The Irish clothing industry has changed beyond recognition over the past decade. High cost structures have forced many traditional indigenous and multinational clothing companies to close and those which survived have had to find ways of gaining a competitive advantage.

Some have achieved this through switching to high added value or niche products, while others have begun to outsource garment manufacture to cheaper overseas locations while maintaining their design, sales and marketing operations in Ireland.

Ireland was traditionally an outsource location itself, especially for US multinationals looking for a European manufacturing base. But while a small number of multinationals remain here, most have closed and moved on as cost structures made them uncompetitive.

Casual wear manufacturer Fruit of the Loom is one example. At its peak it employed well in excess of 2,000 people in the North West. Two weeks ago the company announced that a further 300 sewing jobs would go at its plant in Buncrana, Co Donegal.

This will bring employment in the company down to approximately 700. The company cites high production costs as the reason for the job losses. Much of its manufacture is now outsourced to low cost countries such as Morocco while the Far East and eastern Europe are also becoming key outsource locations.

Employment in the clothing industry currently stands at around 8,500 people. This compares with an all-time high for the sector of 15,200 in 1994. There are approximately 316 companies manufacturing clothing in Ireland and their average after tax profit figure is just three per cent. Children's wear is currently the weakest segment while women's clothing and sportswear are the strongest.

"It's true to say that some parts of the clothing and textiles industry have been in decline and employment in the sector has fallen by 20 per cent since 1996. But there are companies which have sustained and increased their output and the industry is actively pursuing various initiatives to ensure its survival," says Ms Susan Keane, director of the Irish Clothing and Textiles Alliance (ICATA).

"These would include placing a greater emphasis on added value and establishing production networks and strategic partnerships in third party countries. "The clothing and textiles sector has been through a period of intense restructuring and it is operating on very tight margins. It is also more vulnerable than most to wage cost pressures.

"But it remains an industry of key significance to the Irish industrial base, particularly in regional areas. Over 70 per cent of clothing and textile companies are based outside Dublin," Ms Keane says.

Clothing exports have grown from £198 million in 1986 to their current level of around £350 million. More than 60 per cent of output is exported to the UK and Northern Ireland. Most of the remainder goes to mainland Europe, with just 3 per cent exported to North America.

The development of brands, labels and niche products has been vital in ensuring the survival of the indigenous clothing industry. "Irish companies have gone the niche route because they simply can't compete at the volume or lower ends of the market," says Ms Rose Mary Craig of Enterprise Ireland.

"What we are seeing is the emergence of a different kind of clothing sector which offers specialist manufacturing skills (such as sports sock production or sailing shoes like Dubarry) or garments which have a high level of design with an Irish emphasis. Today's clothing companies have to be using the latest technology in order to compete and they have to invest heavily in design, marketing and logistics."

Avoca Handweavers has been producing garments with an Irish twist for almost two decades. The company has a turnover of around £25 million (€32 million) and employs 400 people in Ireland between its retail and manufacturing operations.

"We've always aimed our products at a specific niche and the strategy has served us well," says director of manufacturing, Mr Ivan Pratt. "We sell a lot to the UK (but not London), concentrating on country clothing type shops. We also sell to Sweden and Germany where we deal mainly with small, independent retailers.

"We can't compete with the likes of Marks & Spencer and we don't try because they'd blow us out of the water. Instead, we focus on providing clothes for our women aged 50 plus who appreciate good value and our choice of colours.

"We still manufacture in Ireland but labour is a very big problem even though we pay over the odds and offer a good working environment. We can see a time coming when we may have to review our home-based manufacturing.

"Some of it may eventually go abroad while sampling and quick response would probably stay here. In this event we would see those currently working in this area moving into higher skilled jobs," Mr Pratt says.

Tricot Marine casual wear is produced by Blarney Castle Knitwear. The company was set up 18 years ago and it has already gone the route of outsourcing. It currently has garments made in Italy, Portugal, Tunisia and the Far East.

"We wanted to offer customers a complete lifestyle look and we couldn't do all of that in-house," explains general manager Mr Paul Prendergast. "The decision to start outsourcing was a big one because it's a whole different ball game to having your own plant where you have complete control.

"But the Irish clothing industry is rapidly moving in this direction and it should be seen as something positive which complements home-based manufacture and allows the more technical and higher value added jobs to stay in Ireland.

"There is a change in attitude and ethos within the clothing industry taking place and State agencies such as Enterprise Ireland are now recognising that they need to support us on issues such as outsourcing as this is the way forward."

Clothing's Vital Statistics

Employment in the sector: circa 8,500

Workforce: 60 per cent female

Sector value: £350 million

Exports: 63 per cent to the UK, 28 per cent to Europe, 3 per cent to USA