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GOVERNMENT BLAMED FOR TEXTILE NIGHTMARE

There are “deep flaws” in South Africa’s industrial strategy, said Business Day. And that’s just been proven by clothing manufacturer Seardel’s decision to close Frame Textiles — with 1400 jobs lost in the process. It also indicates how futile efforts have been to try and insulate the country’s textile industry from the global economic crisis by means of protectionist policies — including the introduction of quotas on 31 lines of Chinese imports at the start of 2007.

Still, job losses in the sector continue climbing, said Ethel Hazelhurst in Business Report. In fact, two recent reports have confirmed that quotas not only failed to promote growth in the sector, but they were in fact counterproductive. Quotas encouraged retailers to look for alternatives to Chinese imports, even though Chinese labour costs were rising, making the sector less competitive. And they’re not alone in blaming government policies for the collapse in the textile industry. Seardel shareholders, HCI and trade union Sactwu, also accuse government of being reluctant to provide financial assistance to Frame, said Matuma Letsoalo in the Mail & Guardian. They say government must change its trade policy — or the industry will suffer further job losses soon.

As it is, the clothing and textile sector has lost some 88 000 jobs since 2003. The industry’s not just been hurting from its competition with cheap imports over the past number of years, but the economic meltdown has also led to the collapse of the textiles export market. What’s more, China has just declined SA’s request that the quota agreement be extended — despite SA’s decision to refuse the Dalai Lama entry into SA, said Business Day. Still, it’s been clear for years that we shouldn’t even try to compete with China. Instead the industry should focus on niche markets, in order to save domestic producers. That’Il prove much more effective than protectionist sideshows, or the “silly Buy Local campaign”.

Source: Money Week