Rescue plan for textile industry finally gets moving

While implementation of four core programmes — most of which will be administered by the Industrial Development Corporation (IDC) — will take immediate effect, the department was mum on the extent of the resources earmarked to turn the sector around.

Industry stalwart Justin Barnes, however, estimated that the recapitaliation of the industry, including investment in new equipment, advanced training and operational improvements, would cost about R15bn, more than double the projection of R7bn in the original sector programme drafted four years ago.

But he said implementation of the plan was better late than never as the cost to the economy of the industry shutting down would be far greater.

The industry's share in the economy has declined significantly but it still contributes R8bn a year to gross domestic product (GDP). Moreover, it employs about 200000 workers, and the social impact of mass job losses would need to be quantified.

“It is not what you spend, it is what you get from what you spend that matters. That is how you grow the economy,” Barnes said.

The programme has four core elements. Support measures include the clothing and textiles competitiveness programme, aimed at improving manufacturers' competitiveness.

It also has a capital upgrade programme available to clothing, textiles and footwear manufacturers through its enterprise investment programme, along with preferential loans through the IDC at prime minus 5%.

A further part of the programme revolves around competitiveness at the level of individual firms and at a cluster level, on a cost-sharing basis.

Tariff cuts are a further core component, which will see import duties removed on textile inputs not manufactured locally or not available in commercial quantities.

A part of the CSP has been formulated in response to the global downturn, with the IDC responsible for funding to help firms in distress.

A fourth component constitutes the upgrade of skills in collaboration with the sectoral education and training authority, the Department of Labour and the National Skills Fund.

Source: Business Day

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