Cotton Crisis on the Horizon?

March 2, 2011 at 6:53 pm Leave a comment

Taking a look at the headlines in the past few months, it may be hard to ignore a few important global stories that may have a serious impact on the apparel industry in the year ahead. Due to various unprecedented floods and natural disasters, the world’s supply of cotton has reached a bottleneck. Devastating weather in Pakistan (world’s number three producer of cotton), and continued flooding in Australia has had a marked effect on many formerly productive cotton fields and manufacturing facilities. In addition to natural events, there are also political forces at play as India, the world’s number two cotton producer, has instituted export restrictions to protect its vital domestic textile industry. The result is a domino effect of scarcity, followed by price increases all along the supply chain. As the price of cotton rises, the supply of synthetic substitutes is affected, and the price of petroleum-based raw materials increases as well. Users of these products in the garment and sewn goods industry are caught scrambling for affordable, accessible fabrics to follow through on design plans.

According to Hameed Khan, director of operations at Masood Textiles in Pakistan, prices have increased 15-35% up through January. Speaking to industry newspaper WWD (Women’s Wear Daily) last month, Khan says, “My fear is that from May onward for two or three months until harvest time, there will be no more cotton in the local market, with scarcity determining the price.”

 

The WWD fiber price sheet backs up this point, showing that cotton prices have risen 170% in the last year from $.64 per pound to over $2 per pound, the highest levels since the cotton embargo imposed during the US Civil War. There has been a 40% increase just since the beginning of 2011. In response, heavy users of cotton in the fashion industry have been forced to make design changes, blending available stocks of cotton with synthetic fibers. The result: higher polyester prices.

Add to this the rapidly increasing demand for cotton goods in China, and it is easy to see how today’s cotton market might very well turn into tomorrow’s lesson in supply and demand economics.

According to industry experts there is little hope for prices to drop anytime soon. Big-time apparel companies are already starting to pass the increases on to consumers.

The Jones Group, which encompasses Nine West and Anne Klein, forecasts double digit increases in the coming year. Levi Strauss, Ralph Lauren Polo and JC Penney, among others, have echoed these dire warnings. The Gap, Wal-Mart and other retailers are already scrambling to find a way to soften the blow as surging clothing prices hit the store shelves.

 

 

So what does the future hold for garment and sewn goods manufacturers? For the short-term it seems that the old way of doing business is in jeopardy. To stay ahead of these brutal, inescapable market forces, today’s apparel manufacturer is going to have to look forward, and stay nimble. The ability to keep tabs on the availability and affordability of key raw materials—and to react quickly to a shifting, volatile textile market— is now imperative. It is no longer sufficient to assume that the materials on hand at the time of design are still going to be a realistic option months down the road when it is time to roll out a product line. That is why having a data management system, one that is designed with the needs of the clothing industry in mind, is now a necessity. Without total control over the complex data stream inherent in manufacturing there is no way to foresee and react to this kind of shaky market. Having a PLM system could be the only chance for a garment company to put the reigns on what some have termed a terrifying future for the industry.

 

The VerTex Product Lifecycle Management system by BMS is one of the only PLM products on the market designed from top to bottom to deal with the complexities of the clothing industry. Built by people with over 30 years in the apparel industry, the VerTex system offers configurable, scalable toolboxes to help companies turn a flood of raw data into manageable, meaningful information; the type of information that will allow you to make the most accurate predictions and most informed decisions possible. In this climate nothing can be taken for granted. Inflationary material prices, unstable market forces, political and natural events, all of these factors can influence your choices and decision-making. Having the ability to oversee a product from concept to delivery is more important now than ever before. The best defense against future uncertainties is valid, reliable information. An effectively implemented PLM tool can offer just that.

 

JW Yates

NYC, New York

 

Resources:

http://www.wwd.com/markets-news/apparel-prices-primed-to-rise-3490958

http://www.indexmundi.com/commodities/?commodity=cotton

 

 

 

Business Management Systems

330 West 38th Street

Suite 705

New York, NY 10018

(800) 266-4046

info@bmsystems.com

http://www.bmsystems.com

 

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About BMS

Business Management Systems (BMS) has been a leading provider of product lifecycle management software solutions to the apparel & textiles industry for 15 years, delivering VerTex Toolboxes--an easy-to-use modular system uniquely configured to meet every company's specific needs.

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