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Textiles - 27 July 2013

Alan Wheeler, director, Textile Recycling Association

The current state of the used clothing/textile collection and export markets continue to remain dire. In the last few weeks alone, two more members of the Textile Recycling Association have closed. Collectively the businesses employed around 100 people and provided textile collection services for charities, local authorities and retailers.

With the situation being so uncertain, it is vital that people are realistic about what prices they can expect to get for their used clothing and to ensure that debts are not allowed to build up.  They should also be wary of moving to any new business just because the collector says that they will pay a few pence per kilo more.  It’s easy for anyone to offer you a higher price for your goods, if they do not pay for all of them. 

Charity retailers must ensure that their goods are weighed before they leave the shop. I can think of no other example where a retailer will allow a customer to take the goods away and rely on the customer to weigh the items and tell them shop how much they have taken and base the payment on that. Our Code of Practice makes a recommendation that our members should carry a set of calibrated scales on board their vehicles in order to help charity shops weigh the goods in store, although the responsibility here lies with the charity shop.

Unless there is a prompt re-adjustment of prices, we may see a sudden collapse in the market

At the same time, charity shops and local authorities may wish to talk to their current textile collectors about payment arrangement, either by agreeing to pay more frequently or to set a maximum credit limit. However, at the same time, if their textile collector has to drop their prices, I can assure you it is not because they are trying to be greedy, but because they are all facing real financial challenges.

The current prices are clearly unsustainable.  If a collector makes a reasonable downward adjustment to their prices but continues to make regular collections and pay promptly, then this should provide a compelling enough reason for anyone to stick with them.  Unless there is a prompt re-adjustment of prices, we may see a sudden collapse in the market with more used clothing/textile collection businesses folding and their creditors being left out of pocket.

Whereas five years ago a collector may have got around 500kg for every 1000 bags distributed, nowadays they are likely to get nearer 200kg.

There are a number of reasons as to how we have come to this point, why prices and costs for obtaining UK used clothing remains artificially high and why these are not being passed on in full to the export markets.

Opportunist and itinerant collectors which target door to door collectors and some charity shops are continuing to increase competition for collections.  Attracted by the headline high values of used clothing, they often set up with no idea about collection costs etc. and it is only after a several months that many realise that they are making little or no profit and move on.

However, in these financially austere times, there is no shortage of people trying to give it a go.  Their presence in the market is not only increasing competition for collections and thus keeping the values artificially high, but it is also increasing the actual costs of collection, particularly for door to door collectors.

Whereas five years ago a collector may have got around 500kg for every 1000 bags distributed, nowadays they are likely to get nearer 200kg.

In addition, theft from both clothing collection banks and door to door collections continues to be an issue.   As well as a loss in the actual value of the goods, the cost of repairing or replacing banks that have been damaged by thieves is expensive.  To buy and site a new bank costs the best part of £1,000. 

There is also damage to the reputation of the sector, with the public more wary about putting clothes out for collection.  We have recently written to all Police and Crime Commissioners to highlight this crime and the work that we have done so far with various agencies like the National Fraud Intelligence Bureau and Trading Standards.  The response so far from PCCs has been very positive and we will continue to work with the police and others to tackle this crime.

There are also issues with the export markets.  At the most basic level, the public in the recipient countries are not in a position to take on further increases in prices that they pay for used clothing.  They too, are continuing to feel the effects of the global economic downturn.    But direct political action is also interfering.

Earlier this year, there was a hike in import duties for used clothing in Kenya, which is the most important market in Sub Saharan Africa.  In Ukraine, a bill has been put forward before Parliament which would ban the import of second hand clothing and shoes.  This seems to be a misguided protectionist policy which would devastate the employment prospects of the 250,000 people employed in the sector in that country.

The lesson to be learnt from this is that exporters should not put all their eggs in one basket. 

In Ghana, an important market for West Africa, some of our members have reported that political interference is resulting in significant delays at the container ports, and that the actual market places have been sold onto developers, who are using very persuasive tactics to encourage market stall holders to disappear. Such actions are making it more difficult to export to Ghana.

A number of the smaller exporters tend to be heavily reliant on perhaps only export market.  If they suddenly find that their market is experiencing such political interference then it can make difficult trading conditions impossible, and this seems to have been a significant factor in many of the recent UK closures.  The lesson to be learnt from this is that exporters should not put all their eggs in one basket.  This applies to all exporters irrespective of their size.

In addition, exporters should avoid the temptation to enter into contracts that guarantee the delivery of future quantities.  This can result in exporters scrapping around for goods in the UK and paying higher prices in order to fulfil their contractual obligations.   They need to work with their importing partners in the recipient countries to guarantee realistic contractual arrangements that deal with the here and now at affordable prices.

In the meantime charities, local authorities and others will need to work with their collection partners, to guarantee service and regular payments whist at the same time expect a moderate reduction in the value that they will obtain for their used clothing.

Alan Wheeler, director, Textile Recycling Association

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