Mauritius: The Opportunities and Challenges for Apparel Manufacturers
About 20 hours of flight time from Atlanta to Paris to Port Louis, but the views and culture make it worth the trip. Below is a no filter picture.
(Written from iPhone. Please excuse typos.)
Mauritius, an island off the coast of Southeast Africa, is a leader in African commerce. Consistently ranked as the most innovative or least risky African country to do business, it continues to provide a stable low risk way of doing business with Africa. It also benefits from a sophisticated culture, English as the official language, and French as it’s most prodominent language.
What role does apparel manufacturing play in a High-Income Economy?
Mauritius has seen the ups and downs of the global hopscotch that brands play based on labor cost. Mauritius grew to more than 100,000 (population ~1M) people working in the apparel industry starting in the 80’s up until early 2000, when the WTO ended the quota system. At that point Mauritius saw a migration of orders back to SE Asia (Bangladesh in particular) and the work force dropped precipitiously to around 45,000 workers, where it is holding steady. For the first time in the last 5-10 years, Mauritius feels like the orders have stabilized. Unfortunately, it’s happening right as workers are realizing that the hotel industry is a cooler, cleaner and easier place to work than the factory floor. Now factories are struggling to find talent to grow.
Mauritius, as an apparel supplier, is sitting in a great position. It still has relatively cheap labor. It can’t compare with Bangladesh, but at $425 USD/mo it sits well below China. Many of the factories are vertically integrated from yarn forward and everything up to sewing is mostly automated. There is a deep knowledge of fabrics and treatments, and it is well respected by many of the leading names in fashion to produce high quality goods in smaller batches to almost anywhere in the world in 5 weeks. The Mauritian government has greatly helped this with a speed to market scheme that provides a 40% subsidy on airfreight costs. The orders ride in the cargo of daily outbound passenger planes and can be anywhere in 3 days.
Currently their market breakdown is 30% serves UK, 30% serves South Africa, 10% to USA and 30% to other (Asia, africa, India, etc). Their trade partnerships provide a truely global market without tariffs, giving them access to the US, UK, Europe, China, India and Australia.
Yet they still face many challenges. The South African government is providing large textile subsidies for fabric mills to setup in SA for what one Mauritian manufacturer called “almost free.” This sudden competition for fabric will increase competition for the vertically integrated apparel manufacturers. While Australia is a growth opportunity, few inroads have been made and Australia still prefers to go to SE Asia for it’s sewn goods. The UK is in the midst of Brexit and each day more UK retailers close theirs doors taking their orders with them. The US hasn’t picked up on Mauritius as more than a stop gap for a niche amount of product and while it is a world away, it's air transport subsidies make it a viable player for 4-5 week order turns. Competing in India against the exisiting providers has always been an uphill battle and Africa’s middle class is growing, but not fast enough to replace the death of existing retailers. Across Africa, sub-Saharan countries see the opportunity that Africa can play to the US, as Asia becomes less attractive and more inwardly focused. Governments are looking for new foreign direct investments to build up energy infrastructure for cotton growing and light manufacturing. Ethopia, Eritrea, Kenya and South Africa are all seeing significant investment opportunities. And while Mauritius has speed to market, high quality talent and a knack for value add services and design, it can’t match the labor wages or electricity costs of countries like Ethopia.
Automation will play a significant role in their future.