The unions, DTI nor the IDC have saved 1400 jobs in one of South Africa’s largest and oldest textle companies Frame Group the very union that has failed its members is contemplating joining the chorus of industry strikes taking place throughout South Africa. Will such action be beneficial for their members? For retailers and apparel buyers it will be business as usual and they will simply cancel orders from local suppliers and move their orders offshore.
The announcement that the KwaZulu-Natal local government has put aside R70 million for the apparel sector sounds impressive however, the industry needs a detail assessment and to show transparency as to how this money will be utilized? Will the money stitched into this industry sector actually create sustainable jobs, provide opportunities for companies to upgrade and become more competitive? The industry does not need political rhetoric. Let the industry see this “comprehensive strategy”, let us know who will be managing it, what accountability will there be for accessing the cash injection and how will it save jobs when both the national government, the unions and the IDC that has been tasked to bailout the industry has already failed 1400 workers? Is there space for these 1400 workers to be absorbed into the industry through this initiative?
The clothing industry in KwaZulu-Natal needs to stand together and place pressure on the local government to disclose their strategy. If they do not I feel the money will be squandered and there will be little tangible developmental progress. It is dependent on the industry stakeholders to create a unified voice speak as a collective and interrogate the KwaZulu-Natal’s department of economic development. Are the people in this department responsible for rolling-out the so-called “comprehensive strategy” qualified? Do they have a comprehensive understanding of this complex sector, do they have the skills, the knowledge and the ability to undertake such a task? Such questions must be raised, excavated and interrogated by industry stakeholders who ultimately are the ones that create employment and make this sector function.
NO HOPE FOR FRAME GROUP
THE Department of Trade and Industry has had to abandon plans to rescue the Frame Group, the textile arm of SA’s largest clothing manufacturer, Seardel , after it failed to convince an Asian foreign investor to take up a stake in the failed company[i].
Industry stakeholders were not surprised by the department’s announcement yesterday that its attempts to keep Frame running and save 1400 jobs had been defeated.
“The last gasp was trying to bring in a foreign investor, but the company did suffer huge losses and Seardel itself was sceptical that the business could be turned around,” one commentator said.
The Industrial Development Corporation (IDC) turned down an earlier plea for a bail-out from the firm as the business was unsustainable.
It is likely that Frame’s assets in KwaZulu-Natal and the Western Cape will be taken offshore.
Seardel CE Stuart Queen yesterday confirmed that the group had had some interest shown in its assets from groups in Bangladesh, China and India, and had also been approached by some local manufacturers.
However, liquidity problems in the current economic environment and a particular aversion in SA to extend credit to clothing and textile operations would make it extremely difficult for a local manufacturer to buy the assets, which means they are unlikely to remain in the Southern African Development Community region.
“We have not been pressing hard on a process (to sell the assets), because we were hoping that a solution could be found. But there has been some interest. Frame’s assets are very advanced, so we think we’ll get them sold,” Queen said. The company was hoping to complete the process in the next 18 months.
Some of the assets, such as some looms, would be kept and used at Seardel’s other operations, he said.
Frame — which was composed of spinning, weaving, finishing and denim divisions — was the biggest textile operation in southern Africa and there were concerns that its closure could lead to a dearth of fabric in the region.
However, the IDC’s Willie Fourie, who heads the strategic business unit for clothing and textiles, allayed such fears yesterday. The IDC had indicated that it would help clothing manufacturers who were struggling to secure fabric, while the corporation also had talks with local textile manufacturers Da Gama and Mediterranean Textiles about the possible need to expand production capacity.
However, the IDC had seen “no rush” for the need to increase textile imports, as most firms had made alternative sourcing arrangements when Frame’s closure was originally announced, he said.
Fourie was also confident that workers affected by Frame’s closure might be accommodated elsewhere in the value chain. “With a little more focus on clothing and other downstream activities, and some buy-in from retail, we should be able to make up those jobs fairly swiftly.”
Department of Trade and Industry officials could not be reached for comment yesterday, but earlier in the day the department said its attempts to rescue Frame had failed.
Interventions by Trade and Industry Minister Rob Davies and Economic Development Minister Ebrahim Patel were prompted by an attempt to “facilitate the preservation of strategic capacity and employment in a global and domestic environment, which is placing parts of our manufacturing sector under serious threat”.
The department said that the ministers would “similarly engage actively” in similar circumstances “where there are difficult and strategic decisions at stake within our manufacturing sector”. An industry commentator said attempts should have been made to save some of Frame’s strategic assets.
RESCUE PACKAGE FOR KZN?
THE KwaZulu-Natal government has put aside R70million in a bid to rescue its clothing and textile industry[ii].
This was said by MEC for economic development and tourism Mike Mabuyakhulu in his budget presentation in Pietermaritzburg yesterday.
He said the government hoped this will save thousands of jobs in the province.
Mabuyakhulu said a comprehensive strategy for the revitalisation of the province’s clothing and textile sector has been developed.
“This strategy looks at access to markets, skills development, establishment of an integrated hub that will service stakeholders and development of a funding model to assist SMMEs to purchase raw materials and machinery.
“Government believes we can still rescue this labour-intensive sector. An amount of R30million has been budgeted for this. This would be backed by an injection of over R40million during the next two years.
“This sector has been hardest hit by trade liberalisation, which has resulted in cheap products flooding our market.
“As a result, thousands of jobs have been lost. The current global economic situation has not helped matters,” he added.
Mabuyakhulu said arts and craft, information and communication technology, agri-business as well as business processing are among the industries his department has prioritised.
He also announced that a creative industry would be boosted by the establishment of a R24million music studio at the former Documentation Centre in Durban.
He said a lack of facilities and resources to manufacture and market music products had resulted in artists trekking to Gauteng to seek opportunities.
[i] Government abandons bid to save Frame . Business Day, 21/7/09.
[ii] KZN bid to save textile sector. The Sowetan. 23.7/09
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