COMMENT: Why South Africa’s clothing manufacturers have to stop trying to compete with cheap far eastern imports
South Africa’s clothing manufacturing sector has been crushed in the past two decades, shedding two thirds of jobs in the face of cheap imports and failing to meet the needs of shoppers, according to a report out today.
The country is of course not alone in losing so many jobs, after all citizens across the world wear clothes that are mass produced thousands of kilometres away and sold by familiar high street shops.
But jobs are very, very important in South Africa, a nation where unemployment runs officially at 30 per cent (more than 70 per cent in some outlying regions) and politicians want to be seen to be offering all the opportunity they can to the low paid.
Currently, of all those people who do have a job – any job – 48 per cent earn under 3,500 rand a month ($280). In the past year the government has repeatedly discussed introducing a minimum wage at that level, but ministers’ rhetoric is hampered by the economic realities of the world.
Deep down, politicians know that any enforced wage increases would almost certainly lead to job losses and it’s likely that fewer employees would just be made to work harder. No politician is going to risk that. It wasn’t until 2015 that economic powerhouse Germany introduced a statutory minimum wage, when there was pretty much full employment – that’s the time to do it.
South Africa’s clothing manufacture sector has lost more than 160,000 job losses over the past 15 years, according to Simon Appel, an industry researcher quoted in the www.timeslive.co.za report today (Jan 17), which reveals the devastation blamed on cheap imports.
But the industry in this country faces some unique additional issues compared with the rest of the developing world though: Firstly, while in world terms labour charge are low, clothing factories in Asia and the Indian sub-continent are much lower. Fact. And secondly, the South African government’s commendable efforts to improve workers’ rights and equal opportunity since 1994, means foreign investors set up new production facilities in neighbouring Lesotho, Swaziland and Madagascar instead.
You see, South Africa has employment legislation that doesn’t exist in the developing world and that can be daunting for foreign businesses. European workers might be surprised for example to discover how difficult it is for South African employers to sack staff and there are tough restrictions faced by employers on who they can recruit. There may not be a minimum wage in South Africa, but Austria, Sweden, Denmark, Finland and Cyprus don’t have one either. None has an unemployment level comparable with South Africa.
Around 45 per cent of clothing manufacture costs are labour, according to Christopher Kinross, who employs 253 people in Maitland, near Cape Town.
His factory benefits from the government grants introduced six years ago to try and halt the collapse of the industry. In return for a minimum wage pledge, the state now supports more than 500 different operations to the tune of 5.3 billion rand ($390m ) so far.
Speaking to www.timeslive.co.za Kinross, who has been in the business 50 years, said that support had helped stem the decline of the sector – but he believes more can be done.
“We pay 22 percent duty on imported fabrics… if they [the government] remove that duty, our businesses could grow in a spectacular fashion,” he said.
It would seem straightforward then for South African politicians to reduce import duty on cloth destined for its clothing industry, secure in the knowledge that the growth in sales would lead to increased revenues for the country.
Clever. Forward thinking. An investment in the future…
However, as you may have noticed, in the past decade there’s been little evidence of political leaders planning for the future. From the President’s big spending promises on education, without knowing where the the money will come from, through to increasing the top rate of tax for the rich while retaining a Revenue Service that seems incapable of collecting the money.
Ratings agency downgrades inflicted on the country over the past two years are directly down to the misguided economic judgements from leaders unable to think beyond the next vote winning soundbite… or lining their own pockets.
In a way though, it’s worse than that. South Africa in the past 25 years has increasingly encouraged an entitlement culture in some areas. Unfortunately, this can’t exist in business because, as we’ve seen, you’re now competing against businesses from across the globe.
Entrepreneur is an overused word in South Africa – everyone wants to be one but you don’t meet many. It is a complicated country with a unique history and a leadership torn between pacifying the masses and trying to drag the whole country into the 21st Century. South Africa has transformed dramatically in 25 years – but so has the rest of the world, technologically, economically and educationally.
That’s why it’s a mistake for South Africa’s clothing manufacturers to want to find a way to compete with the sweatshops of the Far East. Quite simply, it’s too late. You can’t. The markets are established, the supply lines have been organised and global brands dominate by offering the consumer, from Turin to Manila, the clothes they want at a price they can afford.
So, it’s no good moaning to the government minister in South Africa that you need more support if you’re factory is going to survive.
Firstly, provide the ‘fast fashion’ service to the big retailers in this country. Produce quickly, professionally, save the retailer time and you will make money. Being faster has value, clothes are on the racks quicker, so more will be sold for extra profit.
Secondly, concentrate on making quality clothing that can be exported. Theat’s the key to long term success. Build a reputation, not for cheapness but for efficiency, not for moaning about lack of government action but for making something that people actually want to buy.
South Africa’s first commercial cashmere production facility is capitalising on the fine hair of the indigenous iMbuzi goats in Ibika, in the Eastern Cape.
Cashmere, made from the soft inner hair of a goat’s coat, is in huge demand for use in luxury fabrics. The owner of the Ivili Loboya production facility is Dr Vuyo Mahlati who is also the current president of the African Farmers’ Association of South Africa (AFASA).
Mahlati told www.farmersweekly.co.za in a report carried yesterday how her processing plant offers the country’s sole wool sorting and scouring services, as well as producing hand-spun yarns used in the manufacture of textiles.
Ivili Loboya’s debut Dedani Collection showcases cashmere garments produced from indigenous iMbuzi goats’ hair blended with silk and Merino wool.
“We foresee a great future for our pioneering fabrics” with strong interest from clothing and interior designers, she says.
“Our research shows that Africa’s growing middle class is discerning in its fabric choices, looking for natural fibres where possible.”
The cool part is that iMbuzi cashmere is sourced from 500 small-scale farmers, many of them women. So, it’s good for the economy too. The government will really like that.
Then there are the big manufacturers who still see South Africa as important (despite the President’s attempts to car crash the economy over the past two years) for example Levi Strauss.
Since the turn of the millennium the iconic jeans maker has closed its factories across the world and now outsources manufacture everywhere… EXCEPT South Africa.
Levi still owns and operates its factory in Epping, Cape Town, producing 4,500 pairs of jeans a day, employing 500 staff, and meeting worldwide industry production practice and targets. Which means its staff earn above average wages. So, there’s a South African success story, though sadly its neighbours haven’t fared so well.
When Levi’s opened the factory in 1994, Epping was the heart of the country’s garment industry. In 2002, 181,000 people were employed in clothing manufacture – by 2014 it was 60,000.
In conclusion this is should not be a story of a country’s industry in decline. South Africa has a fast growing, young and optimistic population, the employees, entrepreneurs and more importantly, the consumers of tomorrow.
Despite the doom and gloom from some industry observes, statistics suggest that as much as 25 per cent to 30 per cent of locally-sold clothing is already manufactured domestically. Those figures are not clear but it’s probably the cheaper end currently.
“The clothing industry was once a crucial provider of jobs in a country suffering from high unemployment, but a flood of cheap imports forced local factories to shutter and lay off workers,” said www.timeslive.co.za yesterday.
It can be a jobs generator again. Don’t compete with the sweatshops of the world, instead look to find a new way to way to manufacture utilising the strengths and experience you have.
READ FULL TIMESLIVE REPORT HERE
READ MORE ABOUT SOUTH AFRICAN CASHMERE HERE
READ MORE ABOUT LEVI’S SOLE OWNED & OPERATED FACTORY HERE
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