The ancient land of the pharaohs holds promising prospects for the future of its textile sector. The textile and apparel industry in Egypt is deeply rooted in its history, dating back to the age of the pharaohs. Today, it stands as the second-largest sector in the country, contributing significantly to the Egyptian economy.

Industry Overview:

The apparel sector plays a pivotal role, accounting for 3% of GDP and 27% of industrial output. Within the textile production, 25% focuses on various aspects, including 12% in home textiles, 8% in cotton yarn, and 5% in other textiles. The public sector holds dominance in spinning, hemming, and weaving, while the private sector owns 90% of the garmenting side.

As of 2010, the textile sector comprises 3,243 companies with a total investment of 3.2 billion USD. Egypt's textile industries annually produce 315 million apparels and export 305,000 tons of cloth and apparel. The United States constitutes 80% of the export market, with the European Union and Arabian countries making up the remaining 20%.

White Gold of Egypt:

Egypt's cotton, often referred to as the "white gold," is internationally acclaimed for its excellence. Contracts for cotton exports with 23 international countries amounted to USD 140.882 million during 2009-10. Egypt's attractiveness in the global textile arena lies in its core investment areas, including cotton cultivation, yarn making, spinning, weaving, dyeing, knitting, and the ready-made garment (RMG) sector.

Egypt imports yarn from various countries, such as Turkey, India, Pakistan, and Turmenistan, and grey fabrics for the RMG industry from India, Bangladesh, and Turkey. The primary markets for Egyptian textiles are the Arabian countries, the EU, and the US. Cotton and textile fabrics rank third in the country's exports, comprising 25% of the total.

Factors Benefiting Egypt in the Global Market:

Several factors contribute to Egypt's competitiveness in the global market. The country boasts an abundant and competitive labor force, with stable wages. The government runs various training programs, continuously upgrading the skill sets of the workforce. Egypt's strategic location facilitates quick and easy exports to Asia, Africa, and Europe. Its proximity to the US gives it an edge as a preferred sourcing location. Egypt is equipped with 15 commercial ports, further facilitating its exports.

In conclusion, Egypt's textile sector, deeply intertwined with its historical roots, continues to evolve and position itself as a key player in the global market, driven by factors such as quality cotton production, strategic location, and a skilled workforce. The future looks promising for this ancient industry in the land of the pharaohs.

Comparative analysis of labor cost of Egypt with other countries

Textile industry has clustered in the main areas of Egypt.

    The Canal region is dedicated to denim production and imports of thick cotton yarns. The Suez Canal facilitates its exports to Europe and Asia.
    The Alexandria region facilitates exports through its ports.
    Middel Delta region where new players are establishing their business.

Mr Mohamed Midani, Board Member of Midani Group of Companies discusses the textile scenario of Egypt at length with Fibre2fashions team.

What factors make Egyptian textiles competitive in the global arena?

"Egypt is an evolving country; so far we have achieved very promising scales in fields of industry and economics. We have a lot of good points that encourage us to improve and compete like electricity cost, labor cost, export funding".

What are the challenges you see for the textile sector?

"One of our major problems in our industry is not having our main raw materials PET Chips produced in Egypt in enough scale, so we have to export it from outside which eventually decreases our competitive abilities a bit."

Which countries are the major markets for Egyptian textiles?

"Knitwear market size is growing rapidly and it is very promising in the near future, especially about countries like India, South Africa, Spain, Morroco, Algeria, Pakistan and others. These countries are major consumers and main targets for knitted fabrics."

Where do you see the industry in the years to come?

"I truly believe that within couple of years to come i.e. may be 3 or 4 years ahead, we will witness a great increasing in the potential, I am very optimistic about that."

Healthy working conditions in the QIZ zones:

Egypt offers a favorable cost-effective environment due to its infrastructure, reliable low cost electricity, gas and water utilities. It has signed a QIZ agreement with US and Israel stating that 35% of its commodities are made in a qualifying zone and minimum 10.5% of its products are made from Israeli materials. This agreement enables Egypts manufacturers tariff and quota fee access into the US markets.

The recent documents of Wikileaks, as published in The Telegraph reveal Egypt as a competitive sourcing country, with a positive reputation for cotton exports. Officers from the New York's Jones Apparel Group state that they do not see any negative environment in the QIZ factories. This gives Egypt a competitive edge among its Southeast Asian rivals.

The Telegraph reports Kesavi Murali, the Senior Compliance Specialist in the Middle East for Jones Apparel Group saying, "In addition to favorable customs treatment under the QIZ, production in Egypt provides cost advantages and efficiencies in production lead time since Egypt is located closer to the U.S. than most other suppliers. While other producers such as Bangladesh, Madagascar, and Sri Lanka have lost market share, Egypt has gained market share".

Despite all the positives, the country still has to take care of a few factors. The Telegraph quotes Murali saying, "Egypt was a better producer than countries who use migrant labor, though Egypt does suffer from high worker turnover which damages operational efficiency". He said that from his standpoint, there were no labor issues with local labor, the main issues in Egyptian factories are qualitative management issues and a lack of health and safety awareness. (Source: telegraph.co.uk)

Egypt has potential opportunities to expand both in the local and international markets. With much care, effort, and Government patronage, textile sector revenue can be doubled and a sustainable annual growth could be achieved.

References:

    Ecrg-trade.de
    telegraph.co.uk