THE TEXTILES AND APPAREL SECTOR IN AUSTRIA

UNCLAS VIENNA 002918 SIPDIS STATE FOR EB/TPP/ABT THOMAS LERSTEN USDOC FOR ITA/OTEXA MARIA D'ANDREA STATE PASS USTR FOR ABIOLA HEYLIGER GENEVA FOR USTR E.O. 12958: N/A TAGS: ECON ETRD KTEX AU SUBJECT: THE TEXTILES AND APPAREL SECTOR IN AUSTRIA REF: STATE 138090 ¶1. Following is 2005 data for Austria (1 EUR = $1.24) keyed to reftel request: -- Total industrial production: $55.2 billion -- Total textile and apparel production: $4.6 billion (textiles: $3.2 billion; apparel: $1.4 billion) -- Textiles share of Austria's imports/exports: 1.8%/2.0% -- Apparel share of Austria's imports/exports: 4.5%/2.5% -- Exports in textiles to the U.S.: $47.6 million -- Exports in apparels to the U.S.: $85.5 million -- Total employment in manufacturing: 529,000 -- Total employment in textiles and apparel sector: 24,000 (textiles 15,000; apparel 9,000). ¶2. Embassy discussed the situation of the Austrian textiles and apparel industry with representatives from both sectors. Industry's reaction to heightened international competition has been to increase competitiveness by moving to higher value-added goods and to invest in innovation and modernization. 50% of the textiles production goes into the "functional" textiles sector such as automobile seat covers or highly specialized products. The apparel sector has been investing in high-quality clothes, thus avoiding direct competition with inexpensive Chinese apparel. ¶3. Sales have decreased slowly, but steadily, over the last 5-7 years. Austria exports approximately three-quarters of its production. Employment in the sector slumped sharply from 39,000 in 2001 to 24,000 in 2005. ¶4. Industry representatives have voiced concerns about "unfair trade practices", "illegal government subsidies", and "low wages and social standards" in China. Industry agrees with the EU's decision to set import quotas for apparel effective through 2008. Industry told us, however, that support for restrictions on apparel and textiles imports from Asia is gradually declining within the EU. McCaw