Now in his second term as president of the International Apparel Federation ( IAF ), which has members from more than 40 countries indirectly representing more than 100,000 companies and 20 million employees across the supply chain, Cem Altan is examining the concerns being felt across the supply chain in 2024. In a conversation with Sourcing Journal, he spoke about the deepening structural problems within fashion value chains and the industry’s reinvigorated focus on solutions.
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Sourcing Journal: Manufacturers are continuing to face a unique—and daunting—set of challenges in 2024. Are solutions emerging? Is your agreement with Inditex setting a precedent?
Cem Altan: I am afraid that in 2024 the combination of rising costs and very little room to raise retail prices will continue to inflict serious pain on our industry. In retail, especially in terms of garment manufacturing, this industry is mostly a people business and understandably inflation leads to higher wages.
But the prices of garments don’t follow.
We have been looking at more sustainable terms for trade initiatives, and continue to focus on more fair and effective supply chain collaboration. We have been looking at some pilot programs in member countries with Inditex with the factories they already work with to improve carbon emissions, etc. So that way they can increase their business with those factories and increase the productivity of manufacturers as well.
SJ: Are manufacturers stressed and panicking about circularity and sustainability and the changes they need to make in a very short time, as deadlines approach?
C.A.: Well, I don’t think anyone is panicking—but it is difficult. It is happening so soon, and it unluckily came at a time when Covid happened, these wars were happening, and there was a big recession. On top of that, sustainability legislation has become more concrete and clear in 2024 about how much investment is required, and apparel and textile suppliers cannot invest in sustainability and business process improvement out of thin air. This has to stop—too many businesses are in serious trouble. There are ways to escape from the pitfalls that part of our industry has ended up in, but rather we are trying more and more to push squares through circles.
Investments are needed to make all these changes, and companies don’t have the money to invest. You have to start from the factory itself, to make it greener, ensure water recycling, better lighting, store areas; these costs have to be planned in. And brands don’t want to put in anything extra towards these, they still want cheap, cheap, cheap.
The point is, we don’t have the margins to pay for the extra costs. Who is going to pay for it?
Renewcell went bankrupt. The consumers don’t want to pay, brands don’t want to pay. It is a big failure. But we have to find a way around it, just like recycling itself.
SJ: What would be the simplest solution?
C.A.: Even though I am a manufacturer myself, I am in favor of reducing the number of quantities we produce. I suggest brands should make their forecasts more carefully, and instead of ordering high quantities should just order as much as they can sell without markdowns. There is a lot of potential still to create better business outcomes, part of which can be used to fund industry transition. Importantly, apparel manufacturers hold the key to the reduction of markdowns and lost sales.
SJ: Some manufacturers say that IAF does not have enough representation in the U.S. What do you say to that?
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C.A.: The last few years we have worked more on the global arena. We have worked more with the U.S. as there are a lot of big brands there, and also U.S. is following EU regulations as well. They are very concerned about child labor and factory conditions and collective bargaining. We have been doing this in Europe for years, but U.S. has just started talking about these things, and about sustainable production as well.
SJ: As the second—or even third—generation of manufacturers takes over in many Asian countries, is IAF able to adjust its vision to the younger leaders?
C.A.: This is one of the most important things. I’m trying to renew the board members, trying to make it a bit more of a mix of experienced and younger members so we can carry the board for the future, and to continue to get fresh ideas and fresh programs with them. Also, to increase the number of manufacturers on the board, so we are having some changes, we usually have 24 members, typically not more than two from each country, and that way we can spread the responsibility.
Last year, nearly half of them were new.
We had no limit to the numbers earlier, but this year we are putting a limit to that. Some members have been there 20 years, so we are going to do four years and an additional plus four years. But of course past presidents are on the board, and immediate past president. If any of the past presidents want to come to the meeting, it is open to them and they can join us.
SJ: Over the past two decades, a far larger chunk of manufacturing has shifted to Asia. How has that changed your membership?
C.A.: Most of our members are associations. They are members from across the world; from Europe, the U.S., Asia. The conversation has to continue on both sides—manufacturers as well as brands and retailers. But yes, we do have many associations from Asia, including a couple of associations from China , Turkey, Taiwan, Korea, India, Indonesia, etc. Morocco and Uzbekistan were among the more recent members.
SJ: What are the issues uppermost on your mind now?
C.A.: Well, audit fatigue is a big issue for manufacturers. Many of them have production for more than one brand, and each brand also has to deal with this, so we have been looking at ways to see how to reduce this and see how international auditors can be accepted by more brands and work together.
We still have a lot of work to do—as you know, the auditing industry has many big players, some of them work with us, and we want to help find some solutions.
We also do conferences in different countries to bring understanding to important subjects. In the last few years, digitization, sustainability, traceability and recycling have been extremely important. We have also been talking a lot about the new legislation that is affecting many different parts of the world, including the green deal legislation from the EU and what manufacturers should do; how they can improve their factories for green production using new energies and less water. This way, they can reduce their carbon emissions as well.
We organize webinars, special events in different countries according to their needs, giving workshops especially for their members.
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