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Textile Manufacturers Say Their Order Backlog Is Getting Longer

Business isn’t great right now, and many textile manufacturers think it’s only going to get worse, according to a new industry survey.

The latest International Textile Manufacturers Federation (ITMF) “Corona-Survey” among more than 220 companies around the world in all segments along the textile value chain showed  that their business expectations in the next six months remain tenuously optimistic but stand “on a much weaker foundation.”

Since September, the balance between more favorable and less favorable business expectations has plummeted to 7 percent from 32 percent. Higher costs for raw materials, energy and transportation are the main concerns for companies. Weaker demand is another worry. On average across the supply chain, companies can only pass on 40 percent of their additional costs, the survey said.

“This is a clear indication that the textile value chain has passed the tip of a strong business cycle in the fourth quarter of 2021,” ITMF said. “Whether we will see a broader albeit slower economic growth in the future will depend very much on whether disrupted global supply chains will be rebalanced and how the Russian war in Ukraine will develop in the coming months.”

In the second half of March, ITMF conducted its 13th survey to determine the state of the global textile market. On average across all regions and segments, the business situation remained in positive territory, with a 14 percent differential between “good and poor” responses. However, this was below the 18 percent difference in January and the 26 percent difference in November. The business situation was in positive territory in all regions except for East Asia and Africa.

ITMF said 43 percent of companies judged their situation as “satisfactory,” showing that “demand remains strong despite the many challenges companies are facing on the supply side like delayed deliveries and higher production costs.”

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In North and South America and Africa, companies said they anticipate a “more favorable” business, while in all other regions the balance between more and less favorable was negative.

As for the different segments, the downstream sectors–weavers/knitters, finishers/printers, and garment and home textile producer–are generally struggling more than the upstream segments–fiber producers, spinners, and textile machinery producers. This is especially true when it comes to passing on higher costs.

The order intake fell to plus 12 percent from a higher level of plus 38 percent in November, reflecting the weaker business situation. Likewise, order intake expectations deteriorated in March to plus 22 percent from plus 34 percent in January. Since July, order backlog rose to 3.1 months from 2.3 months, with the expectations for order backlog unchanged at 2.9 months.

The capacity utilization rate stayed at around 80 percent. The expectations are unchanged given the persistent supply chain bottlenecks, ITMF noted.