"The situation is no longer bearable," Alberto Candiani, president, Candiani Denim, raised a cry of alarm recently. The businessman's urgent plea for help is addressed to the Italian government and European institutions to find a quick and effective solution to the extremely high gas and electricity prices.

 



"It seems that the authorities have not understood that textile companies are highly energy intensive on par with those in tiles, glass and steel. We use very high quantities of electricity for weaving along with gas for dyeing and finishing," continued the owner of the Italian company specializing in the production of premium denim. 




Despite prices of energy sources had remained at a fairly constant level for the past 20 years, after an increase during the pandemic, with the beginning of the conflict between Ukraine and Russia prices skyrocketed, forcing textile entrepreneurs, especially those in Europe, to increase their prices in turn as well in order to cope with the situation.

A round table held during MFS. Left: Andrew Olah (Transformers Foundation), Tahla Kahn (Pakistan Environmental Trust), Alberto Candiani (Candiani Denim), Yucel Bayram (Kipas) and Johannes Stefan (Lenzing Group)
Photo: Maria Cristina Pavarini
A round table held during MFS. Left: Andrew Olah (Transformers Foundation), Tahla Kahn (Pakistan Environmental Trust), Alberto Candiani (Candiani Denim), Yucel Bayram (Kipas) and Johannes Stefan (Lenzing Group)
"We were forced to implement significant increases. Between January and July 2021, the average price for a linear meter of our textiles was €5.35. In the same period in 2022, while taking some costs on our shoulders, we had to sell them at €7.23, but we could reach €9 in the fourth quarter of 2022 if drastic measures to curb energy costs do not come,” he said. “We are forced to sell at improbable figures thinking that, for example, the prices of Turkish manufacturers are €4 per meter, already practically double ours, not to mention the lower prices of producers from other non-European countries. With costs like that, we risk being squeezed out of the market," he explained.




The costs are unsustainable because until a year ago the company was paying about €7 million a year for gas and electricity, while by the end of 2022 it will reach between €25-30 million annually. If on average in the past Candiani's monthly bill was about €700,000, now it amounts to €4 million per month. Costs that are not bearable for a company whose revenues are €100-€110 million a year.

 



"In recent times, given the excellent response from the market, I had hired more staff and restored Saturday shifts, but the current situation does not allow me to continue with these rhythms and I will not be able to confirm all the workers I wanted to hire on a fixed basis, plus I have to start using short time working measures to contain such costs," he added.

Candiani Denim
Photo: Candiani Denim
Candiani Denim
“We have done as much as we could in order to survive the present situation and decided to accelerate the process of increasing our energy efficiency by substituting old boilers with new generation ones. This way we could reach emission levels which are below the ones requested by the Kyoto Protocol. Therefore, we could exit from it and put on the market the emission tradings we had accumulated. We have already started selling them and capitalized a small amount of about €2-€3 million that the company could have put aside. Though, by spending this amount I can do little for the company," continued Candiani.






"I was also going to activate a photovoltaic system, but it takes time and it would only guarantee us ten percent of the energy we need…We have done everything we could. Now we need the Italian Government and, especially, European institutions to intervene and impose, for example, a cap on the price of gas,” he added.

 




Until a few months ago, among the causes of price increases in finished goods was the price of cotton because it had doubled from US$0.65 to US$1.2 per pound, but it seems to have become a problem of secondary importance because energy prices that used to account for ten percent of Candiani's sales now they account for 30%. 





Unfortunately, other factors seem to be dogging the textile sector globally in recent times. For example, the recent disaster caused by monsoon rains in Pakistan resulted in the destruction of the country's crop estimated at 50% to 70%. In addition, other weather disasters that have happened in Texas could lead to significant price increases in the cotton sector as well.

A shirt made with Candiani-Tencel Limited Edition Hemp denim
Photo: Maria Cristina Pavarini
A shirt made with Candiani-Tencel Limited Edition Hemp denim
"At this precise moment, I am not particularly concerned about the cotton situation because I have already set prices and purchased raw material quantities for 2023. It's rather the situation of geopolitical instability weighing on consumption. Now we are seeing already a slowing down in consumption starting in the United States and Europe might follow soon. Many factors indicate to us that next fall could be very difficult…"




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