades could have devastating effects on those countries. Hundreds of thousands of jobs may be lost. 

A taste of this crisis will be felt this year and next, since foreign direct investment (FDI) in manufacturing (and beyond) is expected to recover slowest to developing countries, in light of Covid-19.

Across all sectors, about seven out of ten FDI projects announced by US companies since the beginning of the pandemic went to OECD countries, according to fDi Markets database, more than usual. Investors from Europe have behaved similarly.

Investment will spread out again in the coming year or two, but now is a good time for some of the least-developed nations to start preparing foreign investment opportunities beyond the 'big factory' of old.

This article first appeared on just-style's sister site Investment Monitor.

Time is money for Sri Lanka's apparel logistics

Aligned to emerging apparel export opportunities

How can the Bangladesh apparel sector overcome its failure to move forward?

1. Rising labour costs forced the industry to move to higher-value-added garments, necessitating higher worker training, more modern production systems, and better management.
2. These improvements attracted new, more sophisticated, and more profitable industries, able to pay workers higher wages, with the result, garments became less important.

• Move up to higher-value-added garments
• Move away to other products
• Both

The term ‘partnership’ or 'partner' is a long-established part of the apparel industry lexicon. The term is often invoked by brands and retailers when defining the quality of their supplier relationships, to imply that we’re working together, everyone is benefitting, everything is just great. Strategic partners especially are assumed to enjoy enviable deals with large orders and consistent business marking a lucrative and long-term relationship with a big customer.

But are these partnerships truly great? Given the complexity of global supply chains and the many obstacles that imperil getting products in the hands of consumers, shouldn’t brands and retailers (and investors for that matter) want to know without any doubt that their partnerships with suppliers are strong and functioning as effectively and efficiently as possible?

Part of answering this question requires getting beyond the warm and fuzzies, digging into the details, and breaking down the idea of ‘partnership’ into the key practices that take place between the business partners. Better Buying’s new Partnership Index is a short survey that captures suppliers’ beliefs about practices that impact their business profitability, ability to provide decent work for those making our clothes, and their efforts to improve environmental performance. Better Buying's recently released report reveals some shortcomings, including that only:

• 59% of suppliers reported that the customer’s financial practices were always fair.
• 52% said their customers always gave the visibility necessary to plan business operations.
• 48% said their customers always gave enough time for all processes.
• 44% said their customer’s operational processes were always efficient.

Suppliers whose customers never or only occasionally treat them fairly in financial dealings, work efficiently, give them adequate information to plan production and enough time to carry it out, aren’t really supporting the partnerships needed to meet uncertain market demand under uncertain conditions.

And even more disappointing, only 42% said their customer always asked for the supplier’s suggestions for product and process innovation. This is bad for buyers because suppliers are an untapped reserve of innovation and insights and by not asking for input buyers are missing out on opportunities to improve their business and profitability.

Furthermore, we know from our supplier data that brands cannot afford to be complacent in relation to their most important suppliers, and assume that their purchasing practices will invariably be better. Better Buying's subscribers are frequently surprised to find their strategic suppliers report even more time and financial pressures, compared to their non-strategic suppliers.

Over nearly three decades carrying out research with suppliers from around the world, I don’t recall ever hearing a supplier say they had a “great partnership” with any of their customers. But I’ve frequently heard the term misused by brands as a lever for forcing suppliers to do whatever they asked, ‘in the spirit of partnership.’ Which often meant rushing out an order at an ultra-low price, while being forced to accept less money, cut corners on wages, and resort to excessive overtime in the factory.

What's missing from the business relationship is a "True" Partnership

True Partnerships are mutually beneficial and sustainable. They involve close dialogue between the partners who work together to achieve shared objectives that work for everyone involved. With the importance the industry places on speed to market, cost, quality, and  inventory control, True Partnerships are time- and resource-efficient and deals made are fair in the way profits are shared and risks are allocated. And perhaps to state the obvious – the True Partnership extends over time, through the good times and the bad.

Now more than ever, brands and retailers need to build True Partnerships with their suppliers. And make sure that the quality of the partnerships isn’t just a nice feeling held by the brand or retailer, but is backed up by evidence that suppliers believe the same.

Click here for Just Style's analysis of the new Better Buying Partnership Index report.

There are those that still believe the fashion supply chain can continue its notoriously anachronous journey in the global sourcing, manufacturing and supply of apparel and footwear goods – especially following the Covid pandemic.  Sure, they can keep doing what they’ve always done - but they are unlikely to remain around for very long.

The Covid pandemic literally rammed home the fact that brands, sourcing houses and manufacturers needed to adopt digital processes fast – if they stood any chance of surviving an increasingly complex and uncertain future. A key stumbling block has been that channels between brands and manufacturers have remained obstinately analogue when it came to communicating the progress of production. In-person meetings to sign off materials, design and sampling were common-place, and key costing, sourcing and on-time delivery forecasts were often recorded manually on spreadsheets, over email or simply via telephone conversations. Because of the uncertainty around length of lockdowns, retailers didn’t know what consumers would need and when, and this factor significantly impacted what was produced.

The slow uptake of digitising the fashion supply chain hit the sector hard

Once the pandemic lockdown ensued with a variety of different rules in each global territory and the shutdown of offices, factories and supply routes across the world, most of the fashion industry was completely in the dark about how they could continue business. Compared to other industry sectors, the slow uptake on digitising critical business processes bit the apparel industry hard. Unable to work from the office which stored all this information, brand planners often had no idea where, when and what orders were in state of play, and manufacturers, lacking the technological capabilities to overcome a myriad of capacity fulfilment and delivery challenges, did not have the real-time insights they needed to update buyers in any timely manner.

It was clear that the industry needed greater collaboration and data connectivity between design, development and production partners to provide the full visibility and accountability required to not only manage the potentially short-term disruption of the pandemic, but also enable it to become more resilient, agile, efficient and sustainable in the future to meet the growing expectations of a more demanding consumer and investor.

The Industry adoption of technology has certainly accelerated significantly as a result of the pandemic, as companies woke up to the fact that in order to achieve faster speed-to market, increased productivity, lower waste and end-to-end supply and materials transparency, then the only way was digitise processes as quickly as they could.

Using technology to bring data visibility and transparency to the forefront

Technology brings data visibility and transparency to the forefront. This drives high-value insights that enable better decision-making and ultimately, step-changes business performance to the next level. Traditional methods that rely solely on gut feelings are not going to help take businesses forward, nor build the necessary operating excellence that brands and consumers are increasingly demanding. Technology enables businesses to act with greater speed and agility, while also lowering costs, to ensure they can remain competitive in a notoriously cut-throat environment. Brands require more to meet the needs of now and tomorrow.

This digital revolution and digitising the fashion supply chain has certainly not all been plain sailing. Many solutions have not been perfect or easy to implement, and there is clearly a need for greater standardisation and solution interoperability industry-wide, so that companies can glean ever more meaningful insights, with one version of the truth, to inform their business decisions effectively.

Nonetheless, new solutions are evolving fast and existing technologies are being consistently enhanced to ensure that brands and manufacturers can solve critical pain points together quickly - and seamlessly. Just look at the numerous case studies and market reports already out there attesting to real-world benefits fashion companies are already realising as a result of going digital.

A new focus on people, planet - and performance - has also highlighted that consumers, governments and all industry corporations are increasingly being held to account for what and where they buy; what and where they produce – and the net impacts their actions have on the world.  The fashion industry has a lot to redress here. The only way to prove that meaningful steps are being taken to drive a more sustainable path – will be through the evidence of data – and data cannot be properly harvested without the systemisation and automation of core products and processes across the apparel and footwear supply chains.

Wake up and read the room! There is no going back now. The only way is… forward.

Last week, apparel industry expert David Birnbaum discussed the problems and solutions that need to be taken into account when working with a digitised apparel supply chain.

Don't panic about the impact of Omicron on apparel supply chains just yet, says Dr Lu

A lack of vaccinations in export garment countries could prove problematic, says Antoshak

COP26: Globalisation and the environment

The blame game within the apparel industry

Understanding cotton and apparel

Free trade and the right to pollute freely

Consumers subsidised the system

What are the implications of slowing economic growth on fast fashion?

Grim assessments for fast fashion growth

Is the fast fashion industry 'using' NGOs? 

Self-correcting markets?

Report from the port! It appears supply chain bottlenecks that plagued the apparel industry over the past year are easing. Good news, right? Not so fast. Report from the stores! Holiday sales of clothing were robust. Good news, right? Not so fast. Report from Ukraine! Russian troops on the border. Bad news, right? You bet.

And our industry is caught in the middle of this maelstrom. So, let's unpack some of the details beginning with the port situation. Things may be marginally better (the Port of Long Beach, for example, reports record clearing of cargo), but the high costs of shipping freight globally remain a severe problem.

Next, despite the sense of relief for many in the trade with strong US holiday sales figures, retail sales of clothing have pulled back over the last few months. Normal seasonality or early signs of a weakening economy? It's hard to say; as it's too early in the year to know.

What's more, consumers have returned much of the clothing purchased during the holiday season. Why? Consumers embraced "bracketing" for online clothing purchases: buy three sizes of the same garment, keep one that fits and return the other two. Not great for the bottom lines of retailers or the environment. Many of these returns will end up burning in a landfill.

And then there's the standoff between Russia and Ukraine. What's prompted Russia to amass more than 100,000 troops on its border with Ukraine? Innocent military drills? Unlikely. A prelude to war? Let's hope not. All this saber-rattling comes when the world has had to cope with a pandemic, so it may be a calculated risk that aggression could work while the world is preoccupied.

More bad news for apparel supply chains: Inflation

The bad news keeps coming, folks. For example, in the US, the Federal Reserve may raise its benchmark rate as many as four times this year in a bid to tame inflation. Indeed, suppose the Fed is aggressive in its determination to tame inflation. In that case, there will be dire implications for our industry.

Why? The funny thing about higher interest rates and higher inflation is that both result in weaker consumer demand. This is because the cost of borrowing money to buy products, which costs more because of inflation, results in consumers thinking twice before buying new clothes.

And if borrowing costs go up, what does that mean for apparel businesses that need lines of credit to fund their operations? A lot. The days of low-interest easy money are over. The cost of doing business? It's gone up already. So, get braced for even higher prices.

What's more, Europe is facing higher inflation, too. The European Central Bank has said it won't raise interest rates to curb a recent spike in inflation, but that's also what the Fed said last year when inflation first gained steam. In either case, higher inflation will result in higher interest rates.

Apparel supply chains - the problems

In a way, supply chain bottlenecks are analogous to the difficult times we live in. Things that worked well in the past don't work so well anymore. Blame it on Covid, sourcing complacency, or just bad luck, but here we are. The world has changed - and change is often hard to stomach.

However, we can learn from change, adjust, and rethink previous assumptions. For sure, there are gaps in the system of global supply chains, including apparel. Still, there are some solutions worth exploring to fill those gaps and rebalance supply and demand while identifying the best ways of conducting business in this new world.

In considering the state of global supply chains, it's prudent to review some of the problems that continue to plague our industry today. For sure, some of these problems can be solved in the short term, while others will require more careful consideration.

So, here are some problems directly affecting supply chains:

First, there's the unknown. The pandemic is still on the loose and continues to cause all sorts of logistical problems as worker shortages and port slowdowns affect both exporting and importing countries.

Second, higher shipping costs remain the most significant cause of higher prices of goods for companies. Container rates from China to the US are still running at rates many times higher than pre-pandemic.

Third, backlogs remain a problem at both importing and exporting ports. Which begs the question, how will brands sell products released to them after being delayed at ports for a season or more? From an environmental perspective, these products may end up acting like some bad direct-to-cable movie or, more properly expressed, the direct-to-landfill business.

Fourth, rising raw material costs rival the rising cost of container shipments. All fibre prices have increased in line with sharply higher cotton prices. In turn, this causes a trickle-down effect down the supply chain as each segment raises prices to crawl back some margin. However, the net impact on brands and retailers is sharply higher aggregated costs for their imported products.

Fifth, a higher cost of goods typically translates into higher prices for consumers. Hence, the run-up in inflation. However, prolonged inflation will inevitably result in weaker demand by consumers put off by higher prices. What's ironic, though, is that pent-up consumer demand after months under lockdown during the pandemic soared, which helped to create the supply chain problem in the first place. Only now that recovery may stall if inflation remains a persistent problem. Either way, brands, and retailers are caught in the middle between their customers and suppliers.

Apparel supply chain solutions - learn from our problems

So, those are some of the problems. What can we learn from those? Plenty. Here are some suggestions to solve these supply chain issues:

First, diversify sources of supply to increase production and delivery options. Problems with supply chains boil down to a supply-demand imbalance that the market has struggled to rebalance. And an over-reliance on one or two big suppliers. Get over it. It's time to diversify.

Next, explore suppliers closer to consuming markets or suppliers located in consuming markets to either shifts ports of entry into consuming countries or avoid such ports altogether. Again, this may require a shift in focus away from exporting for the sake of exporting. A more nuanced approach where speed-to-market helps brands serve consumers more efficiently. And it has an environmental benefit by eliminating the carbon-spewing tens-of-thousands-of-miles long supply chains that typify much of today's global trade.

Further, experiment with different fibre blend levels to maintain consumer appeal, which mitigates fibre costs. With everything going on in the world today, along with the potential for weather-reduced cotton crops, tensions over Xinjiang cotton, and continued trade friction between the US and China, synthetic fibres may provide a cushion against higher cotton prices. Polyester is still cheaper than cotton. As we saw when cotton topped US$2.00/lb a decade ago, it may be time to embrace clothing made with more synthetic fibres.

Finally, adopt a comprehensive risk management strategy to hedge company exposure to unforeseen price spikes and maximise declines in costs when possible. It's puzzling to realise that many brands lack a risk management strategy. Sure, many understand risks associated with sourcing, but that's where any mention of risk often ends. Moreover, brands often don't understand commodity risk management, let alone hedging tools that exist for transportation and energy costs.

War is no one’s friend

An additional point is worth making about supply chain disruption: The potential of war. It's hard to ignore the headlines these days. A standoff between Russia and the US over Ukraine - with Europe caught in the middle - has implications for the apparel industry's supply chains and cost structure.

For instance, if we think inflation is a problem now, a shooting war will only exasperate that problem. And then there's China, a likely supporter of Russian goals in Ukraine. Should the US and its NATO allies impose crippling economic sanctions if Russia invades Ukraine, China could test Western resolve by offsetting those financial penalties.

After all, there is precedent for this: when Russia annexed Crimea back in 2014, China made a huge purchase of Russian natural gas. By doing so, China helped to soften the impact of Western economic sanctions against Russia.

Moreover, China has a motive to pal up with Russia to test the mettle of Western leaders and, in particular, US military capabilities around the world. Indeed, should circumstances find the US stretched militarily, what could happen in the Taiwan Straits? It's a scary prospect.

By definition, global supply chains are intertwined with geo-political, great power rivalry. Besides the horrors of lost lives and destroyed property, shooting wars disrupt the normal flow of goods and services.

A final kicker: The problems that knotted-up supply chains for months may be further complicated by disruptions at China's ports due to Omicron outbreaks and the Chinese government's zero-tolerance policy. The fact China is hosting the Winter Olympics this month only makes matters more complicated.

Downhill skiing, anyone?

There's nothing like a pandemic to change things

Heaps and pipe dreams

A digestif for the industry on apparel supply chains

1. Movement of immigrant labour. Made in the USA, for instance, sounds great until it hits home that so many cut-and-sew jobs are filled by immigrants. The needle trade was decimated by globalisation years ago. So domestically made clothing has become popular recently - only that few people are available to fill what jobs remain. Immigration restrictions have only aggravated the problem. Besides, there are plenty of jobs that pay more and avoid factory work conditions. But so many consumers look for American-made clothing — it's a growing market that needs to find a solution to its labour problem. But it’s not just an American phenomenon, as the UK and Europe in general are wrestling with similar problems.
2. Sourcing diversification. This is a biggie. For too long, the industry relied on just one or two supplier countries for all their products. The shipping issues become easier if products can be shipped from points closer to consuming markets. Trucking plays a key role here. Even so, many trucking jobs go unfilled. So, it's a step in the right direction but will take time to implement.
3. Adjustment of warehousing. Just-in-time delivery, although far from dead, needs fixing. Hence, the recent trend of moving warehouses closer to consuming markets. Indeed, proximity to a market has become more critical. But to do so, exporters of products will have to restructure their businesses to maintain more inventory, a tall order during challenging economic times.
4. Reconsider older methods of sourcing. I recently met with a major clothing company about a full-package programme. Typically, they would order such products from their office in Asia. But with all the supply chain difficulties, they wanted to know if there was a US option. I said, yes, there was, but their response was: "Great! Because we don't know how to source domestically." It goes to show how things have changed. It will require companies to relearn what was retired years ago. It'll be a process, that's for sure.

 What we need to consider

The Covid pandemic uncovered many flaws in the way the apparel industry works in terms of how, where and with whom, however, the greatest flaw of all has been an inability to understand the relationship between cost and price.

Cost:  What the apparel supplier pays for the product (materials and manufacturing process)

Price:  What the customer pays for the apparel product.

The apparel industry's confusion over cost and price

This failure distorts the entire decision-making process. It is for this reason that our decisions most often fail to bring the results we expect.  Consider the following Misapprehensions.

Misapprehension I: Cost synonymous with price

Our effort to digitise the supply chain fails because we cannot differentiate between cost and price. As explained in the 'digitising the apparel supply chain' article, when we analyse one of the simplest steps in the supply chain —buying the zipper— the flaws in the system become obvious.

1. Factory receives the customer’s order which includes the colour/quantity breakdown.
2. Factory orders the zippers (four colours) from the designated supplier. Price US$0.10 per piece.
3. Three colours arrive on time (three days).
4. One colour arrives 30 days late.

Faced with this serious delay, the customer has two equally bad choices:

1. Cancel the garment order for the fourth colour, which leaves both sides with substantial losses.

The supplier side is left with fabric and materials which has already been paid for, but now cannot be used.

The customer side suffers consequential losses — loss of profit on the cancelled goods.

2. The customer accepts late delivery and suffers losses due to substantial markdown.

We can see that based on this methodology, the price of the zipper remains fixed, but whether the customer elects to go with alternative 1 or 2, the cost can rise to as much as US$10 per piece. These costs are not accounted for in the digitised supply because the digitised supply chain does not consider costs at all.

Misapprehension II: Cost determines price

There is a belief among some garment exporting countries as well as some NGOs that cost should determine price because customers’ paying low Free On Boars (FOB) prices, prevent factories located in the poorest garment exporting countries to move forward to higher wages, better conditions and the investments desperately needed to make the factory more competitive.

This is not supported by the data.  The chart below shows average FOB prices for garments imports to the United States as of 2021 and per-capita income as measured by purchasing power parity (PPE).

As we can see from the chart above Cambodia is at the bottom of the list, followed closely by Bangladesh.   

However, the data tells only part of the story.

These two countries which have the lowest per capita income are paid the lowest FOB price by their customers.

However, low FOB prices and low per capita income are not necessarily obstacles to moving forward.

Cambodia is home to the world’s fastest growing and one of the most successful garment-exporting industries. In the period 2002-2020 Cambodia’s global marketshare increased by 1687%. 

On the other hand, as of 2022 minimum wage in Cambodia’s garment industry rose to US$194 per month compared with US$91 in Bangladesh. Cambodia’s factory compliance is the highest in the region. All this was achieved despite Cambodia’s low per capita income and equally low FOB price.

Cambodia’s experience proves that a country can operate a successful garment export industry offering workers higher wages and better working conditions while still charging their customers the lowest FOB price, once and for all showing that price based on cost makes no sense.   

Why the apparel industry needs to address the cost versus price problem

The problem is not the grasping customer, but rather poor factory management, that is unable to increase productivity, improve scheduling and install the latest manufacturing systems.

The terrible truth is that by relating FOB price to factory costs, more often than not, the customers are paying a premium price to the worst factories, which leads to serious problems on both the supplier and customer side.

On the supplier side, when the factory is being paid a premium price despite its shortcomings, its management will have no incentive to invest in worker training, new systems and other areas of improvement.

On the customer side, the problem goes back to the basic rule of business. The customer facing unnecessary FOB cost increases must try to pass those increases on to the consumer invariably resulting in a higher retail price, all of which leads us back to basic micro economic theory. At the end of the day, the higher prices will result in smaller orders because as we are taught in economics 101:

Higher prices lead to lower demand

Whether you are a factory or a customer, success to a large degree depends on the ability to reduce costs. The good news, as we have seen above is that cost reduction does not equate to low wages, poor working conditions or low levels of sustainability. Indeed, as we have seen in the 'effect of reducing free on board (FOB) prices on garment costs' article, cost reduction often requires increased wages and better working conditions.

A recap of the apparel industry's flaws

As we have seen in my previous related articles:

• Failure to see the difference between cost and price distorts any attempt to create a workable tool.
• The basic costsheet serves no purpose.  The customer does not care about FOB costs and therefore does not include factory costs when negotiating prices.
• FOB price reduction does not lead to cost reduction. In today’s world, more often than not, cost reduction requires FOB price increase.

Finally, in this article we have seen there is no relationship between cost and price.

Where does this leave us, and more importantly, why are we here and how do we escape from the trap?

The pandemic and its related lockdown has been a modern-day Pandora’s box; which, having opened has allowed all the flaws and incorrect beliefs to escape. There is no going back.

How do we move forward?

To move forward, we must first understand the underlying problem. Simply put, the decisions we make do not lead to the results we expect.

There are two possibilities

1. We are asking the wrong questions.
2. The tools we use do not provide the results we need.

Asking the right questions

Developing a new tool kit for the apparel industry

If our goal is to create a way to determine the best management decision-making process, then the tools must address the management decision-process.  Everything else — digitising the supply chain, the basic cost sheet, reducing FOB prices and concentrating on cost alone — becomes irrelevant.

In this regard, my previous four articles, including this one, have served only to explain the problem so my next article will offer the way forward.

Click here for a recap of David Birnbaum's articles prior to this one.

• Digitising the supply chain
• The basic costsheet
• Reducing FOB prices and their effect on garment costs

It is said that leaders become obsessed with legacy when the curtain begins to fall on their time in power – but leaders don’t write their own history.

Although Tony Blair may want to be remembered for public sector reform, peace in Northern Ireland and a reduction in child poverty, any biography of the man will be dominated by the catastrophic consequences of his decision to support the US-led invasion of Iraq.

Circumstances, luck and bad judgement are often as much the author of legacy, if not more, than skill, intelligence or bravery.

So, what will Boris Johnson, a UK Prime Minister defenestrated by his own MPs, be most remembered for?

Johnson would hope the pillars of his legacy are his oft repeated slogans of ‘getting Brexit done’ and ‘getting the country through Covid’. History is unlikely to be so kind.

He was a leader who promised to re-establish the UK on the global stage, while delivering prosperity to regions of the country economically left behind.

Just under three years on from coming to power, he has been kicked out of office with a mandate unfulfilled and a country diminished by his leadership.

Johnson saved until the last moments of his premiership his greatest insult to the country he was elected to lead: a desperate scorched earth policy to remain in power. His refusal to resign in the face of a mass revolt of his own ministers expanded the moral vacuum at his core to encompass and suffocate the institutions of state.

Boris was bad for business

The UK can proudly boast a reputation for strong inward investment and being one of the most desirable countries on the planet to do business. Yet despite all his boosterism, UK investment performance has gone backwards under Johnson’s leadership.

While the UK managed a small increase in inward FDI in 2021 as global investment recovered from the injuries of Covid, the country's FDI performance has lagged behind all other countries in the G7 since Johnson came to power in 2019.

Johnson has damaged the reputation of UK plc, and the effects of this will be felt long after he is gone. Investors crave reliability and predictability. They hate partners they cannot trust. Johnson’s leadership has not only eroded the trust in him but also trust in the UK.

During each scandal that has unfolded around him, Johnson and his backers have relied on distortions, distractions and downright lies to cover up his misdeeds. Central to his legacy will be a reputation for dishonesty, whether it was printing lies on the side of a bus, lying to unsuccessfully protect friends like Chris Pincher or Owen Paterson, or the increasingly desperate denials of his knowledge of lockdown parties in Downing Street.

On the international stage he has been happy to discredit the UK by threatening to tear up the Northern Ireland Protocol he won an election by promising to enact. This seeming indifference to international law has threatened to recast the UK as an international pariah.

Boris's broken promises

Johnson's leadership was mocked abroad and ineffective at home. His domestic agenda promised a green industrial revolution but has left the UK as the sick man of the G20: only Russia is expected to have lower growth in 2023.

Johnson loved to make promises to the UK electorate but was incapable of keeping them. His central domestic project was to level up the UK, reducing economic inequality between London and the rest of the country. Yet research suggests that by the government’s own metrics, most parts of the UK have fallen further behind London since this policy was launched.

More recently Johnson has promised greater energy security for the UK, with wild promises of building one new nuclear power station every year. The hastily brainstormed ideas in this strategy did not come with firm funding commitments, and his government had little idea of how to tackle a growing cost-of-living crisis.

Long after 'levelling up' is forgotten as a political slogan, the legacy of Johnson’s most significant 'achievement' will continue to cast a shadow over the UK. The campaign to leave the EU was given impetus by his decision to back it. He has wrapped himself in Brexit ever since, first as a general election strategy and then as proof of his potency.

Yet Brexit, or at least the form of Brexit he has pursued, has been a disaster for the UK economy. Two years on from Brexit, UK growth is lagging behind EU members states, exports have fallen by 46%, and foreign direct investment flows remain far lower than they were in 2016.

Two years on from leaving the EU, UK manufacturers are still trying to cope with the additional costs and bureaucracy it has delivered.

A country diminished

Where does all this leave the UK? Seemingly on the verge of a recession, with trust in politics in the gutter, and political institutions that have been pushed to the point of destruction.

Johnson's grubby attempts to cling onto power and ignore political reality, like a toddler refusing to relinquish another child's toy, are fitting for a man who seemingly cares little for anything other than himself.

Luckily for the UK, the damage Johnson has inflicted will not be permanent. It remains a place where investors and companies want to be, and it still wields soft power that carries considerable global weight.

However, the immediate future for the country has been made more difficult by Johnson’s leadership. That will be his legacy. Well, that and all the lies.

Stability, and maybe even decency, have been in short supply in the UK in the past few years. Issues such as Scottish independence, Brexit and the future of Northern Ireland have polarised the country, while the conduct of its leading politicians during the Covid-19 lockdowns dented faith in its leaders and damaged its reputation globally.

Above all of this has stood one woman: Queen Elizabeth II. While the parties were going on in Downing Street, she was mourning her husband in a manner that complied with the regulations that applied to the rest of the country. That she behaved with such dignity, with such humility, surprised no one. It was, after all, entirely consistent with her conduct as monarch ever since she took the throne in 1952. The more standards slipped in other UK institutions, the more the Queen stood out.

To have been in the public eye for 96 years and live in such a scandal-free manner, one which commanded respect in every corner of the globe, seems almost impossible in the 2020s, in the age of social media. And this is what the UK has lost: a bastion of dignity, decency, discretion and stability, who displayed those qualities in a way no other global statesman or stateswoman could emulate. Even the ever-growing number of republicans in the UK would afford her respect, as it is no understatement to claim that there has been no greater, more dedicated public servant to any country in the history of the world. She is, quite simply, irreplaceable.

A constant amid times of change

The UK that Queen Elizabeth II inherited upon the death of her father in 1952 is very different to that in 2022. Its status as a world power has diminished, and the Empire is now a Commonwealth. The country is one of the most multicultural in the world, having undergone social and economic revolutions. Although the Cold War and the rise of the likes of India and China have seen the UK’s status slip as a hard power, it still exerts a high level of soft power over the world, and the Queen has played a big role in this. The image and perception of a country is an important part of the soft power it exerts, and in its Queen the UK has had a figurehead and ambassador that was the envy of most.

It was telling that in the flurry of tributes from international figures in the immediate aftermath of the Queen’s death, former US President Donald Trump sent a long, emotional and touching message of condolence. Trump rarely showed deference to anyone in his time in the White House (a pattern that has continued since he was voted out), and yet his afternoon at Buckingham Palace in 2019 seems to have left an indelible impression upon him that led to this rare show of humility. For presidents and prime ministers over the past 70 years, no matter how troubled their history with the UK may have been, time spent in the Queen’s presence was an experience never to be forgotten.

And this matters. When a head of state visited the UK, the Queen, with her warmth, her sense of humour, her place in history, was the ace up the country’s sleeve. A reception at No. 10 Downing Street would often be a routine meeting of elected leaders having high-level conversations, much like they’d had countless times already. A cup of tea with a woman who had received the likes of Winston Churchill, JFK, Tito, Indira Ghandi, Ronald Reagan, Nelson Mandela et al? No other country could make such an unforgettable offering. The favourable impression such meetings would engender did the UK no harm when it came to forming alliances, attracting investment, making trade deals, maintaining its role as a global soft power, even when its hard power credentials were crumbling.

The UK has lost one of its greatest assets in Queen Elizabeth II

King Charles III has been first in line to the throne for 70 years, and he is now left with an unenviable act to follow. He has promised “not to meddle” as monarch, something he didn’t always manage as Prince of Wales, and his life has most certainly not been scandal-free in the way that his mother’s had been. Away from his private life, his estrangement from his youngest son has generated numerous unwanted headlines, while the accusations surrounding his younger brother Prince Andrew have further sullied the royal family’s reputation. While a figure as trustworthy as Queen Elizabeth II was at the helm, the UK had a matriarch of unimpeachable character that helped to deflect some of this controversy. No living royal can offer such a buffer against the scandal, the negative headlines, the brand damage.

The difficulties that King Charles will have to contend with run beyond the domestic too. Barbados removed the Queen as head of state and switched to a parliamentary republic in November 2021, and Jamaica has suggested it will do the same. How many other countries will follow remains to be seen, but it seems unlikely they will be the only two dominoes to fall. In the UK, support for the monarchy has been shrinking, albeit slowly, in recent years, and stood at only 61% in a May 2021 YouGov poll. A majority in the 18–24 age group stated a preference for an elected head of state replacing the monarch. After the inevitable outpourings of grief and patriotism in the coming weeks and months, it seems unlikely that King Charles will reverse this direction of travel.

The UK has already found itself in a period of instability, uncertain of its role in the world in a way that stands in sharp contrast to the confident, modern country that a huge international audience witnessed at the opening ceremony of the 2012 Olympics in London (the highlight of which was, let’s not forget, the Queen skydiving into the stadium after meeting up with James Bond). Brexit left it estranged from its nearest trading bloc, and a rise in nationalism in recent years, both inside the Houses of Parliament and outside, has left the country looking insular and lacking any long-term plan to turn around its stuttering economy. The last thing it needed was a jolt of this nature.

What now for the UK?

Of the many quite staggering statistics to be produced conveying just how lengthy Queen Elizabeth II’s reign has been, the fact that she had been monarch for one-third of the US’s history is perhaps the most striking. That puts her historic significance into context. It is estimated that she visited 117 countries, and while it would be wrong to pretend that she received a universally warm reception in each of them, she could generally rely upon being greeted by streets packed with well-wishers. Again, how many prime ministers, presidents or chancellors could make such a claim? Will any figure from the UK ever be able to command such international respect ever again?

The UK lost many things on 8 September: a monarch, a diplomat, a standard-bearer, an icon, a beacon of stability, a unifying presence, an international ambassador that no other country could hope to match. The country will, in the coming months, miss her reassuring presence, but over the coming years it will miss her global standing, her gravitas, even more. This is not to write off King Charles, who has been preparing for this role for the past seven decades, but the Queen was unique in countless ways that worked to the incalculable benefit of both the UK and UK plc. There is no one in the world that could replace her, as the UK will find out.