- June 26, 2008
- Posted by: admin
- Category: Clothing and Textiles
About three years ago clothing manufacturer Seardel sold its beach house in the upscale holiday town of Plettenberg Bay for R17 million.
Chief executive Aaron Searil says it bought the pad for investment purposes only. It paid R7 million for it eight years ago and one certainly can’t argue with a 143 percent return on investment over five years.
But detractors argue that it is just this sort of thing that that has lead to a decline at the once great company.
Too much was spent at the head office level and its well-run manufacturing divisions were starved of capital for new equipment. The R7 million beach house investment would have gone some way towards a longer-term investment in machinery, creating sustainable profit for years.
It may not sound like a lot of money, but in the labour-intensive clothing business, R7 million buys you a lot. Ask any factory manager in the sector.
Searll’s decision to relinquish control of Seardel is a happy ending to a sad tale.
The once grand company had become barely profitable, its woes possibly more self-inflicted than even the efforts of those feared Chinese manufacturers.
It is also an elegant ending for Searll after 40 years at the helm. He keeps his investment but his controlling interest falls away to those ex-union boys, Johnny Copelyn and Marcel Golding of Hosken Consolidated Investment (HCI). Searll must have been tempted to asset- strip Seardel for its valuable industrial properties, or to sell out to a buyer that wanted to do the same, potentially shedding thousands of jobs.
Now it appears some disposals will take place but the company will remain intact. The pressure to restructure and hand over control may well have come from the union boys at HCI and, indeed, workers in the factories. After all, the Southern African Clothing and Textile Workers’ Union (Sactwu) owns a chunk of HCI and Seardel.
This may prove to be Sactwu’s grandest hour yet, after its call for quotas on Chinese clothing imports backfired.
Source: Business Report – Business Watch – Opinion