Hope returns to clothing, textiles sector

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Seamstresses work at an underwear factory in Cape Town. Government incentives and support have helped to stem job losses in the industry, which had been suffering from poor competitiveness. Photo: Mlondolozi Mbolo

Johannesburg - The clothing and textile industry had slowly regained its strength and if supported, South Africa would be able to compete with global manufacturers, Economic Development Minister Ebrahim Patel said last week.

Patel was speaking at the annual bargaining Council meeting of the Southern African Clothing and Textile Workers Union (Sactwu) in Durban on Thursday.

“We are not yet there but we have achieved a lot in saving jobs and creating jobs in this industry,” Patel said.

The industry had suffered job losses between 2002 and 2012 as a result of cheap imports, poor training and a lack of investment by companies, among other factors.

But the latest numbers from Sactwu indicate that there has been a slowdown in job losses.

A fortnight ago, the union said the number of jobs lost had declined by 66 percent between a 12-month period in 2010 and the corresponding period last year.

In 2010, a total of 10 119 jobs were lost; this dropped to 5 338 job losses in 2011. In 2012, the industry suffered a further 5 330 job losses, while 3 416 posts were cut last year.

The industry has shrunk by 20 percent in the past three years and job loses were estimated at 29 500 between 2007 and 2010.

Patel said that during the Zuma administration, the sector had benefited from about R4 billion spent either in the form of loans or incentives. In terms of the incentives, support was conditional on increased competitiveness.

The production incentives fall under the Clothing and Textile Competitiveness Improvement Programme, which helps companies improve competitiveness and pay for capital upgrading. Through the Department of Trade and Industry, the government had approved the R2.2 billion production incentive fund for the clothing, textile, footwear and leather sector, which Patel said had saved 63 000 jobs and created 8 000 additional jobs.

In addition, the Industrial Development Corporation has made loans and investments of R2.2bn to 93 companies in the industry, saving 12 000 jobs in the process.

A major beneficiary of the Department of Trade and Industry’s incentive has been Seardel, a major clothing and textile manufacturer.

In its most recent annual report, the Seardel board acknowledged the importance of the incentive programme.

The KwaZulu-Natal Clothing and Textile Cluster has also benefited from the government’s intervention.

Apparel Manufacturers of SA executive director Johann Baard said his observations were that the industry had improved over the past 18 months. “Since the sector has received support from the government four years ago, we have witnessed over the past 18 months what we refer to as a stabilisation of the sector.”

In past 15 to 20 years the industry has shrunk as a result of retrenchments, factory closures and an influx of cheap imports. “Over the past 18 months, we have seen that trend flattening off,” Baard added.

A positive announcement about relief on fabric import duties would add to the stabilisation, he said.

For the past 20 years, local manufacturers had paid, on average, about 22 percent in import duties for fabrics that were not available locally.

“Our customers are the retailers. When they place an order with us, they tell us what fabric they want, and (if) we can’t find it in the domestic market, we are then forced to import it,” Baard said.

Importing fabrics was the single biggest input cost for the average clothing manufacturer, Baard said.

Most domestic retailers, including Woolworths, Edcon and Mr Price, import up to 70 percent of their apparel, but Foschini and Edcon have recently involved local suppliers.

Last year, Edcon increased its local suppliers, while Foschini said 65 percent of its women’s wear was now made in South Africa.

Alex Liu, the deputy chairman of the United Clothing and Textile Association in Newcastle, KwaZulu-Natal, which represents companies that do not comply with minimum wage levels, said association members had not benefited from government subsidies. “This is because we are not part of the bargaining council, which is one of the criteria.”

But he agreed that job losses in the industry had lessened.

Commenting on the growing number of international fashion retailers entering the South African market, Patel said the government hoped that in the long term, the local industry would become part of the global supply chain.

He said this would be achieved when local manufacturers were more competitive not only on number of units and price, but also on turnaround time and quality.

“We have to find the niche markets for the manufacturers and they could be for the domestic market, but they could also be for some of these larger chains, and increasingly our challenge is going to be putting a value proposition to the big international retailers to let them recognise that part of the social responsibility of benefiting from our markets is taking up agreements with local producers. This can only be done if we have an industry that is dynamic and competitive.”


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