“Last year, due to the land policy, all the land in our village had to be converted into forests within the next two years, so we sold the machine , started processing. Unexpectedly, when the epidemic hit this year, we breathed a sigh of relief.” A cloth boss who originally owned more than 100 looms revealed.
In 2017 and 2018, due to the water-jet loom rectification movement launched in Jiangsu and Zhejiang regions, the number of looms suddenly decreased a lot, which also led to the supply of gray fabric production capacity exceeding demand. , many manufacturers had no time to produce at full capacity, so they came up with the idea of expanding to the central and western regions. However, in 2020, many bosses said that they had sold their machines and factories for processing or switching to trade, but there was no financial pressure. So big…what’s the reason for this?
The crazy expansion in 2017 and 2018 has sown its consequences! The price of gray cloth flooring cannot be sold!
Last year, overcapacity in the gray fabric market became an indelible pain in the hearts of textile people. Coupled with the deterioration of the market environment, Sino-US trade friction intensified , the number of orders has shrunk sharply, and everyone’s life is very difficult. This is all because in 2017 and 2018, when “every day makes money”, Jiangsu and Zhejiang eliminated the production capacity of water-jet looms. In order to meet production needs, cloth bosses began to move to peripheral areas, and the machines were sold by hundreds and hundreds of hundreds. The production capacity of gray fabrics is about to explode, and these gray fabrics will eventually flow into the Jiangsu and Zhejiang markets, and the prices will be cheaper, which has a huge impact on the local gray fabrics!
Such a large gray fabric production capacity cannot be digested by terminal orders. This has led to the overcapacity of gray fabrics in the past two years, and the price has also dropped again and again. For example, the price of 300T pongee in 2018 was 3.2 yuan/meter, but now there is only 2 yuan/meter left. When selling, it can be sold for about 1.4, a drop of 40%! But even though the price has dropped below the floor price, it still cannot be sold!
Without profit, even the workers can no longer afford it!
Beginning in March this year, foreign trade orders were canceled and suspended. It only improved slightly in May, but the epidemic dealt a heavy blow to the economy. , it will take a long time for clothing demand to return to the level of previous years. It can be said that most manufacturers are currently relying on scarce domestic trade orders, and some manufacturers are in the current situation of having no orders to make. “From mid-March to now, we have not received orders for foreign trade, and domestic trade is also pitiful. Thousands of kilometers of land have been produced. Now half of the machines have stopped, and the production is used as inventory. This means that we have only expenses and no income for three months. However, raw materials, labor wages, water and electricity, etc. all need cash. Once the cash flow is interrupted , we can only disband.” A manufacturer of polyester taffeta, pongee, and four-way elastic said.
Take 100 looms as an example. In terms of rent, the current factory rent is 60-70 yuan/year/square meter. A factory with 100 machines and 2,000 square meters per year The rent is about 120,000-140,000 yuan;
In terms of wages, skilled workers are 9,000 yuan/month and new workers are 5,000-6,000 yuan/month. Generally, a factory needs to have 30-40 workers. Then the monthly salary cost is at least 300,000 yuan;
Add in other expenses such as raw materials, water and electricity, financial management, etc., so the cost of weaving per day is about 40,000 yuan. Yuan or so.
In terms of inventory, factory inventories are now more than 2 months old, and some are even more than 3 months old. The inventory pressure is quite high, and the occupied funds are about 2 million.
Although business costs this year are a little lower than in previous years, raw material prices are at a low level, and electricity bills are also discounted, the costs are low, but there is no profit. This is due to the lack of foreign trade orders, and secondly, the inventory cannot be sold, which takes up a lot of working capital. Many manufacturers say that it is difficult to support workers now, and they are simply eating up their previous capital, but there will be a day when the capital is exhausted.
Weaving manufacturers with orders missing for more than 3 months: July A wave of production shutdowns may begin
Now it is July, which is the traditional textile off-season. For textile companies that have been carrying it for more than half a year, He said that he was indeed a little tired, “In the past few months, we were struggling to hold on, and we were still weaving inventory when we had no orders. Now it is July, and more and more manufacturers are on holiday and suspending production. We are also considering stopping for a longer period, so that we can It can relieve the pressure on funds and inventory.” said a manufacturer of imitation memory.
Understand that there are many bosses in the market who intend to suspend production and take holidays. There is overcapacity coupled with insufficient demand, and there are signs of a second outbreak of the epidemic in the United States recently. This makes Boss Bu less confident about the future. For a long time in the future, Boss Bu will face a lack of orders and tight funds. At present, all Boss Bu can do is adjust his mentality, take it one step at a time, and try to stabilize his plate.
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