Rescue plan for textiles

A rescue package has been drawn up to try to stem job losses and closure of factories in the South African clothing and textile industry.

The plan was outlined in a special report by the Department of Trade and Industry, labour and employers, which said: “Huge spare manufacturing capacity in China and other Asian economies pose a threat to the very existence of the sector.”

The policy proposal called for:

A production incentive that would allow companies to receive a subsidy;

The Industrial Development Corporation to provide companies with capital at an interest rate of prime minus five percent for two to three years;

The IDC to increase its equity exposure in clothing and textiles;

The newly introduced manufacturing investment programme to be amended to ensure increased uptake;

Guidelines for the new clothing and textile competitiveness programme aimed at enhancing companies' competitiveness to be structured to ensure maximum benefit to the industry;

A co-ordinated skills development programme throughout the industry;

All tiers of government to procure their clothing and textiles locally;

All government assistance to be accompanied by conditions of tax and labour law compliance; and

Customs fraud to be dealt with by setting up a dedicated clothing unit.

The proposal also suggested trade interventions such as increasing clothing tariffs and closing loopholes that allow neighbouring countries to be used as conduits for imports.

The industry has lost 69000 jobs, or 39% of its workforce, over the past six years.

The document said it was feared that there would be 20000 industry job losses a year in the next two to three years.

Recent casualties in the clothing and textile sector include SANS Fibres, with one of the most technologically advanced plants in Africa, with the loss of 1500 jobs in one year.

The report said smaller firms across South Africa — in Bellville, East London, Pretoria, Woodstock and Atlantis — had notified trade unions of further retrenchments and closures over the next few months.

The initial processes of formulating the rescue package were criticised in some quarters for inadequate consultation and for being mainly driven by the Southern African Clothing and Textile Workers Union (Sactwu).

Some companies criticised the proposed deal for putting the needs of labour ahead of those of industrialists and investors.

However, participants defended the process and said it was comprehensive.

Andre Kriel, deputy general secretary of Sactwu, said: “We don't think it's about labour first. It's in the spirit of the national framework agreement to address the economic crisis through decent work.

“We are encouraged by it and hope it can be finalised quickly and speedily because of the serious job losses in the industry.”

Said another insider: “Whatever choice is made at the end of the day, it must address the institutional weakness, and recognise that there will be winners and losers. Decisions need to be based on some very good research and implementation must be effective.

“Any form of protectionism leads to all sorts of side effects, often negative.”

Source: Business Times

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