International Production Cost Comparison – Scope & Coverage 1

International Production Cost Comparison

Spinning/Texturing/Weaving/Knitting/Finishing

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 to developing countries, many of which are turning to the latest textile technologies
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, 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 - trace capital intensity in each
segment - must constantly be borne in mind. It should also be noted that international competition takes
place between a much wider array of producers working with the most modern and highly capital-intensive
equipment of the type assumed in this study or 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 one
element 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, tariffs, etc.) renders it difficult to calculate
production costs 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.

INTERNATIONAL TEXTILE MANUFACTURERS FEDERATION

FÉDÉRATION INTERNATIONALE DES INDUSTRIES TEXTILES
INTERNATIONALE VEREINIGUNG DER TEXTILINDUSTRIE
Wiedingstrasse 9 Phone (+41-44) 283 63 80
CH-8055 Zürich Fax (+41-44) 283 63 89
Switzerland E-mail [email protected]
Web www.itmf.org

International Production Cost Comparison – Scope & Coverage 1

 Contents
3 Acknowledgements

Basis of Calculation
4 Scope and Coverage
5 Exchange Rates
6 Raw Material Costs
8 Definition of Cost Factors

Cost Factors
9 Spinning
10 Texturing
11 Weaving
13 Knitting
15 Finishing

Calculated Costs
18 Definition of Cost Elements

Manufacturing Costs
19 Spinning
21 Texturing
22 Weaving
25 Knitting
28 Finishing

Total Costs
31 Yarns
34 Woven Fabrics
37 Knitted Fabrics
40 Finished Fabrics

Annex
43 How to calculate company-specific depreciation and
interest costs

International Production Cost Comparison – Scope & Coverage 2

 Scope and Coverage
Geographically, the study covers Bangladesh, Brazil, Central America (i.e., estimates Geographical
based on partial data from El Salvador, Honduras, and Guatemala), China, Egypt, India, Coverage
Indonesia, Italy, Korea Rep., Mexico, Pakistan, Turkey, the USA and Vietnam. These
countries/regions all actively participate in international textile trade as exporters
and/or importers. The countries/regions are further referred to as countries.

Every year, the machinery manufacturers on whose equipment the present study is Methodology
based are conducting numerous cost calculations for prospective clients around the
world. Based on factors supplied by these clients, manufacturing costs are measured and
used in the evaluation of investment projects. By using the same approach, ITMF’s
International Production Cost Comparison attempts to simulate reality within the limits
outlined in the introduction. Cost factors for the participating countries are supplied by
individual companies, consultants and textile trade associations. They are carefully
reviewed by the six machinery manufacturers cooperating in the study and represent
average cost factors for the country concerned. The results are presented in a way that
enables 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 ring yarn made of 100% Product
cotton of 1-1/8" staple length and a Ne 20 (Nm 33 / 30 tex) carded open-end yarn made Coverage
of 100% cotton of 1-1/16’’ staple length. In texturing, it is a 100% polyester POY 75 f72
den textured yarn. The cotton yarns are woven into a "print cloth" fabric of 27.6/27.6
threads per cm (ring yarn) and a ‘‘print cloth’’ fabric of 24.0/24.0 threads per cm (rotor
yarn), and a textured fabric of 38.0/31.0 threads per cm. Fabric dimensions are 168 cm
grey width (cotton ring and rotor yarn), and 177 cm grey width (textured yarn). In
knitting, the fabric constructions are of the Single Jersey type, 192 cm unfinished width
(cotton ring) and of the Lapique type, 224 cm (cotton rotor) and of the Interlock type,
190 cm unfinished width (textured yarn), resp. For finishing the products cover the
cotton woven fabric (grey weight 190 g/m), the cotton knitted fabric Single Jersey (grey
weight 230 g/m) and Lapique (grey weight 358 g/m) as well as the polyester knitted
fabric Interlook (grey weight 209 g/m).

The cost calculations are based on the assumption that the cotton yarn is spun in a new Mill Type and
mill equipped with 36'480 Rieter ring spindles producing 906 kg per hour and 3'072 Size
Rieter open-end rotors producing 962 kg per hour. In texturing we are considering a
plant size of 10 set eFK Machines, each having 384 working positons and cam shaft
winding. The average operation speed is 800 m/min at 95% efficiency with 5 kg final
packages. In weaving, 200 Picanol air-jet weaving machines OmniPlus-i-2-P-190 produce
19.4 meters of fabric per machine and hour (94% machine efficiency), 150 Picanol air-jet
weaving machines OmniPlus-i -2-P-190 produce 22.3 meters of fabric per machine and
hour (94% machine efficiency) while 60 Picanol rapier weaving machines OptiMax-i-4-R-
190 have an output of 12 meters per machine and hour (95% machine efficiency). For
knitting, Single Jersey (Lapique), 17 (13) circular knitting machines of Mayer & Cie, type
Relanit 3.2 II, 30 inch diameter, gg 24, 96 feeders, with an output of 25.3 (31.4) kg per
machine and hour (85% machine efficiency) are assumed, while for knitting Interlock, 8
circular knitting machines of Mayer & Cie, type OV 3.2 QC, 30 inch diameter, gg 28, 96
feeders, producing 10.7 kg per machine and hour (85% machine efficiency), are
needed.In finishing, the continuous open width process route for cotton woven fabric is
composed of 1 singeing machine, 1 BENNINGER bleaching machine, 1 BENNINGER
mercerizing machine, 1 BENNINGER hotflue, 1 BENNINGER PAD steam, 1 stenter frame,
1 sanforizing machine, 4 inspection tables with a production of 69'120 meter per day.

International Production Cost Comparison – Scope & Coverage 3

The continuous open width process route for cotton knitted fabric is composed of 2
slitters, 1 BENNINGER Trikoflex pre-treatment range, 1 stenter frame, 2 BENNINGER CPB
dyeing stations, 1 BENNINGER Trikoflex washing range, 1 belt dryer with infeed stenter,
2 compactors, and 4 inspection tables with a production of 20 tons a day. The
discontinues process route for cotton knitted fabric entails 6 BENNINGER FabricMaster
hydrodynamical jets, 2 slitters, 1 belt dryer with infeed stenter, 2 compactors, and 6
inspection tables with a production of 15 tons a day. The discontinues process route for
polyester knitted fabric entails 2 slitters, 1 BENNINGER Trikoflex washing range, 1 stenter
frame, 4 BENNINGER FabricMaster hydrodynamical jets, 2 rope opener, 1 belt dryer with
infeed stenter and 6 inspection tables with a production of 15 tons a day. (s. details
below each cost factors table on p. 9-16).

Rates of output are assumed to be identical for all 14 countries concerned. The different Efficiency
efficiency standards prevailing in the countries have been taken into consideration by Standards
varying the number of workers required to obtain the output levels indicated.

The calculations are based on cost factors that prevailed in the 1st quarter of 2021. Reference
Cotton/polyester prices are those of the last week of February 2021. Period

Definition of Cost Factors

Manufacturing costs relate to the production area only, i.e., excluding overheads. Reference Area

Wages include social charges, fringe benefits and shift work premiums. Note that the Wages
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 Operating
individual times are according to Benninger, Mayer, Oerlikon Barmag, Picanol, Rieter and Personnel
Santex Rimar standards. Supervisors, as well as staff for laboratories, workshops,
despatch, etc. are not included.

The requirements of skilled and unskilled workers for machine maintenance are Overhauling
determined according to Benninger, Mayer, Oerlikon Barmag, Picanol, Rieter and Santex and
Rimar standards for the overhaul and maintenance of their machines. The values Maintenance
indicated give the requirements per shift, similar to those for operatives. Personnel

The necessary average floor space for machines, gangways and reserve (can space etc.) Floor Space
was evaluated on the basis of a great number of spinning, texturing, weaving, knitting
and finishing 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 Building Costs
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.

International Production Cost Comparison – Scope & Coverage 4

The straight-line method (as against the degressive method) was used to calculate Depreciation
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. 44).

Interest rates vary not only from country to country but also from company to company Interest Rates
within one single country. In this study the average interest rates that prevailed in the
first quarter of the reference year were assumed

Definition of Cost Elements

In spinning, revenue from the sale of waste (waste from slivers, filters, flats and grid Waste
droppings, etc.) is considered when calculating waste costs. In knitting, absence of
waste is assumed. In finishing, the waste for both, Woven and Knits, refers to fibres
and impurities loss during processing.

Wage costs are calculated on the basis of the wages paid to operatives and to skilled Labour
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 Power
machines, the illumination and the air conditioning (in weaving and finishing, also
steam, gaz, 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 Auxiliary Material
the buildings represent the costs for auxiliary material (this includes preparation
costs in weaving and dyestuff and chemicals in finishing).

This element includes depreciation of machines, accessories and buildings. Depreciation

Machinery costs include free delivery to the mill, erection and - where applicable -
customs duty and taxes.

Costs of capital interest. Interest

The sum of the above group of costs represents the total manufacturing costs. Total Manuf. Costs

Cost of raw cotton/polyester in the finished product in USD per kg or meter. Raw Material

The tables with “Total Costs” present the cumulative sum of production costs across Total Costs
segments plus the cost of raw material in each segment (i.e., raw material costs
presented in the tables with cost factor). In other words, the total cost for spinning
equals the manufacturing costs for spinning plus fibre costs. The total costs for any
subsequent segment (i.e., weaving/knitting and finishing) entail the total costs from
the previous segment plus its respective manufacturing cost and fibre costs. This is
true for each process route. Costs are transformed into the matching units, i.e., USD
per m or USD per kg, depending on the segment requirements.

Ex: The labour cost in the table “Total Cost 2021: Spinning Ring/NE30” equals the
labour cost in the table “Manufacturing Cost 2021: Spinning Ring/NE30”. The labour

International Production Cost Comparison – Scope & Coverage 5

 cost in table "Total Cost 2021: Weaving Ring Yarn Fabric" equals the labour cost in
table “Manufacturing Cost 2021: Weaving Ring Yarn Fabric” plus the labour cost in
the table “Total Cost 2021: Spinning Ring/NE30“ expressed in the corresponding unit
(i.e. USD per meter).

Cost Factors: Spinning (Example)

Korea, Rep.
Bangladesh

Indonesia

Vietnam
Pakistan
America

U.S.A.(6)
Product

Central

Turkey
China

Egypt
Brazil

India

Italy
Unit

Hourly wage for skilled

USD
personnel
Hourly wage for
USD
machine tenders
Hourly wage for
USD
unskilled personnel
Operating hours (per
Hour
year)
Cost of electric power
USD
(per kWh)
Cost of buildings (per
USD
m2)
Annual building
maintenance (% of %
building cost)
Depreciation period for
Year
machinery
Depreciation period for
Year
accessories
Depreciation period for
Year
buildings
Customs, import tax,
etc. (% of machinery %
price)
Capital interest rate (%) %

Raw material cost (per

kg of cotton 1-1/8", USD
ring)
Raw material cost (per
kg of cotton 1-1/16", USD
rotor)

International Production Cost Comparison – Scope & Coverage 6

 Manufacturing Cost: Spinning Ring/NE30 (Example)

Korea, Rep.
Bangladesh

Indonesia

Pakistan
America

Vietnam
Product

Central

Turkey

U.S.A.
Brazil

Egypt

India

Italy
Unit

USD per kg
Waste
% of Total

USD per kg
Labour
% of Total

USD per kg
Power
% of Total

Auxiliary USD per kg

material % of Total

USD per kg
Depreciation
% of Total

USD per kg
Interest
% of Total

USD per kg
Total
% of Total
Index: Italy

Total Cost: Spinning Ring/NE30 (Example) Korea, Rep.

Bangladesh

Indonesia

Pakistan
America

Vietnam
Product

Central

Turkey

U.S.A.
Brazil

China

Egypt

India

Italy
Unit

USD per kg
Waste
% of Total

USD per kg
Labour
% of Total

USD per kg
Power
% of Total

USD per kg
Auxiliary material
% of Total

USD per kg
Capital*
% of Total

USD per kg
Raw material
% of Total

USD per kg
Total
% of Total
Index: Italy

*depreciation & interest

International Production Cost Comparison – Scope & Coverage 7