NEW YORK — Fiber producers don’t need a crystal ball to see what issues are going to be paramount to the industry next year.
Producers are keeping a wary eye on the costs of raw materials, especially oil, and the Jan. 1 elimination of apparel and textile quotas by the 148 countries of the World Trade Organization.
The twin issues are “really creating an enormous headache,” said Bill Ghitis, president of global apparel for Invista, the former DuPont unit acquired by Koch Industries in April.
“I don’t think we’ve ever lived though something like this,” said Ghitis, of the increases in raw material prices, which means oil for fibers such as Invista’s Lycra spandex. “Overall commodity prices have reached what I would say were unsustainable levels. We have little choice but to try to pass them on because we are talking now [about] financial survival.”
The producer price index for synthetic fibers, which measures overall shifts in pricing, rose to a three-year high of 107.5 in October, according to the U.S. Bureau of Labor Statistics.
Ghitis added that the $8.4 billion synthetic fiber producer is relying on its economies of scale and global presence to help offset rising costs.
Crude oil closed out last week at $42.54 a barrel, up from about $30 a year ago, according to WTRG Economics.
Increased consumption, a lack of new production capacity and unrest in the Middle East have all contributed to the volatility of oil prices.
As costs for producers have risen, consumers and the rest of the supply chain from retailers to manufacturers are pushing for ever-lower prices.
“The squeeze is getting so unbearable that, at some point, people are being forced to stand up to the people downstream,” said Bill Girrier, vice president of marketing and sales at RadiciSpandex, which produces about 5 percent of the world supply of spandex.
Girrier said the spandex maker is looking to limit its exposure to both pricing stress and any fallout from the drop of quotas by systematically getting into niche markets, such as higher-end fibers for warp knits or heat-resistant spandex.
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