Apparel production in Europe falls despite nearshoring interest

What do the latest production figures show?

EU textile and clothing turnover contracted sharply in the first quarter of 2026, falling 3.0 per cent for textiles and 4.2 per cent for clothing year on year, according to EURATEX. Production volumes fell further in 2025, with textile production decreasing 1.6 per cent and clothing production showing a sharper decline of 4.5 per cent compared to the previous year. The production of textiles, wearing apparel, leather, and related products did not change significantly over the past decade, Eurostat reported.

Employment in the sector continued its downward trend in the first quarter of 2026, with textile employment falling 1.8 per cent and clothing employment by 1.5 per cent year on year. In the fourth quarter of 2025, the number of jobs in the textile sector fell 4.8 per cent and in the clothing sector by 1 per cent year over year; compared to the pre-pandemic period, employment has decreased 14 per cent in textiles and 16 per cent in clothing.

Where is European apparel manufacturing concentrated?

With 166 billion euros in annual turnover, 1.2 million jobs and nearly 200,000 companies across the EU-27, the sector remains one of Europe's key industrial ecosystems. Portugal's textile and clothing industry employs roughly 130,000 workers across approximately 12,000 companies and exported 5.499 billion euros in 2025, according to INE data compiled by the ATP. Italy hosts over 45,000 fashion companies and employs roughly 400,000 textile and apparel workers, the largest concentration in Europe, according to Confindustria Moda.

In the clothing sector, employment increased in Spain by 28 per cent, the Czech Republic by 11 per cent and Denmark by 6 per cent, while countries including Croatia, Poland and Lithuania saw declines. Eastern Europe supplies a significant and growing share of EU27 apparel imports and ranks among the fastest-growing EU sourcing regions, according to Eurostat External Trade data from 2025.

Which brands are using European production?

In 2025, Inditex worked with 914 factories in the European Union, representing 13.67 per cent of its network, and the group increased the number of factories it operates in Asia, America and Africa while it reduced the number in the European Union. The production network relies on a split manufacturing model, with around half of production coming from suppliers near Spain, including Portugal, Morocco and Turkey, while volume basics like cotton T-shirts are sourced from long-term supplier factories in Asia across a network of 6,684 vendor plants.

In 2026, H&M established a new production house in Barcelona, Spain, creating a team dedicated to design, sourcing and supplier relations to leverage the city's creative talent and supply chain network. Key players include H&M Group, Coats Group plc, Kering, Mango and Beaulieu International Group, according to market analysis. Mango's supply chain involves over a thousand Tier 1, Tier 2, and Tier 3 factories in 29 countries, with nearshoring from EU and Turkey; the company's primary sources are Turkey, China, India and Italy.

What cost and lead time differences exist?

European production offers shorter lead times but higher unit costs than Asian manufacturing. Portuguese factories offer delivery times of 4 to 8 weeks, compared with 16 to 24 weeks for Asian production. Romania, Bulgaria, Poland, Lithuania, Latvia, Slovakia, Czechia, and a slowly recovering Ukraine quietly stitch for Hugo Boss, Max Mara, Inditex, Moncler, and LPP, often at CMT rates 30 to 45 per cent below Portugal and 50 to 70 per cent below Italy.

Across 47 OneAim quotes in the first quarter of 2026, basic tee CMT averaged 3.40 dollars in Bulgaria, 3.80 dollars in Romania, 5.10 dollars in Poland, and 5.60 dollars in Lithuania. Many Portuguese factories work with minimums of 100 to 500 pieces, whilst in China or Bangladesh, minimums frequently start at 1,500 to 5,000 units.

What is driving nearshoring interest?

Europe's production debate is no longer just about cost, it is increasingly about risk, responsiveness and regulatory proof; nearshoring can compress lead times and make development, sampling and quality management easier, but it competes with Europe's structural cost base, particularly when energy and compliance costs are elevated; as a result, Europe tends to be commercially easiest to justify where margin and risk justify proximity: premium goods, technically demanding products, and accessories.

In Europe, EU-level regulations mandating greater supply chain transparency and traceability under the Corporate Sustainability Reporting Directive have added compliance-driven incentives for nearshore and domestic production arrangements that simplify audit trails. Polish, Romanian, and Lithuanian plants serving Inditex and H&M already run traceability data layers ahead of the 2027 Digital Product Passport mandate, according to the European Commission ESPR from 2025.

What challenges does European manufacturing face?

Turnover contracted sharply in both sectors in the first quarter of 2026, extending the downward trend in place since 2023; weak EU domestic demand, intensified competition from low-cost imports, and a subdued global trade environment remained the dominant headwinds. Exports declined by 2.9 per cent, employment fell by 2.8 per cent, and the trade deficit with third countries continues to widen, according to the 2026 edition of EURATEX Facts and Figures.

In March 2026, confidence fell by 2.7 points in textiles and by 0.9 points in clothing compared with the previous month; order books deemed insufficient and a worsening production outlook are weighing heavily on managers' morale. EU textile and clothing imports from countries outside the bloc stand at approximately 122 billion euros, while exports are approximately 61 billion euros; around one-third of textile and clothing products sold in Europe are manufactured in China.