strengthening entrepreneurship and enterprise …€¦ · technical textiles value chain in egypt...

STRENGTHENING ENTREPRENEURSHIP

AND ENTERPRISE DEVELOPMENT

(SEED)

TECHNICAL TEXTILES VALUE CHAIN GAP ANALYSIS

IN EGYPT

Summary of Study

August 2019

USAID’s Strengthening Entrepreneurship and Enterprise Development (SEED) Project

EXECUTIVE SUMMARY

The objective of this report is to capitalize on the emerging technical textiles opportunity in Egypt;

accordingly, the report draws a detailed mapping and analysis of the technical textile value chain in

Egypt, including locally manufactured and imported products identifying opportunities for localization. In

this report, the technical textiles value chain players are divided into segments including, technical raw

materials suppliers and producers (fibers precursors, fibers, and fabrics), converters (end-products

producers), and end markets (distributors and users).

This report “Technical Textile Value Chain Gap Analysis in Egypt” is the first and only report that provides

a comprehensive analysis of the technical textiles value chain in Egypt, it acts as a guide for strategic

planning and future investments. The report is considered a valuable resource for government agencies,

international organizations, financial institutions, private companies, and investors. The report features a

comprehensive list of major Egyptian producers of technical textiles classified based on their position in

the value chain. The report also includes 58 market data tables and 58 figures spread through 112 pages

of in-depth analysis of the technical textiles value chain in Egypt. Moreover, the report features the first

published dictionary of HS codes classifying the technical textiles based on raw material and end-

products, including 192 codes at the 6-digit level.

The report provides an overview of the global technical textiles industry, and a detailed mapping of the

technical textiles value chain in Egypt in addition to an in-depth trade analysis. In the trade analysis, the

data was categorized and classified according to the International Harmonized System of codes. Imports

and exports data for these commodity codes were analyzed for a five years period starting 2013 and

ending in 2017 and the compounded annual growth rates was calculated. The analysis revealed that

Egypt’s technical textiles value chain is emerging, with a total import of US$ 605.4 million and total

exports of US$ 746 million in 2017. The exports are growing at a very fast rate CAGR 51% from 2013-

2017, while the imports are slightly decreasing. Major imports included polymer laid nonwoven (US$ 96.9

million), coated and laminated fabrics (US$ 93.6 million), Packtech (US$ 71.84 million), and Protech (US$

43 million). Whereas, major exports included Medtech (US$ 283 million), glass fiber yarns and fabrics

(US$ 160.5 million), Sporttech (US$ 147.2 million), and polymer laid nonwoven (US$ 66.6 million). Major

imports partners were Asia Pacific (US$ 300 million), Europe (US$ 150 million) and the Middle East (US$

102 million), while major exports partners were Europe (US$ 273 million), Africa (US$ 188 million) and the

Middle East (US$ 170 million).

The report also includes an in-depth SWOT analysis of the technical textiles value chain in Egypt, a total

of 27 interviews were conducted. Interviews were conducted with different producers of raw materials,

end products, auxiliaries’ producers, service providers such as machine makers, testing and research

institutes, development associations, and governmental entities. Afterwards, the report presented the

bottlenecks and constraints facing the technical textile industry in Egypt, major bottlenecks included, lack


of technical expertise, difficulty in sourcing high performance raw materials, and required large capital

investment. The report provided suggested interventions along with suggested entities and association

who are responsible for those interventions.


TECHNICAL TEXTILES DEFINITIONS

The definition of technical textiles according to the authoritative Textile Terms and Definitions, published

by the Textile Institute, is “textile materials and products manufactured primarily for their technical and

performance properties rather than their aesthetic or decorative characteristics”.

There are 12 main fields of application for technical textiles, were categorized by Messe Frankfurt GmbH

Techtextil, the leading international trade exhibition for technical textiles.

Agro-textiles, also known as Agrotech, are used in agricultural applications related

to growing and harvesting of crops and animals. They are also used in forestry,

horticulture, as well as animal and poultry rearing including animal clothing. Agro-

textiles have to be strong, elongated, stiff, bio-degradable, and resistant to sunlight

and nontoxic

Buildtech are used in construction and architectural applications, such as for

concrete reinforcement, facade foundation, interior construction, insulation, noise

prevention, visual protection, protection against sun light, building safety etc. The

field of textile architecture is also expanding as textile membranes are increasingly

being used for roof construction. Such fabrics as PVC coated high tenacity

Polyester.

Clothtech include all those textile products that perform function, most often

invisible components, in clothing and footwear products such as interlinings,

sewing thread, insulating fiberfill and waddings.

Geotech are textile fabrics which could be woven, nonwoven or knitted fabric used

for many proposes such as support, drainage and separation at/or below ground

level, coastal engineering, earth and road construction, dam engineering, soil

sealing and drainage systems. Geotech has to have good strength, durability, low

moisture absorption and thickness.

Hometech are used in manufacturing many home furnishing fabrics including

carpet backings, curtains, wall coverings, etc. They are mostly fire-retardant

fabrics


Indutech are the Industrial Textiles, used in different industries for different

functions such as separation and filtration, transporting materials, acting as

substrates for abrasive sheets and other coated products. They range from

lightweight nonwoven filters, knitted nets and brushes to heavyweight coated

conveyor belts.

Medtech include all textile structures that are designed and manufactured for a

medical application. They are used in health care and hygiene applications in both

consumer and medical markets. They are generally used in bandages and sutures

that are used for stitching the wounds.

Mobiltech are used in transportation industry, such as in construction of

automobiles, railways, ships etc. Examples of Mobiltech include seat covers, seat

belts, non-wovens for cabin air filtration, airbags, parachutes, inflatable boats, air

balloons Truck covers and restraints are significant textile end-uses in the

transportation sector.

Oekotech are the Environmental Textiles; they are used in environmental

protection applications, such as floor sealing, erosion protection, air cleaning,

prevention of water pollution, water cleaning, waste treatment/recycling, depositing

area construction, product extraction, domestic water sewerage plants.

Packtech are the Packaging Textiles; these textile structures are used for bags,

packaging sacks, Flexible Intermediate Bulk Carriers (FIBCs) and wrappings for

textile bales and carpets, durable papers, tea bags and other food and industrial

product wrappings.

Protech are the Protective Textiles that are used in protection against various

threats such as heat and radiation for fire fighter clothing, molten metals for

welders, bullet proof jackets for army and police officers, chemical materials for

labors working in petrochemical, as well as protection against bacterial and blood

pollution in hospitals. The protective textiles are made with the help of specialty

fibers such as high tenacity PET or PP, Aramids, UHMWPE…etc.

Sporttech are the Sports Textiles, used mainly for making sportswear including

sports shoes and other sports accessories. Increasing interest in active sports and

outdoor leisure activities such as flying and sailing sports, climbing, cycling, etc.

has led to immense growth in the consumption of textile materials in manufacturing

sporting and related goods and equipment.


EGYPT’S TECHNICAL TEXTILES VC MAPPING

Figure 1 Detailed map of Egyptian technical textiles value chain including all stakeholders


Egypt’s technical textiles value chain is emerging, with a total imports US$ 605.4 million and total exports

US$ 746 in 2017. The exports are growing at a very fast rate CAGR 51% from 2013-2017, while the

imports are slightly decreasing. Half of the imports were raw materials while the other half was end-

products, whereas, one third of the exports was in the form of raw materials and the other two thirds were

end-products. The large imports of raw materials are a positive indicator that there are downstream

imports substitution by local producers. Further, the large exports of end-products confirm that there is a

deep industry with downstream capacities capable of supplying end-products to the international market.

Summary of Egypt’s main imported technical textiles in 2017

Category Imported item Value in 2017 US$ million

CAGR 2013- 2017 (%)

Share of total imports (%)

Polymer laid nonwoven

Man-made filament < 25 g/m² 65.13 9.98 10.76 Man-made filaments > 70 - 150 g/m²

16.00 -14.99 2.64

Man-made filament 25 - 70 g/m² 15.77 -4.16 2.60

Coated/ Laminated/ Impregnated

PU coated 38.32 -0.36 6.33 PVC coated 31.16 0.03 5.15 Coated other plastics 24.17 2.50 3.99

Packtech Suitcases, school bags 42.64 -10.84 7.04 Handbags 18.57 6.01 3.07 Travelling-bags, sports bags 10.63 -11.00 1.76

Protech Occupational prevention dress 18.14 10.49 3.00 Coated/ rubberized garments 13.18 -16.11 2.18 Professional or sporting garments

11.75 -36.97 1.94

Medtech Catgut, sutures wound closure 17.47 11.64 2.89 Hygiene products 16.70 - 2.76

Clothtech Slide fasteners 14.25 4.60 2.35

Elastic tapes > 5% elastomer 12.64 -3.39 2.09

Technical yarns

Monofilament > 67 dtex 15.21 79.66 2.51

Summary of Egypt’s main exported technical textiles in 2017

Category Exported item Value in 2017 US$ million

CAGR 2013- 2017 (%)

Share of total exports (%)

Medtech Hygiene products 243.07 - 32.58 Adhesive dressings 40.13 -1.22 5.38

Glass fiber yarns and fabrics

Glass rovings 88.76 664.39 11.90 Glass threads chopped 41.64 638.50 5.58 Glass fiber mat 21.49 367.04 2.88 woven glass rovings 8.64 56.30 1.16

Sporttech Tracksuits 147.18 170.50 19.73

Polymer laid nonwoven

Man-made filaments < 25 g/m² 52.46 73.17 7.03

Man-made filaments 25- 70 g/m² 13.70 331.46 1.84

Protech Coated/ rubberized garments 15.00 47.29 2.01 Professional or sporting garments

8.40 -11.30 1.13


VALUE CHAIN SWOT ANALYSIS

Strengths Weaknesses

Low cost of doing business o Low labor and utility cost o Economy of scale

Reliable suppliers of commodity raw materials o Availability of raw materials and auxiliaries

High local demand of diverse products

Strong exporting environment o Preferential free-trade agreement o Strategic geographic location for export o Availability of free zones o Export subsidy program o Draw back system

Possibility to acquire technical know-how o Technical know-how and technology can be

transferred o Availability of technical training o Availability of machinery agents and

representatives

Good Infrastructure o Roads, IT, ports, industrial zones…etc. o Good banking systems and financing

programs o Part of the government strategy

Availability of Basic Testing and certification o Availability of international standards o Availability of testing bodies for basic tests o Availability of certification bodies

Low technical expertise o Lack of technical know-how o No proprietary technology (R&D) o No technical or specialized educational

programs o Lack of technical experts o Lack of awareness and resistance to

change o Lack of trained and skilled labor o Limited design or development

capabilities o High turnover in employees o Negative work attitude and culture

Lack of suppliers of high-performance raw materials

o Unavailability of high-performance and specialized raw materials

o Local suppliers lack consistent quality and deliveries

Large capital investment o Expensive machinery and equipment o Small scale companies with high cost

structure o High bank interest rates

Lack of advanced testing and certification o Lack of local standards and testing

facilities

Lack of industrial laundering and care

Bureaucracy

Opportunities Threats

Growing local market demand o Growing local demand o Low local competition o Legislations and standards will increase

consumption o Opportunity for import substitution

High export potential o High demand in neighboring regions o Government strategy to increase export o Lack of regional competition

High potentials for industry growth o High profit margins o Protected local industry o Qualifying programs for small investors o Success stories will encourage investors o Cost advantage

Potential foreign investment o New industrial areas o USA-China trade war o New Chinese investments o Low exchange rate

Increasing competition o From other outsourcing countries o From China and India in local market o From local small companies o From foreign investments o From conventional textile materials o From Turkey in export to EU

Changes in the business environment o Political instability in the region o Increase in utilities and energy prices o Instability in investment laws o Export and import control on high

performance materials o Unstable bank interest rate o Appreciation of EGP against USD for

exporters o Removal of local import tariffs o Removal of local export subsidy o Changes in the trade agreements

Technological changes o Fast technological changes o Increase in proprietary technology


SUGGESTED INTERVENTIONS

Establishment of specialized centers of excellence and competitiveness centers, which can support in

technical training, technical consultation and technology transfer.

Establishment of specialized research center, and technology incubator, which can support all research

and development activities as well as technology commercialization.

Update the curriculum of the textiles engineering departments to include a major or concentrate on

technical textiles.

Providing awareness and training programs for the textile companies in Egypt on the fundamentals,

applications and market potential of technical textiles.

Establishment of vocational training programs, as well as professional educational programs to industry

professional in major technical textiles sectors in Egypt, for instance, nonwoven.

Establishment of pilot plants and prototyping facilities, to support scaling up of new technical textile

developments.

Facilitate import of high performance and specialized fibers, yarns and fabrics.

Reduce the import tariffs that reaches up to 10% on technical textiles raw materials.

Encourage direct foreign investment in upstream processes that requires high capital investments.

Support small companies in competing based on a proprietary know-how rather than scale.

Reconsider the interest rates and make special programs for financing machinery especially for small

and medium sized industries.

Upgrade the testing capabilities of local testing institutions.

Support the local testing institutes in their accreditation.

Establish centralized industrial laundering centers in proximity to major users of protective clothing and

medical apparel.

Prepare an investment plan for MSMEs in the technical textiles sector to avoid over capacity in a certain

stage or product.

Provide subsidy to local producers to be able to compete with foreign investments in technical textiles

in Egypt

Focus on Egypt’s completive advantages to drive technical textiles exports. In this context, for example

glass fibers, which are made from locally abundant silica sand.

Encourage technology transfer and licensing through the specialized competitiveness centers and

centers of excellence.

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