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May 6, 2020

Global textile industry prepares for 33% fall in turnover

Global textile manufacturers are expecting challenges ahead, with turnover forecast down an average of 33% compared to last year.

By Michelle Russell

Global textile manufacturers are expecting challenges ahead, with turnover forecast down an average of 33% compared to last year.

A third survey by the International Textile Manufacturers Federation (ITMF) between 16-28 April among its members and affiliated companies and associations about the impact of the pandemic on the global textile value chain shows worldwide orders are down 41%, on average.

Orders in East Asia dropped visibly less (-28%) than in all the other regions (-40% and more). It can be assumed this region, which was hit first by the corona-crisis, is also recovering first from it.

In the last few weeks, most Chinese textile companies have ramped up production significantly. Likewise, off-line retail stores have reopened, and consumption is picking up again in East Asian countries. It remains to be seen what the consumption behaviour will be like in China, Korea and other places once shops are open again, the survey notes.

Worldwide, expected turnover is down 33% on average this year compared to 2019. In Europe, companies are forecasting turnover will be down by “only” 22% – a figure significantly better than the 33% drop reported in ITMF’s second survey.

Companies in East Asia, meanwhile, are expecting turnover to be down by 26%, compared to a drop of 24% in the last survey.

“Companies’ turnover expectations in South East Asia and South Asia, on the other hand, have deteriorated significantly,” the survey explains. “These regions were hit later by the corona-pandemic and hence the full impact was felt with a delay.”

Compared to 2019, expected turnover for 2020 is down to -38% in South East Asia and to -31% in South Asia. Turnover expectations in Africa, South America and North America have not changed much since the second survey.

The main challenges companies are pointing to are securing enough liquidity, supply chain disruption, and uncertainty.

Opportunities include increasingly thinking about diversification, currently focusing on medical textiles; streamlining organisation and production processes; accelerating the reassessment of existing supply chains; and accelerating digitalisation and investing in sustainable production.

According to the ITMF, many companies receive little to no help, even if governments have support policies in place. These can comprise loans with low-interest rates and deferred repayment, delayed tax payments, delayed social security payments, short-work schemes, and reduction of power costs.

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