We are now several months down the road since I wrote my first blog about hyperinflation. In the past year, a number of different elements have led to price increases, from cotton to container transport, from technical fibres to chemicals and dyestuff, from spinning to weaving to dyeing and finishing, and last but not least, surging energy prices never seen before. For each of those elements we thought: this will only last for a limited amount of time, it cannot stay this high, when will this come down again?
And here we are, one year full of surprises and many explanations and negotiations passed to get to a certain degree of price acceptation in the market. We’ve noticed that some companies in the protective clothing industry still believe this is only temporary and that we will go back to the stable price situation we had before, and that end users still dare to demand price stability for at least a year. I am afraid I have to disappoint you. This situation is here to stay.
There actually is one positive element of a situation with hyperinflation: it usually has a temporary character. Unfortunately, we are moving into a situation where we can no longer talk about hyperinflation. Instead we are now moving into a longer period of elevated inflation. Many economists across the globe all agree on one thing: that inflation is expected to carry on well into 2023. In other words, we will continue to be faced with ongoing price increases for at least another year, if not more. Instead of resisting this unstoppable movement, we believe it’s better for all of us if we embrace it and cope with it together throughout our supply chain as best we can.
“Instead of resisting this unstoppable movement we believe it’s better for all of us if we embrace it and cope with it together throughout our supply chain as best we can.”
Effects of Ukraine situation
In addition, the unstable situation with Ukraine will only make matters worse. Oil prices are increasing further, recent developments led to another spike in gas prices, and all raw materials continue to go up in price. This will only be reinforced by the positive developments that are taking place with Covid. More and more countries go back to pre-Covid times in terms of social distancing and opening up the entire economy. This will lead to increased economic activity which will push demand up, and given the ongoing supply chain challenges, this will only lead to even more price increases.
All signs are pointing to elevated inflation
I wish I could sketch a brighter picture than this. But all signs are pointing in the same direction. We are sure that economic activity will grow, and we expect much more activity in the protective clothing industry. But all of this will take place at continued higher prices going forward. Luckily, we are also coming across plenty of companies that do accept this situation and who are actually much more concerned about security of supply. And rightfully so. Supply chains continue to face many challenges and we know one thing: more disruptions will happen, we just don’t know when and where. Flexibility is key to adapting to this ever-changing environment, and that’s exactly the mentality we have taken at TenCate Protective Fabrics. Please join us in this journey and let’s focus on those things that we can influence and accept those we can’t.
“Flexibility is key to adapting to this ever-changing environment and that’s exactly the mentality we have taken at TenCate Protective Fabrics.”