NATIONAL ACTION PLAN

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1 NATIONAL ACTION PLAN - Latvi atvia - 1

2 CONTENT 1. BACKGROUND 3 2. SWOT ANALYSIS 6 3. VISION 8 4. OBJECTIVES 9 5. BUSINESS ACTION (STRATEGY) GENERAL CONCLUSIONS 11 REFFERENCES

3 Present National Action Plan of Latvia is made during the EU project Baltic Fashion, part of the Baltic Sea Region Program which is part-financed by the European Union. The Action Plan is based on the information collected and analyzed during the project time and also on some data kindly provided by the Latvian Association of Apparel and Textile Industry. 1. BACKGROUND In Latvian textile and fashion industry there are now about 700 SMEs with about employees in total working in production. The fashion (clothing) industry comprises around 500 companies of them included micro, small and medium-sized ones (excluded retailers and also companies working very closely with the fashion industry: photographers, advertising, etc.). Total turnover of the Latvian apparel & textile and fashion industry in 2012 was about 430, LVL (~ 600, EUR) with export rate of 85 % (60% of which went to EU countries, 25% to CIS countries and 15% to other countries). The biggest Latvian producers now are the following (only first two of them are to be considered as big enterprises, others are SMEs): - Valmieras Stikla šķiedra (gada apgrozījums~ 50, LVL); - Lauma Fabrics (~ 25, LVL) - Lauma Lingerie ( ~5, LVL) - Kwintet Production (~ 11, LVL) - Mežroze (~ 7, LVL) - Rita (~ 4, LVL) - New Rosme (~ 7, LVL) - Tonus Elast (~ 7, LVL) - Ogres Trikotāža ( ~ 5, LVL) - Aurora (~ 3, LVL) - Spectre Latvia (~ 2, LVL) - Solutions (~ 2, LVL). If these companies total turnover (~130, LVL) is excluded, then, the turnover for the rest SMEs (mostly small and micro companies) is about 300, LVL (~ 428, EUR) that is quite impressive figure. During the last 20 years Latvian companies working in the fashion sector have been experiencing various development conditions: - total reorientation of production patterns in the years after Soviet Union collapse; - expansive market development in the begging and middle of 2000; - abrupt and painful adjustment under the years of economic crisis; - slow and very moderate recovery in the last 3 years. The latest development for some production companies that have successfully adopted to crisis is the fact that their capacities are now fully deployed again and plans are made to further develop production capacities and for some of them also build their own brands. Several Latvian fashion brands which have expanded internationally during last 3 years: - Vaide - Natalija Jansone 3

4 - Katya Katya Shehurina - Amoralle - Narciss Despite such turbulent changes made a lot of SMEs to be very careful and sometimes too conservative in taking risks and developing business. It is becoming very clear that some business support mechanisms need to be put in place to revitalize current pattern of business development and to help Latvian fashion brands to be more competitive and successful on the local and international markets. During this project the analysis of the training needs and support measures of SMEs was made. The following main organizations/programs to support Latvian SMEs were indicated: - Operation program Human Resources and Employment, financed by the European Social Fund (ESF); - Operation program Entrepreneurship and Innovations, financed by the European Regional Development Fund (ERDF). - Investment and Development Agency of Latvia (LIAA, ). LIAA is a state institution subordinated to the Ministry of Economics of the Republic of Latvia operating since 1993, which provides consultations on foreign markets, partner searches, visits, trade missions, financing possibilities and marketing campaigns. LIAA is involved in the implementation of national programmes on export and innovation promotion and participates in EU 7th Framework Programmes' projects. Some selected support programs: Foreign markets International Markets. Stands of national enterprises at international exhibitions abroad and export advice. Development of new products and technologies for small and medium-sized enterprises. Site provides information about the EU funds planning, management, monitoring and evaluation in the programming period , as well as legislative acts regulating the EU funds management in Latvia and other relevant information about issues under the competence of the Ministry of Finance as the Managing Authority of the European Union funds. - LIAA Business incubators: - Association of Textile and Clothing Industry of Latvia ( ). - Baltic Fashion Federation ( ) - Latvian Chamber of Commerce and Industry (LCCI)( - Latvian Business Development Center ( ). The following main training institutions of Latvia provide trainings programs to Latvian designers and fashion SMEs: - Art Academy of Latvia ( ) Fashion design; - Riga Technical University ( - Technology and Design of Textile Materials; - BA School of Business and Finance ( Creative Industries Management; 4

5 - Latvian Academy of Culture ( ) Management of Culture; - Riga School of Design and Art ( ) Fashion Design; - Riga School of Design ( ) Fashion Design; - Riga School of Arts and Crafts ( ) Fashion design, Textile Ware Performing, Needlework Performing, Leatherwear Performing; - Riga Purvciems School of Crafts. The following main institutions provide business trainings for Latvian fashion SMEs: - Management and business training centre ( ) - Centre for Commercial Education ( ) - Business consultation and training centre LatConsul ( ) - Business consultation and Training Triviums apmācība ( ) However, it have to be said, that mostly, these business training courses are too general (for different economic fields) with no specific topics on the fashion industry. Thus, fashion SMEs need more targeted support. The representatives of thirteen well-known Latvian fashion SMEs were asked to fill the Questionnaire about the needs of professional trainings and consultations. 39% of all respondents represented middle sized company, others small ones. Most of the companies were found in the last 15 years, they all have a good experience in manufacturing, designing and entrepreneurship. The total majority of enterprises are still manufacturing in Latvia. Based on this research the most important fields that need training and consulting were identified as: - new online businesses (92%) - digital technologies for pattern making (92%) - new materials (85%) - new methods in the designing process (85%). As 9 companies are exporting over 50% of their production it is natural that they are looking for ways to develop such fields as: - contracting companies abroad (77%) - marketing & sales (63%) - internationalization (71%) - distribution (77%) - logistics (77%). The sustainable development may seem of a less interest for respondents. Still, 77% of respondents agreed on the need for consulting on topics how to become more socially sustainable. 62% of respondents also were interested in getting more information about training and consulting possibilities concerning environmental sustainability and also 62% how to take sustainability issues into account. Only a half of all respondents (49%) showed interest for more training needs in areas like staff recruitment and legal aspects of employment. The major part of the respondents (85%) affirms that they get support from professional organisations and associations in Latvia. Slightly smaller number of companies acknowledges 5

6 that they are aware of training programs and courses that meet the business development needs. Nevertheless, a fair number of companies point out that there is no suitable offer and no specific courses on subjects of their interest, there are no good trainers in Latvia, and no information on desired courses. Respondents showed a big interest in new forms of training, such as online sessions, workshops or training on the job. 2. SWOT ANALYSIS of the Latvian L fashion f and textile sector Based on the research of the training needs and support measures as well as the results of several round-tables and investigation of the production facilities in Latvia the SWOT analysis of current situation for the Latvian fashion SMEs was made. STRENGTHS Ability to produce in small volumes and just in time Design as export product with high added value (many Latvian designers got recognition on the international arena). Production of functional garments Production of lingerie and underwear High technological production process Experience on international markets Geographical and cultural proximity to EU and CIS markets Growing interest to Latvian fashion from consumers, politicians, local and international media (also due to international event Riga Fashion Week) WEAKNESSES Limited local market and thus limited sales opportunities that leads to high production costs Lack of funding for start-ups Lack of government financial support for fashion industry such as incubators, training courses, R&D, promotion on international markets and trade missions Lack of information about current developments (very little statistics, no R&D projects), new materials, innovative technologies. Lack of the managerial and marketing knowledge and skills Lack of specific business trainings courses for fashion sector specialists (especially in brand-building, marketing & sales - nationally and internationally) Inefficient workers training system to provide sufficient level of knowledge and skills for young specialists Poor cooperation between fashion 6

7 designers and manufacturers and as result, designers cannot produce quality garments, and producers are lacking innovative design Poor cooperation between SMEs and scientific institutions to develop new products and materials and to implement innovations and new technologies. Poor cooperation between SMEs/designers and retailers OPPORTUNITIES Expansion to new international markets via e-commerce Opportunity to develop new innovative products and brands Internationalization of Latvian brands. Sustainable slow local production Implementation of new technologies and innovations for production Collaboration between several professional organizations in the field of fashion to unite efforts in order to support SMEs in more efficient way Possibility to create a local cluster and also to integrate in the international clusters THREATS Financial crisis and slow economic recession Increasing costs of energy, resources and labour Lack of financial resources to implement innovations and new technologies Emigration of skilled labour force No educational bases to train engineers for textile industry Unattractiveness of the technical specialities (engineers, technicians, technologists) to younger generation that will lead to a critical shortage of them in 5-8 years (thus, workforce become older) Competitiveness of third countries 7

8 3. VISION Where do we want to be within next 8-10 years: 1. Fashion and Textile industry in Latvia is competitive and innovative. 2. Latvian fashion industry plays an important role in the Latvian economics that is appreciated also on governmental level. 3. Latvian fashion industry has a positive and prestigious image on the local market and is recognized abroad. 4. Strong support structure for Fashion and Textile sector in Latvia funded and regulated by government (see also a blue-print below). 5. Innovation cluster in Latvia is working actively and it is supported by government. 6. Efficient cooperation between all professional associations & state institutions. Following blueprint shows how important the role of government is, and how government regulations could make a positive impact to business development providing business support measures on 3 different stages. 8

9 4. OBJECTIVES MID-TERM OBJECTIVES (FOR 3-5 YEARS) Support measure system for Fashion and Textile sector SMEs in Latvia funded by government to be improved. Different organizations of the fashion sector are collaborating and their actions are coordinated on the governmental level. State institutions play an active role in promoting the positive image of the Latvian Fashion and Textile sector. Education and training system for specialists of Fashion and Textile sector to be improved. The number of Latvian fashion brands successful on local and international markets is increased. Fashion and Textile sector to be attractive for young specialists (engineers, technologists, technicians) (e.g. to increase the role of professional education in Latvia) The cluster in Latvia is created LONG-TERM OBJECTIVES (FOR 8-10 YEARS) Strong support measure system funded by government for Fashion and Textile industry in Latvia continues to develop. Textile and clothing production in Latvia is innovative and high-technological and is supported by government. New technologies and innovations are widely implemented in Fashion sector. Cluster activities are supported. The employees are well-educated and skilled. Sustainable and slow fashion production is increased. The consumer is well-educated in terms of sustainability and slow fashion. 9

10 5. BUSINESS ACTION (STRATEGY) In order to meet the objectives mentioned above the following actions are needed to be implemented on 3 levels: governmental and professional organizations (responsible organizations/institutions: Ministry of Economics, Ministry of Culture, Ministry of Science and Education, Investment and Development Agency of Latvia, Latvian Association of Textile and Clothing Industry, Baltic Fashion Federation) training institutions (responsible institutions: Art Academy of Latvia, Riga Technical University, Riga School of Design and Art) SMEs. On governmental and professional organizations level: - Fashion and Textile industry should be included in National development plan of Latvia. - There should be a government official with sufficient handling power to curate the Fashion and Textile industry. - Creation of inter-ministerial working group that would solve issues of development of Textile and Fashion industry on governmental level. - Promotion of the positive image of the Fashion and Textile sector on governmental level via mass media and different culture and business events - To provide government support for taking part in the main international fashion fairs. - Development of incubator that would provide successful transition of young professionals from educational institutions to work place. - Mapping of the demand of certain specialists in the long-term period in order to control the supply/demand of specialists in particular field. - R & D projects that support the mid-term and long-term objectives. - To decrease the % of the grey economy in the Latvian Fashion sector decreasing the social taxes. - Availability of information (data base of enterprises with production facilities not only in Latvia but as minimum in Baltic states/region). On the training institutions level: - Constant updating of the training programs in accordance with local and global development trends in industry - Bringing the lecturers from abroad for training in fashion management, merchandising, internationalization, marketing & sales, brand-building (e.g. in disciplines in which there no local trainers in Latvia) - Changes in the education policy started from secondary schools to motivate the children to choose technical studies in the future - Business training courses with more specific topics for fashion SMEs - Improved employees training system to provide sufficient level of knowledge and skills for young specialists - Grants and scholarships for the most successful students; - Development of dual training system - Compulsory practice at industry enterprises (funding these enterprises for that); 10

11 - Support to the common integration projects involving several high schools in order to get full chain (for example, students of Economy department of Riga Technical University, students of Technology department of RTU, students of Fashion Design Department of Latvian Art Academy; then, we potentially have the specialists in management, technology of cloth, design of cloth) which can learn how to collaborate all together building a working team and developing big common projects. Such activities should be coordinated and financed by government. - Creation of fashion incubator (could be also within incubator for different business fields) with specific equipment (PC with special software programs, manufacturing and digital cutting machines and assisting professional staff) in order graduates/ start-ups are able to produce their first sample collection. - Funds for the students to go to main industry fairs (textile, design) in order to see and identify all the requirements with which they will face starting to work at enterprises. On the SMEs level: - Improvement of knowledge and skills of top-managers especially in fashion management, marketing & sales, merchandising, logistics, internationalization, brand-building, e-commerce. - Improvement of knowledge and skills of technical staff (e.g. pattern makers, sewers, engineers). - Implementation of the new technologies and innovations. - Building professional working team (human resources management). - Sustainability of production process. 6. GENERAL CONCLUSIONS This National Action Plan of Latvia is based on the information collected during various meetings, seminars and round-tables that took place during the project implementation. It shows that many different actions on governmental, professional organizations, training institutions and SMEs level are needed in order to improve business environment, to make stronger support mechanisms, to improve knowledge and skills of SMEs employees and to build more positive image of the Latvian Fashion and Textile industry. Industry has good potential and various competitive advantages to play more important role in Latvian economy. 11

12 Responsible Partner: Baltic Fashion Federation (Project Partner 6), Date: May 21, This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Baltic Fashion Federation and can in no way be taken to reflect the views of the European Union Elena Strahova Author REFERENCES EFERENCES: 1. Round table meeting with the Latvian Fashion SMEs in June, 2012; 2. Round table meeting with representatives of the Art Academy of Latvia and president of the Latvian Association of Textile and Clothing Industry in June, 2012; 3. Round table meeting with top-managers of Riga Design School in June, 2012; 4. Research Current Situation and Needs for Training and Support for the Fashion Industry of Latvia, conducted by Mara Adina (Academy of Art of Latvia) and Madara Grinvalde (Latvian National Contact Point of the Baltic Fashion Project), February-July, 2012; 5. Research Mapping of Production Companies in Latvia, conducted by Madara Grinvalde, Latvian National Contact Point of the Baltic Fashion Project, in June November, 2012; 6. Seminar Eco-Innovations and the Production Process, Baltic Fashion Project, on October 30-31, 2012; 7. Survey Production Possibilities in Latvia, conducted by Guntis Strazds, president of the Latvian Association of Textile and Clothing Industry, in September October, 2012; 8. Discussion Project Baltic Fashion: How to strengthen the Fashion & Textile Industry in Latvia. September, 2012; 9. Analysis Assessment of the availability of information on fashion & textile sector in Latvia. Analysis conducted by Elena Strahova, Latvian National Contact Point of the Baltic Fashion Project, in March-June 2011; 10. SWOT Analysis of the Latvian Fashion & Textile and Apparel Sector. Analysis conducted by Elena Strahova, in April

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