WATER ENERGY CREATIFITY 1) TEXTILE MARKET 02/11/16. The World Challange. The World Challange. The World Challange

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1 Andrew Macdonald Board Member International Textile Manufacturers Federation (ITMF) The World Challange Overcoming Tex.le Industry Challenges ICAC 75th Plenary Meeting Emerging Dynamics in Cotton: Enhancing Sustainability in Cotton Value Chain October 3-November 4, 216 Islamabad, Pakistan WATER ALSO FOR THE TEXTILE INDUSTRY 2 The World Challange ENERGY The World Challange CREATIFITY ALSO FOR THE TEXTILE INDUSTRY ALSO FOR THE TEXTILE INDUSTRY 3 4 Creativity is the act of turning new and imaginative ideas into reality. Creativity is characterized by the ability to perceive the world in new ways, to find hidden patterns, to make connections between seemingly unrelated phenomena, and to generate solutions. 1) TEXTILE MARKET 5 6 1

2 World Population (in bn) Export Textiles & Clothing Billion. USD - top exporters Others Intra-EEU Bangladesh Mexico Vietnam Taiwan Indonesia Pakistan Turkey India Korea USA Hong Kong Extra-EEU China 7 Quelle: World Trade Organization, International Trade Statistics 8 Apparel Market Size of Selected Countries 215 to 22 Source: Euromonitor Mean annual growth rate 215 to 22 Retail value in USD bn, Region constant 215 prices, % fixed exchange rate China India Indonesia Vietnam C+I+I+V combined USA EU USA and EU combined World 1'36 1' Retail E-Commerce Sales in USD bn and as % of Total Retail Sales USD % USD % USD % USD % USD % USD % China USA UK Source: emarketer (December 23, 214) 1 2) NEW TECHNOLOGIES AND INNOVATION IN TEXTILE MANUFACTURING WATER ENERGY CREATIFITY

3 CompeJJveness of the texjle and apparel industry TexEle and apparel manufacturing in constant search for higher producevity: Faster Less labour-intensive Less energy-intensive Less water-intensive CompeJJveness of the texjle and apparel industry This results in high demand for ever more automated and ever more energy-efficient machines NecessiEes for the industry: Increase of R&D aceviees Networking with suppliers and customers to develop new products (e.g. technical texeles or funceonal texeles) and processes (e.g. digiezaeon of the texele value chain) Monitoring of market for technological innovaeons Monitoring of market trends WATER DryDye fabrics The Yeh Group, which produces both warp and we\ kni]ed fabrics, implemented a new waterless dyeing process developed by DyeCoo TexEle Systems of the Netherlands ENERGY Over the last two decades the energy consumption of ring-spinning machines on average in Brazil, India, Italy, Korea and the USA - fell by over 9% from 3.5 to 3.2 kilowatt hour (kwh) per kilogram (kg) of yarn. The energy efficiency of rotor spinning machines improved even more, whereby consumption dropped from 3.6 to 1.4kWh per kg, a drop of 61%. Energy costs in ITMF s survey include the costs relating to the actual power consumption of the machines, the illumination and the air conditioning kwh per kg of yarn Energy efficiency is improving Energy consumption spinning (average of Brazil, India, Italy, Korea and the. USA) Ring-spinning, lhs Open-end spinning, rhs kwh per kg of yarn Power Costs Relevant Cost Factor % of total manufacturing costs 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Manufacturing costs for ring spinning in 214 Interest Depreciation Auxiliary material Labour Brazil China Egypt India Indo. Italy Korea Turkey USA Waste Power The breakdown of manufacturing costs (excludes costs of raw material) shows that power costs are an important cost factor. The percentage of manufacturing costs spent on power was 15% and above for most of the surveyed countries. In China, for example, power costs reached 25% of manufacturing costs. Source: ITMF 17 Source: ITMF 18 3

4 CREATIVITY New Technologies & Processes 1) Mass Customization CREATIVITY New Technologies & Processes 2) Digital Printing Producing goods and services to meet individual customer's needs with near mass production efficiency 19 2 CREATIVITY New Technologies & Processes 2) Version 4. BIG DATA 2) Version 4. BIG DATA CREATIVITY The basic principle of Version 4. is that by connecting machines, work pieces and systems, businesses are creating intelligent networks along the entire value chain that can control each other autonomously Geographical shi\ towards Asia Ring spindles, installed capacities 3 3) WHERE ARE THE AREAS OF INVESTMENTS? 23 Million spindles Source: ITMF Turkey Other Asia Pakistan Africa S. & N. America Brazil China Japan India Russia USA Europe UK 24 4

5 4) IMPLICATIONS FOR COTTON WATER ENERGY CREATIFITY All these three challenges apply to cotton 1) Development of cotton plants requiring less water through breading and genetic modification. 2) Machinery for harvesting, ginning and transportation energy efficient. CREATIVITY Suggestion for item 3 3) Creativity in searching for better quality control, new uses for cotton and cost reduction to compete with synthetic fibers Telephone version 1 Telephone version

6 Telephone version 1.3 Telephone version 2. 2% of the population s Telephone version 3. Reflection Smart phone appeared a niche market Today integraeon data in all relevant global net works, sharing of data, within the whole supply chain horizontally and verecally Billions on line every day 216-1% availability Cotton Classing version 1. So How Does this Dynamic RevoluEon Apply to the Classing of Co]on for the TexEle Industry?

7 Cotton Classing version 2. Cotton Classing version 3. Co]on classificaeon of the future, needs to upgrade to version 3. fully with instruments ideally basis 1% sampling Such technology more than just faster produces vital informaeon for breeders, farmers, traders, merchants and spinners, and especially the final consumer the co]on spinner. 216 Data collected is available on-line for all stakeholders - farm to the supply chain, - governments and policy makers of the future. We need to increase the use of this technology though out the world for all co]on, and thereby ensure the future efficient trading of co]on. Reliability in measurement/data empowers sellers to negoeate prices and also build reputaeon as suppliers of co]on that is fully consistent in its measurements. HVI instruments exist for this evolueon, but not fully uelised for efficient trading. 5) SOME STATISTICS FROM ITMF I) SYNTHETIC FIBRES II) COTTON YARN III) FIBRE CONSUMPTION Work towards version 4. total integraeon between the producer and consumer. 4 Fiber ProducJon - World (in million tons) ** (%-change) Co]on * Wool * Acrylic Nylon (filament) Nylon (staple) Polypropylene (staple) Polypropylene (filament) Polyester (staple) Polyester (filament) Cellulosic (staple) Cellulosic (filament) Total MMF Total Fibre ProducJon * ConsumpEon figures ** Forecast Source: PCI Fibres (215) 41 World Man-made Fibre ProducJon by Country / Region (million tons) * %-change China Western Europe Eastern Europe Turkey Africa/Middle East Chinese Taipei North America India Japan South Asia S. Korea Australasia Total Fibre ProducJon * Forecast Source: PCI Fibres (215) 42 7

8 World Polyester ProducJon by Country (million tons) * %-change Polyester (staple) Polyester (texjle filament) Polyester (staple) Polyester (texjle filament) Polyester (staple) Polyester (filament) China India USA Turkey Chinese Taipei South Korea Indonesia Thailand Malaysia Vietnam Bangladesh Others Total * Forecast Source: PCI Fibres (215) 43 in ' tons 2, 15, 1, 5, China - Polyester Staple Capacity ProducEon OperaEng Rate (rhs) China: Built-up of capacities in polyester staple between 2 and 214 from approx. 2.5 million tons to approx. 16 million tons. In 214 production reached around 1 million tons, while capacities stood at 16 million tons. Consequently operating rates fell below 6% in % in ' tons 4, 35, 3, 25, 2, 15, 1, 5, China - Polyester Filament in % COTTON YARN Capacity ProducEon OperaEng Rate (rhs) Top exporters of cotton yarn in 215 Global exports of cotton yarn in 215 Volume of cotton yarn exports Global exports of cotton yarn 1.6 3,5 1. Million tons Million USD 3,3 3,1 2,9 2,7 2,5 2,3 2, Million tons.4.2. India Pakistan Vietnam USA China Hong Kong Indonesia Turkey Taiwan South Korea 1,9 1,7 1,5 Q1 26 Q3 26 Q1 27 Q3 27 Q1 28 Q3 28 Q1 29 Q3 29 Q1 21 Q3 21 Q1 211 Q3 211 Q1 212 Q3 212 Q1 213 Q3 213 Q1 214 Q3 214 Q1 215 Q3 215 Q Value, lhs Volume, rhs Source: GTA

9 Top importers of cotton yarn in 215 Global imports of cotton yarn in 215 Volume of cotton yarn imports Global imports of cotton yarn 2.5 4, ,5 1. Million tons Million USD 3, 2,5 2,.9 Million tons China Hong Kong Turkey South Korea Russia Egypt Portugal Italy El Salvador Japan 1,5 Q1 26 Q3 26 Q1 27 Q3 27 Q1 28 Q3 28 Q1 29 Q3 29 Q1 21 Q3 21 Q1 211 Q3 211 Q1 212 Q3 212 Value, lhs Volume, rhs Q1 213 Q3 213 Q1 214 Q3 214 Q1 215 Q3 215 Q Source: GTA 49 5 Global TexJle Mill ConsumpJon (in tons) 12, 1, FIBRE CONSUMPTION 8, 6, 4, 23: 47'813 23: 19'433 2, 23: Co]on Wool Cellulosic (staple) Cellulosic (filament) Polyester (staple) Polyester (filament) Nylon (staple) Nylon (filament) Polypropylene (staple+filament) Acrylic 52 Long-term Perspective Share of cotton in world. fibre consumption, % Source: International Cotton Advisory Committee (ICAC) This is the picture for cotton, if nothing is done to meet the three challenges that face the textile industry. So we call upon the cotton industry to take action now 53 CREATIFITY CreaJvity is the act of turning new and imaginaeve ideas into reality. CreaJvity is characterized by the ability to perceive the world in new ways, to find hidden pa]erns, to make conneceons between seemingly unrelated phenomena, and to generate solueons. 54 9

10 Thank you for your adenjon!