Cloth manufacturing units battered by inflation

11 Jun '08
2 min read

Increase in NT dollar exchange rates coupled with hike in prices of crude oil, raw material and power has had a chain effect on the orders received by the cloth manufacturing units which has been on a persistent decline.

In a bid to lower operating pressures, textile manufacturing factories have actively started seeking a restructure in production and marketing strategies.

While some units have reduced their overall production, others have resorted to replacement of old looms with new efficient ones. Ironically, this time manufacturers are facing dual pressure of soaring prices of raw material from upstream sectors and weaker demand from the lower reaches.

Additionally, the dyeing and printing industry from the down stream sectors have increased labor wages by 10 percent with effect from June, causing a triple jump in the cost of production, if oil prices and that of other raw materials are taken in to consideration.

The situation is so grave, that accepting orders at a time when the currency has appreciated by manifolds would only result in losses as gross margins of cloth factories have eroded significantly.

Even though TN dollar and RMB have firmed up against US dollar, the Korean Won has continued to remain on the weaker strata. As a result, most of the orders for thick, high count clothing fabrics and sanding cloth products, from the US and elsewhere as well, have been snatched away by South Korea.

Fibre2fashion News Desk - Vietnam

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