Shock as Seardel closes Frame Textiles

About 1400 Frame workers will be affected.

Frame comprises the spinning, weaving, finishing and denim divisions of Seardel's vertical pipeline, and is the biggest textile operation in southern Africa.

Its demise will also hit workers and companies operating in related industries, such as clothing manufacturers that get fabric from Frame and the cotton industry, which will lose a large customer.

An analyst described the closure, which follows those of other large industrial textile operations over the past five years, as “marking the deindustrialisation of the textile industry in SA”.

Textile Federation MD Brian Brink said the loss of critical capacity in the value chain was tragic for the industry.

Seardel blamed the closure on a plethora of competitive challenges, including cheap, often underinvoiced imports, subsidised goods in peer markets, increases in input costs and the noncompliance of local competitors with the minimum conditions of employment legislation.

In a remarkably forthright statement, Seardel lashed out at a failure of the government to help the industry out of the doldrums.

The customised sector programme, aimed at recapitalising the industry, has been on the cards for more than four years but was never implemented. The programme was mooted after several other proposed policy interventions to assist the ailing industry, which also never materialised.

An industry source said the Department of Trade and Industry was mainly to blame for the demise of Frame and a long line of textile operations before it.

Seardel decried its having to compete with companies that benefited from state funding through the Industrial Development Corporation (IDC).

However, it emerged that Seardel also approached the IDC about a bail-out for Frame, which could not be agreed on.

IDC CEO Geoffrey Qhena said at the weekend the corporation had had lengthy talks with Seardel on helping the company, but the parties could not come up with a workable solution.

“We tried different permutations. We have said that we would help companies that are going though difficult times during the downturn. But the problem (with Frame) goes deeper than that. Businesses have to have economic merit in the long term for us to put money in. Unfortunately, in this instance that did not seem to be the case. The intention for us is not to inherit things that are not going to work.”

Industry consultant Joop de Voest said the Frame closure would have ramifications throughout the region: “To lose a stalwart of that nature, that has invested so much to become more efficient and with some of the assets still relatively new — it's a tragedy. Significant sourcing contracts will now probably go to China.

“There are also clothing manufacturers (that source fabric from Frame) that will throw in the towel because they are too small to buy from China. The same goes for fabric knitters as the capacity to source yarn has significantly reduced.”

Seardel's Stuart Queen could not be reached for comment, nor Andre Krile, spokesman of the Southern African Clothing and Textiles Union, which is a Seardel shareholder.

Source: Business Day

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