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The European textile industry calls for immediate action to deal with the energy crisis; The future of European industry is at stake

By on August 26, 2022 0

BRUSSELS — August 26, 2022 — European textile & fashion in Europe, represented by EURATEX, calls for a single European strategy to deal with this energy crisis. To safeguard the future of the industry, a revision of the electricity price mechanism is necessary and a European gas price cap of €80/MWh. Special support for companies must be granted to avoid bankruptcy and the relocation of textile production outside Europe.

Gas and electricity prices have reached unprecedented levels in Europe. Due to the strong global market competition that characterizes the European textile and clothing industry, these cost increases are impossible to pass on to customers. This has already led to capacity reductions and production stoppages. Closures and moving production out of Europe are expected if the current situation persists, leading to further deindustrialisation of our continent and increased dependence on external suppliers.

Specific segments of the textile industry are particularly vulnerable. The man-made fibers (MMF), synthetic fibers and cellulose-based industry, for example, is an energy-intensive sector and a large consumer of natural gas in the manufacture of its fibers. The disappearance of European fiber products would have immediate consequences for the textile industry and for society in general. Textile dyeing and finishing activities are also relatively energy intensive. These activities are essential in the textile value chain in order to give textile and clothing products added value through color and special functionalities (e.g. for medical applications).

The European textile industry is calling for an EU-wide gas price cap at €80/Mwh and a review of the electricity market price mechanism, to reduce the huge price differentials with our foreign competitors.

Governments should ensure that critical industries, such as textiles and all its segments, are able to secure gas and electricity contracts towards the end of the year at an affordable price. A stable and predictable energy supply is of utmost importance. Gas restrictions and rationing should only be used as a last resort. No compulsory consumption reduction should be foreseen.

In addition to these measures under discussion, we are currently seeing a proliferation of contradictory and uncoordinated national initiatives to deal with the energy crisis. This has led to a de facto fragmentation of the single market, resulting in a chaotic political and regulatory environment which adds further pressure to our supply chain, which is fully integrated at European level. Measures that ensure a level playing field in the EU are of the utmost importance.

The future of the European textile and clothing industry is at stake!

EURATEX President, Alberto Paccanelli, explained: “Given the current situation, a scenario where whole sections of the textile industry would disappear can no longer be excluded. This would lead to the loss of thousands of businesses and tens of thousands of European jobs and would further deepen Europe’s dependence on foreign sources of essential goods. This applies specifically to SMEs that need temporary support measures (e.g. state aid, tax relief, energy price caps) to survive the current crisis and prepare for the green transition in more long term.

Posted: August 26, 2022