Jeansland Podcast
This is why I do this. Jeansland is a podcast about the ecosystem in which jeans live. There are an estimated 26 million cotton farmers around the world, and about 25% of their production goes into jeans, which could mean 6.2 million farmers depend on denim. I read estimates that at least 1 million people work in retail selling jeans, and another 1.5 to 2 million sew them. And then there are all the label producers, pattern makers, laundries, chemical companies, machinery producers, and those that work in denim mills. I mean, the jeans industry, which is bigger than the global movie and music business combined, employs a lot of human beings. And many of them, like me, love jeans. The French philosopher and existentialist Simone de Beauvoir, when visiting New York, said, "Everyone in the New York subway is a novel." I never met her, but I guess she made the observation because of the incredible diversity of people who ride the subway system. I'm convinced the people in our jeans industry are like those in the subway. They are unique, with rich and complex stories to tell, and I want to hear them. And deep inside me, I think you might feel the same way.
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Jeansland Podcast
Ep 64: The Hidden Cost of War
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The war doesn't show up where you think it does.
In Episode 64's Andrew's Take, he looks at the war in Iran, not politically, but through the lens of the jeans industry. Orders were booked months ago. Prices were locked when oil was lower, freight was cheaper, and currencies were more stable.
None of that is true anymore.
Factories across Bangladesh, Pakistan, and Vietnam are absorbing the difference. They didn't start the war. Their countries aren't fighting it. But between energy costs, freight surcharges, chemical pricing, and weakening currencies, the margin on a finished garment simply disappears.
The contract is fixed. The cost is not. Andrew breaks down exactly where that gap shows up, and who carries it.
If you value these conversations, subscribe and leave a review. It helps more than you think. This episode of the Jeansland Podcast is brought to you by Inside Denim, the global resource for everything denim, from sustainability insights to fabric innovation and brand stories shaping the future of the genes industry. Inside Denim keeps you informed and inspired, so stay ahead of what's next in denim at insidedenim.com. You can also visit genesland.co and sign up for our bi-weekly newsletter. It gives you access to our full archive along with the development shifts and stories shaping the denim supply chain in real time. Follow us on LinkedIn, Facebook, and Instagram to stay connected between episodes. This week I want to talk about the war in Iran. Not what I think about it, but its impact on the genes industry. And what I know for sure is that suppliers sure didn't start the war. Their countries are not fighting in it, but they're paying for it. Think about this. Factories across Bangladesh, Pakistan, Vietnam, et cetera, are packing goods today at prices agreed to two, three months ago. The order's fixed, the delivery date is fixed, the margin was already thin. What was not fixed is everything else. Because between now and then, when the war started February twenty eighth, everything's changed. And in Jean's Land, the war doesn't show up in any headlines. It shows up in the supplier's P ⁇ L. And in this case, it'll probably be in red. Let's break it down. Energy. Oil goes up, electricity follows. Every process in the production of textiles and garments requires energy. And spinning, dyeing, finishing, laser, ozone, garment sewing machines, all the costs go up. These countries don't produce energy. The genes land supply nations import it, which means that they don't control the price, but they absorb it. And oil and all sorts of other elements of an order move by sea, like cotton or yarn or stretch fiber. Fuel surcharges rise. War risk insurance kicks in, routes get longer, shipping costs are up, and that's that. And then there's the chemicals. Indigo, enzymes, finishing agents are all globally priced and dollar-linked. Companies like our Chroma aren't adjusting for the currency problem. If the currency weakens, the cost rises. It's as simple as that. Polyester and spandex are oil in disguise. Oil jumps, the oil fibers jump with it fast. Currencies, taka, rupee, dong, all weaker against the dollar. Sounds like an advantage. Theoretically it is, but it isn't. Because everything they buy, energy, chemicals, freight, is priced in dollars. So the cost base rises faster than any export base. And money itself, interest rates have gone up to control inflation. Working capital gets expensive or even hard to get. Factories are paying more just to operate. Here's the real problem. All of this happened after the orders were booked. Oil was lower, freight was cheaper, currency was more stable, and that's when the prices were locked in. Factories are not probably going to call the buyer and say, hey, things have changed. Do you mind if we revisit the price? Not sure that can happen. Or even if it did happen, whether it would work. The contract is fixed. The cost is not. So what happens? A factory with a $3 margin per garment suddenly faces higher energy, higher freight, blah, blah, blah. The margin disappears. Sometimes it goes negative. There's a myth in global trade that the weaker currencies make exporters more competitive. In Jean's land, and in this particular case, that's fiction. Costs for most of the things inside a gene are global, and prices are in US dollars, and prices are negotiated. Margins are local. And the local is where the damage sits.