Textile and clothing industry

and machinery manufacturing not providing grounds for optimism. Supply shortages in semiconductors are now expected to persist over and beyond the end of the year. Further shortages of nickel, palladium and neon as well as logistics problems are exacerbating the situation. This will curb growth in the supplier industries of steel and metal processing. The production forecast for 2022 has thus been reduced from seven percent down to five percent.

The economic upturn is overshadowed by the challenges facing the industry. The Ukraine war has triggered a further escalation in prices, particularly for energy, which are proving too much for companies to cope with. The federal government has responded with a package of measures to cushion the impact of the most extreme price peaks on spot markets at least. The package will not provide relief across the board due to the high obstacles which are above and beyond the scale stipulated by the European Commission. A possible gas embargo would cause a further substantial increase in prices and paralyse industrial production even factoring in remaining natural gas supplies, particularly as the federal government is planning to give gas suppliers the legal right to pass on price increases along the supply chain.

Contact: Holger Ade / Phone: +49 233 1958 821 / Mail: hade@wsm-net.de

Textile and clothing industry

Following two years impacted by Covid, the German textile and clothing industry was back to prepandemic levels across all key economic indicators in February 2022. Sales were back to 2019 levels following an annual increase in 2021 of 5.5 percent and a very good start to 2022 with first quarter growth of 21 percent and exports already higher than before the pandemic. Overall, the clothing sector only started out 2022 with an increase in sales of three percent in 2021 (textiles up 6.9 percent). However, short-term export and sales expectations improved significantly more for clothing than for textiles, where many suppliers in other industries are badly affected by supply chain disruptions. The number of people working in the industry shrank by around eleven percent during the crisis.

Commodity prices have been and continue to be an increasing problem for the industry. The prices of all key commodities of the textile and clothing industry have surged over the past two years, affecting both synthetic and natural fibres such as cotton. Energy-intensive products such as nylon and its intermediates are particularly affected by price increases, especially given the sharply increasing energy prices. While products are cheaper on the whole in Asia, particularly because energy prices here have not risen that much, the logistics crisis represents a further problem for German companies. Container shipping rates from the Far East have multiplied about tenfold in the last two years. The situation is compounded by supply delays and cancellations. Just over 90 percent of clothing companies and just over 60 percent of textile companies are struggling with material shortages. All companies are affected by the hike in prices. Roughly 60 percent of companies in the industry expect to be able to pass on a maximum of one quarter of the price increases to customers. Producer prices increased more than usual for the industry. In the first three months of the year producer prices for clothing were 2.6 percent higher and for textiles 8.2 percent higher.

The outbreak of the Ukraine war has placed additional pressure on the industry. The direct impact of the war on companies in the textile and clothing industry is low. Although over 50 percent have