The ReDress Consultancy invites comments from the industry. Are they being too simplistic in their views. And what of the labour breakthrough? How will this affect the compliance issue, wage pahse-in and bargaining council's actions or mandate?
Things are looking up for the clothing sector. It is on the verge of a breakthrough with labour on a new wage dispensation for the industry, as well as in securing a 22% duty rebate on imported fabric.
Things are looking up for the clothing sector. It is on the verge of a breakthrough with labour on a new wage dispensation for the industry, as well as in securing a 22% duty rebate on imported fabric.
For years clothing manufacturers have been pleading with government to remove the 22% duty on fabric since the sector imports 80% of its fabric needs. Local fabric, it argues, is either not available in commercial quantities or is not price competitive with Asian imports. (Fabric makes up about half the manufacturing cost of the average garment, more than twice labour costs.)
“We’re close to getting sign-off for a comprehensive duty rebate on all imported fabrics, whether locally available or not,” says Johann Baard, executive director of Apparel Manufacturers of SA .
The last hurdle is for the textile sector to secure a commitment from both the public and private sectors to source more fabric locally in exchange for the textile industry giving up the protection offered by the 22% duty.
The Textile Federation’s Brian Brink says previously government would have given the tariff relief without having considered the upstream impact, but to do this would be akin to “turning the lights off” on SA’s textile industry.
“It’s taken a world recession and a decade of savage attack from China for them to find a cleverer way of doing things,” he says, predicting that agreement is only months away.
In a separate development, the industry, after months of facilitation by the Commission for Conciliation, Mediation & Arbitration , has concluded a proposed wage settlement agreement at leadership level with the SA Clothing & Textile Workers’ Union . If the union’s members accept the proposal, which Baard says contains “unprecedented, innovative elements and wage model adjustments”, employers will consider it a breakthrough.
In addition, two key industrial support measures, the Competitiveness Programme and the Production Incentive Scheme, have assisted in stabilising the sector. The department of trade & industry estimates that 171 companies have benefited from these two programmes and that this has supported or saved at least 40591 jobs while 1111 new jobs have been created.
Another positive development is that a dedicated SA Revenue Service forum has been established for the sector. It will be supported by a secretariat and ensure customs compliance, among other things. “We’re encouraged because the single most important thing that could have a massive impact on the sustainability of the industry is to deal with illegal imports and under- invoicing,” says Baard.
Manufacturers are confident that if all these measures fall into place, the industry will be able to win back lost market share from the East. “Over the next 12-18 months we expect this to translate into significant job creation ,” says Baard.
Reference: FM, 23 September 2011
Clare Bisseker
9 comments:
the union seems very quiet it's deafening on these matters which affect so many of it's members.
The flight of production has already begun to the neighbouring states.
I am sure any breakthrough would be welcomed as long as it benefits all, both turn-key manufacturers, cmt's & the staff who work in these establishments.
Lets wait & see before setting off the party crackers just yet
Hello Anonymous,
Just so you know, it was the union which conceptualized, designed and brokered this rebate deal.
Thanks
Simon
SACTWU
Simon, Nowhere in the article is the union acknowledged, why would Mr. Baard make such an obvious omission
how is this "deal" going to benefit the CMT operator who does not have the same deep pockets as the turn-key manufacturers.
we wait with baited & somewhat skeptical breath when the union says it does anything other than place the country on a path into the economic wilderness - are we crossing the Rubicon yet again
Hi Anonymous #2
There could be many reasons why SACTWU is not mentioned in the article. Out of respect for Mr Baard, I will not speculate on the omission. Nevertheless, perhaps its useful for you to note that the article doesn't actually mention the genesis of the proposal. Of course though, that doesn't mean the proposal doesn't have a genesis.
Your question about the CMTs is a good one. In principle CMTs should have lower costs since the input cost of fabric would be lower. But it's possible that other actors - retailers and larger manufacturers - may simply try to absorb the savings themselves and pass only smaller savings to the CMTs.That's a battle CMTs will have to fight with their customers though, hey. Unfortunately its just part of the cut-throat world of free enterprise and competition.
Simon - very interesting point about CMT's, we talk free enterprise but nothing is free, in the term free enterprise - far too many restrictions & strings attached - T & C's apply.
Regulation is far too stifling - I am not saying to do away with all regulations but they need to be relaxed & policed fairly - not only for the benefit of a few.
Jobs must be sustainable & and less cumbersome constraints in place for the industry to become a more cost effective, productive industry, Govt. hand out & incentives are a short term solution & is limiting - only a few can & will benefit - for obvious reasons - we need an approach which encompasses all in a way that all benefit, especially the workforce.
Intimidation & thug tactics to force companies to "comply" only make the industry go further underground & does not solve anything long term, it has not happened in the past & is not happening in the present.
Both sides can point fingers at each other but yet again name calling is not productive or constructive.
We need a productive industry & workforce - only then, as simplistic as it may be, can we take the next step to become more sustainable.
The high wage / low wage debate will be debated for ages. We need to have a proven productive workforce before we can talk serious money.
Higher productivity reduces output overall cost which then can be balanced with a better /higher wage for the workforce. Low productivity costs jobs not create
Simon, find it of interest that the union you work for is very proud of the fact that you have instigated the removal of duties on textiles-how will you now explain the closure of factories and loss of more jobs? What is the reason and where is research to show this action will help SA clothing/textile industry? I find it of interest that Baard talks about textile industry but no word from textile body itself is AMSA now spokesperson for entire industry and AMSA/union/BC making deals for clothing and textiles? Too many unanswered questions-special agenda being pushed for one group of people or company. Short term fixes More explanation required.
CT#1
CT#1
The proposal put forward by SACTWU explicitly linked the rebates to a procurement deal in which local textile factories must have their capacity bought up before the rebates are given on imports. That provides an incentive for local clothing companies to increase their sourcing from local textile mills.
You'll notice from the article that Brian Brink and Texfed have been part of the discussions.
Dear Simon, Thank you for responding. So you are saying that rebates on textile imports are not going to happen until "textile factories have their capacity bought up before before rebates happen"? And do you have evidence, written confirmation or can you supply textile industry information about the procurement deal-with whom, when, what-what are the details?
CT#1
Hi Anon
As I understand it, the matter has been under negotiation between all the parties regarding how much capacity must be bought up before the rebate is allowed. Obviously clothing employers want a very low threshold and textile employers a much higher one. I've not been involved in the process for almost a year so I'm I'm not sure where it stands at the moment. It's probably useful to check that with your association.
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