- May 27, 2009
- Posted by: admin
- Category: Clothing and Textiles
ROB DAVIES, the minister of trade and industry, yesterday defended the government’s intervention at Frame Textiles.
He said the move was aimed at saving the production plant from closure and was not due to Minister of Economic Development Ebrahim Patel’s past involvement with the Southern African Clothing and Textile Workers’ Union (Sactwu).
The government’s high-profile action, led by ministers Davies and Patel, to save Frame Textiles has been criticised for favouring one company over the many that are struggling in the garment sector and in other industries.
According to trade union Solidarity, 33 000 permanent jobs have been lost or are due to be shed throughout the economy since November.
Statistics SA reported on Monday that liquidations of companies and close corporations between January and last month were 45.3 percent higher than a year earlier at 1 357.
One industry commentator, who declined to be named, said, in reference to Frame Textiles: “It is not about production capacity. It is about equality across the sector.”
All textile companies were suffering the effects of competitors in the East receiving government subsidies.
“I do not know how government can support one company,” the commentator said.
“I am a little cynical of Patel’s role.”
Patel was previously the general secretary of Sactwu, which, through its investment arm, has a 40 percent interest in Hosken Consolidated Investments, which in turn holds 70 percent of Seardel, which owns Frame Textiles.
Seardel announced in April its intention to close Frame Textiles’ spinning, weaving, finishing and denim divisions due to its inability to turn around the loss-making business.
Patel declined to comment yesterday. He referred questions to Davies.
Frame was not the only company the government was helping, Davies said. Garment and textile businesses were being helped by, among other things, the Clothing and Textiles Competitiveness Programme, which the Industrial Development Corporation (IDC) was running. It includes preferential loans at prime minus 5 percent.
Nimrod Zalk, the chief director of industrial policy at the Department of Trade and Industry, said the department would assist companies in a similar position to Frame if they approached the department or the IDC. He would not disclose which other firms the department was assisting.
He said the intervention at Frame was made public to inform its customers so they would not find turn to imports.
Another sector that is struggling is the automotive sector. Roger Pitot, the executive director of the National Association of Automotive Component and Allied Manufacturers, said about 10 companies had closed.
The IDC was providing bridging finance to automotive firms that were experiencing cash flow problems. “We are not looking for handouts.”
Source: Business Report – Samantha Enslin-Payne