"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.
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.
"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.