COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 15.05.1996 
COM(96) 210 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PARLIAMENT, 
THE ECONOMIC AND SOCIAL COMMITTEE 
AND THE COMMITTEE OF THE REGIONS 
The competitiveness of subcontracting in the textile and 
clothing industry in the European Union 

CONTENTS 
1. Introduction 3 
2. Situation of subcontracting in the European textile and 
clothing industry 4 
3. Factors for improving competitiveness 6 
4. Action to promote the competitiveness of subcontracting 
in Europe 7 
4.1 Multisectoral programmes and instruments 7 
4.2 Community action in support of subcontracting 9 
4.3 Promotion of the competitiveness of subcontracting 
in the textile and clothing industry 10 
5. Conclusions 13 
d 
1. INTRODUCTION 
Small subcontracting firms working for local or distant manufacturers make up a large 
proportion of the textile and clothing industry in the European Union, varying from 10% to 
60% depending on the Member State. These subcontracting activities are spread between 
a web of thousands of small businesses, often taking the form of cottage industries, which 
play an essential role as a source of employment and income, particularly in certain 
regions. 
The latest estimates suggest that subcontracting employs 650 000 people, of whom around 
200 000 are home-based. Approximately 150 000 undeclared workers must be added to 
this. This accounts for a considerable proportion (approximately one third) of all jobs in 
the textile and clothing industry in the European Union. 
Subcontracting is highly labour-intensive and an extremely important source of jobs. 
However, these firms suffer from certain structural weaknesses. They have to cope with 
far-reaching changes and the adjustment strategies adopted by their customers (industrial 
manufacturers and distributors), on which they often depend heavily. They are also 
vulnerable to competition from low-wage countries. Finally, a series of cultural and 
psychological barriers have given rise to underinvestment in training and innovation and 
difficulties in building strategies tailored to the changes and with access to the markets. 
Small subcontractors, in particular, have extremely lean management structures unwilling 
to take action not connected directly with running the firm. 
In a climate of major industrial change and fiercer international competition, strengthening 
the competitiveness of subcontracting is essential in order to maintain significant industrial 
activity in Europe, bearing in mind the close links existing within the textile and clothing 
industry. 
While the bulk of the efforts to adjust must be left to the skills and capacities of the firms 
themselves, the public authorities must contribute towards creating an environment 
conducive to making the firms more competitive and capitalizing on the advantages 
stemming from completion of the internal market. 
The objective of this communication is to propose a package of measures and a 
structure for supporting the efforts made by subcontractors in the textile and 
clothing industry to improve their competitiveness. The Commission, assisted by a 
Group representing the industry, could play a promoting and organizational role to 
ensure complementarity and synergies between the various levels and partners. 
Dissemination of information and of best practices, in the context of the competitive 
advantages of the industry, and strengthening of industrial cooperation are the two lines of 
action to be given priority. The action envisaged consists, in particular, of intangible 
investment to implement a work programme initiated with the collaboration of both 
management and workers. 
3 
Accordingly, in December 1992 the first subcontracting forum was held in Madrid, 
followed by several sectoral conferences. In 1994 a study on subcontracting in the 
clothing industry analysed the importance and structure of subcontracting, identified the 
difficulties encountered by finishers and manufacturers and studied the competitiveness 
strategies needed in order to find solutions in the form of redeployment and the measures 
taken by the public authorities and firms. 
In March 1994 the European Commission organized a European forum on subcontracting 
in the clothing industry in Brussels, attended by over 200 representatives of the industry. 
This provided an opportunity to exchange information on the programmes in progress or 
being prepared and on the action best suited to the needs of the subcontracting sector 
(finishers, industrial manufacturers and distributors). 
In the wake of these moves, a series of pilot projects has been launched to test the viability 
of the action envisaged. At the same time, five round tables have been organized in 
various Member States (Belgium, France, Italy, Greece and Portugal) to examine the 
suitability of the programme in the field. 
The entire exercise has been carried out in close collaboration with management and 
labour. To this end, a steering committee has been set up, bringing together 
representatives of the Commission departments concerned, the relevant trade associations, 
including small businesses, and the trade unions. Depending on the subjects discussed, 
various independent experts have also been asked to contribute. 
On 28 March 1996, the Industry Council asked the Commission to present it with a 
communication on the position of subcontracting in the European textile and clothing 
industry. 
2. SITUATION OF SUBCONTRACTING IN THE EUROPEAN TEXTILE AND CLOTHING 
INDUSTRY 
Subcontracting involves all the areas in the textile and clothing industry, but is particularly 
widespread in the finishing and made-up articles sectors (knitweaiVclothing). It covers a 
multitude of undertakings, including large numbers of small firms, many of them located 
in rural regions where they offer local employment, mainly for women, and thereby make a 
considerable contribution to local prosperity. 
Subcontracting firms vary widely in terms of size, areas of activity, development and 
relations within the industry. It is a relatively unknown world from the statistical point of 
view. With the cooperation of the firms concerned the Commission has launched a 
statistics programme to fill at least some of the gaps. 
Subcontracting today is subject to a series of constraints stemming from the major 
structural and cyclical changes affecting the entire textile and clothing industry. The firms 
face a market with increasing outside competition, stagnant demand in Europe and big 
changes in consumer preferences. To develop subcontracting and keep it profitable, a shift 
in the comparative advantages of these activities is required, principally by using flexible, 
quick response systems and harnessing know-how. 
In particular, subcontractors in the textile and clothing industry face: 
(a) Internationalization of production and, in particular, relocation to low-wage 
countries, which are the basic competition facing subcontractors. The relocation of 
making-up activities to these countries has been accentuated by transfers of orders 
by leading manufacturers. A number of third countries have attained high 
standards of sophistication and quality, while transport costs and times have fallen. 
Flexible relocation is increasingly within the reach major distributors who take 
decisions on the basis of an in depth analysis of all the relevant economic factors, 
both positive and negative. Such distributors also have the capacity to control 
complex logistics, information and management systems for relocated plants. 
(b) The greater influence of distributors (specialist chain stores, department stores, 
etc.). Initially, subcontracting benefited from this. However, more rational 
management of major distribution structures in Europe, particularly the 
development of mass distribution, has stepped up the pressure on prices. 
Moreover, in response to less predictable demand, distributors have attempted to 
reduce their commitment at the start of the season and increased their mid-season 
orders for restocking and responding to demand. Consequently, subcontractors for 
made-up articles are forced to accept the risk of rapid response to more flexible 
demand across the product range and renewal of collections at prices competitive at 
world levels. 
(c) This situation is reflected in the new regulation on outward processing traffic1 
which aims at keeping relocation of production within certain limits and under 
equitable conditions to enable undertakings in the Community to develop and 
promote industrial cooperation. Subcontractors can also benefit from these 
measures in order to keep competitive by cutting their costs. 
(d) The cost of managing the complex demand has fallen as a result of 
computerization and the introduction of new sophisticated management and 
organization methods. However, labour costs remain fairly high (75% to 80%) 
because of the seasonal, irregular workload which requires more flexible use of 
working time. 
Some operators have turned to clandestine work to cut costs and satisfy the needs 
for lean production. There are an estimated 150 000 clandestine workers (20% of 
the regular workforce). According to the study mentioned earlier, every year these 
activities cost, in unpaid taxes, an amount equal to the support paid to the textile 
and clothing industry in the EU. In view of the pressure which they exert on prices, 
these practices provide no lasting protection for jobs or for the competitiveness of 
the undertakings. They are opposed by the workers' associations and cannot be 
tolerated by the public authorities. 
Council Regulation (EC) No 3036/94, OJ L 322, 15.12.1994. 
Today, four rationales dictate subcontractors' operating strategies, namely: 
(a) costs, based on low labour costs and direct competition with low-wage countries; 
(b) response and flexibility, drawing advantages from competitive speed of response 
to demand in phase with the diversification and volatility of demand and 
distribution trends; 
(c) expertise and know-how, on the niches of the market where know-how, 
experience, learning or specialization offer significant competitive advantages; 
(d) service, where finishers offer manufacturers added services such as cooperation in 
design, coordination of subcontracting networks, logistical support, fabric 
purchases, etc. 
In some regions, particularly in Northern European countries, response, service and 
flexibility are the predominant concern under the pressure exerted on prices by 
developments on the distribution side. In others, by contrast, the situation is less uniform, 
with costs the overriding rationale for approximately one-third of subcontracting in 
Europe, the same share as response and flexibility. The remaining third is divided equally 
between expertise and service. 
Subcontracting based purely on cost considerations is the area which faces the biggest 
challenges and will continue to do so. In particular, the gap between costs in Europe and in 
certain of its trading partners is too wide to preserve competitive advantages on this point, 
particularly in the case of bottom-of-the-range products. By contrast, Europe still holds 
other competitive advantages allowing productivity improvements, particularly in 
terms of qualifications, service, better use of flexible logistics, style and product 
quality. 
Another major challenge faces small subcontractors in particular. These are an important 
source of jobs, but often they are compartmentalized into their regional markets and find it 
difficult to seize the opportunities created by the opening-up of the markets and by the 
changes in demand, technology and the industry. 
3. FACTORS FOR IMPROVING COMPETITIVENESS 
The steady loss of comparative advantages on labour costs, in comparison with low-wage 
countries, has triggered adjustments in the subcontracting sector in Europe to realign the 
competitive advantages of its activities. 
The greatest successes in this area have been with the development of intangible 
investment and industrial cooperation in particular. 
The competitiveness factors related with intangible investment have developed in step 
with trends on the markets and in demand. In terms of flexibility and response, 
production has been reorganized by using just-in-time and rapid-response methods 
combined with all-round vocational training. In addition, quality, innovation, know-
how and service have assumed growing importance in firms' strategy. Use of information 
technologies appears an extremely important means of improving the competitiveness of 
firms in this sector, including subcontractors. In practice, these technologies are an 
appropriate means of meeting the needs imposed on firms by the reorganization of 
production, the changes in consumer behaviour and, more generally, the development and 
globalization of markets. For small subcontractors in particular, these technologies provide 
a faster, cheaper means of organizing contacts and reducing some of the handicaps of 
distance, making it easier to participate in activity or information networks and in 
restructuring the industry. 
However, to develop and strengthen these factors in competitiveness greater efforts are 
needed on dissemination of information and training. The first thing is to overcome the 
psychological, cultural and willingness barriers in order to demonstrate the advantages of 
the reforms within firms and to whet the appetite for training on the part of workers and 
managers alike. Modern means of communication, with appropriate assistance, would then 
allow specific schemes tailored to finishers' availability. 
Subcontractors should also be able to benefit fully from the single European market or 
to acquire an international dimension. Cooperation between firms should enable them to 
find complementary strengths which would contribute to more competitive positioning of 
subcontracting activities within the textile and clothing industry, by developing and 
consolidating clusters and activity and information networks, organizing ways of 
harnessing know-how, promotion measures and access to non-Union markets. 
Moreover, successful cooperation between manufacturers and finishers has shown that this 
area is also a major means of strengthening competitive advantages and stability, not only 
for subcontracting but also for the industry as a whole. 
The measures taken by the Union as part of its general competitiveness policy, the policies 
to support industrial adjustment and a more offensive commercial policy should encourage 
the essential synergies and act as a catalyst for decentralized moves and projects at national 
and European levels. 
4. ACTION TO PROMOTE THE COMPETITIVENESS OF SUBCONTRACTING IN EUROPE 
4.1 MULTISECTORAL PROGRAMMES AND INSTRUMENTS 
Several of the Community programmes and instruments under the existing policies can be 
used by subcontractors to support the action taken by the private sector to improve its 
competitiveness. 
A budget of ECU 141 billion, in 1992 prices, has been allocated to action financed by the 
Structural Funds from 1994 to 1999 (to which ECU 4,724 billion for the new Member 
States must be added). Funding can be provided for subcontracting under the action 
programmes for industry in the Community support frameworks and the Member States' 
single programming documents and under the Community initiatives. 
In the objective 1 regions with a heavy concentration of textile and clothing firms, the 
existing industrial programmes offer great potential, both in terms of resources and of the 
measures planned to improve industrial competitiveness. To this end, the follow-up to the 
programmes provides an opportunity to make the action on subcontracting more effective, 
by acting on the conclusions of this communication. 
In the case of the objective 2 regions, the Member States will be submitting the new 1997-
1999 programmes to the Commission for approval soon. Consequently, this would give 
objective 2 regions an opportunity to include action on the competitiveness of 
subcontracting in their programmes (for which a Community contribution of 
ECU 8 billion, in 1992 prices, is planned). 
The Community initiatives consist, in particular, of: 
PME, which was allocated a budget of ECU 1 billion for 1994 to 1999 to 
encourage small businesses to adapt to the requirements of the single market and 
international competition; 
the RETEX programme for modernization and conversion of regions dependent on 
the textile and clothing industry which has a budget of 522 million ECU for the 
period 1994-1997. The extension of this programme to 1999 is being considered . 
ADAPT, with a budget of ECU 1.4 billion (in 1994 prices) for 1994 to 1999, to 
encourage the workforce to adapt to industrial changes by means of innovatory 
transnational projects. An additional ECU 170 million is planned to finance action 
on the information society, an area of particular interest for developing relations 
between manufacturers and subcontractors. 
Furthermore , the LEONARDO programme worth 620 million ECU, aims to promote 
quality and innovative capacity in the area of professional training on a trans-national 
basis, supporting pilot projects, exchange programmes, studies and analyses. 
In addition, the financing from the European Social Fund takes account of the special 
difficulties which small businesses have in improving their staffs qualifications and with 
in-house training in general. Encouragement has been given to improve the quality of the 
outside training available and to develop distant learning methods in order to provide more 
efficient, more flexible training. Between 1994 and 1999 some ECU 6 billion from the 
Social Fund could go towards promotion of a more systematic approach to continuing 
vocational training. 
The action for the new objective 4 in turn offers a more effective response to 
subcontracting firms' training needs. In particular, objective 4 encourages diagnosis of 
firms' needs for training and requalification in their specific environment and provides a 
means of defining a strategy to organize training and run continuing training schemes. To 
this end, it also encourages action on transfers of technology and professional experience 
from big businesses to their small suppliers. 
In the fourth framework programme on research and technological development, 
more has been done to make it easier for small businesses to participate in the Community 
research programmes and to gain access to the results.In particular, in the field of 
Industrial Technology and Materials (Brite Euram IH) more than 60 research projects are 
underway, most involving SMEs within the sector. A targeted research programme2 
consisting of networks of R&D projects in the textile/clothing sector is in progress. 
Various other financial instruments (EIB global loans, the "PME facility" interest-rate 
subsidy mechanism and the European Investment Fund) are available to support action by 
small businesses in various fields. 
Finally, measures have been taken to promote cooperation between small businesses, 
such as the BC-Net and BRE networks for seeking potential partners and the 
Europartenariat and INTERPRISE programmes for direct contacts as well as local inter­
regional initiatives like subcontracting promotion centres. 
The Council approved in 1995 a special budget line of 400M ECU to support the 
modernisation and restructuring of the Portuguese textile and clothing industry This 
programme will be implemented over the period 1995-1999 and incorporates measures 
which will help the subcontracting sector become more competitive. 
4.2 COMMUNITY ACTION IN SUPPORT OF SUBCONTRACTING 
The action taken in support of subcontracting has been concerned principally with 
creating a favourable environment for subcontracting in the context of the single market 
and improving information and communication between manufacturers and 
subcontractors. 
4.2.1 Creating a favourable environment for subcontracting 
(a) Statistics programmes to improve information on subcontracting 
The object of this exercise is to supply regular information on trends in subcontracting. It 
is coordinated by Eurostat in collaboration with the national statistics institutes and the 
relevant trade organizations. 
(b) Practical guide to the legal aspects of subcontracting 
To improve contractual relations between manufacturers and subcontractors, the 
Commission has published a practical guide outlining the main legal issues arising in this 
connection and examining the legislation in force in the Member States on subcontracting 
relations. The guide will be updated to take account of legislative developments in 
Member States and to extend the comparative analysis to Austria, Finland and Sweden. 
The targeted research project(Tofa/ Quality Textiles)gxou^ the projects in 4 clusters: "Advance 
Processing Machinery", "Innovation in Processing Techniques", "Modelling and Planning", 
"Monitoring and Control". 
(c) Code of practice 
In collaboration with UNICE (Union of Industrial and Employers' Confederations of 
Europe) and trade associations, in order to improve relationships between manufacturers 
and purchasers, the Commission has started the elaboration of a Code of Practice setting 
out standards of good practice in quality, certification and periods for payment. 
4.2.2 Improving information and communication between manufacturers and 
subcontractors 
(a) Multilingual sectoral terminology 
A preliminary series of glossaries of multilingual sectoral terminology has been published 
to deal with language problems connected with international subcontracting. These are 
now being brought up to date, with the cooperation of workers and employers to take 
account of the technical advances in the sector and the development of the single market. 
(b) Networking of data bases on subcontracting 
In 1994 the Commission launched the SCAN (Subcontracting Assistance Network) project 
to improve the accessibility, regularity and quality of information on subcontracts by 
means of interconnection and interoperability of subcontracting exchanges and data bases 
in Europe. 
(c) Directory of intermediary agencies for subcontracting 
This Directory was published for the first time in 1992 and updated in 1994. It provides an 
overview of all agencies representing undertakings interested in subcontracting. 
4.3 PROMOTION OF THE COMPETITIVENESS OF SUBCONTRACTING IN THE TEXTILE AND 
CLOTHING INDUSTRY 
In response to the conclusions of the forum on subcontracting in the clothing industry, held 
in Brussels in March 1994, the Commission, in cooperation with the two sides of the 
industry and with technical support from independent experts, has promoted a series of 
studies to assess the impact and feasibility of certain support measures to make the 
industry more competitive. 
The general lines of action considered were tested in the field by five round tables in 
Belgium, France, Greece, Italy and Portugal. These covered four fields: 
(a) Information 
In essence, the action envisaged forms part of the Commission's general programme. In 
addition, a user guide to European Union financing programmes targeted, in particular, 
on small businesses in this sector, was published recently. 
10 
(b) Cooperation between manufacturers and subcontractors 
Improvement of the channels of communication between manufacturers and 
subcontractors is broadly considered a key means of promoting competitiveness and 
further progress in the situation of subcontractors. It helps to bring this sector out of its 
isolation. 
The work done so far has focused on technical relations, particularly on three means of 
communication: 
the manufacturer's technical file, which should offer a clear, comprehensible 
definition of the characteristics of the product to be made; 
technical glossaries bringing together the corresponding terms in different 
languages; 
electronic data interchange (EDI) covering the broader needs for the firms' 
activities. 
These instruments were considered useful by the undertakings questioned and by 
representatives of the industry, who stressed the support which they would lend for 
creating an environment conducive to participation in the single market. 
(c) Training 
In the clothing industry, several areas of training have been identified and studied with 
regard to the qualifications required in the light of developments in the international 
environment, on the markets and in the situation of the industry.3 
Particular attention must be paid to the qualifications on business management strategies, 
on logistics and flow management, on international relations and human relations 
(motivation, communication, etc.), and the flexibility and versatility of the entire 
workforce. 
Generally, the qualifications required by subcontracting firms are no different from those 
required by the industry as a whole. Nevertheless, there are certain specific problems 
connected with the limited availability of staff and lack of time, insufficient 
information, fragmentation and other difficulties which entrepreneurs experienced in 
attending or releasing their staff to attend training courses. 
A first step in this area would, therefore, be the development of awareness campaigns to 
demonstrate the benefits of training and, generally, of firms' adaptability, in conjunction 
with ways of restoring the competitive advantages essential to their future. 
The next essential step would then be to offer training geared to subcontractors* 
specific problems, tailored to the conditions in which such firms operate (distant learning 
and in-house training) and at an acceptable cost. 
Study on employment and qualification needs in the European clothing industry, sponsored by the 
Commission and conducted by the Institut Français de la Mode (IFM). 
11 
The Community and national training programmes offer opportunities to make progress in 
these fields. Nevertheless, proper synergies must be developed between the Commission, 
the national authorities, representatives of both sides of the industry and the firms 
themselves in order to take the action necessary. 
(d) Promotion 
The partners' thoughts on activities to promote subcontracting centre principally on events 
such as fairs. The feasibility study sponsored by the Commission, in collaboration with 
the two sides of the industry, stressed the importance of developing effective promotion 
instruments and also a wide variety of needs and opinions, particularly on the possible 
establishment of a European subcontracting fair for the textile and clothing industry. 
Firms' interest in this type of promotion depends, naturally, on the predominant thrust of 
their marketing strategies (national, Community or international market). 
Trade fairs specifically on subcontracting already exist in France, Italy and, more recently, 
Greece. A similar event has been announced in Spain. Clearly, it is up to the private 
sector to establish and develop events of this type. The Commission supports the 
coordinating efforts made by the industry in this field and, in particular, the establishment 
of a computerized network for collaboration between subcontracting fairs in Europe. 
The Commission is also considering the possibility of supporting the "inverted trade 
shows" between purchasers and subcontractors. Furthermore, promotion activities should 
include participation by these firms in fairs organised in the framework of different 
activities in the textile and clothing industry. 
Nevertheless, it must be borne in mind that participation in such fairs is limited in 
comparison with the number of subcontracting firms in operation. Further thought is 
therefore needed on other means of promoting subcontracting, which would be more 
permanent, open to a larger number of businesses and capable of harnessing the 
advantages of the European dimension. 
12 
5. CONCLUSIONS 
European subcontractors are at the heart of the textile and clothing industry. They 
face crucial challenges. Their growth and greater competitiveness will shape the 
future of the entire industry. 
Experience shows that firms' efforts to adapt allows subcontracting to remain 
competitively placed in the context of the European textile and clothing industry, 
particularly if they continue to develop means of offering greater quality, 
innovation, reliability and flexibility. 
Various programmes and multisectoral instruments under the national and 
Community policies could be used by subcontracting firms. It would be 
particularly important to secure greater participation by small firms in programmes 
and action to support the efforts to improve competitiveness associated with 
intangible investment (quality, innovation, training, etc.). However, in view of 
certain characteristics of subcontracting (very diversified, fragmented activities and 
cultural and psychological barriers), further efforts must be made on awareness-
raising and information by the trade associations and public authorities. 
International cooperation between subcontractors to harness potential 
complementary strengths on both the Community and export markets should be 
considered carefully by the industry and encouraged and supported by the public 
authorities. Partnership agreements between operators in the textile and clothing 
industry, particularly between manufacturers and subcontractors, should likewise 
be encouraged. 
Further efforts must be made to promote coordination of action and synergies at 
regional, national and European levels. The Commission can play a promoting and 
coordinating role. However, the effectiveness of this process will depend on the 
participation of subcontracting firms. Sometimes it has proved difficult to ensure 
that they are represented, because of the highly varied fragmented nature of their 
activities. Under these circumstances, the Commission proposes organizing a 
permanent Group on subcontracting in the textile and clothing industry, 
bringing together European and national representatives of the industry and of the 
trade unions. This Group will examine developments and priorities in the sector, 
with particular attention to the economic situation and the impact on 
competitiveness and employement, the impact and effectiveness of individual 
measures, programmes and multisectoral instruments, means of increasing the 
involvement of small firms in particular and the need for any supplementary 
support measures targeted on the specific requirements of subcontractors in the 
textile and clothing industry. 
1 2> 
TABLE 1 
Employment in subcontracting in Europe (1992) 
No of jobs 
Textiles' 
Clothing 
of which 
subcontracting 
in the clothing 
sector Belgium 
46 000 
35 000 
5000 Germany 
188 000 
230 000 
40 000 Ireland 
7 000 
15 000 
5000 Greece 
14 000 
60 000 
35 000 : Italy 
304 000 
370 000 
195 000 . Spain 
139 000 
180 000 
-90 000 Netherlands 
18000 
15 000 
6 000 France 
116000 
180 000 
90 000 Portugal 
98 000 
130 000 
60 000 United 
Kingdom 
141 000 
230 000 
120 000 Denmark 
8000 
10 000 
3000 Total 
1 080 0002 
1 455 0002 
650 0002 
Source: Mercer Management Consulting 
1. Knitwear and hosiery are included under clothing. 
2. Excluding undeclared or clandestine jobs. 
TABLE 2 
Clandestine employment in the clothing industry1 (1992) 
No of jobs Belgium 
7 000 Germany 
6 000 Ireland 
2 000 Greece 
12 000 Italy 
39 000 Spain 
20 000 Netherlands 
10 000 France 
20 000 Portugal 
20 000 United 
Kingdom 
14 000 Denmark Total 
150 000 
Source: Mercer Management Consulting 
1. Estimates by Mercer Management Consulting for which the European Commission is not responsible. 
TABLE 3 
Breakdown of subcontracting jobs in Europe 
Total workforce: 650 000* 
Italy 
United Kingdom 
France 
Spain 
Portugal 
Germany 
Greece 
Netherlands 
Belgium 
Ireland 
Denmark 30% 
18% 
14% 
14% 
9% 
6% 
5% 
1% 
1% 
1% 
1% 
Source: Mercer Management Consulting 
* Excluding undeclared or clandestine workers 
TABLE 4 
Breakdown by size of establishment and number of jobs in subcontracting* 
(1992) 
500 + 
200-500 
100-200 
50-100 
20-50 
10 20 
0-10 
Total France 
Noof 
establishments 
10 
50 
150 
300 
800 
800 
5 500 
7 600 Noof 
employees 
5 000 
10 000 
15 000 
15 000 
16 000 
8 000 
20 000 
90 000 Portugal 
Noof 
establishments 
5 
35 
70 
210 
320 
3 500 
4 140 Noof 
employees 
2 000 
8 000 
9 000 
13 000 
10 000 
18 000 
60 000 Germany 
Noof 
establishments 
6 
15 
150 
550 
1 500 
2 168 Noof 
employees 
2000 
2000 
10 000 
16 000 
10 000 ] 
j 40 000 j 
Source: Mercer Management Consulting 
* Excluding undeclared or clandestine workers 
A' 
<> TABLE 5 
Overriding factors in subcontracting in Europe' 
(percentage of jobs) 
Costs 
Response and 
flexibility 
Marginal work 
Service 
Expertise and 
know-how Portugal 
65% 
15% 
-
-
20% 
100% Greece 
60% 
30% 
5% 
-
5% 
100% Belgium 
40% 
30% 
5% 
15% 
10% 
100% Ireland 
40% 
20% 
5% 
25% 
10% 
100% Netherlands 
40% 
40% 
-
20% 
~ 
100% France 
30% 
30% 
10% 
20% 
10% 
100% Denmark 
-
80% 
-
20% 
-
100% Germany 
5% 
55% 
5% 
25% 
10% 
100% Spain 
30% 
40% 
10% 
10% 
10% 
100% Italy 
30% 
30% 
10% 
10% 
20% 
100% United 
Kingdom 
20% 
25% 
-
50 %2 
5% 
100% European 
average 
32% 
33% 
6% 
16% 
13% 
100% 
1. Including clandestine work, which is divided between costs and response and flexibility 
2. A large proportion of jobs downstream from services have been included under costs. 
Source: Mercer Management Consulting 
^ TABLE 6 
Primary problems mentioned by subcontractors 
Payment delays/risk 
Imprecise orders 
Development of 
customer portfolio 
Lack of protection in 
the event of any 
downturn in activity 
Lack of contract 
Lack of aid for 
modernization 
Social legislation 
Language problems Germany 
O 
^9 
O Belgium 
O 
e 
• Denmark 
0 
0 Spain 
O 
o 
o France 
O 
O 
o 
e United 
Kingdom 
O 
o 
^p Greece 
^ 
© 
^A 
^p 
^m Ireland 
^ 
e Italy 
^ 
• 
e Netherlands 
A 
Q Portugal 
O 
^% 
• 
9 Problems frequently mentioned in the surveys 
Source: Mercer Management Consulting questionnaire 
Financial Sheet 
Budgetary line B5-4110 Industrial Competition policy of the European Union 
1. TITLE OF THE ACTION: PROMOTION OF THE COMPETITIVENESS OF THE 
SUBCONTRACTING TEXTILE AND CLOTHING 
INDUSTRY 
2. CONCERNED BUDGET LINE: B5-4110 
3. LEGAL BASIS: Communication from the Commission to the Council on the 
implementation of a Community action programme in favour of 
the competitiveness of the European industry 
COM(95)319. 
4. DESCRIPTION OF ACTION : 
4.1. General objective: To support the efforts of improving 
of the action the competitiveness of subcontracting in textile/clothing 
in areas of information, training, co-operation, 
promotion. The action is included in the framework of the 
action programme on the competitiveness of the 
European industry. 
4.2.Period covered by the action: 3 years, i.e. 1996/1997/1998. 
5. CLASSIFICATION OF RECEIPTS AND EXPENDITURE 
5.1. DNO 
5.2. CD 
5.3. Types of receipts aimed at 
No purpose 
6. TYPE OF RECEIPTS AND EXPENDITURE 
subsidy for co-financing together with other sources from the public or private 
sector: Co-financing of initiatives undertaken by the public sector as well as 
by professional associations. 
Others: The Commission has the intention to ask for the realisation of 
operational tools (e.g. technical file of production) that will be at the 
disposition of the economic operators. 
1 <r 
7. FINANCIAL IMPACT 
7.1. Mode of calculation for cost of the action for 1996 fiscal year (connection 
between individual costs and the total cost) 
4 pilot project related to 4 areas quoted beneath 
7.2. Breaking down by elements of action 
CE in MioEcus 
Breaking down 
Technical file of fabrication 
Promotion of specialised fairs 
Diagnosis finishers 
Projects for management training 
TOTAL Budget 96 
0,075 
0,075 
0,15 APB97 
0,13 
0,12 
0,25 Var. 
in% 
66,7 
^3 
8. DISPOSITIONS FOR ANTT-FRAUD FORESEEN (AND RESULTS OF 
THEIR IMPLEMENTATION) 
Contract 
9. ELEMENTS OF ANALYSIS COSTS-EFFICIENCY 
9.1. Specific quantitative objectives, population aimed at 
- Specific objectives : the Commission envisage to finance 4 pilot projects in order 
to improve the attractiveness of intellectual investments in the small and medium 
size firms of the sector by the creation of a favourable environment for 
subcontracting in textile and clothing. These firms, isolated from their economic 
environment have neither the capacity, nor the time necessary to participate in 
multi sectoral actions. The measures aim the improvement of a) their relations with 
the finishers b) entrepreneurs' information of the solvency and the perspectives of 
their firms, c) the promotion and evaluation of the participation at fairs and at 
similar manifestations and d) the improvement of the level of management training 
of finishers through the logistics adapted to their level of knowledge and time. 
- Population aimed at : 
The subcontracting firms of the European union. 
9.2. Justification of the action 
- Necessity of Community budget intervention 
For reasons of cultural and economic compartmentalisation, the 
subcontracting firms have difficulties to start this kind 
of action and to utilise the Community means 
- Choice of intervention mode 
* advantages compared to alternative measures (comparative advantages) 
Decrease the costs of the starting up of the envisaged actions. 
* analysis of similar actions, possibly carried out at Community or 
national level 
It has been noted that a series of Community actions have not attracted the 
interest of small and medium sized firms, in particular not the subcontracting 
firms. In most of the cases these actions are expensive and are not adapted to 
the specific needs of their structure (size, lack of management structure, staff 
training etc.). 
- Main uncertainties that could affect the specific results of the action. 
The non mobilisation of the subcontracting small and medium sized firms 
in order to use these tools. 
9.3. Follow up and assessment of the action 
- Indicators of performance 
* indicators of output (measure of activities displayed) 
* indicators of the impact according the objectives 
Increased use of the actions foreseen in the Community programmes, 
among the small and medium sized firms. 
2 o 
-Modes and periodicity of the planned assessment 
Unit m/E/4 has the intention to assess the situation in 1998. 
—Valuation of obtained results 
The envisaged assessment here beneath leads to a written report and a 
re-assessment of the situation. 
10. Administrative expenditures (part A of section III of General Budget). 
The effective mobilisation of necessary administrative resources will result from 
the annual decision of the Commission on the allocation of resources, including 
in particular supplementary staff and capital that have been granted by the budget 
authority. 
10.1 Impact on the number of jobs: NONE. 
Type of 
employment 
Temporary 
civil servants 
or officials 
Other 
resources 
Total staff to 
allocate 
to the 
adminis 
tration of the 
action 
permanent 
employment 
1 A 
IB 
no 
2 persons temporary 
employment 
1 A 
no 
1 person of which 
by use of 
existing 
resources 
within the 
DG 
yes 
yes 
yes by appeal to 
supplement 
tary resources 
no 
no 
no duration 
3 years 
3 years 
3 years 
For the supplementary resources, indicate according to which pace their disposal would be 
necessary. 
10.2 Global financial impact of supplementary human resources :NONE. 
Sums Mode of calculation 
Civil servants 
Temporary officials 
Other resources 
Total 1 j 
The sums state the total cost of supplementary employment for the total duration the action 
if this one is at a determined duration, for 12 month if the duration is undetermined. 
10.3 Increase of other expenditures following the running of the action 
BUDGETARY LINE 
A0-2500 SUMS 
32.000 ECU* 
meeting expenses 
* These sums correspond to expenditures for 12 month MODE OF CALCULATION 
Two meetings a year of 
the Working group of 20, 
experts from professional 
associations from member 
states . 
(2X16.000 ECU) 
z-*\ 

ISSN 0254-1475 
COM(96) 210 final 
DOCUMENTS 
EN 10 08 
Catalogue number : CB-C0-96-223-EN-C 
ISBN 92-78-04022-3 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
Z. ^