Leading suppliers from across the industry have joined forces with Drapers and the British Clothing Industry Association (BCIA) to lobby the government over the issue of credit insurance.
Michael Wolff, managing director of high street supplier Fielding Group; Simon Berwin, managing director of menswear supplier Berwin & Berwin; Pan Philippou, chief executive of WDT, which owns young fashion brands Firetrap, Fullcircle and Sonetti; and Howard Ross, UK and Republic of Ireland country manager at German mainstream womenswear brand Gerry Weber, are just a selection of industry leaders that have spoken out in support of the Credit Insurance Campaign, which launched in Drapers last week.
The campaign, which is being led by Peter Lucas, chairman of the BCIA who is also chairman of menswear supplier BMB Group, is demanding that the government channel some of the cash set aside to support the UK’s financial institutions into insuring orders from UK retailers.
“If retailers can’t get supply, they go bust, which leaves the high street with empty shops, and suppliers go bust, which leads to job losses. The government must do something to keep money moving around.”
Michael Wolff, managing director, Fielding Group
Suppliers are furious that credit insurers such as Euler Hermes and Atradius, to which they have paid premiums for several years, have slashed cover available to the sector, which has left them fighting to survive or with massively depleted order books. Both are issues which have directly led to job cuts in the sector.
Wolff told Drapers this week: “The only companies you can get credit insurance on are those like Sainsbury’s and Marks & Spencer - stable businesses you don’t really need it for. I pay a premium of between £30,000 and £40,000 a year, but I can’t get insurance on those businesses I need it for. Secondary retailers have a real problem with this.
“The BCIA campaign is a great idea. There is a confidence problem and this is creating an ever-decreasing circle. If retailers can’t get supply they go bust, which leaves the high street with empty shops, and then suppliers go bust, which leads to job losses across the sector. The government must do something to keep money moving around.”
WDT’s Philippou was also vocal in his support. “The industry is faced with a very precarious situation. We have spring 09 stock still waiting to go out and we haven’t been able to take some orders for autumn, which has given us dual problems. It’s crippling businesses so they can’t function,” he said.
“We also have severe issues with exports and the government should help us as exporters. We have millions of pounds of export orders and we’ve had to reduce these. We’ve had to cut a number of jobs already as a result.”
Philippou added: “We need government intervention to create reassurance or give insurance, otherwise this is a spiral of events. Retail is suffering the worst now and millions of jobs are at stake. The banks have been bailed out and there is talk of support for car manufacturing, but retail has been left high and dry.”
Berwin agreed, adding: “We’re being affected by this issue in the same way as everyone else is. Where have all the [insurance] premiums gone from the good years? Without the supply chain, retailers have empty shelves. Government support would certainly help.”
Gerry Weber’s Ross said: “We’ve had lots of retailers that have lost insurance and our blanket strategy is if we can’t get insurance we can’t supply, even if the retailer has never defaulted on payment. The government has got to help the sector now.”
David Baumall, managing director of high street supplier Company-X, said: “We need the government to restore some confidence.”
Drapers is calling for suppliers, manufacturers and brands to contact the BCIA with examples of where a lack of or reduction in credit insurance has had a detrimental effect on business. This information will be treated confidentially by the BCIA, but will help it create a dossier of evidence for Lucas to present to Peter Mandelson, secretary of state for business, enterprise & regulatory reform.