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East Africa wants a ban on imports of secondhand clothing from the US.It’s expected that such a ban will cause job losses in the US, causing up to 75 per cent reduction in revenues for some US textile businesses.
The East African Community (EAC) says imports of secondhand US clothing have caused a decline in the African textile industry.
The African Growth and Opportunity Act (AGOA) allows several African nations favorable trade arrangements with the US. But AGOA requires countries to have a market-based economy or to be at least making progress towards one. It is felt that any import ban or tariffs would halt this progress towards a free-market system in EAC countries.
Countries like Kenya, Tanzania, Rwanda and Uganda have import tariffs. As a result 40 per cent of small and medium textile firms in the US have reduced employment by at least 25 per cent since the tariff increases, 88 per cent of firms have experienced a revenue reduction of at least 25 per cent since the tariff increases and more than 52 per cent say they would be forced to reduce their number of employees by at least 50 per cent if the full ban were implemented.
"Pakistan's textile exports was worth $12.45 billion with imports worth $3.35 billion in 2016-17. The country exported raw cotton amounting to $42.85 million, cotton yarn $1.24 billion, cotton cloth $2.12 billion, cotton carded $235000, yarn other than cotton yarn $24.351 million, knitwear $2.362 billion, bed wear $2.133 billion, towels $786.606 million, canvas and tarpaulin $133.853 million, and readymade garments $2.316 billion in 2016-17, reported the recent textile division data."
Pakistan's textile exports was worth $12.45 billion with imports worth $3.35 billion in 2016-17. The country exported raw cotton amounting to $42.85 million, cotton yarn $1.24 billion, cotton cloth $2.12 billion, cotton carded $235000, yarn other than cotton yarn $24.351 million, knitwear $2.362 billion, bed wear $2.133 billion, towels $786.606 million, canvas and tarpaulin $133.853 million, and readymade garments $2.316 billion in 2016-17, reported the recent textile division data.
Pakistan has a cotton shortfall and that’s why it has to import about 2.5 million bales cotton for of $850 million per annum. The country also imports around 3-4 million synthetic fibre worth $500 million as it is not produced locally and other textile items worth $1.5 billion. Further the country imports synthetic and artificial silk worth $700 million and worn clothing of around $150 million. Besides this, to meet industry requirements, machinery worth $500 million is imported every year. Energy consumption by the textile sector is based on imported oil, coal and gas, which further adds to total production costs. Given this scenario, any depreciation of the rupee will increase costs of production manifold and may hurt the high value adding to textile exports.
Government thrust needed
As Ashfaq Hasan Khan, former economic adviser to Finance Ministry points out currency adjustment should be the last resort of the government as it would increase input costs of export-oriented sectors. Moreover dependency on imports has increased and depreciation would further hurt industrial sectors. The government should first review its taxation policy, reduce utilities tariffs including power, gas and water prices and immediately pay the stuck-up refunds of exporters to boost exports.
As per media reports, about 35 per cent production capacity of textile value chain is impaired/closed while prospective investors are reluctant to make new investments due to high cost of doing business. Energy cost is more than 30 per cent of the total conversion cost in spinning, weaving and processing industries. Industrial gas tariff in Pakistan is 100 per cent whereas electricity tariff is about 50 per cent higher than the regional competitors. Pakistan textile share in global market declined from 2.2 per cent to 1.7 per cent and unemployment increased by 30 per cent, sources added.
Exporters have raised serious concerns about declining exports and termed high cost of doing business including energy prices, non-payment of refunds claims as well as overvalued rupee as major factors making them uncompetitive. They further say 30-40 per cent factories have closed down while others are on the verge of collapse due to high input cost.
APTMA officials say electricity is available at Rs 10.5/kwh for the industry in Pakistan as compared to Rs 7/kwh in other regional countries including Bangladesh. Further, gas is available at Rs 1,000 /MMBTU in Pakistan against Rs 400 in Bangladesh. In such circumstances, the industry cannot compete in the international market and hence is losing customers, they added.
As Amir Fayaz, Chairman, APTMA explains around Rs 200 billion of the textile industry is stuck with government under sales tax, duty drawbacks etc., and is creating severe liquidity crunch for the industry. Serious liquidity crunch is negatively affecting production capacity, resulting in a steady decline in the country's exports. Lot many textile mills have been shut in the past one year, resulting in loss of jobs and which has further complicated the entire trade dynamics.
Ashoka and the C&A Foundation have given away the €180,000 Fabric of Change award. The project launched in 2015, was aimed at addressing questions surrounding gender inequality, human rights abuses, unnecessary waste and child labour in the textile industry. The Fabric of Change initiative was incepted by social innovators, Ashoka, and the C&A Foundation, who fund the project. Last month, the prize money was awarded from the project’s ‘Scaling Impact Fund’, to four participants who Ashoka says will be able to address these environmental and social questions.
One is CanopyStyle, which has developed a strategy to eliminate endangered forest fiber sources from the manufacturing process. The company is seeking to ensure that the textile industry’s supply chain is as transparent as possible in protecting ancient forests from being used to produce viscose from wood pulp.
The Gender Justice award went to Rebecca van Bergen executive director and founder of Nest. Bergen received the award for developing a process for ethical compliance for self-employed, home workers and artisans in what she calls the ‘informal economy’. The strategy is a response to artisan craft and home employment being the second largest employer of women in developing economies, as up to 60 per cent of garment production is in the home, with unregulated working conditions. The strategy plans to reach over 2,00,000 artisans by 2020 and will launch a steering committee of major retail brands to pilot the initiative.
Other prize winner was Poder which has developed a platform to improve conditions for maquiladora workers in the textile sector and give them increased access to information and eliminating deniability of large companies.
China's strong economic growth showed visible signs of fading in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree. Industrial output, investment, retail sales and trade grew less than expected last month, after the world's second-largest economy put in a surprisingly strong showing in the first half. But economists do not expect any hard landing, with the government keen to ensure stability ahead of a once-in-five-years Communist Party leadership reshuffle in the autumn.
The upshot is both foreign and domestic demand appear to have softened at the start of the third quarter, say economist. The statistic bureau says the overheated property market has cooled "somewhat", but it still expected China's economic performance to be steady in the second half. The performance in July was stable.
Growth of private investment also ebbed to 6.9 per cent in the first seven months of the year, suggesting small and medium-sized firms still face challenges in accessing financing. Private investment accounts for about 60 per cent of overall investment in China. Retail sales pulled back, too, but growth remained in the double-digits for the fifth month in a row, suggesting consumption will continue to overtake factory output and investment as the biggest growth driver of the economy, a key policy goal for Beijing.
Retail sales expanded 10.4 per cent in July on-year, down from June's 11 per cent and forecasts for a 10.8 per cent rise. But while car sales remained solid, automakers cut back production. Beijing is targeting growth of around 9 per cent in fixed asset investment for 2017, and expects retail sales to increase about 10 per cent.
Chinese textile firms using North Korean factories for production. Once ready, the factories then send the clothes that are labeled as Chinese all over the world. Making clothes in North Korea helps Chinese manufacturers make huge cost savings. Textiles were North Korea’s second biggest export in 2016.
Chinese suppliers send fabrics and other raw materials for manufacturing RMG to North Korean factories across the border where the garments are assembled and exported. Dozens of clothing agents operate in North Korea, acting as go-betweens for Chinese clothing suppliers and buyers from the United States, Europe, Japan, South Korea, Canada and Russia. North Korea has about 15 large garment exporting enterprises, each operating several factories spread around the country, and dozens of medium sized companies. All factories in North Korea are state-owned. And the textile factories appear to be doing great business. They take orders from not only China but all over the world.
It is believed North Korean workers can produce 30 per cent more clothes each day than a Chinese worker. Total exports from North Korea in 2016 rose 4.6 per cent. In addition Chinese companies are relocating their factories to Bangladesh, Vietnam and Cambodia to take advantage of cheaper labor.
Nandan Denim’s net profit for Q2, June quarter has risen 2.06 per cent as compared to the corresponding period of the previous year. Net sales for the quarter were up by 41 per cent. Ebitda and pat margins were at 14.44 per cent and 3.84 per cent respectively.
The company successfully completed capacity expansion plans and expect to get the full realisation and synergies of the expansion in the current fiscal. Post expansion, the company has become India’s largest denim fabric manufacturer with an installed capacity of 110 million meters per annum. Spinning capacity is increased to 141 tons per day and in addition the company has created a yarn dyed shirting capacity of ten million metric tons a year.
Going forward, emphasis will be laid on fashion denim fabrics to target better realizations compared to regular denim material. A combination of higher sales volumes and value added products is likely to fuel top-line growth in the coming fiscals.
Denim fabric contributes 80 to 90 per cent to Nandan’s annual turnover. Spinning capacity has more than doubled. This will ensure adequate availability of yarn for the company’s fabric manufacturing unit besides reducing the degree of dependence on outside suppliers of raw materials and facilitating margin accretion.
Daiichi Orimono produces synthetic polyester fabric with an ultra high-density weave, which makes the material extremely water-repellent and durable. One of the company’s most popular fabrics is 100 per cent polyester but looks and feels like linen. Another hot seller is a polyester fabric that mimics the properties of cotton.
A loom is used to weave fabrics. The process is different for each type of thread used and requires fine adjustments by hand to get the weaving force just right. It is this craftsmanship which makes such fine textures possible.
Even when it produces a textile that does not sell well initially, the company keeps it in stock. What also sets Daiichi Orimono apart is that it sells its products directly to overseas customers, which account for about 70 per cent of its business. Business grew when upscale apparel brands began embracing synthetic fabrics that had traditionally been used in outdoor and sporting goods. Demand in the fashion world for soft, lightweight synthetic fabrics continues to swell. Since 2014, the company has taken the lead in jointly developing fabrics and opening new markets in cooperation with other fabric manufacturers from Japan.
For the quarter ended June 30, 2017, Indo Rama Synthetics’ net revenues stood at Rs 652.54 crores as against Rs 727.45 crores in the corresponding quarter of the previous year. Operational ebidta for the quarter stood at Rs 22.16 crores as compared to Rs 21.68 crores for the corresponding quarter in the previous year. Net loss for the quarter ended June 30, 2017, is reported at Rs 15.57 crores as compared to a net loss of Rs 16.56 crores in the corresponding quarter of the previous year.
Indo Rama Synthetics is India's largest dedicated polyester manufacturer. The main business activities are textiles, polyesters, and industrial chemicals. However in the last few years there has been an oversupply of polyester in the industry. This has resulted in lower profit margins for the company.
Meanwhile, Indo Rama has taken several initiatives to improve its operational performance in terms of specialty products, higher capacity utilisation, cost control initiatives and addition of new customers. Production capacity is 6,10,050 tons per annum of polyester staple fiber, filament yarn, draw texturized yarn, fully drawn yarn and textile grade chips.
Indo Rama Synthetics’ sales volume rose 16.13 per cent for the quarter that ended on September 30, 2016.
Grasim’s net profit for the quarter rose 8.2 per cent year-on-year. Revenue increased 12.8 per cent. Earnings before interest, tax, depreciation and amortisation increased 5.2 per cent. The ebitda margin contracted 150 basis points to 20.3 per cent.
Grasim is a Aditya Birla Group company has a near-monopoly in viscose staple fiber, a biodegradable cotton-like fiber. The company entered the branded consumer segment with Liva, an apparel brand that uses viscose fiber. Liva clothes are now available in over 3000 stores.
Viscose staple fiber prices have gone up globally as inventory in China nearly halved in the last couple of months, helping in better price realization. Liva has helped the viscose staple fiber segment grow at 12 to 13 per cent.
Grasim merged with Aditya Birla effective July 1 as part of the group restructuring. This business will add close to Rs 5000 crores in revenue and Rs 600 crores in ebitda on an annualised basis. Grasim had a cash surplus of Rs 2900 crores at the end of June. The merger with Aditya Birla Nuvo will add a gross debt of Rs 2000 crores. UltraTech is expected to add another Rs 11,000 crores on a consolidated basis, being a subsidiary of the company.
The EU Ecolabel for textiles has been fine tuned to include accessories and intermediate products used in textiles. The amendment also clarifies the exceptions applying when recycled fibers or organic cotton fibers are used and revises the calculation required with regards to percentage of these fibers used in EU-Ecolabelled textiles.
Other criteria for chemical management, such as water repellent finishes, are mentioned alongside new rules for wool and pesticide residues on cotton. Any fiber may be used without having to meet the textile fiber criteria if it contributes to less than five per cent of the total weight of the product or if it constitutes a padding or lining.
For calculating the percentage of cotton in a product that shall be required to comply with certain criterion, the recycled cotton fiber content shall be deducted from the required minimum percentages except in the case of clothing for babies under three years old. There are also changes to criteria on the substitution of hazardous substances used in dyeing, printing and finishing where it states that for water repellent chemistry the repellent and its degradation products shall be either readily and/or inherently biodegradable, or non-bioaccumulative in the aquatic environment, including aquatic sediment.
