The dismantling of the multifiber agreement can bring a great deal of trouble to the Moroccan textile industry. With the rules that regulated the textile market no longer effective, Morocco risks to see its textile industry under intense pressure and could lead to jobs and revenue losses as international firms turn to China for their supply and manufacturing.
Aware of the risks they face, domestic and foreign textile companies operating in Morocco are attempting to meet the challenges of responding to the threats coming from their Asian competitors but also to calm their jittery partners, from trade unions, to customers and from suppliers to creditors. These partners worry essentially about the lack of progress in raising competitiveness and modernizing the textile industry through the application of the industrial upgrade program. Some foreign customers have even approached their Moroccan suppliers with newspaper articles comparing worldwide prices, requiring them to meet those prices or risk to lose business.
The industry has been for a long time counting on the government to help reshape it. While the textile industry says it has drafted a roadmap for success, the government appears to be slow in its involvement. Prime Minister Driss Jettou has reportedly taken the initiative to demand to various ministries and administration the establishment of a government plan aimed at bailing out the textile sector based on the industry's own roadmap. Salah-Eddine Mezouar, the minister of commerce and industry, and former head of the textile industry association was appointed to chair a special commission for this purpose, which is slated to draft a plan by the end of 2005. By review options more than 10 months from now, central authorities are sending the wrong signal by dismissing any signs of urgency in the current trends in the global textile market. Meanwhile, the industry request to lower social security contributions by half as one of the measures aimed at helping the industry, and initially turn down by the Prime Minister, is said to be on the agenda, as the government appears to be willing to reconsider it.
For the Moroccan government, there is a lot at stake in helping the textile industry. It is, after all, Morocco's biggest employer. Knowing that, the industry association AMITH has been push for more concessions and support from the government so its members can compete in equal footing with its traditional and emerging competitors. Indeed Moroccan companies are now dealing with a fast evolving environment characterized by the removal of preferential treatments they benefited from, the abolition of quotas, the progressive dismantling of custom barriers that sheltered them for a while, the emergence of lower-cost competitors, the prominent presence of China and India as the giants of textile production, the dwindling prices and reduced margins, the changes in the global supply chain and customer buying behavior and many other factors that are leading to massive changes in the industry.
But the biggest problem Moroccan companies face is that they are ill prepared to switch from basic contract manufacturing to innovation. Thus, the role of its leaders, with the help of the government, is to push for a conversion to an industry that is not waiting for a foreign company to order products based on its requirements but to one that is more proactive and offers innovative solutions. As a measure aimed at helping poorly performing companies, AMITH is asking the government to reform the tariff and pricing structures as regulated by the state.
The industry has made in April 2004 a series of propositions toward that end with the goal of boosting the competitiveness of the companies that export to the European Union. The textile industry is also pleading with the government to create an incentive scheme for companies that purchase raw materials from Turkey. Such purchases would help Moroccan exporters reduce their tax payments to European countries from their supply acquisition activity in the EU. Turkey offers better treatment to the advantage of Moroccan suppliers. With the Turkish element in the Moroccan exporters strategy, AMITH hopes its members will be more competitive in the Eastern European markets, in particular for pants.
© The North Africa Journal 2005
