Following the word “foreign trade refund” on the textile hot search list, “reducing production”, “stopping production” and “holiday” have recently become a hot trend in textiles. New words on the search list.
1
Weaving companies began to take turns to reduce production, reduce employees and reduce salaries
A weaving company in Jiangsu and Zhejiang issued a notice: Due to the withdrawal of international orders, the production of 36 looms will be reduced starting from March 28, and all employees will take turns. Corresponding salary reduction!
A mother of two children born in the 1980s said: “I have been engaged in blocking cars. I have been working for more than ten years, and it has been more than two years since I quit my job after having my second child. Now that my child is grown, I planned to return to work, but I couldn’t find a job at all. Many factories not only refused to recruit people, but also laid off some people. Many of my peers My friends have also switched from three shifts to four shifts, but at least they have jobs, I don’t even have a job!”
After listening to the complaints of this female textile worker, the editor My heart couldn’t be calm for a long time. From end customers suspending operations to fabric manufacturers receiving order cancellation notices, to weaving manufacturers reducing production, this series of chain reactions have been transmitted to downstream. Some weaving companies cannot withstand the pressure of the downturn and have begun to reduce production and take turns to take holidays. The editor has seen many notices similar to the following in the circle of friends. I fear that more weaving companies will join the ranks of reducing production in the future.
2
The fabric orders were withdrawn, but it was the weaving companies that suffered the most
Although fabric companies are directly affected by foreign order cancellations, in fact, the biggest impact is on weaving companies. On the one hand, it is becoming increasingly difficult for weaving enterprises to transfer funds. As we all know, most of the sales of gray fabrics are shipped in arrears, especially since 2019, this situation has become more and more serious. The orders in hand of the fabric merchants were cancelled, and some of them had already completed production and were not shipped. If they could not receive payment, the fabric merchants would naturally not pay the weaving companies. In short, the repayment cycle is extended indefinitely and capital flow becomes a big problem.
On the other hand, due to the impact of the global epidemic, not only foreign trade orders have been returned, but domestic sales orders have also been affected. The demand for gray fabrics has dropped, the delivery speed has been slow, and supply exceeds demand. Contradictions continue to be magnified. High inventory and low market conditions force weaving companies to start reducing production! Therefore, some weaving factories in the Jiangsu and Zhejiang markets have begun to suspend and reduce production.
3
In just a few months, the operating rate of looms may be on a “roller coaster” again
At the beginning of March, good news about goods being sold out came frequently in the circle of friends, and weaving manufacturers also began to reduce inventories. But only half a month later, the market began to change direction. Fabric manufacturers have successively received notices from customers canceling orders and suspending orders. Subsequently, many weaving manufacturers said that the delivery speed of goods has been slowing down recently, and the production and sales in the factory have begun to become unbalanced again.
According to data monitoring from China Silk City Network, the loom operating rate rose sharply from 25% to 80% in early March, and then began to decline on March 20, falling to 76%. During the visit and research, the editor learned that many weaving manufacturers have plans to reduce production in April. We can imagine that the subsequent trend of loom operation rates will show a straight downward trend, which is as exciting as a roller coaster!
As for the price of gray fabrics, they have also declined with the downturn in the market. Recently, when the editor mentioned the word price to Boss Bu, he heard it was “guaranteed capital”. Affected by the epidemic, upstream raw materials have fallen by the limit many times, polyester prices have continued to fall, and gray fabrics have lost cost support. Although the transaction atmosphere in the market improved for a time in early March, and shipments of conventional products also eased, facing the accumulation of gray fabric inventory in the early stage, weaving manufacturers still have a long and difficult road to destocking. Under the triple influence of high inventory, low cost, and low market conditions, the price of gray fabrics continues to fall. There is even a situation of selling at low prices in the market.
4
Production reduction to cope with the epidemic The market after the end
In special times, special operations are necessary to ease the market. The current suspension of production is not because weaving companies have lost confidence in the market, but to usher in a new market after the epidemic is over. If the inventory is too high and blind production will only divert funds, it will cause unnecessary trouble to the operation of the enterprise.
It is only about 3 months since the last production cut, and it is happening again. At present, due to the outbreak of overseas epidemics, poor demand for clothing, and a lack of a good environment in the upstream and downstream sectors, it is still unknown whether the actual effect of production reduction can be realized. Whether it is reducing staff and salary, or encouraging employees to find their own way out, it is really a helpless move for weaving companies to survive in a desperate situation.
In general, when the epidemic is over, terminal demand will still be��Exists, but the market consumption structure may change. However, everything will gradually recover, but the process may be slow, so now Boss Bu’s top priority is to maintain a relatively healthy cash flow level.
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