Textination Newsline

"Shared vision of a true circular economy for the textile industry"

US fashion group PVH has joined the fibre-to-fibre consortium founded by Carbios, On, Patagonia, PUMA and Salomon. The aim is to support the further development of Carbios' biorecycling process on an industrial scale, setting new global standards for textile recycling technologies. PVH owns brands such as Calvin Klein and Tommy Hilfiger. In the agreement signed by PVH Corp, the company commits to accelerating the textile industry's transition to a circular economy through its participation in the consortium.

Carbios is working with On, Patagonia, PUMA, PVH Corp. and Salomon to test and improve its bio-recycling technology on their products. The aim is to demonstrate that this process closes the fibre-to-fibre loop on an industrial scale, in line with sustainability commitments.

The two-year cooperation project will not only enable the biological recycling of polyester articles on an industrial scale, but also develop thorough sorting and disassembly technologies for complex textile waste. Existing members voted unanimously for PVH Corp. to join the consortium, saying the common goal is to support the development of viable solutions that address the fashion industry's contribution to climate change..

Carbios has developed a technology using highly selective enzymes that can recycle mixed feedstocks, reducing the laborious sorting required by current thermomechanical recycling processes. For textiles made from blended fibres, the patented enzyme acts only on the PET polyester contained within. This innovative process produces recycled PET (r-PET) that is equivalent in quality to virgin PET and can be used to produce new textile fibres.

Textile waste treatment and recycling
Globally, only 13% of textile waste is currently recycled, mainly for low-value applications such as upholstery, insulation or rags. The remaining 87% is destined for landfill or incineration. To work on improving textile recycling technologies, consortium members will supply feedstock in the form of clothing, underwear, footwear and sportswear. In 2023, a new PET textile waste facility will be commissioned at the Carbios demonstration plant, notably as part of the LIFE Cycle of PET project co-funded by the European Union.  This is in anticipation of future regulations, such as the separate collection of textile waste, which will be mandatory in Europe from 1 January 2025.

From fibre to fibre: circularity of textiles
Today, the textile industry relies largely on non-renewable resources to produce fibres and fabrics, partly turning to recycled PET bottles for recycled polyester fibres. However, this resource will become scarce as PET bottles are used exclusively for the production of new bottles in the food and beverage industry. In a circular economy, the materials used to produce textiles are obtained from recycled or renewable raw materials produced by regenerative processes. In addition to supplying raw materials for the demonstration plant, the consortium members also aim to produce new products from r-PET fibres using the company's biorecycling process.

"Partnering with Carbios and its consortium members demonstrates our continued commitment to incorporating more circular materials into our collections," said Esther Verburg, EVP, Sustainable Business and Innovation, Tommy Hilfiger Global and PVH Europe. "We are excited to support the development of Carbios' enzymatic recycling technology and to leverage new solutions that can help us drive fashion sustainably."

• Chinese companies are planning several major projects
• Germany is supplying more textile and clothing machinery

Several Egyptian and Chinese companies have announced some heavy manufacturing investments in textiles and clothing. The government is committed to creating new production priorities for textiles and wants to increase added value. Labor-intensive industries benefit from the low value of the Egyptian pound for their exports. For textile and clothing machinery, Germany achieved a delivery share of around 20 percent in 2016. In the Egyptian textile and clothing industry, the signs point to expansion and modernization. Local media reported on a series of investment plans by Chinese and Egyptian companies. According to the newspaper Al Gomhouria, a Chinese producer is planning the world's largest textile factory for USD 6 billion in the economic zone on the Suez Canal. The Chinese companies TIDA and Shoon Dong Roy want to build a clothing factory for USD 800 million. Sino-Egypt Minkai plans to build a textile industry complex for around USD 750 million. The local paper and stationery manufacturer Mintra plans to start the production of sports shoes with an initial investment of USD 50 million. Manufacturing in the 10th of Ramadan City is scheduled to begin in mid-2018, serving both the domestic and overseas markets. Egypt is still importing about 85 percent of the shoes sold in the country.
Oriental Weavers plans to purchase new production lines, machinery and equipment in 2018. For this purpose, EUR 6 million are to be invested. According to the newspaper Al Shorouk, the expansion will be financed by a bank loan.

State relies on new textile cities and more value added
The Egyptian state also wants to strengthen textile and clothing production. The Ministry of Investment and International Cooperation, the Supreme Council for Textile Industries and an unnamed Chinese partner want to set up a free zone for textile production in Minya. The ministry plans to provide part of the funding through international institutions and create specialized training programs for workers. According to media reports, the project value should be at USD 324 million.

In early 2017 the Egyptian Ministry of Industry announced that it would set up new textile production centers at a total of ten locations. In particular, spinning mills and weaving mills are in the spotlight. This perspective is shared by the Ministry of the Public Sector. It is aimed primarily at increasing value adding and therefore carried out a study in 2017.

Import demand for textile and clothing machinery is expected to increase
Egyptian textile and clothing companies often produce with a lot of manual work and partly outdated machines. On the one hand, the government is keen to ensure that as many jobs as possible are created for the approximately 800,000 young people who enter the market each year. On the other hand, a more automated and modern production of textiles and clothing would enable more complex products. These could be sold at a higher profit, but may also require less human labor.

An Indian company has secured a contract to modernize cotton processing. In compliance with a framework agreement with the Cotton and Textile Industries Holding, Bajaj Clothing automates cotton ginning systems. A total of eleven companies in different parts of the country will be equipped with the new machinery until August 2018. In late December 2017, Egypt Today announced that the government wants to modernize the spinning and weaving mills in Northern Egypt. The investment volume will amount to a total of one billion Euro over a period of five years.

The newly announced projects are expected to increase the demand of import machinery in the near future. Like other types of equipment, the vast majority of textile and clothing machinery will be imported into Egypt. Deliveries from Germany were able to improve both in absolute terms and relatively in 2016, despite an overall shrinking of the volume of imports. The German supply share jumped from 15.8 to 20.4 percent compared to 2015.

Source: UN Comtrade

The consequences of the release of the Egyptian pound in November 2016 will mainly benefit labor-intensive industries and those that are processing mainly local raw materials. After October 2016, the value of the EURO soared from just under 9 to 21 Egyptian pounds and has stabilized at this level. According to various figures the textile and clothing companies in the country employs between 1.0 and 1.2 million workers. It is reported that state-owned enterprises are strongly represented in the textile sector, while the private sector plays a greater role in the clothing sector.

The advantage is dampened by the import requirements for cotton. In Egypt, especially soft and high-quality long-staple cotton is grown and exported. By contrast, domestic textile and clothing companies mainly use short-staple cotton from abroad as a raw material. Their import as become more expensive due to the currency developments. Nevertheless the competitiveness of Egypt's textile and clothing exporters has improved as a result of the new foreign exchange situation. Their exports should have developed better in 2017 than at the peak of the currency liquidity crisis in the previous year. At that time, exports fell by12.6 percent to around USD 1.7 billion.

Source: UN Comtrade

Increasing labor costs at Asian production sites, long transport routes and sometimes dissatisfaction with the product quality make some customers look for new sources of supply for textile and clothing products. According to a report by the news portal Middle East Eye, Egypt lies at least with USD 100 as a monthly salary for workers roughly equivalent on a level with India or Bangladesh and about half of Chinese salaries. In addition, the country at the Suez Canal is capable of fast deliveries to Europe and the United States. Regional competitors include Turkey and Tunisia. Egyptian manufacturers are not always recognizable as such, as they often manufacture for major international brands. Middle East Eye names Calvin Klein, Decathlon, Tommy Hilfiger and Zara as examples. In November 2017, Dice Sport and Casual Wear agreed to supply Levi Strauss & Co. with children's clothing.

Since 2017, Egypt became part of the Better Work Program of the International Labor Organization. The program includes 30 apparel factories in which the working conditions should be improved. Such confirmations could then give Egyptian products competitive advantages in export. However, to stand up to the tough international price warfare and at the same time to meet by the customers expected production standards will be a challenge.

• Competition requires Modernization
• Declining Exports due to Energy Shortage and Lack of foreign Currency

Cairo (gtai) – Egypt’s vertically integrated textile and clothing industry has a strong basis. To remain competitive more modern equipment and innovative products are required. Also the cooperation with local suppliers is upgradeable. The government is planning two new textile industrial zones. The import of textile and leather machinery in the first three quarters of 2015 reached USD 135 million. Of this 17% were Ger man deliveries.

The situation of the textile and clothing industry in Egypt provides ample material for both optimists and for doomsayer. Technical modernization of the mills and a focus on products with higher added value offer opportunities. Potential also has a better link between the production stages. These would include installation for spinning, weaving and laundries for denim. As upgradeable product groups like underwear, high quality knitwear and fabrics can be seen. With such the benefits of Egypt could be better accentuated. These include the favorable geographical location, the proximity to major markets and a variety of trade agreements. According to the American Chamber of Commerce Egyptian manufacturers already provide clothing for international brands such as Calvin Klein, Disney, Gap, Timberland and Zara.

The chances however are being opposed by a number of difficulties. Also the textile and clothing sector was hit by the energy crisis and the lack of foreign exchange. Many companies have a limited level of liquidity. Research and development were neglected for years, although there are positive examples of innovative companies also. Many producers were forced to close in recent years. Due to the risks in the sector banks are very reluctant in lending money.

Especially needed would be modern technology and product innovations in the face of the strong competitive pressures from abroad. The comparatively low level of wages in Egypt is higher than at Asian competitors. This lets rise problems in terms of export opportunities, also with regard to the domestic market. Here imported goods cover ground, especially since Egyptian manufacturers have raised their prices in recent years. As intensifier act the high exchange rate of the Egyptian pound and the inflation rate of around permanently 10%.    

The cost pressure makes it difficult for the mills to attract high-skilled workers, which is also reflected in a high fluctuation. Several times since 2008 strikes have paralyzed the production. Industry experts complain about a poor education level and lack of efficiency. As a countermeasure the companies organize courses for their employees.

The local cultivation of cotton does not cover the demand of the textile manufacturers

Despite cotton is grown in Egypt on a large scale, the varieties do not fit the needs of most local spinning mills. The country is famous for its high-quality, soft and durable long-staple cotton, while the factories prefer and demand now short and medium staple cotton qualities. The exports are facing a strong competition from the US Pima cotton quality. The Egyptian textile and garment companies mostly import in contrast their material especially from Greece, the United States, Burkina Faso and Benin. As a result, the high-quality raw cotton is exported and not value adding intensively processed domestically, while scarce foreign exchange flows in the import of foreign cotton.

Unrest in the sector is provided by short-term legislative changes. Thus the import of cotton was prohibited in summer of 2015, however allowed again after one week. Domestic cotton farmers are particularly affected by the reduction of subsidies, which concerns the cultivation itself and the needed fertilizers. Many farmers change to other crops, because cotton does not pay anymore and high inventories have accrued.

Egypt has a vertically integrated textile and clothing industry. It represents about 25% of the industrial production of the country and also provides a quarter of all manufacturing jobs. The largest product group is clothing, also fabrics and filament fiber and yarn play an important role. Approximately 50 to 60% of the spinning, weaving and felt capacities are state owned, while private companies dominate for 90% the garment production. The regional main textile areas are greater Cairo, the Nile Delta and Alexandria. In February 2015 the General Authority for Investment and Free Zones counted 4,594 textile and apparel companies with total investments of nearly USD 6 billion. Of this 4,399 companies where located in normal domestic areas, 196 in special free zones.

Quellen: Invest in Egypt, Research of Germany Trade & Invest

Weaker export results for textiles and clothing in 2015

With a volume of at last nearly USD 2.7 billion in 2014, textiles and clothing were the fourth most important export goods of Egypt. Based on the first nine months of 2015 however, weaker annual results than in 2014 are expected. The by far biggest target markets are still the EU and the USA.

*) January – end of September
Sources: UN Comtrade

Against all odds, the Egyptian textile and clothing companies are about to invest in their facilities. ESW announced in September 2015 to provide eight subsidiaries with approximately USD 19 million for reactivated and new production lines. The Czech Pegas Nonwoven Co. has ordered another manufacturing facility for its Egyptian plant. The imports of textile and leather machines from Germany are more stable than the total imports. After the results of the first three quarters, it is clear that German deliveries in 2015 will be higher than in 2014.

*) January – end of September
Sources: UN Comtrade

The Egyptian government has announced to build two industrial zones for textiles in Borg El Arab and the 6th of October City near Cairo. In August 2015 the Chinese Gondong Group had first talks about a possible investment in Egypt.

Internet addresses

Cotton Research Institute
Internet: http://www.arc.sci.eg
Egyptian Textile Development Association
Internet: http://www.etda-egypt.org
Egy Stitch & Tex (internationale Ausstellung in Kairo)
Internet: http://www.egystitchandtex.com
Industrial Development Authority
Internet: http://www.ida.gov.eg
Industrial Modernisation Centre
Internet: http://www.imc-egypt.org
Industrial Union of Garments - Chamber of Textiles Industries
(im Dachverband Federation of Egyptian Industries)
Internet: http://www.fei.org.eg
Home Textile Export Council
Internet: http://www.egyptianhometextiles.org
National Research Center (mit Textile Industries Division)
Internet: http://www.nrc.sci.eg
Ready Made Garments Export Council
Internet: http://www.rmgec-egypt.com
Textile Export Council
Internet: http://www.textile-egypt.org