Integral – Esquel’s Sustainable Development Garden

Disrupting the textile industry through redefining manufacturing jobs
and investing in innovation

Company Overview

Esquel Group is a family-owned textile and apparel company based in Hong Kong with operations throughout China, Vietnam and Sri Lanka, employing over 35,000 people worldwide. As a total service and solution provider, Esquel differentiates itself from other manufacturers by investing in its people and innovative technology to ensure sustainable manufacturing ‘from seed to shirt’.

In 2019, Esquel began Integral in Guilin, China – a pioneering developmental business model combining modern technologies with a highly skilled workforce to facilitate sustainable manufacturing. Purposefully designed to allow the business and its people to co-exist in harmony with the environment, Integral is Esquel’s ‘Sustainable Development Garden’ and is home to a specialty spinning mill and a garment factory. Leveraging new technology and management philosophies, Integral enables Esquel to bring out the best in their workers.

The Social Issue

The impacts of climate change have come to threaten the natural resources that Esquel’s textile business relies on. Physical risks such as rising temperatures have facilitated the growth of a cotton pest, while record rainfall in Guilin and the rest of China in the last 2 years has resulted in more frequent flooding. These developments have significantly heightened the risk of cotton supply throughout Esquel’s supply chain.

Aside from environmental issues, there is also the social challenge of ensuring quality employment and respectful working conditions for workers in an industry renowned for its low safety standards and pittance in wages. Indeed, average turnover rates in the industry remain high (over 20%) and despite the abundance of labour, there is a dearth in skilled engineers capable of operating the high-tech machinery required for cotton manufacturers to remain competitive in an increasingly saturated industry.

Nature was allowed to regenerate the land, restore it to its former vitality and become the lake.

Business Value

Esquel’s supply chain is extremely vulnerable to the impacts of climate change. By investing in greener production methods and building designs, Integral seeks to mitigate climate risks and maximise productivity. The textile industry is renowned for its heavy environmental footprint, and Esquel intends to be a leader in innovative technologies and greener practices throughout its manufacturing process to reduce energy, water and resource consumption.

Esquel is a family business guided by strong values. The company genuinely cares for its employees and sees them as its top asset to facilitate sustainable growth. Contrary to the industry norm, Esquel aims to provide workers with not just a safe working environment and better take-home pay, but also opportunities to learn and gain vertical mobility internally. The ultimate aim is to narrow the wealth gap but by upskilling employees to integrate automated technology, Esquel also ensures its workforce is able to adapt to the future needs of the business to maintain a competitive edge.

The Shared Value Strategy: Sea Island Cotton and Integral

To secure its supply chain against the physical risks of climate change, Esquel’s R&D sought to develop a more sustainable cotton seed variety. In collaboration with the Shanghai Institute for Biological Sciences of the Chinese Academy of Sciences, the National Human Genome Centre and Nanjing Agricultural University, and with a US$2.4 million investment, Esquel successfully completed the genome sequencing of Sea Island Cotton in 2015, a world’s first. The aim of this research was to identify the strengths and weaknesses of different genes in order to breed new varieties of Sea Island Cotton, characterized by the quality of the fiber, resistance to pest and disease, and adaptability to different climates. Esquel’s Sea Island Cotton variety produces high yields with proven stability throughout the year, allowing the growth of premium, more sustainable cotton.

But Esquel understood the need for a more fundamental shift to address the climate crisis and ensure sustainable growth. In 2012, the company launched ‘Integral’ – a pioneering sustainable manufacturing facility combining modern technologies, quality employment, innovation and environmental sustainability. Integral includes a learning center, a natural dye garden, a spinning mill, which started operating in 2018 and a garment factory launched in 2019. Award-winning architectural firm Ronald Lu & Partners helped design Integral with the aim to demonstrate how manufacturing can co-exist with the natural environment and preserve bio-diversity.

The garment factory and spinning mill coexist in harmony with nature.

Esquel focuses on SDGs #8 (Decent Work and Economic Growth), #12 (Responsible Consumption and Production), and #13 (Climate Action) and addressed them in the early planning stages of Integral. Indeed, the land on which Integral was built had previously been polluted by over-development, and was carefully restored to its former vitality, to create habitat for local wildlife. Moreover, Integral was constructed using locally sourced sustainable materials. The architects used innovative technologies and design elements to reduce the facilities’ impact on the environment. For instance, the design maximizes natural light and redirects it to workshop floors, thereby lowering electricity consumption. The water used in the manufacturing process is also recycled and treated to discharge zero wastewater and on site transportation is powered by green electricity.

Esquel focuses on SDGs #8 (Decent Work and Economic Growth), #12 (Responsible Consumption and Production), and #13 (Climate Action) and addressed them in the early planning stages of Integral.

Integral also aims to build the skills of its workforce, recognising that ‘we can only grow as fast as the talent we nurture’. Building on the success of its automated spinning mill in other parts of China, Esquel replicated and improved their automation model in Integral, subsequently hiring and upskilling 140 engineers for the spinning mill, which combines advanced robotics with highly-skilled labour. The result has been a significant increase in productivity and consistent quality. Whereas a generic spinning mill would require 930 employees to operate, Integral’s specialized spinning mill requires only 140 employees for the same output around the clock. Likewise, Integral’s onsite engineers can adjust and test machines for the drawing process in 25 minutes, when it previously required one hour. With these ‘managineer’ positions, Esquel redefines the dated mundane shopfloor job into knowledge-intensive, high-tech, interpersonal work that has the power to attract and retain fresh talent into the industry.

This increase in productivity is reinforced by Esquel’s longstanding policy of looking after its employees and creating a quality working environment. Esquel’s multi-skilled mill operators are ‘mangineers’ (engineers that are also equipped with management capabilities), and the company empowers technical staff to run their respective production cells autonomously. Employees are empowered to work as one team to solve shop floor issues, minimize downtime and allow effective training. In contrast to industry norms, Esquel actively encourages a policy of ‘no overtime’ to ensure a healthy work-life balance for all staff. In 2019, the average working hours for workers have decreased from 9 to 8.5 hours per day, while wages and productive output have remained the same.

From the space to the menu and the kitchen, Dining service at Integral redefines how catering can be done.

Integral also pioneered Esquel’s ‘Dining 2.0’ catering model, which uses local produce and a pre-order app to minimizing food waste. The menus are designed to provide a balanced diet for workers to help them develop healthy eating habits, and the dining halls have wide, scenic views fostering a closer relationship to nature and one another.

As a result of this approach to employee wellbeing and talent development, Esquel has experienced much lower staff turnover rates relative to industry standards. The average industry turnover rate in China is upwards of 20%, while Integral’s garment factory turnover rate was 2.3% in 2019. By considering their employees as ‘knowledge workers’ rather than manual labour, Esquel has retained a more resilient, agile and committed workforce that contributes to increased productivity without compromising on hours worked or income earned.

Future Outlook

Integral is still in its early years but the significant progress already measured in terms of sustainability, improved productivity and quality of labour underline the project as the sustainable manufacturing model of the future. In an industry entrenched in detrimental labour practices and environmental impact, Integral showcases how textile and apparel manufacturing can sustainably evolve through investment in a skilled and agile workforce in tandem with innovative technologies to reduce the industry’s environmental footprint.

Esquel is now looking to replicate the success of the Integral project in its factories in Vietnam and other operations in China. Despite the continuing challenge of climate change, Esquel aims to lead the cotton manufacturing industry in its transformation towards a more sustainable model that ultimately benefits society while creating competitive advantage.