The paper develops an ecological approach to explore conditions for industrial renewal in the UK textiles and apparel sector and the possibilities for policy. The authors argue that the material legacy of deindustrialisation conditions the opportunities for survivor firms and creates specific, sub-sectoral, industrial ecologies. Literature from economics, business studies, development and ecological studies is used to outline a framework that allows different possible relations between firm capability and local habitat. Two sub-sectors, carpets and apparel are used to explore the notion of interaction between firm capability and ecology: though the context of deindustrialisation is similar in some respects, the specific conditions provide quite distinctive opportunities for renewal. In carpets, relatively larger firms have more successfully co-evolved with retailers through various kinds of mutuality; in apparel, a workshop sector of mainly small and micro-firms frequently struggles with predatory behaviour by much larger retailers. The implication of this analysis is that industrial policy needs to be grounded in analysis of the capabilities-habitat interplay, focusing on areas where conditions are favourable or can be improved through supporting firm capabilities and modifying supply chain behaviours. The concepts and analysis are relevant for considering other industries and contexts where industrial renewal depends on producer firms and the ecology in which they operate.