Oil prices fuel TCF's concerns

The textile clothing and footwear (TCF) industry predicts dire consequences from the impact of the global oil shock on the cost of fabrics, finished apparel and footwear.
The crude oil price hike - that surged to more than $US65 ($A84.7) a barrel this month - have affected freight charges and impacted on consumer spending, claimed Lisa Stubbs, director of fabric wholesaler Cooper Watkinson.
She warned this could result in manufacturers being forced offshore to keep prices down.
"We're looking at our pricing structures and consolidating relationships with our suppliers to keep prices under control. We're also looking at working further ahead [of the season] in order to factor sea freight [rather than air freight] timelines into our schedule," Stubbs said.
"While this is standard practice for any fabric wholesaler it has certainly become more prominent in our decision making."
Bendigo (Victoria) manufacturer Australian Defence Apparel (ADA) expected "flow-on price increases" over the longer term, although it had not reported an "immediate impact" on margins, ADA operations manager Maverick Spiteri said.
"Rising transport costs will affect the delivery of raw materials into ADA and the transit of finished goods to our clients," he claimed, adding "some margin erosion" would be likely.
The price of selected textiles is also a concern for Trevor Thomas, strategic programs director for TCF consultancy TCF Services.
"When oil prices go up, the price of synthetic textiles, which depend on oil for their manufacture, will rise," he said.
While TCF companies might consider moving offshore more quickly than they would have done otherwise, it was also possible that increased freight rates could have the reverse effect and actually keep manufacturers onshore.
"We may also see prices for apparel and footwear going up and hitting consumers in the short term," Thomas said.
Simon Cox, CFO of Melbourne headquartered apparel manufacturer and wholesaler Austin Group, said he might consider implementing "more efficient processes" to offset rising prices.
"However, it's a case of looking at the business as a whole. All the inputs are constantly changing and oil prices are just one factor."
Fabric wholesaler Cooper Watkinson (Sydney office)