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August 30, 2022

Euratex urges unified approach in tackling energy crisis

The European Textile Industry Association (Euratex) is urging a unified strategy to tackle the energy crisis saying there is a risk of entire segments of the textile industry disappearing leading to widespread company closures and job losses.

By Hannah Abdulla

Euratex has criticised “contradictory, uncoordinated national initiatives to tackle the energy crisis.”

“This has led to a de facto fragmentation of the Single Market, resulting in a chaotic policy and regulatory environment that adds a further strain on our supply chain, which is fully integrated at European level. Measures that guarantee a level playing field in the EU are of utmost importance”.

Euratex says to safeguard the future of the industry, a revision of the electricity price mechanism is necessary and an EU-wide cap on gas prices at 80€/MWh. Special company support needs to be granted to avoid bankruptcy and relocation of textile production outside Europe.

It adds that gas and electricity prices have reached unprecedented levels in Europe and due to severe global competition in the market, the cost increases are impossible to pass on to customers.

This has already led to capacity reductions and production stops. Closures and the shift of production outside Europe are being forecasted should the current situation persist, leading to further de-industrialization of our continent and increased dependency on external suppliers,” Euratex says.

Euratex president Alberto Paccanelli explained: “Given the current situation, a scenario where entire segments of the textiles industry will disappear can no longer be excluded. This would lead to the loss of thousands of companies and tens of thousands of European jobs and would further aggravate the dependency of Europe to foreign sources of essential goods. This applies specifically to SMEs who need temporary support measures (e.g. state aids, tax relieves, energy price cap) to survive the current crisis and to prepare for the green transition in the longer run.”

Specific segments of the textile industry are particularly vulnerable, comments Euratex, pointing to the man-made fibres (MMF), synthetic and cellulose-based fibres industry, for instance, is an energy-intensive sector and a major consumer of natural gas in the manufacturing of its fibres. The disappearance of European fibre products would have immediate consequences for the textile industry and for society at large. The activities of textile dyeing and finishing are also relatively intensive in energy. These activities are essential in the textile value chain in order to give the textile products and garments added value through colour and special functionalities (e.g. for medical applications).

Euratex is calling upon governments to ensure critical industries such as textiles and all its segments are able to ensure gas and electricity contracts towards the end of the year at an affordable price. Gas restrictions and rationing must only be used as a last resort. No mandatory consumption cuts should be foreseen.

Last week the UK announced a domestic energy bill rise to GBP3,549 (US$4202) per year from 1 October with no caps for apparel factories or retailers. A GlobalData analyst says apparel spend will be reduced and some retailers will struggle with overheads, which could restrict growth for the sector.

Earlier, the UK Fashion and Textiles Association (UKFT) warned UK clothing manufacturers will face see significant challenges as energy bills look set to surge again, with many unable to pass on the cost to consumers.

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