Leicester and the Boohoo bombshell: what can UK fashion manufacturing do to move forward?
Leicester forms the heart of British fashion manufacturing and it should be a centre of excellence of which the industry and the nation can be proud. However the city and its garment makers have found themselves at the centre of a media storm focused on allegations of underpayment of staff and unsafe working practices during the COVID-19 pandemic.
The city was forced into a second lockdown due to a localised outbreak of the virus and several garment factories were forced to close as high numbers of cases were discovered. This prompted national journalists to probe the industry and resulted in reporters from The Sunday Times and The Guardian going undercover in the city to unearth unethical practice.
The Sunday Times report rocked the market and, in particular, one of UK fashion's fastest growing businesses, Boohoo. A company operating in a building with the Jaswal Fashions brand above the door, but which in fact turned out to be an entity called Morefray, offered staff just £3.50 to work in its factory where clothes destined for Boohoo and its subsidiary Nasty Gal were seen.
Following the revelation, more than a £1bn was wiped off Boohoo's share price and, while it insisted that the supplier in question had been subcontracted packing work without its knowledge, it appointed a leading QC to investigate its supply chain. Some investors, however, remained unconvinced and one of its largest, Standard Life Aberdeen, ditched shares worth £80m. Its smaller fast fashion rival QUIZ faced similar allegations the following week.
That there are factories in Leicester operating outside of the law and ethical norms is no secret, but just how big is the problem and why does it happen? In a city with 1,400 garment manufacturers, the vast majority are ethical operators but do we risk all of them being tarred with the same brush?
We speak to four industry experts, including two manufacturers (one of whom is based in Leicester), to help understand the extent of the problem and what can be done to ensure that British fashion manufacturing can prosper in future without the shadow of unethical practice hanging over it.
Jenny Holloway is CEO of Fashion-Enter, a not for profit, social enterprise, which strives to be a centre of excellence for sampling, grading, production and for learning and development of skills within the fashion and textiles industry. The London factory was established in 2010 with support from ASOS, which remains a client along with Marks & Spencer and John Lewis.
As an ex Senior Buyer from Arcadia and a buyer from M&S, I always knew how important it was to have deep foundations for our ethical factory. I knew about ethical compliance and understood about policies and processes, but I certainly didn't understand how important it was to bed these policies into a business, so they are the very life and soul of the factory.
I feel for all factories because as a white middle aged degree-holding CEO that has a team for ethical compliance we can keep up to date with the latest requirements for auditing for both Fast Forward and for SMETA and it's a hell of a lot of work. It took us years to be fully compliant too so how hard is it for factory CEOs whose English is a second language? How hard is it to really embed a policy when actually they are worried about the what work they have coming in next week to pay the bills?
Covid is just one of a string of issues that makes fully compliant garment manufacturing difficult in the UK; of course it can be done and we are living proof but the truth is there is not consistency of work and those weekly and monthly variations of feast or famine with production creates a complete nightmare for manufacturers.
So that expression "when the sun shines make hay" really is attributable to the garment makers. When orders are flowing because the sun is shining it's a brave manufacturer that will turn down work because in a few weeks’ time, when there is a wet summer, when the latest press adversely hits sales, or there could be another Covid spike, there is no work, yet the machinists still need their pay, the utility costs still have to be paid and rent and rates are a killer (especially in London). Then of course there's the HMRC costs of VAT, PAYE, Pensions, NIC – it’s a totally transient business with little stability of forward orders.
I still hark back to the days when I was at M&S and we had the great powerful suppliers of SR Gent, Bentwood, Claremont and Bairdware. These big boys were equally as Herculean as the merchandise managers and execs and actually they were respected and treated with reverence. Their factories, in hindsight, were positively awesome; fully compliant in every way with a workforce that was proud of their craft to be a stitcher. There was always succession planning too with daughters following their mothers.
Today with more scandals of sweat shop factories yet again our wonderful garment making industry is having another knocking, but you can't blame it all on the manufacturers. Yes of course there are rogue factories out there that are exploiting, but in every sector you get these rogues but, actually, they are not the norm. The norm is more of a hard-working CEOs working six days week when the sun is out and worrying when the rain comes how they are going to keep their workforce together.
The workforce know their strength, especially after the gates closed with migrant labour from EU, and they know that they can pick up jobs easily too. Then you have the workforce that expect to be paid 16 on the books and 16 off the books i.e. cash so they can carry on receiving their benefits. The recent allegations of undercover reporters have again highlighted this, but it really does not have to be like this.
That reporter would not have been asked for RTW - Right to Work Documentation. That's the first major step in compliance. The worker categorically should not have been paid cash and should not have been in the building, but I can how this has happened. Peak capacity and the orders have to come out on time otherwise a cost price reduction will be imposed by the retailer. Factories do not make big margins, so any cost price reduction is a killer. So, when someone comes along and accepts £3.50 an hour without paying tax and all the other HMRC commitments you can understand why that CEO says yes. Of course, it's not right and I don't want my words twisted here but you can see the panicking CEO thinking “I have got to get that order out on time – it's another extra pair of hands”.
It's wrong and it has to stop and the only way it will stop is when the retailers and factories work as one; when the buyer realises the skills of the factory and they are respected; when there is set on-going production so the factory can plan ahead, offer decent wages for a stable workforce and not operate in a climate of fear.
We spent at least three years making our factory work correctly with deep solid foundations and in that time it was ASOS that supported us and beared with us while we made mistakes that we owned up to. Being an ex-senior buyer I can see both sides of the equation and we are in a lucky position to have an on-going honest relationship with ASOS that we work with. This is what all factories need and it's time that all retailers woke up and smelt the coffee beans – the UK is amazing. It has so much to offer with speed of response production but do treat the factories fairly and honestly and driving the price down to the bottom of the glass is just one quick way of driving a factory down to unethical practices.
With a third of the market value wiped off for Boohoo due to the Leicester allegations isn't it the time now for retailers to work hand in hand with factories or better still open your own?
Dr Bhavik Master is director of Jackmasters a Leicester-based manufacturer of knitwear which has been operating in the UK for 35 years working for a wide range of high street stores, online retailers, designer and independent boutiques and specialist catalogues firms based in the UK, Europe Japan and America. Dr Master has taken to social media to present his views on why Boohoo has managed to be so successful and to present his vision for a new model for fashion fashion.
The overarching message here is that there are many reasons for this and many people involved in the supply chain. It’s a chronic issue and it’s not just about Boohoo. It’s to do with this aggressive marketing to young people that has been going on to create a need and unnecessary want for cheap fashion. I know the people buying it are young, they may be students, and they can’t afford to spend much.
Boohoo has outgrown the UK manufacturing facility and they basically need to move out or work side by side with good UK manufacturers to help build the capacity. They should have a vision of how we can build up UK manufacturing together.
They could have a programme where they say "we’re going to employ 20 people a month, invest in this kind of machinery, we’re going to work with these yarns and these materials because that it what we believe in" and they can communicate that to customers.
They’ve said they want to be a global player in fashion and we should be challenging their mission statement and saying “because you’ve been so phenomenally successful you should be setting the standard for what UK manufacturing can do”.
It’s a great opportunity for them to turn around their ethics but they need to play on a fair playing field. Boohoo can create a phenomenal amount of jobs in the creative industries but they need to work in a more honest and open fashion. They could bring in a load of 16 year olds and teach them to be pattern cutters or designers or graphic designers – basically set up an apprenticeship scheme.
The rest of the high street has left us and they’re not coming back, they just want 90 days’ payment terms and discounts. Why don’t Boohoo stay and work with us?
What’s done is done – I’m a big believer in moving forward.
Kate Hills is CEO of Make it British Live, the annual showcase of British manufacturers and producers of textiles, clothing and homewares. The next event is scheduled for 9 and 10 March 2021.
The situation in Leicester is the industry’s worst kept secret. Everyone knows that Boohoo has a stranglehold on the city, and until some radical action is taken it will continue to go on. What particularly upsets me is that there are some wonderful manufacturers in Leicester, who play by the rules, but they aren’t competing on a level playing field.
It should become a legal requirement for all garment manufacturers in the UK to pass an industry recognised audit, and retailers should list all of the factories that they are using. If buyers worked on open costings with their manufacturers they’d have a much better idea of whether minimum wage was being paid, and they could help by educating the customer over how much clothes cost to make. There’s just far too little transparency in garment manufacturing right now.
Adam Mansell is CEO of UK Fashion & Textile Association (UKFT), the most inclusive network for fashion and textile companies in the UK. We bring together designers, manufacturers, suppliers, agents and retailers to promote their businesses and our industry, both in the UK and throughout the world.
UKFT condemns the illegal practices in the garment factories found by the Sunday Times and calls on enforcement agencies such as HMRC to investigate and take immediate action. At the same time all parts of the industry need to ensure that purchasing practices do not lead to illegal employment conditions in the supply chain.
The overwhelming majority of UK clothing and textile factories operate in a transparent and ethical way. During the recent COVID-19 pandemic, many have been working to supply vital PPE, often on a voluntary basis. It is therefore all the more disappointing that a minority of companies continue to engage in illegal practices: paying workers below the legal minimum wage and failing to provide suitable working conditions. It is essential that this issue be resolved urgently and effectively.
There has in fact been a steady resurgence of interest in UK fashion and textile manufacturing over recent years. Retailers are looking to de-risk their supply chain by bringing it closer to home and brands are keen to take advantage of the USP of selling a UK-made product. We actively encourage them to do so but only where factories operate to acceptable standards.
This encouraging growth in UK made clothing and textiles has also seen the number of jobs on the manufacturing side of the industry steadily rising. The UK Fashion & Textile Association and other industry partners have worked extremely hard over the past few years to change the perceptions of UK manufacturing. Today’s industry, far from being filled with the dark satanic mills of the past is a vibrant, innovative industry, creating growth, jobs and opportunity. This diverse sector produces high quality products used in hospitals, cars, international catwalks and the high street.
UKFT is committed to seeing initiatives such as Fashion Forward, as well as other supply chain auditing programmes, working with manufacturers to help ensure that their employment practices, welfare standards and quality assurance procedures are continuously improved. We also actively encourage consumers to think very carefully about how their fashion and textile products are made.
We are committed to engaging with Government, other stakeholders and industry to deliver ethical working practices for manufacturers that, at a minimum, meet those which exist under the National Agreements between several employer bodies and the trade unions.
The Government’s enforcement agencies must be pro-active in investigating factories that fail to meet the required standards and operate outside of the law. Particular focus should be placed on enforcing payment of the living wage/minimum wage. Where abuses are found, the Government has to use the full force of the law to ensure that companies comply and those that do not are closed down.
UKFT extends an open invitation to the press, the Government and any other interested parties to come and see some of the incredible UK-based fashion and textile factories, producing Great British products. These companies are the standard rather than the exception, with employers providing a safe and rewarding working environment and where the garments, textiles and other products are made to the highest quality.