INTERNATIONAL PRODUCTION COST COMPARISON 2003

Transcription

1 Spinning / Texturing / Weaving / Knitting INTERNATIONAL PRODUCTION COST COMPARISON 2003 INTERNATIONAL TEXTILE MANUFACTURERS FEDERATION FÉDÉRATION INTERNATIONALE DES INDUSTRIES TEXTILES INTERNATIONALE VEREINIGUNG DER TEXTILINDUSTRIE

2 International Production Cost Comparison 2003 Spinning/Texturing/Weaving/Knitting ITMF is an international association for the world s textile industries, dedicated to keeping its world-wide membership constantly informed through surveys, studies and publications and through the organization of annual conferences, participating in the evolution of the industry s basic raw materials and their application, through specialised committees, with the overall objective of creating growth and prosperity in all aspects of the industry. INTERNATIONAL TEXTILE MANUFACTURERS FEDERATION FÉDÉRATION INTERNATIONALE DES INDUSTRIES TEXTILES INTERNATIONALE VEREINIGUNG DER TEXTILINDUSTRIE Am Schanzengraben 29 Phone (+41-1) Postfach Fax (+41-1) CH-8039 Zürich secretariat@itmf.org Switzerland Web

3 Foreword The world s primary textile industry is engaged in a continuing modernization and restructuring process, spurred by the advent of entirely new or more sophisticated textile technology together with increasing competition for markets and products. Originating in the industrialized countries, the process has spread to newly industrialized and even to developing countries, many of which are increasingly turning to the latest textile technology as a means of ensuring their competitive position, especially in export markets. This trend has been clearly evidenced by the survey on world textile machinery shipments conducted by ITMF since 1974 (International Textile Machinery Shipment Statistics). ITMF s International Production Cost Comparison, which was first published in 1979, is designed to trace the implications of the growing capital intensity in the primary textile industry. Thus, the presentation in this study of manufacturing costs and of total yarn/fabric costs includes a breakdown into the various cost elements which allows for a better appreciation of the relative importance of these elements and their respective influence on the total costs. When reading the report, the objectives of the study - as outlined above - must constantly be borne in mind. It should also be noted that international competition takes place between a much wider array of producers working not only with the most modern and highly capital intensive equipment of the type assumed in this study, but with depreciated old or second-hand machinery, leading to wide variations in manufacturing costs. Attention is furthermore drawn to the fact that the cost pattern as emerging from this report reflects but one of the elements entering into the calculation of the final sales price for yarns and fabrics, others being overheads, incentive schemes, transport and insurance, import and export duties, etc. Moreover, competitiveness is determined increasingly by such factors as quality and style, reliability, promptness of delivery, flexibility, etc., which fall outside the scope of this study. An international comparison of this order can therefore never be more than an approximation to the real market situation. Finally, the changing nature of macro-economic factors (wage levels, inflation, interest and exchange rates, etc.) renders it difficult to make production cost calculations which are valid for a longer period. Hence, as no attempt is being made in this study to neutralize the effects of changes in the economic environment, the cost data presented are those valid at the beginning of the investment period, their validity for the later phases of the period being dependent on changes in macro-economic factors. October 2003 ITMF International Production Cost Comparison

4 Acknowledgements The cooperation in this study of the following is gratefully acknowledged: Barmag AG, Remscheid, Germany Maschinenfabrik Rieter AG, Winterthur, Switzerland Sulzer Textil AG, Rüti, Switzerland Terrot Strickmaschinen GmbH, Stuttgart, Germany Associação Brasileira da Indústria Têxtil e de Confecção, Sao Paulo, Brazil Santista Têxtil S.A., Sao Paulo, Brazil Indian Cotton Mills' Federation, New Delhi, India Reliance Industries Limited, Mumbai, India Associazione Tessile Italiana, Milan, Italy Spinners & Weavers Association of Korea, Seoul, Korea Rep. Turkish Textile Employers' Association, Istanbul, Turkey Roberts, Curry & Company, Greenville, SC, USA Cotlook Limited, Birkenhead, UK International Cotton Advisory Committee, Washington, DC, USA ITMF International Production Cost Comparison

5 Contents 3 Foreword 4 Acknowledgements 5 Contents Basis of Calculation 6 Scope and Coverage 7 Exchange Rates 8 Raw Material Costs 9 Definition of Cost Factors 10 Spinning 11 Texturing 12 Weaving 14 Knitting Cost Factors 2003 Calculated Costs 16 Definition of Cost Elements Manufacturing Costs Spinning 19 Texturing 20 Weaving 22 Knitting Total Costs Yarns 27 Woven Fabrics 29 Knitted Fabrics 31 Annex How to calculate company-specific depreciation and interest costs ITMF International Production Cost Comparison

6 Scope and Coverage Geographically, the study covers the following countries: Brazil, China, India, Italy, Korea, Turkey and the USA. These countries all actively participate in international textile trade as exporters and/or importers and all but China are members of the International Textile Manufacturers Federation. Every year, the machinery manufacturers on whose equipment the present study is based are conducting numerous cost calculations for prospective clients around the world. Based on factors supplied by these clients, manufacturing costs are calculated and enter as an important element into the evaluation process of a given investment project. By using the same approach, ITMF s International Production Cost Comparison attempts to simulate reality within the limits outlined in the study. Cost factors for the participating countries are supplied by individual companies, consultants and textile trade associations. They are carefully reviewed by the four machinery manufacturers cooperating in the study, with a view to arriving at representative average factors for the country concerned. The results are presented in a way enabling the reader to see the repercussions on the costing structure of diverging factors (e.g. labour and capital costs). The product base in spinning is a Ne 30 (Nm 50 / 20 tex) combed yarn made of 100% cotton of 1-1/8" staple length. In texturing, it is a polyester POY 75 den textured yarn. The yarns are woven into a "print cloth" fabric of 70/70 threads per inch, and a textured fabric of 96.5/78.7 threads per inch. Fabric dimensions are 66 inch grey width (cotton ring and rotor yarn), and 69.7 inch grey width (textured yarn). In knitting, the fabric constructions are of the ottoman type, 92.5 inches unfinished width (cotton ring) and of the mini-jacquard type, 82.7 inches (cotton rotor) and 65.0 inches unfinished width (textured yarn), respectively. The cost calculations are based on the assumption that the cotton yarn is spun in a new mill equipped with Rieter ring and rotor spinning machinery producing 420 kg per hour while the textured yarn is produced on 10 Barmag FK6M-1000 with an output of 1,000 metres per machine and minute, or 2,600 kg of yarn per day, (9 machine efficiency). In weaving, 32 Multi-phase B190 produce 58.4 yards of fabric per machine and hour (87. machine efficiency), and 60 Rapier S190 N4 SP12/20 produce 13.6 yards (91. machine efficiency). For knitting, 30 circular knitting machines of Terrot I3P-284, 30 inch diameter, 20 gg, 84 feeders, with an output of 33.6 yards per machine and hour (100% machine efficiency), and of Terrot S3P-172, 30 inch diameter, 28 gg, 72 feeders, producing 71.0 and 86.2 yards per machine and hour (100% machine efficiency), respectively, are assumed. Rates of output are assumed to be identical for all 7 countries concerned. The different efficiency standards prevailing in the countries have been taken into consideration by varying the number of workers required to obtain the output levels indicated. The calculations are based on the cost factors that prevailed in the 1st quarter of the reference year. Cotton/polyester prices are those of the last week of March and of January, respectively. Geographical Coverage Methodology Product Coverage Mill Type and Size Efficiency Standards Reference Period ITMF International Production Cost Comparison

7 Exchange Rates In view of rapidly changing currency relationships, especially vis-à-vis the US dollar (USD), production cost factors are surveyed in domestic currencies, and converted to USD for ease of comparison. Average exchange rates for Q1/2003 were employed, as outlined below: Brazil: 1 USD = 3.53 Real China 1 USD = 8.28 Yuan Renminbi India: 1 USD = Rupees Italy: 1 USD = 0.93 Euro Korea: 1 USD = 1,200 Won Turkey: 1 USD = 1,681,336 Lirasi All values appearing in the tables detailing Cost Factors, Manufacturing (Conversion) and Total Costs are expressed in USD. ITMF International Production Cost Comparison

8 Raw Material Costs 2003 (Cotton 1-1/8") All quotations refer to the last week of March 2003 and are expressed in USD per kg. Price = USD 1.30 per kg Local market price for representative Brazilian style (Type 6.0) Real 1.88 per pound. Plus premium for Superfine 1-1/8" of 3.5 cents per pound. Price = USD 1.68 per kg China Cotton Index for representative Chinese style (T328) Yuan 13,400 per ton. Plus premium for Superfine 1-1/8" of 2.50 cents per pound. Price = USD 1.25 per kg Bombay quotation for representative Indian style (H-4) Rupees 5,793 per 100 kg. Plus premium for Superfine 1-1/8" of 1.50 cents per pound. Price = USD 1.42 per kg Medium count cotton used in the production of 30-count 100% combed cotton yarn. Quotes for SM 1-1/8" in Cotton Outlook (March 28, 2003) are weighted by proportions in Italian imports; trade with Egypt, Sudan and other extra-fine cotton producers is excluded. Price = USD 1.41 per kg Medium count cotton used in the production of 30-count 100% combed cotton yarn. Quotes for SM 1-1/8" in Cotton Outlook (March 28, 2003) are weighted by proportions in Korean imports; trade with Egypt, Sudan and other extra-fine cotton producers is excluded. Price = USD 1.41 per kg Izmir quotation for representative Turkish style (Izmir, Standard 1, white) Lira 2,355,000 per kg. Plus premium for Extra 1-1/8" of 2.50 cents per pound. Price = USD 1.26 per kg 7-regions SLM 1-1/16" average of 53.8 cents per pound. Plus premium for SM 1-1/8" of 3.3 cents per lb = 57.1 cents per lb. Brazil China (Mainland) India Italy Korea Rep Turkey USA Sources: Cotton Outlook and ICAC ITMF International Production Cost Comparison

9 Definition of Cost Factors Manufacturing costs relate to the production area only, i.e. excluding overheads. Wages include social charges, fringe benefits and shift work premiums. Note that the study is based on expenditure in the production area only and therefore excludes overheads (management, accounting, sales). Since, from experience, this cost factor differs widely from one company to the other, its impact on the total costing structure may clearly be considerable. The number of operatives required are determined by work-study methods. The individual times are according to Barmag, Rieter, Sulzer and Terrot standards. Overlookers and supervisors, as well as staff for laboratories, workshops, despatch, etc. are not included. The requirements of skilled and unskilled workers for machine maintenance are determined according to Barmag, Rieter, Sulzer and Terrot standards for the overhaul and maintenance of their machines. The values indicated give the requirements per shift, similar to those for operatives. The necessary average floor space for machines, gangways and reserve (can space etc.) was evaluated on the basis of a great number of spinning, texturing, weaving and knitting mill layouts. Certain alterations may arise, according to specific machinery layouts. The cost of the buildings refers to the production area only and includes the costs of the air conditioning ducts for supply and recycled air; the lighting system; the installations for high and low voltage electricity supply; fire protection; etc. The dimension of the air conditioning installation is in direct relation to the specific climatic conditions in the respective countries. The straight-line method (as against the degressive method) was used to calculate depreciation costs which are based on the period most commonly applied in the countries concerned (as against those provided for in tax laws). Where depreciation rates differ from those assumed, the company-specific depreciation costs may be re-calculated using the formula in the Annex (p. 31). rates vary not only from country to country but also from company to company within one single country. In this study the average interest rates that prevailed in the first quarter of the reference year were assumed. The interest rate quoted for Turkey refers to a rate assumed to be typical for USD loans extended to Turkish companies. Reference Area Wages Operating Personnel Overhauling and Maintenance Personnel Floor Space Building Costs Rates ITMF International Production Cost Comparison

10 Cost Factors 2003: Spinning 1 Hourly wage for skilled personnel /3 Hourly wage for machine tenders Hourly wage for unskilled personnel Operating hours (per year) 7,549 8,592 8,463 7,000 8,144 7,284 7,800 Cost of electric power (per kwh ) Cost of buildings (per m 2 ) Annual building maintenance (%) period for machinery (years) period for accessories (years) period of buildings (years) Customs, sales tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per kg cotton) Notes 1 Based on conditions in south-eastern United States 2 Rate for spinning technician 3 Includes 2 fringe benefits 4 Rate for industrial user in Greenville County, South Carolina Type Rieter ring spinning Yarn Data Raw material - 100% cotton (incl. winding); Staple length - 1-1/8 inches Rieter rotor spinning Yarn count - Ne 30 combed Rate of Output 420 kg per hour ITMF International Production Cost Comparison

11 Cost Factors 2003: Texturing 1 Hourly wage for skilled personnel /3 Hourly wage for machine tenders Hourly wage for unskilled personnel Operating hours (per year) 7,618 8,300 7,900 8,000 8,000 8,000 8,400 Cost of electric power (per kwh) Cost of buildings (per m 2 ) Annual building maintenance (%) period for machinery (years) period for accessories (years) period of buildings (years) Customs, sales tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per kg polyester POY) Notes 1 Based on conditions in south-eastern United States 2 Rate for loom technician 3 Includes 2 fringe benefits 4 Rate for industrial user in Greenville County, South Carolina Size of Mill 10 Barmag FK6M-1000, 240 positions Yarn Data Raw material - 100% polyester POY Yarn count - 75 den textured Rate of Output 1,000 metres per minute texturising speed 2,600 kg per day (9 machine efficiency) ITMF International Production Cost Comparison

12 Cost Factors 2003: Weaving 1 Hourly wage for skilled personnel /3 Hourly wage for machine tenders Hourly wage for unskilled personnel Operating hours (per year) 7,618 7,875 8,402 6,500 7,144 7,142 7,800 Cost of electric power (per kwh ) Cost of water (per m 3 ) /5 Cost of steam (per lb. yarn ) Sizing cost (per lb. yarn ) Cost of oil/gas (per kg. / per cu. ft ) 0.19 (oil) 0.37 (oil) 0.19 (oil) (gas) 0.38 (gas) 0.28 (oil) 4 (gas) Cost of buildings (per m 2 ) Building space (m 2 ) - M8300 Building space (m 2 ) - G6300 5,000 4,800 5,000 4,800 5,000 4,800 5,000 4,800 5,000 4,800 5,000 4,800 Annual building maintenance (%) ,000 4,800 period for machinery (years) period for accessories (years) period of buildings (years) Customs, sales tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per yard of woven fabric) - cotton yarn textured yarn Notes 1 Based on conditions in south-eastern United States 2 Rate for loom technician 3 Includes 2 fringe benefits 4 Rate for industrial user in Greenville County, South Carolina 5 Includes sewage at 70% of cost ITMF International Production Cost Comparison

13 Print Cloth (ring/o-e yarn) Size of Mill 32 Multi-phase B190; compressor, vacuum cleaning system, 4 additional modules, module preparation, 2 combi transportation units, combi air conditioning, sizing for 1600 mm warp beams, warping, cloth inspection, yarn and fabric storage Fabric Data Cloth type - print cloth Construction - 70/70 threads/inch Yarn type - 100% cotton Yarn count - Ne 30 warp & weft Grey width inches Grey weight g/yard Rate of Output 58.4 yards of fabric per machine and hour (87. machine efficiency) Print Cloth (textured yarn) Size of Mill 60 Rapier S190 N4 SP12/20; air conditioning, warping, cloth inspection, yarn and fabric storage, transportation units Rate of Output 13.6 yards of fabric per machine and hour (91. machine efficiency) Fabric Data Cloth type - textured fabric Construction /78.7 threads/inch Yarn type - PES filament/textured Yarn count - 75 den Grey width inches Grey weight g/yard ITMF International Production Cost Comparison

14 Cost Factors 2003: Knitting 1 Hourly wage for skilled personnel /3 Hourly wage for machine tenders Hourly wage for unskilled personnel Operating hours (per year) 6,210 8,592 8,500 6,500 7,690 7,200 7,800 Cost of electric power (per kwh ) Cost of buildings (per m 2 ) Annual building maintenance (%) period for machinery (years) period for accessories (years) period of buildings (years) Customs, sales tax, etc. (% of machinery price) Capital interest rate (%) Raw material costs (per yard of knitted fabric) - ring yarn (ottoman) o-e yarn (mini-jacquard) textured yarn (mini-jacquard) Notes 1 Based on conditions in south-eastern United States 2 Rate for loom technician 3 Includes 2 fringe benefits 4 Rate for industrial user in Greenville County, South Carolina ITMF International Production Cost Comparison

15 Ottoman (ring yarn) Size of Mill 30 Terrot I3P-284, circular knitting machines, 30 inch diameter, 20 gg, with side creel; cloth inspection Rate of Output 33.6 yards of fabric per machine and hour (100% machine efficiency) Fabric Data Construction - ottoman Yarn type - 100% cotton Yarn count - Ne 30 Unfinished width (open) inches Cloth weight g/yard Mini-jacquard (o-e yarn) Size of Mill 30 Terrot S3P-172, circular knitting machines, 30 inch diameter, 28 gg, with side creel; cloth inspection Rate of Output 71.0 yards of fabric per machine and hour (100% machine efficiency) Fabric Data Construction - mini-jacquard Yarn type - 100% cotton Yarn count - Ne 30 Unfinished width (open) inches Cloth weight g/yard Mini-jacquard (textured yarn) Size of Mill 30 Terrot S3P-172, circular knitting machines, 30 inch diameter, 28 gg, with side creel; cloth inspection Rate of Output 86.2 yards of fabric per machine and hour (100% machine efficiency) Fabric Data Construction - mini-jacquard Yarn type - 100% PES Yarn count - 75 den Unfinished width (open) inches Cloth weight g/yard ITMF International Production Cost Comparison

16 Definition of Cost Elements In spinning, revenue from the sale of waste (waste from slivers, filters, flats and grid droppings, etc.) is considered when calculating waste costs. Wage costs are calculated on the basis of the wages paid to operatives and to skilled and unskilled labour for maintenance work. All social charges and shift-work premiums are included. For reserve personnel a percentage figure is added. Energy costs include the costs relating to the actual power consumption of the machines, the illumination and the air conditioning (in weaving, also steam and heating). It is assumed that the mill is lit for the entire production time. The costs for spare parts, lubricants, cleaning materials and maintenance work on the buildings represent the costs for auxiliary material (in texturing, includes insurance costs, and in weaving, yarn preparation costs). This element includes depreciation of machines, accessories and buildings. Machinery costs include free delivery to the mill, erection and - where applicable - customs duty and taxes. Costs of capital interest. The sum of the above group of costs gives the total manufacturing costs. Cotton/polyester. The sum of the above group of costs gives the total yarn or fabric costs. Waste Auxiliary Material Total Manuf. Costs Raw Material Total Costs ITMF International Production Cost Comparison

17 Manufacturing Costs 2003: Spinning / Ring Waste % Total manufacturing costs (per kg of yarn) Index (Italy: 100) (60) (50) (55) (100) (59) (66) (74) USD / kg Waste Aux. material ITMF International Production Cost Comparison

18 Manufacturing Costs 2003: Spinning / O-E Waste % % Total manufacturing costs (per kg of yarn) Index (Italy: 100) (76) (62) (69) (100) (70) (80) (78) USD / kg Waste Aux. material ITMF International Production Cost Comparison

19 Manufacturing Costs 2003: Texturing Packing Total manufacturing costs (per kg of yarn) Index (Italy: 100) (67) (50) (58) (100) (66) (79) (69) USD / kg Packing Aux. material ITMF International Production Cost Comparison

20 Manufacturing Costs 2003: Weaving Ring / O-E Yarn % Total manufacturing costs (per yard of fabric) Index (Italy: 100) (41) (45) (50) (100) (60) (51) (73) USD / yard Aux. material ITMF International Production Cost Comparison

21 Manufacturing Costs 2003: Weaving Textured Yarn % % % % % % Total manufacturing costs (per yard of fabric) Index (Italy: 100) (43) (43) (46) (100) (46) (44) (84) USD / yard Aux. material ITMF International Production Cost Comparison

22 Manufacturing Costs 2003: Knitting Ring Yarn % % 1 Total manufacturing costs (per yard of fabric) Index (Italy: 100) (59) (34) (50) (100) (50) (50) (80) USD / yard Aux. material ITMF International Production Cost Comparison

23 Manufacturing Costs 2003: Knitting O-E Yarn % Total manufacturing costs (per yard of fabric) Index (Italy: 100) (57) (34) (50) (100) (50) (50) (80) USD / yard Aux. material ITMF International Production Cost Comparison

24 Manufacturing Costs 2003: Knitting Textured Yarn Total manufacturing costs (per yard of fabric) Index (Italy: 100) (58) (35) (50) (100) (50) (50) (80) USD / yard Aux. material ITMF International Production Cost Comparison

25 Total Costs 2003: Ring Yarn Waste Capital (depreciation & interest) Raw material % % Total yarn costs (per kg of yarn) Index (Italy: 100) (73) (77) (68) (100) (75) (79) (80) Total Costs 2003: O-E Yarn Waste Capital (depreciation & interest) % % Raw material % Total yarn costs (per kg of yarn) Index (Italy: 100) (84) (91) (79) (100) (85) (90) (84) ITMF International Production Cost Comparison

26 Total Costs 2003: Textured Yarn Packing % 0% 0% Capital (depreciation & interest) Raw material % % Total yarn costs (per kg of yarn) Index (Italy: 100) (89) (66) (97) (100) (79) (126) (100) ITMF International Production Cost Comparison

27 Total Costs 2003: Woven Ring Yarn Fabric Waste Capital (depreciation & interest) % Raw material Total fabric costs (per yard of fabric) Index (Italy: 100) (59) (63) (60) (100) (69) (67) (77) Total Costs 2003: Woven O-E Yarn Fabric Waste % Capital (depreciation & interest) % Raw material % Total fabric costs (per yard of fabric) Index (Italy: 100) (63) (68) (64) (100) (73) (71) (78) ITMF International Production Cost Comparison

28 Total Costs 2003: Woven Textured Yarn Fabric Packing % % % 2 20% Capital (depreciation & interest) Raw material % Total fabric costs (per yard of fabric) Index (Italy: 100) (52) (48) (56) (100) (52) (60) (87) ITMF International Production Cost Comparison

29 Total Costs 2003: Knitted Ring Yarn Fabric Waste Capital (depreciation & interest) Raw material Total fabric costs (per yard of fabric) Index (Italy: 100) (71) (71) (65) (100) (72) (75) (80) Total Costs 2003: Knitted O-E Yarn Fabric Waste Capital (depreciation & interest) Raw material Total fabric costs (per yard of fabric) Index (Italy: 100) (79) (81) (74) (100) (79) (84) (83) ITMF International Production Cost Comparison

30 Total Costs 2003: Knitted Textured Yarn Fabric Packing Capital (depreciation & interest) % Raw material Total fabric costs (per yard of fabric) Index (Italy: 100) (77) (53) (79) (100) (68) (98) (93) ITMF International Production Cost Comparison

31 Annex How to calculate company-specific depreciation and interest costs The separate presentation in this study of depreciation and interest costs makes it possible to calculate company-specific capital costs. Note that the share of machinery in total depreciation in spinning varies from 8-9 in the different countries and that for weaving from 80% - 8, whereas the machinery part makes up more than 9 of total depreciation in knitting. The remainder is for accessories and buildings. Example: United States Costs (Machinery) Weaving Ring/O-E Yarn Share of machinery in total depreciation: 8 Assumed depreciation period (see page 12): costs (machinery) per yard/fabric (see page 20): 7 years 8 of USD = USD 0 Company-specific depreciation period: Company-specific depreciation costs (machinery) per yard/fabric: 10 years USD 0 x 7 / 10 = USD 2 Costs Weaving Ring/O-E Yarn Assumed interest rate (see page 12): 5.2 costs per yard/fabric (see page 20): USD 0 Company-specific interest rate: 6.0% Company-specific interest costs per yard/fabric: USD 0 x 6.0 / 5.25 = USD 3 ITMF International Production Cost Comparison