Three Years of Decline: The State of Europe's Textile Industry
Every week, textile factories across Europe shut their doors. Behind every closure are lost jobs, affected communities, and strategic production capacity that disappears for good. That's not rhetoric — it's the sober opening of the latest EURATEX Economic Update (April 2025), published by the trade association representing Europe's textile and apparel industry.
For the third consecutive year, the sector has recorded a decline — in output, revenue, and employment. This is no longer cyclical noise; it's a structural trend that demands political and business responses.
What the EURATEX Data Shows
The association represents approximately 160,000 companies across the EU, predominantly SMEs, which together employ around 1.3 million people. The key figures from the 2025 Economic Update paint a bleak picture:
- Industrial production in the textile and apparel segment has fallen again year over year.
- Import pressure from Asia — particularly from Bangladesh, Vietnam, and China — remains persistently high.
- Energy costs and labor-related overhead in the EU make European locations structurally more expensive than competitors in third countries.
- At the same time, compliance costs are rising due to new EU regulations, including the Ecodesign for Sustainable Products Regulation (ESPR), the Corporate Sustainability Reporting Directive (CSRD), and the proposed Corporate Sustainability Due Diligence Directive (CSDDD).
EURATEX is calling on the European Commission to develop a coherent industrial policy that treats competitiveness and sustainability not as opposing forces, but as complementary goals.
Regulation as a Double-Edged Sword
ESPR and the Digital Product Passport
The Ecodesign for Sustainable Products Regulation (ESPR) has been in force since July 2024. It empowers the Commission to issue product-group-specific delegated acts — textiles and apparel are on the priority list for 2025/2026. The centerpiece of the ESPR is the Digital Product Passport (DPP): a machine-readable dataset containing information on material composition, repairability, carbon footprint, and end-of-life pathways.
For manufacturers and importers, this means in practice: you must capture product data in a structured format, make it accessible via a standardized data carrier — typically a GS1 Digital Link-compatible QR code — and keep it up to date throughout the product's entire lifecycle. The technical specifications for the DPP data carrier are aligned with the GS1 Digital Link standard (ISO/IEC 18975), which prescribes a URL structure through which resolver services can deliver context-dependent information.
Compliance Costs Hit SMEs Disproportionately
The structural problem: large corporations like Inditex or H&M have compliance departments and IT infrastructure capable of absorbing new requirements. For the roughly 80 percent of European textile companies that employ fewer than 50 people, the math looks very different. Every new reporting obligation — whether under CSRD, ESPR, or national supply chain due diligence laws such as Germany's Lieferkettensorgfaltspflichtengesetz — demands resources that small businesses simply don't have.
EURATEX has explicitly called on the Commission to embed SME-specific relief measures in the delegated acts under ESPR. This isn't a new idea — the principle of SME relief is already built into the ESPR regulation itself (Recital 18) — but practical implementation is still pending.
What Companies Can Do Now
Data Strategy Before Technology Decisions
A common mistake in practice: companies buy a QR code solution or a DPP tool before they understand their own data situation. The real challenge isn't the data carrier — it's sourcing the data across the supply chain.
Concretely, if you want to issue a compliant Digital Product Passport for a cotton T-shirt, you'll need, among other things:
- The percentage of recycled fibers (calculated according to ESPR methodology)
- Proof of origin for natural fibers (relevant for CSDDD due diligence obligations)
- Information on repairability and spare parts availability
- Details on proper end-of-life disposal and recyclability
This data rarely sits with the brand manufacturer. It lives with spinners, weavers, and cut-and-sew operations — often in countries with limited data transparency. If you're not already requiring your suppliers to deliver structured data today, you'll find yourself under serious time pressure when DPP obligations kick in.
Technical Implementation: What the Standard Requires
The ESPR does not mandate a specific QR code provider, but it does require the use of a unique product identifier (typically a GTIN or another GS1 key) and a resolver infrastructure that links the QR code to the actual dataset. A GS1 Digital Link-compliant QR code follows this URL structure:
https://id.gs1.org/01/{GTIN}/21/{SerialNumber}
The resolver — operated either by the manufacturer itself or through a third-party provider — routes each scan to different data views depending on context (consumer, recycling facility, customs authority). Technically, this isn't rocket science, but it does require a clean architecture and ongoing data maintenance.
If you manage several hundred or thousands of SKUs, you should evaluate early on whether a bulk import workflow makes sense for the initial data migration — manual entry doesn't scale.
The Political Dimension: Reshoring as an Opportunity?
EURATEX argues that part of the answer to structural change lies in bringing strategic production capacity back to Europe. That may sound like protectionism, but there's an industrial policy logic behind it: if you need to capture DPP data across a short, transparent supply chain, you have a structural advantage over competitors operating 15-tier global supply chains.
The European Commission has taken initial steps toward strategic industrial policy with the Net-Zero Industry Act and the Critical Raw Materials Act. Textiles aren't explicitly addressed there — but the logic is transferable: when regulators mandate supply chain transparency, they indirectly create incentives for shorter, better-documented value chains.
Outlook: Consolidation or Transformation?
The EURATEX data leaves little room for optimism. Europe's textile sector will get smaller — the question is whether it loses strategic relevance in the process, or transforms toward higher-value, more sustainable products.
Regulation like the ESPR can be a driver of that transformation — provided it is enforced consistently and uniformly, including for imported products from third countries. That's the critical point: a European manufacturer required to produce a DPP is competing against an Asian importer who (for now) faces no such obligation. As long as this asymmetry persists, regulation amplifies the competitive disadvantage rather than reducing it.
The Commission has announced its intention to subject importers above a certain threshold to the same DPP obligations as European producers. Exactly when and how this will be operationalized in delegated acts remains to be seen. For companies investing in DPP infrastructure today, that's an important variable in any business case.
What is clear: if you build your data strategy now, you'll be better positioned — regardless of how quickly the regulatory deadlines arrive.
