Textile Machinery Industry: How to Face the Prosperity Never Became in 20 Years

Since the beginning of this year, the market demand for hot weather has caused textile machinery companies to miss their expectations. At present, most companies' orders are scheduled for March and April next year. For example, automatic winders for Qingdao Textile Machinery Co., Ltd., Wuxi Hongyuan's texturing machine orders have been fully filled in 2011, and Oerlikon Barmag's chemical filament yarn equipment. It even booked for 2012. The actual production and sales of enterprises have also been verified from the statistical data of the entire industry. In the first three quarters of this year, the enterprises above designated size in the textile machinery industry of China completed an industrial output value of 57.661 billion yuan, a year-on-year increase of 48.58%, which was the best in the same period of history; Realize industrial sales output value of 56.62 billion yuan, an increase of 46.17%; total profit of 3.418 billion yuan, an increase of 1.72 times, compared with 2.99 billion yuan in the highest profit of the same period in 2007, an increase of 62.85%; completed exports of 1.242 billion US dollars, year-on-year Increased by 44.82%. The overall profitability of the textile machinery industry has been improved and it has returned to the best level before the financial crisis.

Investment-led Growth in High-growth Textile Industry Fixed-asset investment growth is undoubtedly the direct factor driving the sales of textile machinery products. Statistics in recent years show that equipment investment accounts for more than half of the fixed assets investment of textile enterprises in China. From January to September this year, the total investment in fixed assets of the textile industry was 276.201 billion yuan, an increase of 25.66% year-on-year, an increase of 16.95 percentage points from the same period of last year. The scale of investment in all sub-sectors of textiles has been expanded compared with the same period of last year, of which the growth rate of wool and chemical fiber investment has reached about 50% year-on-year. In comparison, despite the high growth rate of fixed assets, Woolen Textile has a relatively low base, and it has no obvious driving effect on the sales of the entire equipment. However, the growth of fixed assets in the chemical fiber industry reached 49.36%, which effectively stimulated the sales of chemical fiber equipment. In the third quarter, polyester staple fiber equipment sold 40 lines, and various types of texturing machines sold 1,500 units.

The sub-industry with the largest share of fixed assets in the textile industry this year is still the cotton spinning industry, accounting for 43.58% of the total investment in the industry. The dependence of China's textile machinery industry on cotton spinning equipment is as high as 60%. Therefore, it is not difficult to understand the overall recovery of various indicators in the textile machinery industry this year. Statistics show that in the first three quarters, 6.489 million spindles of cotton spinning machines were sold, an increase of 59.1% year-on-year. Nearly 1300 automatic winders were sold, an increase of 97.73% compared with the same period of last year, and more than 350 nippers were used for combers, combing machines, etc. Sales have also more than doubled. In addition, in the first three quarters of this year, the investment growth in the knitting and printing and dyeing industries exceeded 20%, resulting in a significant increase in the sales of knitting and printing and dyeing equipment.

Concerns behind the firestorm orders "The biggest problem we have now is that even if we work overtime, we will not be able to deliver goods, and we will call one by one every day." This situation exists in almost all textile machinery companies. Obviously, for the textile machine market experienced a sudden improvement after the financial crisis hit, the company did not have much psychological preparation.

Why did the market go hot at once? On the surface, it is the driving effect of the recovery of the upstream textile market. However, people in the industry generally believe that the strong rebound in sales of cotton yarn and cotton cloth is not entirely due to market demand, but that the proportion of factors that supplement inventory and speculation is more. First of all, this year's cotton production cuts, coupled with India’s ban on cotton exports, have led many companies to rush to buy cotton, which has, in turn, pushed for an increase in cotton yarn production. Second, the price of cotton raw materials has skyrocketed this year, attracting a large amount of foreign capital to invest in cotton yarn; Based on the expected appreciation of the appreciation of the renminbi and the growth of raw material prices, the company will desperately hoard raw materials as soon as funds are available. Driven by the above three demand factors, the textile market has seen rapid growth this year, and textile machinery equipment has also experienced hot sales.

It is because the growth of sales is not all due to market demand. Many textile machinery equipment manufacturers always feel unsteady in facing a large number of orders that come hand in hand, and there is no end to how long the situation of hot-sales sales can sustain. In particular, the irrational growth of cotton prices after the National Day has deepened the concerns of textile machinery companies.

On the one hand, the increase in the financial costs brought by the increase in cotton prices to textile companies further increases the financial risks of textile machinery enterprises. On the other hand, with the intervention of the national macro-control measures, the price of cotton suddenly drops back to high prices. Textile companies that put cotton into production are bound to suffer a severe setback. Those projects that were originally planned may stop immediately. At that time, the textile machinery contract that has already taken effect may be delayed. Therefore, fluctuations in raw material prices not only bring great risks to the textile industry, but also have a very negative impact on the textile machinery industry.

Selecting high-quality orders to guard against risks In fact, concerns of textile machinery companies have emerged after August: With the gradual fall of cotton yarn prices at the end of July, orders for looms have begun to decrease. According to some looms companies, some textile companies that paid the deposit had suspended delivery in August and September, and since October, the prices of raw materials have changed.

In the period when the price of such raw materials fluctuates, how to accept orders is a tricky issue for the textile machinery subject to changes in the upstream market. There are fewer orders, affecting the efficiency of the company; there are too many orders. Once the market changes, it is more dangerous to carry the equipment into its own hands. Therefore, when the CEOs of some textile machinery companies received soft orders, they also realized the truth: For safety reasons, priority should be given to selecting good quality orders, and those that have poor quality contract orders should be given up. Abandoning, can not let the order tie the company dead, otherwise the profit that originally can obtain may have made a mistake. This shows that textile machinery enterprises that have experienced years of baptism in the market economy are now very rational and very mature, and their market judgments are also more robust.

Not only that, we have also seen that even in the face of this year's fierce sales market, there are very few textile machinery companies blinded by blind orders to expand production. In the first three quarters of this year, the investment in fixed assets of the textile machinery industry was 5.15 billion yuan, an increase of 8.43% year-on-year and a decrease of 0.44 percentage points from the same period of last year, accounting for only 33.8% of the fixed assets investment in the textile industry.

It is undeniable that blind expansion is undeniable. The insufficiency of production capacity makes it difficult for some textile machinery companies to deal with sudden market changes this year. However, in the long run, small batches and many varieties will be the trend of the textile machinery industry in the future. The era of 10 million new spindles per year in the textile machinery industry is over. From this year's sales situation, it is not difficult to see that equipment sales that can save energy, reduce labor, increase labor productivity, and increase the added value of downstream companies' products are much higher than equipment with high energy consumption and low automation. Of the 6.49 million spindle spinning machines sold in the first three quarters of this year, there were 1 million spindles in long cars, which accounted for 16% of sales of spinning frames. This was unimaginable in the past. And this year, there are not many textile companies that really have plans for the project. Most of them are relocations and product upgrades.

Therefore, under such circumstances, it is wise for textile machinery enterprises to abandon poor quality orders and not to blindly expand production capacity. It is also an inevitable choice for an industry to achieve sustainable development.