10 of 2023

Newsletter No 10/17 March 2023                              


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KZN South Coast’s manufacturing sector holds unlimited opportunities for investment

By Agnes Matladi

“KwaZulu-Natal’s manufacturing sector enjoys a significant share of the South African economy and is the second largest in the country with nearly a third of manufactured exports being produced here.” – Trade & Investment KZN

The disruptions to the global supply chain in the wake of Covid-19 lockdown measures highlighted the need for companies to diversify their sources of supply. This is good news for manufacturers on the KZN South Coast as the industry is poised for growth, with national investments in port upgrades making locally manufactured products more accessible to the domestic and global markets.

“We have identified manufacturing as a key growth sector on the KZN South Coast, with several sub-sectors now primed for investment,” explained Phelisa Mangcu, CEO of South Coast Tourism and Investment Enterprise (SCTIE), the official economic development arm of the KZN South Coast. “Alongside the need for diversifying product sources, the regional manufacturing sector is further supported by the Eastern Seaboard Development, a project that aims to strengthen economic linkages between provinces, as well as The African Continental Free Trade Agreement (AfCFTA) that will open us up to the continental market.”

Manufacturing investment opportunities

1. Furnishers

The skilled, local craftsmanship and direct accessibility to timber result in quality-made furniture products along the KZN South Coast. One example is Out of Wood, a 100% black-owned furniture production business with 13 full-time employees producing customized wooden furniture that is supplied to local furnishers. The team works with solid timber sourced locally from Surejoy Industries in Harding under the Umuziwabantu Municipality, crafted using three-phased machinery. SCTIE has identified a gap in the value chain with an opportunity for transportation to increase capacity and connect Out of Wood with the Gauteng market (where there is existing demand) and beyond.

2. Timber

With an abundance of timber farms in the Harding region, the manufacture of wooden products boasts a wealth of investment opportunities. Surejoy Industries, a family-owned organisation consisting of 2 300-hectares of timber plantations and a mill, manufactures purlins, rafters, CCA-treated poles, and other wooden products. A complement of around 240 full-time employees produces a range of wooden products supplying manufacturers of hardware and furniture, with a storage depot in Marburg.

As it currently stands, there is no workshop in the region that can attend to the sharpening of saw blades – a vital component of the timber industry. SCTIE has noted the potential for investors to establish such a workshop, meeting market demand in a well-established timber farming area. Existing furniture stores and timber retailers are also encouraged to visit the KZN South Coast to source raw materials as the destination is a regular supplier of timber.

3. Cut, Make, Trim (CMT) Manufacturing

The textiles industry has a lot of investment potential, with cut, make, and trim manufacturing a way for those in fashion to transform their vision into complete products, ready for market. On the KZN South Coast, Cengemajita Fashion & Entertainment has been identified as an emerging CMT manufacturer, with significant investment opportunities. This 100% black-owned company, with 12 full-time employees, was established in 2009, securing machinery in 2016 and gaining ground until Covid-19 hit. They resuscitated the company in 2022, securing school uniform orders, with the aim to establish a shop in the South Coast Mall.

“As with all businesses in South Africa, load shedding remains one of the biggest challenges to productivity, making investments in renewable energies a priority,” continued Phelisa. “We welcome the president’s recent announcement regarding renewable energy incentives for businesses and individuals, and look forward to the growth of this sector on the KZN South Coast.”

Extending from Port Shepstone, the area’s economic hub, throughout the KZN South Coast, there are so many investment opportunities. To find out more about these, get in touch with SCTIE, the KZN South Coast’s One-Stop Shop for investment. Contact SCTIE on 039 682 7944, email info@sctie.co.za or visit www.investkznsouthcoast.co.za.  Keep updated on Facebook; South Coast Tourism and Investment Enterprise on YouTube; @infosouthcoast on Twitter or Instagram; and South Coast Tourism and Investment Enterprise on LinkedIn.

Published in Business, Economy, Finances, Banking and Insurance

Race is on to waterproof outdoor clothing without forever chemicals

By Zahra Hirji and Olivia Rockeman

Outdoor apparel companies are looking for more sustainable technologies to reproduce the waterproof effectiveness of their current offering. PICTURE; 123rf

Companies need to start addressing their supply chain ahead of regulations banning the toxic chemicals

Patagonia has spent nearly a decade rejiggering its supply chain, redesigning products and dumping millions of dollars into a high-stakes trial-and-error process that is nearly complete.

This isn’t about optimising for fashion. Patagonia, like practically every other outdoor apparel company, has long relied on polyfluorinated chemicals (PFAS) to make its products water-resistant. The problem is that these chemicals, also known as fluorochemicals, PFC chemicals or forever chemicals, are toxic.

They have been linked to cancer and other health problems and they don’t degrade easily: PFAS have been found in drinking water and in the human bloodstream. Despite years of warnings from scientists and environmental activists, many apparel retailers only recently started sussing out how to ditch PFAS in outdoor apparel and gear. But the stragglers may not be able to straggle much longer: bans on the chemicals are coming.

“We were looking for a magic chemistry that could do it all and get our performance back and keep your jacket waterproof,” says Matt Dwyer, Patagonia vice-president of product impact and innovation. “And it took a whole lot more work than that.”

The PFAS problem has been decades in the making. In the 1950s, Minnesota-based chemical maker 3M launched Scotchgard that used fluorochemicals to make fabrics water- and stain-repellent. Within a few decades, the chemicals were ubiquitous in outdoor apparel and gear.

That is because “they just blew everything apart in terms of how well they worked”, says Richard Blackburn, a professor of sustainable materials at the University of Leeds. These chemicals can repel water as well as, if not better than, any alternative, he explains. If water is poured on a textile treated with PFAS, it just rolls or beads off. And unlike the alternatives, fluorochemicals also effectively repel oil, dirt and other stains. “From a chemical perspective, they are fantastic,” Blackburn says.

The trade-off is settling for products that don’t repel water quite as well as those coated with forever chemicals.

But that resilience is also a liability. Mike Schade, a campaign director with the environmental group Toxic-Free Future, notes that PFAS are harmful across their life cycle. The manufacturing phase can affect factory workers and local water systems, while washing and owning jackets and other products coated with PFAS can potentially harm consumers. Indeed, 3M had known the chemicals were found in the blood of the general population and detected at elevated levels in its own workers by the mid-1970s. But exactly what 3M knew about the dangers of PFAS was not publicly revealed until decades later after investigations and litigation.

“One of the reasons we’re concerned about PFAS is because they’re incredibly persistent chemicals,” Schade says. “They’re manufactured for food packaging or firefighting foam or rain jackets, and the chemicals don’t go away when they’re released into the environment. They can persist literally for hundreds of years.”

A key turning point, according to Blackburn, was Greenpeace’s Detox campaign in the mid-2010s, which started publicly targeting some outdoor apparel companies about their use of fluorochemicals. The environmental group tested 40 items for forever chemicals and found them in all but four, exposing an industry-wide problem.

That campaign had an impact on apparel makers in Europe. Jack Wolfskin announced its clothing, packs and bags were “100% PFC-free” by mid-2019; Vaude Sport announced its clothes and gear were PFC-free by 2020; and Haglofs is now “95% PFC free”. But in the US, and the rest of the world, an abundance of rain gear and outdoor equipment with PFAS are still in circulation.

Patagonia initially transitioned away from what is called “long-chain” PFAS chemicals, including PFOA (perfluorooctane sulfonate) and PFOS (perfluorooctanoic acid), to “short-chain” ones — completing the swap for products in stores by mid-2016. At the time, the thinking was that short-chain chemicals were safer; testing and scientific study into long-chain chemicals was more extensive.

But as the transition was under way, Dwyer says the company realised this was not “just an imperfect solution, but was a solution possibly as bad as the ones that we’d replaced”. So the journey to go totally PFAS-free began, and quickly proved daunting.

The first fabrics the company tested with PFC-free chemistries back in 2015 “were stiff as paper and you could rip them in half,” Dwyer says. After hundreds of sample trials testing out dozens of different chemistries, Patagonia is today using about eight different PFAS alternatives for water-resistance on its various products sold worldwide. The company is aiming for all products on its shelves to be “PFC-free” by the end of 2024 and announced last fall that 78% of its materials were already there.

A few other companies are also making progress, but a survey of 15 apparel and outdoor apparel brands on their PFAS use yielded a wide spectrum of results. Outerwear company Rains publicly reports not using these chemicals today, either because it never did or already phased them out. (The company did not respond to Bloomberg Green’s questions.) Swedish company Fjällräven says it has moved away from PFAS in all of its products, though the last of the new versions won’t be available to consumers until later this year.

Eight companies have announced plans to transition away from PFAS in the coming years, including Canada Goose, Columbia Sportswear, Cotopaxi, WL Gore & Associates, Patagonia, Lululemon Athletica, LL Bean and VF. Lululemon aims to do so by the end of this year. Adidas, Arc’teryx Equipment, Nike and Vuori have not shared specific phase-out targets publicly or in response to Bloomberg Green’s repeated questions. After publication, Eddie Bauer said it plans to remove PFAS from all products by spring 2024.

When Greenpeace contacted Fjällräven in 2012 about finding forever chemicals in its products, the outdoor apparel company had, as far as its executives knew, already stopped using PFAS in those items. “I said show me your test results, and I went to the Greenpeace headquarters in Germany,” says Aiko Bode, operating sustainability director at Fjällräven. The activists were right. “Sh*t, something must have happened,” Bode recalls.

His follow-up investigation first revealed that a supplier using fluorochemistry on another company’s products was cross-contaminating Fjällräven’s, prompting a reorganisation of Fjällräven’s suppliers. Subsequent testing revealed that simply having Fjällräven products in stores near products from other companies that used the chemicals still resulted in low levels of contamination. Indeed, one of the biggest challenges for the brands ditching PFAS is co-ordination across large and often complex supply chains.

Despite its contamination struggles, Fjällräven did ultimately figure out how to eliminate forever chemicals from the manufacturing process. In 2015, it started making its waterproof Keb Eco-Shell jacket using a PFAS alternative; by the middle of this year, even the zippers will be fluorochemical-free. And the company tapped another pre-existing alternative — a paraffin/beeswax mix — for its “cornerstone material,” G-1000, which is made of recycled polyester and organic cotton. The trade-off on that, Bode says, was settling for products that do not repel water quite as well as those coated with forever chemicals.

“If you go through just what normal people do, going through a fog, going through a forest, walking the dog, it works very well,” he says. But if you are hiking through two hours of heavy rainfall, for example, “you will not be dry”.

That loss of function is behind some companies’ reluctance to move away from forever chemicals, says Blackburn, who also calls all the added functionality “overengineering”. Blackburn’s research backs this up. An online survey of nearly 1,000 outdoor enthusiasts, most of them from the UK, found that they essentially only cared about water repellency.

“If you only want water repellency, there are much more sustainable technologies that work and deliver technically,” Blackburn says. “If you also want combined oil repellency then no, you can’t achieve that yet with any alternative chemistry.”

Representatives of Adidas, Columbia Sportswear and North Face-owner VF, all of which are partway through their transitions away from forever chemicals, likewise noted that finding PFAS alternatives in high-performance jackets and other products designed for extreme environments is the most challenging task.

WL Gore & Associates — maker of Gore-Tex, a waterproof fabric used widely across apparel and footwear that has been found to contain PFAS — says it is working to scale the use of a PFAS alternative known as ePE, which has been in development for a decade. The company says it is on track to transition the “vast majority” of its consumer portfolio away from harmful chemicals by the end of 2025.

Time is of the essence. Faced with indisputable science and pressure to address environmental harms, governments are starting to catch up with PFAS. In the US, about a dozen states already have policies banning or strictly regulating these chemicals in various products, from firefighting foam to rugs to cosmetics, according to tracking by an alliance of health organisations called Safer States.

More restrictions are coming online or being discussed specifically for textiles. A Maine law that took effect in January requires brands to disclose to state environmental officials whether PFAS is used in their products; the chemicals will be banned in the state entirely by 2030. In California, a law passed last year bans the manufacture, distribution and sale of some fluorochemical-containing textiles for everyday use starting in 2025. Washington state will ban PFAS in a range of consumer products, including apparel, by 2025. New York will also implement a ban on most apparel containing these chemicals by 2025.

In the EU, six countries submitted a proposal last month that would restrict the manufacture and use of PFAS across a range of product categories.

As the urgency around eliminating PFAS gains steam, companies that have made little progress thus far are effectively already behind. Fast-fashion retailers may be able to roll out new clothing lines in just a few months, but the rest of the apparel world takes one or more years to go from product design to store-ready. That means companies aiming to heed upcoming bans need to start addressing their supply chain as soon as possible.

“Our chemical crystal ball told us that these regulations and things like that we’re going to happen at some point,” says Dwyer at Patagonia, which is already working on its 2025 products. “Now we know they’re in the very near future.

Bloomberg News

Denim after dark

By Nokubonga Thusi

Haute-couture craftsmanship and denim collide in G-Star RAW’s latest collaboration with fashion designer David Laport.
Image: Walter Pierre

An ode to nocturnal adventures and the endless possibilities of denim

Investment dressing takes on a whole new meaning as haute-couture craftsmanship and denim collide in G-Star RAW’s latest collaboration with fashion designer David Laport. The limited-edition Denim After Dark capsule collection merges Laport’s signature pleating and sculptural designs with G-Star RAW’s denim expertise to create two high-fashion pieces — an haute-couture dress and a pleated, ready-to-wear bow top crafted from premium Japanese selvedge denim and tulle.

Captured by South African fashion photographer Walter Pierre, the campaign not only showcases the delicate craftsmanship of the denim pieces against the rawness of the industrial city but is also an ode to nocturnal adventures and the endless possibilities of denim.    

HomeChoice final results December 2022

Revenue for the year increased by 6.5% to R3.7 billion (2021: R3.4 billion) and operating profit jumped 83.3% to R482 million (2021: R263 million). In addition, profit and total comprehensive income for the period attributable to owners of the parent jumped 81.2% to R308 million (2021: R170 million). Furthermore, headline earnings per share grew 41.8% to 288.5 cents per share (2021: 203.5 cents per share).

Notice is hereby given that the board of directors has declared a final gross cash dividend of 77.0 cents (61.60 cents net of dividend withholding tax) per ordinary share for the year ended 31 December 2022.

Looking forward
The group is well positioned to drive the growth ambitions of the board and further entrench the group as a profitable fintech-focused business.

Weaver Fintech has a strong track record of product innovation and is well positioned to accelerate market share growth capitalising on scalable digital operations with high customer conversion.

A sizeable fintech customer base, with strong customer engagement across both FinChoice and PayJustNow brands, presents significant cross-sell opportunities to drive growth.

Our Retail business is demonstrating good momentum to return to improved levels of profitability with renewed investment in technology platforms and retail showrooms.

Rex True – resignation of company secretary

Shareholders are advised that Ms Ardilah Mushabe has resigned as the Company Secretary of Rex Trueform with effect from 31 May 2023

TFG – trading update

Shareholders are advised that this voluntary trading update is being made ahead of an investor conference being attended by TFG management later this week.

The ongoing energy crisis and elevated levels of load shedding are having a profound impact on South Africa’s economy and society at large, making it difficult for businesses to trade, operate and plan at normal levels. This is adding abnormal costs to the business, including the inability to pass on the impact of inflation and the costs of dealing with load shedding to the consumer in full. Further, due to load shedding, retail footfall has declined in some regions and this, together with a change in consumer spending patterns, has impacted all South African retail.

Whilst we remain focussed on minimising the operational and financial impacts of load shedding, we estimate the financial impact of load shedding to have reduced TFG Africa’s retail turnover by approximately R1 billion in FY2023 (and by more than R250 million in the 2-month period alone). The resultant higher levels of inventory have also necessitated increased levels of stock provisioning which will contribute to the deterioration of gross margin in TFG Africa compared to the previous financial year. Additional unbudgeted direct costs of c.R65 million have also been incurred in respect of diesel, security and maintenance. Capital expenditure of c.R220 million has been spent to date on back-up power solutions and an additional c.R30 million will be spent in FY2023 to ensure that c.80% (by turnover) of TFG Africa’s stores have back-up power over the next few months. Back-up power solutions are most effective only up to and including stage 4 load shedding, but are less effective at stages 5 and 6. Other consequences of load shedding have included disruptions to operations. At this stage there has only been a minimal impact on TFG’s supply chain.

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