SOUTH Africa’s largest textile and clothing group, Seardel, has announced what could be only the first round of retrenchments at the company, which will leave 1400 workers without jobs.

This comes after the group embarked on a restructuring programme with a view of returning it to profitability after it recorded operational losses in its latest interim reporting period, ending December.

Several divisions of the Frame Textile Group will be closed, including weaving and finishing, denim and spinning.

Employees who will lose their jobs are also members of the South African Clothing and Textile Works Union, whose investment arm is a major shareholder in empowerment group Hosken Consolidated Investment.

HCI in turn controls 70.2 percent of Seardel.

This has spurred questions of a conflict of interest between a drive by the unions to protect workers jobs and the agenda of shareholders to maximise profit.

Seardel, along with the rest of the industry, has been battling because of low-cost imports from China. Massive hikes in input costs, such as electricity, have also had an impact, as these could not be passed on to customers.

But some analysts have said the company under-performed regardless of whether these setbacks are taken into account.

Seardel said in a statement that over the past 10 years over R360-million has been spent on plant and machinery to raise efficiency levels, but it became clear improved efficiencies alone would not be enough to compensate for structural issues facing the industry.

An industry insider said there was no co-operation between the various units in the group and along the value chain, within Seardel. “The clothing and textile units did not co-operate with each other.”

There has been speculation that the clothing and textile conglomerate might be asset-stripped in an attempt to realise maximum profit for shareholders. Some shareholders have said the only way to access value would be to close down non- performing operations, sell land and return cash to shareholders.

Seardel employs 15000 workers.

Source: Business Times – Adele Shevel