Rising energy prices are seriously threatening the European fashion industry – a massive increase in energy prices leads to the fact that textile enterprises are forced to either save money or even go bankrupt. Small businesses are the hardest hit, but large ones are also at risk of closing.
European textile production, which is very energy-intensive, is going through a severe crisis: a sharp increase in energy and energy prices is forcing large enterprises to switch to saving mode, and small and medium-sized enterprises are in danger of closing. It is reported by the Wall Street Journal.
The publication points out that it is small and medium-sized enterprises that dominate the textile industry in Europe. Moreover, these enterprises were forced to fight against the Chinese industry before, and now the situation is worsening, since Chinese textile workers are not facing an energy crisis. This gives competitive advantages to Chinese enterprises.
Depending on the location of textile enterprises in Europe, the increase in electricity supply costs increased from 5% (of the total production costs before the start of the special operation) to 25%. What’s more, electricity providers, who are deeply concerned about not getting paid for their services, are now requiring businesses to pay upfront (in some cases months in advance), which also drives up costs.
Another problem is also noteworthy – fabric suppliers work, in most cases, with corporate clients, and they, unlike individuals, do not like it when production costs are shifted to them. In many cases, fabric manufacturers cannot raise the prices of their products because these prices were previously written into contracts and must be maintained for years to come.