How does the pandemic has affected the economic sustainability of Textile industry in France?

Abstract

Research background: France is one of the leading textile manufacturers in Europe. However, the COVID-19 pandemic has challenged the current practices in the industry. The lack of crisis management characterized by delayed payments, order cancellations, fixed costs, and other unpredictable expenses, turned it difficult for firms to guarantee liquidity and to preserve their economic sustainability. Purpose of the article: To analyse how the pandemic has affected the economic sustainability of Textile industry in France. Methods: Using the financial reports of 57 French firms operating in Textile industry, in 2018-2020, from ORBIS, a financial analysis is performed using the ratios of profitability, liquidity and indebtedness, as well as the profit margin and labour productivity to evaluate how these firms have been tackling the challenges of the recent crisis; and, thus, evaluate their economic sustainability. Findings & Value added: Results suggest that micro firms and SMEs have better financial profitability, display higher levels of liquidity, are less indebted and are more capable to increase their profit margins. Yet, the larger firm shows a higher level of labour productivity, followed by the micro enterprises. Thus, smaller French textile firms appear to be more economically sustainable during the pandemic. This might suggest that smaller firms are more flexible, resilient, and capable to quickly adapt their operations to market’s needs. Such findings provide policy insights on the implementation of the appropriate strategies during times of crisis.