CAIRO: Over a century ago, Egypt s ruler Mohammed Ali took advantage of the halt of the American cotton trade owing to the civil war in that country and compelled Egyptian farmers to cultivate cotton almost exclusively.
The cotton that was grown was long-staple, meaning that its fibers are longer than the other cotton produced in most of the world and that it is suitable for high-quality yarn and fabrics.
Thanks to Mohammed Ali, Egypt stands alongside the United States as one of the world s primary producers of long-staple cotton and the latter is an essential distinguishing factor of Egypt s textile industry.
With long-staple cotton fiber you can produce very fine products, specifically for shirting, for very fine bed linen, which is really in a very big demand for the European and American market … People are really paying anything to get it, says Ammar Shamsi, chairman of Shamsi Group, one of Egypt s leading ready-made garment producers.
But the industry will not achieve its full potential in Egypt unless more funds are invested in technology to convert long-stable cotton into the highest quality yarn, and to convert this yarn into finished fabric and clothing worthy of posh labels.
This kind of fine Egyptian cotton is not really spun in Egypt … because the technology we have is not good enough for spinning, says Shamsi.
This is because each step of the production process affects the quality of the end product despite the quality of the input.
You can produce very low coarse yarn from very high-quality cotton, [but] you re losing value in the process, explains Tamer Nassar, executive vice chairman of SETCORE, which owns a spinning mill in Borg El-Arab, adding that the fineness of yarn is a function of the cotton that goes into it and the way it s spun.
The shortage of investment in the intermediate processes of textile production such as spinning and weaving, both historically dominated by the state-owned companies, has effectively driven the higher end of the value chain out of Egypt.
The public sector spinning and weaving industry is really dying. There s no new investment taking place in that sector at all and it s not able to compete in world markets, says Nassar.
Attracting investment is therefore crucial to the development of the industry, particularly in light of the trend of the migrating production from Europe to more competitive regions.
The textile industry generally speaking is migrating from Europe to the south, says Nassar. Energy and labor costs are uncompetitive [in Europe]. Labor costs are uncompetitive. There s no land to expand.
Egypt is contending with the likes of India, Pakistan and Turkey to take over production from Europe, but the battle is not restricted to the end product since competition for ready-made garments may threaten upstream industries including spinning, weaving, dyeing and even cotton cultivation.
We d rather [European producers] come to Egypt than go to Pakistan, because they re going to move from Europe anyway, says Nassar. They re going to buy the cotton from Pakistan. They re going to buy the yarn from Pakistani companies. Why do that there? Why not have it here, right next door to us, and keep the value chain in the country?
In order to encourage investment in Egypt, the government has earmarked the extension of the fourth industrial zone in Borg El-Arab, an area of 1.2 million square meters, as an industrial cluster for textiles.
An industrial cluster is focused on a certain industry and tries to serve this industry to the best, says Amr Assal, chairman of the Industrial Development Authority. The industry is located geographically in the same zone. This encourages the feeding industries to be there next to the manufacturer.
SETCORE is currently the only manufacturer that is up and running in the zone, with a $25 million spinning facility that is in the process of being expanded to double its present capacity of 3,000 tons of cotton per year and approximately $25 million in sales.
Two European weaving companies, the Italian Albini and the Swiss Appenzell, have committed to established facilities in the zone. Pakistan s Seif Group will also build a spinning factory and a number of Turkish producers plan to move to the zone. Nassar expects the zone to attract a total of at least $1 billion.
It s much more attractive for an investor to invest in a cluster in his or her own industry than to just come and invest in a desert, says Nassar. Instead of just offering real estate to investors, you offer a lot more than that. You offer an industry. You offer a network. You offer suppliers and customers.
The cluster may therefore address one of the key shortcomings of the textile industry in Egypt, and bring more modern technology and skills for intermediate processes while enhancing the quality of the end product and retaining for Egypt a higher value from such products.