he Textile Services Association’s latest data on the price of raw cotton indicates that there will be further tough times ahead for the working garment industry.
Clean, affordable and quality work wear might be in short supply as a result of the all time high in the price of raw cotton. Latest figures from the Textile Services Association (TSA) indicate that, in the last two months alone, the price of raw cotton has gone up by another 20%. That represents a rise of 95% from January 2010 to January 2011. Reports in the Financial Times claim that cotton has risen by 150%.
According to the TSC, the record hike in price is threatening the future of the UK’s commercial laundry sector and is severely affecting the operational costs of the big users of commercial laundries that supply corporate work wear to major customers in sectors such as healthcare, food production, car manufacturing and the pharmaceutical industry. In the TSA’s quarterly Laundry Cost Index, it is clear that the situation highlighted by the ‘Cain report’ published in January is becoming more and more serious.
Market forces are reflecting the combined effects of the crisis facing the cotton industry itself – major floods around the world affecting cotton growing areas as well as increasing fuel, taxation and energy costs. Cotton prices represent 15% of total operating costs for UK commercial laundries and the current price level is higher than rates were during the American Civil War.
“Crisis-hit commercial laundries in the UK now have no choice but to pass on these spiralling costs to its customers,” explains Murray Simpson, chief executive of the TSA. “Major users of commercial laundries such as the users of corporate clothing, will have to work with their suppliers to find an answer that is sustainable and benefits everyone. Not only are thousands of skilled jobs at stake, but a failure to recognise the challenges may lead to serious supply and quality issues. It is a matter of exercising enlightened self-interest."
Commercial laundries employ in the region of 25,000 people and the industry has a turnover of £1 billion, which as a consequence of the rise in the price of raw cotton is at risk if the price rise is not absorbed into the main market. “Laundry companies across the UK cannot accept this price burden on their own,” states Murray Simpson. “We have already seen that energy prices, which typically comprise 10% of operating costs, have seen two major brands Brooks and Rentokil Initial go out of business as a result. Cotton is at least 15% of TSA members operating costs and as such represents a major threat to their businesses.”
The Textile Services Association is the trade association for the laundry, dry cleaning and textile rental industries in the UK, with membership ranging from large multi-site public companies to smaller family businesses. It acts to lead the industry - to represent the sector effectively and with authority to Government both in the UK and EU, to regulatory bodies and to the media.
The TSA’s Laundry Cost Index is published quarterly and draws on data from the UK government and the Office of National Statistics – go to http://bit.ly/goE80h to download the LCI.
The Cain Report was published in January 2011 and was based on data available in November 2010 – at that time cotton had risen by 76% year on year, as opposed to 95% in January 2011.