South Africa- 24 July 2010
More jobs lost in South Africa’s clothing sector
Commentary from The ReDress Consultancy
The largest South African clothing group, Seardel is considering the need to dismiss a further 800 of its staff from its division that make bras.
This is another wake-up call for government and the South African Clothing and Textile Union. There is so much potential for business and employment growth in the South African clothing, textile and fashion sectors, however, these sectors face unrealistic competition from Asia. Maybe it is time to institute restrictions on clothing imports and encourage local development. I do not fully agree with the argument that this will increase the retail price of clothing and “the poor” will not be in a position to afford such price hikes therefore, an entire industry and thousands of jobs must be lost. We need to excavate and unpack the meaning of “the poor” and define this sector of the population. Where do they buy and what do they buy? What is their spending on apparel?
The membership of the clothing union is hemorrhaging. It is time that they use some creativity in finding mechanisms to sustain and grow jobs. The days of 1980s union activity is over. Engage with South African consumers do not alienate them. Tell them, show them what it is important to support local design and made clothing.
There is required an effort of intellectual and emotional activism by industry, government, the union and the retailers on ground level in the shopping malls and with the media in their engagement with South Africans to tell of the importance these industries have to the welfare of South Africa and why the support of South Africans is paramount.
There is required an effort of intellectual and emotional activism by industry, government, the union and the retailers on ground level in the shopping malls and with the media in their engagement with South Africans to tell of the importance these industries have to the welfare of South Africa and why the support of South Africans is paramount.
The unions and clothing sector complain about the lack of entry of new hands or skills in the clothing sector. Who would want to enter this sector when one only reads about job losses and factory closures? As a collective we need to engage with the youth, show them the growth potential of entering this sector of the economy. We need to demonstrate that they will not be condemned to a life behind a sewing machine but there are and is an array of opportunities for career advancement.
The youth I have and continue to engage with who have an interest in clothing all want to become fashion designers. However, what they do not realize, that without a local clothing and textile manufacturing sector, there will be no local fashion design manufacturing. The design sector requires multi skilled operators to produce design intensive clothing.
The latest proposal to retrench 800 staff from Seardel will have a detrimental effect on communities and the livelihood of nearly 4000 people. Most workers in the apparel manufacturing sector are women and at times the single breadwinner not only for their immediate families but often extended family are dependent on the income of these garment workers.
Policy development, rhetoric and promises and even bailouts by the IDC will not stop cheaper imports, unfair competition or a labour force that is diminishing nearly monthly. What is needed is for the industry, government and unions to work together and find mutual ground and then be prepared to take some drastic economic and trade decisions.
My resources inform me that further retrenchments in the sector is imminent and that that there may be a clamp down on unregistered clothing companies that will lead to further closures and job losses. Our clothing, textile and fashion sector as a collective with all public and private stakeholders must begin vigorous public engagement to diminish the erosion of these industries and the subsequent human suffering that will follow.
My resources inform me that further retrenchments in the sector is imminent and that that there may be a clamp down on unregistered clothing companies that will lead to further closures and job losses. Our clothing, textile and fashion sector as a collective with all public and private stakeholders must begin vigorous public engagement to diminish the erosion of these industries and the subsequent human suffering that will follow.
In April this year the company had to retrench around 800 people from it suit manufacturing facility and its intimate wear facilities. The last two years has seen its workforce reduce by nearly 5000 people.
In 2009 1400 people from the FRAME Group were retrenched.
In April South African clothing and textile union boss Andre Kriel said that the company need[ed] to focus on “ timeous delivery to customers, constant improvement of the quality of garments manufactured, innovative design, modernisation of production methods, constant skills and equipment upgrades and increased efficiency levels”.
The reason the company is considering having to close Intimate Apparel is according to Seardel CEO Stuart Queen, due to the fact that that” bra's are close skin-fitting items that required significant investment in design, pre-production technical resources and quality processes”. In May Seardel’s CEO reported that the company had spent over R50 m on new plant and equipment.
In September 2002, the company released some of its “smartest profit figures in its long history”. (CBN Archive Oct 02) This was at a time the industry was marred with strikes and when late the year before Cyril Ramaphosa was one of the main players in a consortium that bought a “meaningful stake in the group”.
Exports from Frame textile division in 2002 were targeted to reach R130 million in 2003. Six years later the same division had to close.
In 2005 the company reported a 45% decline in its headline earnings per share (Fin24.com, 28 Sep 05).
The company said cheap imports, dumped and undervalued finished goods were the primary reasons for the decline. For the same period exports revenue was R229 million versus R395 million in 2004.
The company’s 2009 report states remuneration to key management personnel was R21.9 million (2008: 27.4 million.) Hosken Consolidated hold 71% of the Group’s equity via a subsidiary.
Seardel can't support bra maker
Ref: Fin24.com
July 22, 2010
Marc Hasenfuss
Cape Town - Clothing and textile conglomerate Seardel Investment Corporation [JSE:SER] has proposed closing down Intimate Apparel, a division that makes well-known brands of lingerie and swimwear.
This is the second major operational shut-down at Seardel since empowerment giant Hosken Consolidated Investments [JSE:HCI] took control of the company in 2008. Last year Seardel was forced to close down textile group Frame's vertical pipeline.
The proposals could affect over 800 permanent employees. Consultations with unions are already under way.
In an announcement on Thursday evening, Seardel CEO Stuart Queen stressed the decision to shut down Intimate Apparel had been taken in principle – subject to any viable alternatives and consultation.
Queen said the manufacture of niche clothing products in South Africa remained challenging.
But he stressed that Intimate Apparel faced a number of unique pressures, including the fact that the manufacture of bra's was complex and labour intensive.
"The garments produced are generally of a very high minute rate with low selling prices, making it extremely difficult to recover the costs of labour inputs."
He added that bra's are close skin-fitting items that required significant investment in design, pre-production technical resources and quality processes.
"This investment in technical personnel is particularly expensive given their unique skills, and cannot be recovered in the selling price of the garments unless significant volumes with acceptable margins are achieved."
Queen said margin pressures had completely eroded selling prices and made it impossible to recover the costs of raw material inputs, labour and other overheads.
Also wage and other differentials with Seardel's international competitors meant local production was not competitive. Queen pointed out that the average imported landed cost of a bra was typically 20% lower than a locally manufactured item.
"The strategy to source fashion brassieres and core brassiere lines from offshore companies by retailers in order to realise the targeted retail margins has overcome Intimate Apparel's ability to compete".
Queen said the pressures exerted over recent years have translated into significant ongoing losses being incurred at Intimate Apparel.
"We have, over a number of years, looked at every possible avenue to remedy this situation - including major reorganisations, restructuring and the downsizing of operations."
Queen said Intimate Apparel had invested in equipment, facilities and training to improve productivity and efficiencies. He said major strides hade been achieved in terms of "world class manufacturing principles" to improve productivity and efficiency levels at Intimate Apparel.
"Despite the successful implementation of many of these initiatives, it has become clear that improved efficiencies alone will not be sufficient to compensate for the structural and depressed margin issues facing the division."
Ref: Fin24.com
July 22, 2010
Marc Hasenfuss


