After the European Council summit proposed measures to tackle the energy crisis, the European textiles industry has expressed concerns about the loss of competitiveness of Europe demanding the earliest action to save the industry.
The EU textile industry asked the EU council to look at and resolve issues faced by textile players across the value chain. The major factor in the sharp decline in the competitiveness of European textiles is energy cost.
The energy cost in Europe is 6 times higher than in the United States and China. Other textile economies also have access to cheap energy. European textiles lose competitiveness on this count alone. This is the reason that most of the European textile companies still in operation are incurring losses while most have closed. Except for the food business investment in all other sectors has halted in Europe. The textile and clothing sector of Europe is still operating because of its sense of responsibility towards the European Society.
While other economies like China, India, and the US tackled the energy issue proactively the EU acted passively and slowly in responding to the crisis. The Biden administration for instance came up with the 369-billion-dollar scheme of the Inflation Reduction Act.
The loss of Europe’s loss of global competitiveness is evident from the fact that EU imports have registered a 35 percent increase in 2022. The current loss of competitiveness of EU manufacturing will not be recovered even with lower energy prices unless measures are taken to correct the unlevelled playing field on which the EU industry has to operate in the international markets.
If the status quo is maintained, not only the EU will not be able to recover its competitive position on the global business stage, but it will also fail in its plans to reach zero-net emissions and achieve circularity. The whole value chain, from fibers, and nonwoven, to fabrics, clothing manufacturers are facing unprecedented pressure because of the current geopolitical situation, macroeconomic conditions in the EU along with unfair competition from third states.
In the EU, SMEs have been badly impacted by the current crisis. They lack the financial leverage to absorb the impact of energy prices. EU must take steps to ensure their survival. The tolerable gas price is a maximum of 80 Euro/MWh and at the same time, electricity prices should also be lowered to sustainable levels.
