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Staff Report STAFF REPORT August 18, 2003 To: Economic Development and Parks Committee From: Joe Halstead, Commissioner Economic Development, Culture and Tourism Subject: 2003 Toronto Fashion Industry Report All Wards Purpose: To provide an update on fashion cluster activity, including the upcoming New Labels documentary, Toronto Fashion Week, the Apparel Industry Development Council and export development initiatives. Financial Implications and Impact Statement: There are no financial implications resulting from the adoption of this report. Recommendations: It is recommended that this report be received for information. Background: Since 1984, the Economic Development Division has been working together with the City’s Fashion Industry Liaison Committee (FILC), to support and promote this significant sector of our economy. Our strategy has included the promotion of Toronto as an international fashion centre improving linkages among the industry members, and to enhance the economic viability of the industry. Efforts are focused on the broader fashion cluster, including apparel manufacturing as well as design, wholesale and retail sales and marketing, education and training, fur, accessories, fashion media, hair, makeup, photography, choreography and modeling. The purpose of the report is to provide an update on the results of the cluster development strategy. The report also discusses some recent changes in trade legislation expected to have a negative impact on the cluster. The City’s efforts to support the fashion/apparel cluster will - 2 - continue to be important. Economic Development staff are working together with the industry to implement a number of key projects, that are outlined below. Comments: The City’s sector support strategy, developed and delivered in partnership with the industry, has focussed on enchanting and promoting the innovation, quality and value inherent in the product and services delivered by the fashion/apparel cluster, its quick response capabilities, and the development of a skilled workforce. That strategy has proven successful. Independent research has confirmed that Toronto’s fashion/apparel industry has been competitive with the best in North America. According to the Toronto Competes study, Canadian apparel makers are traditionally superior to the U.S. in responsiveness and small batch production – which is increasingly required today. Toronto’s cluster, heavily concentrated in the City, has grown relative to the North American average over the last decade, and grew in absolute terms as well. Although the cluster experienced a severe downturn with the onset of NAFTA, the impact on Toronto’s industry was not as bad as in similar cities, and it’s recovery was stronger. One of the City's largest industrial employers, the cluster employs approximately 50,000 people in apparel manufacturing, retail and related jobs, and is the fifth largest such cluster in North America, following Los Angeles, New York, Greensboro and Montreal. Although it experienced a significant downturn resulting from the earlier recession and the implementation of the free trade agreements, the cluster experienced 12% employment growth between 1994 and 2001, and maintained a significant manufacturing workforce. Apparel exports to the U.S., which grew dramatically over this period, fuelled much of the increase. Export data is not available for the Toronto market specifically, but based on an employment multiplier for the Toronto Area and Ontario export figures, our research indicates that Toronto’s fashion and apparel exports grew from approximately $381 million in 1993 to $1.371 billion in 2002, an increase of 260%. Export data is available for four of the cluster’s subsectors, including apparel manufacturing, textile production, textile mill production and leather products manufacturing. Clothing manufacturing represents the largest share of the export sectors, with manufacturers exporting $587 million worth of product in 2002, 43% of the cluster exports. Textile mills exported 29%, textile product mills 16% and leather and allied products 12%. As illustrated in the graph below, export growth among these cluster sub-sectors was strongest for clothing manufacturing, and leather and allied products followed by textile mills and textile product mills. - 3 - Sub Sectors Export Trends in Toronto, CMA (1993-2002) 800 CLOTHING MANUFACTURING 600 TEXTILE MILLS 400 TEXTILE PRODUCT MILLS 200 LEATHER AND ALLIED PRODUCT MANUFACTURING ($ in Millions) 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year Increased Competition On June 28, 2002, the Prime Minister announced to the G-8 summit meeting in Kananaskas that Canada would eliminate all import duties and quotas on apparel imports from the world’s 48 least developed countries (LDCs), effective January 1, 2003. The Canadian Apparel Federation (CAF) predicts the impact will be a loss of 10,000 to 15,000 Canadian jobs as imports increase and Canadian manufacturers reduce domestic production. So the current decrease in apparel manufacturing employment in the City, from approximately 15,300 jobs in 2001 to 13,200 jobs in 2002, is not unexpected. A downturn in the U.S. economy has also negatively impacted sales. As a result, Industry Canada introduced the Canadian Apparel and Textile Industries Program (CATIP), to provide $33 million over three years to help the industries compete globally. This program will assist individual companies and industry organizations to implement projects to increase innovation, develop and implement global strategies and facilitate access to capital. A joint government-industry working group on textiles and apparel recently presented a series of recommendations to the Minister of Industry, to ensure the industries succeed in the emerging trade environment. The apparel industry continues to lobby the federal government for trade policy changes to mitigate the negative impacts on the domestic industry resulting from the LDC legislation, and submitted an additional set of recommendations in a report entitled A Foundation for Innovation in the Canadian Apparel Industry. The City and Industry’s Response The challenges facing the fashion/apparel cluster underscore the need for the City’s continued involvement in sector support. In addition to pursuing industry development opportunities under the CATIP program, the City is working on a number of initiatives to retain jobs, build industry capabilities and increase export opportunities. These initiatives have been developed in consultation with the volunteers from each of the industry subsectors, who make up the Fashion Industry Liaison Committee. The Division is working together with the federal government to develop an industry training and development project through the newly incorporated Apparel Industry Development Council (AIDC). The Toronto Fashion Incubator continues to support the development of new - 4 - companies. The Economic Development Division, other levels of government, industry, sponsors, and the Fashion Design Council of Canada are working to build Toronto Fashion Week as an international platform to showcase the industry's capabilities. A number of export development initiatives are also under development. Toronto Fashion Week Founded by the City in 1992, Toronto Fashion Week (TFW) is held each spring and fall to launch the designer ready-to-wear collections to media and buyers, generating sales. Industry participation, sponsorship and media coverage continues to grow, resulting in a world-class production, part of the international show schedule that showcases the best in Canadian fashion. TFW show production and marketing have been managed by the Fashion Design Council of Canada (FDCC) for the past six seasons. Economic Development staff work year round with show organizers, event participants and other levels of government to provide information, guidance, support and follow-up to the event. Toronto Fashion Week is a key component of a national marketing strategy for the industry, building an international presence for the cluster. It has been successful, as shown by the results below. From March 17 to 21, 75 of Canada’s top designers presented their Fall/Winter 2003 collections to more than 15,000 media, buyers, industry VIPs and consumers. More than 30 sponsors supported the overall event, which has a budget of approximately $500,000. Many more co-sponsored individual designer shows. The Toronto Fashion Week website received 200,000 hits per day throughout the week. There were 61 million bids from 27 countries on the silent auction, held for the first time that season on E-Bay. Over 50 print publications covered the collections. Over $400,000 of television coverage from Fashion Television Channel alone assisted in raising the profile of Canadian design and apparel with consumers, driving industry sales and employment. One of the highlights of this past season was the launch of fashcam, a project co-sponsored by the City’s Economic Development Sector Initiatives Program (EDSIP) to promote fashion. Combining music, entertainment and design, fashcam creates fashion videos for broadcast on the web, FashionTelevision, VH1, movie theatres, airlines and nightclubs. Crystal Siemens’ video premiered at the Paramount Theatre to a full house. fashcam.com hosts the videos, designer profiles, website links, and encourages the public to peruse the videos and buy the merchandise. Plans are underway to launch future videos in key markets, such as New York. The next Toronto Fashion Week will be held from September
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