Box cs3.1: Productivity Commission review report excerpt

The Textiles, Clothing and Footwear (TCF) sector in Australia today is very different from that in the past. Traditionally, local activity was characterised by a series of manufacturing processes, with firms along the supply chain purchasing inputs from (mainly local) upstream suppliers and selling outputs to (mainly local) downstream customers. High tariffs and quota protection ensured the continued viability of firms along the chain, restricted the ability to source from competing offshore suppliers and reduced the incentive to find new (export) markets. Retailers played a largely passive role in selling final products designed and supplied by manufacturers with limited direct contribution to purchasing or production decisions …

In recent years, however, competition from emerging low-wage production centres, slowing growth in domestic consumer demand, large reductions in domestic assistance and increased concentration in retailing have collectively placed new pressures on local TCF manufacturers. Many firms have left the sector, while others have rationalised, merged, and pursued new sourcing strategies to survive. As a result, aggregate domestic TCF manufacturing activity has contracted and import penetration has risen sharply. […]