The labor cost of the textile and apparel industry has soared by more than 50%, and the profit of orders is not as good as the rising cost of labor!
At present, the labor cost of domestic textile and clothing has risen from 20% to 30% of the total cost a few years ago to 50% to 60%. At present, there is still no stopping the upward trend. The profit of order transfer can’t keep up with the rising cost of labor! ”
“Five years ago, the per capita salary of our factory employees was around 3,000 to 4,000 yuan, and now it has risen to 8,000 yuan, and the workers are still not satisfied with the increase and feel that it is still too low.” the owner of Maya Garment Co., Ltd. hoover said.
It seems that the textile and apparel industry, which has long relied on cheap labor for competition, may not be able to return to its old state. Only through technological innovation can the domestic textile and apparel industry continue to develop in the game with the market and labor costs.
The predicament of the textile and apparel industry: the profit of orders cannot keep up with the rise in labor costs?
1. Labor costs have risen sharply
The textile and garment industry is a typical labor-intensive industry. The labor advantage makes China the world’s largest exporter of textiles and garments. However, starting in 2012, as my country’s demographic dividend has gradually disappeared, labor costs have increased year by year. The survey shows that the wages of workers in textile and garment factories in the southeast coastal areas are concentrated in the range of 5,000-10,000 yuan, and the wages of workers in the central and western regions are roughly 3,000-6,000 yuan.
“Five years ago, the company’s labor costs accounted for only 20%, and now it has reached 60%,” said Wu Zhixiang, the boss of Jiangsu Liqiang Textile Co., Ltd. In addition, the instability of employees and the additional costs of accelerating turnover are also problems facing the company.
Hoover said, “The factory’s salary was still around 3,000 to 4,000 yuan five years ago, but it has now risen to 8,000 yuan.”
He believes that the reason for the increase is that, on the one hand, the cost of living caused by inflation has increased, and on the other hand, the labor force has fallen. After 90, don’t want to do it, don’t think about it after 00.”
The survey found that although the employers believe that the overall salary in the textile and apparel industry is not low, the employees are not very satisfied with it.
Liang Wei (pseudonym) has been engaged in the textile industry for 17 years, worked in Fujian for more than 9 years, spent 3 years in Jiangsu, and then worked in Guangzhou and Shantou for 2 years, doing car stop, management, and machine repair, and currently doing weaving in Zhejiang Work, responsible for controlling 2 machines. When work is busy, I have to work 12 hours a day, morning and evening shifts, few vacations, and no small pressure.
He said that the initial salary was only 4,000 yuan, and now it is 9,000 yuan on a monthly basis. “The average worker looks at 2 machines, and the basic salary is 7,500 yuan, but a skilled worker can see 6 machines with 2 people, which is an extra 7,500. Yuan, the boss will give these two people an appropriate amount of processing capital.”
Although more and more wages were received, Liang Wei said, “I have been working for so many years, and I feel that the wages have not gone up. As wages are rising, prices are also rising.”
Deng Jian (a pseudonym) also has similar feelings. He has been in the textile industry for 11 years. He is currently working as a shaman in a textile factory in Fujian. His salary is calculated by piece, with a minimum guarantee of 1,800 yuan and more than 6,000 yuan for a month or two. “In the textile industry At work, the salary is relatively stable. As long as you go to work, you don’t have to worry about no money, and there is no problem in supporting your family.”
However, he added, “Although wages have risen, prices have also risen, so you earn more and spend more.”
It is not only labor costs that have risen but also the cost of raw materials. Chen Huan told reporters that the labor cost of the company used to be about 30%, and the material cost was 30%. Now the labor cost is more than 50%, even up to 60%, and the material cost is also 40%, so the current profit point can reach 5%. It’s all very difficult. You can still make money if you have a larger amount, and raise prices are inevitable.
Hoover said that the increase in labor costs has a huge impact on the textile industry, and the required production costs have also increased. Now the product prices of the main body, customers naturally feel that the price has risen quickly, and the next step is to reduce the order volume. “This is almost an impact. A question of survival is that if the cost becomes higher and higher, the market will be lost, and orders will be transferred to places with lower labor costs, such as Southeast Asian countries.”
He took the products produced in his own factory as an example. Although he explained to the customer that the production cost has risen by 50%, the customer still asked for a 10% price reduction. The original product had a 30% profit, and a 15% price reduction was affordable, but the cost was rising. Under the background of the current situation, it is very difficult to further reduce the price.
Labor costs continue to increase, product prices cannot rise, and profit margins are compressed, causing textile companies to face pressure. At present, it seems that textile orders transferred abroad can be retained for some time, but it is difficult to retain them for a long time.
2. The “shortage of workers model” in the apparel industry has become the norm
On October 24, the China Employment Training and Technical Guidance Center of the Ministry of Human Resources and Social Security released the ranking of the 100 most lacking jobs in the country in the third quarter of 2020, showing that China’s manufacturing industry recovered significantly in the third quarter and the demand for talents was strong. Of the 28 newly ranked occupations, 19 are directly related to manufacturing, accounting for 67.9%; among the 15 occupations with increasing shortages, 5 are directly related to manufacturing, accounting for 30%.
Judging from the situation in each month of this year, the blue-collar index is the lowest around the Spring Festival. The index continued to rise in May, rising in a V shape and reached a record high in September.
3. Where have all the people in the textile and apparel industry gone?
Young people nowadays prefer to deliver food to the factory. This is indeed the status quo of young people, and one truth is already clear, that is, emerging industries are on the rise. Faced with such a fierce impact, if the traditional manufacturing industry wants to compete with the emerging industries, it must make some changes.
4. “Retaining people” in the apparel industry is more difficult than “recruiting people”
Most people only realize that the factory is “difficult to recruit workers”. In fact, the main reason is that the factory “cannot retain people.”
The business of garment factories can be divided into peak season and off-season. Before May 1st, each year is the peak season. There are many orders and many workers are needed; in the off-season, the demand for labor decreases sharply with the number of orders.
China’s textile industry is so profitable that it can only recruit temporary workers as much as possible. The result is that most of the textile industry competes at a low level, because you spend three years of high-cost training workers, and you may quit all overnight.
Therefore, it is the problem of garment factories that cannot retain people at the moment.
At present, the textile and apparel orders transferred from abroad can “quench the thirst of the moment.” The long-term development of the domestic textile and apparel industry still needs to repeatedly balance between high cost and high quality, and move slowly.
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