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SLOW ATTRITION

Why have you been unable to reverse operating losses (R21m last year) in your clothing manufacturing division?

Retailers have many sourcing options around the globe and relatively low costs in switching suppliers. As a result, apparel manufacturers have little pricing power and are unable to pass on increasing input costs. We manufacture a product that sells for R29,75 now compared to R34,90 10 years ago and in half the time, but rising input costs and flat or falling selling prices will ultimately overwhelm manufacturers.

 

Seardel has shed 28% of its workforce in three years and plans to cut another 1500 jobs. What will it take to stop further attrition?

It comes down to focusing on your areas of competitive advantage over imports — like niche products and quicker response times. Unfortunately these are mostly not areas where mass production takes place.

 

Are illegal imports and under-invoicing being addressed?

There is more focus on this of late but the problem is enormous and is the biggest factor affecting the local industry.

 

Has the bargaining council’s crackdown on non-compliant firms helped or are they relocating to countries where they can pay sweatshop wages?

Clearly a system where some have to obey the rules while others are free not to is unworkable. The industries in neighbouring countries are growing but these areas come with their own set of complications and the amount of growth that can take place there is limited.

You’ve accessed the production incentive scheme but are still laying off.

The production incentive reduces the risk of investing in new processes and equipment. Ultimately this will improve efficiencies. Textile and clothing industries the world over are heavily subsidised.

Does being partly owned by the collective bargaining body of your workforce complicate the running of the business ?

Seardel is independently managed and commercially run. The SA Clothing & Textile Workers’ Union’s shareholding in Seardel is less than 30%. The company is acutely aware of SA’s need to create employment and so businesses are given a lot of time to prove whether they are sustainable. Ultimately, the only sustainable jobs are those that are profitable.

Source:  Financial Mail – Claire Bisseker