16 of 2024

                                                                                                        Newsletter No 16/03 May 2024

                                       

NewsBriefs wants to share your company profile.

If you are a manufacturer or supplier to the Clothing & Textile trade please send us your company profile on a word document up to 500 words explaining what your participation is to the industry.

You can also supply one visual in jpeg or png format.

Our aim is to share one newsworthy submission per week with our readers.

Although editorial is neither guaranteed nor implied, suitable editorial for consideration may be submitted to:- carla@newsbriefs.co.za

Click on any ad to go to the advertisers website

How SA’s onshoring plan will bring clothing manufacturing back home

By Claire Bisseker

The local clothing industry has been brought to its knees after years of cut-price competition from Chinese imports, but a new revival plan is gaining traction and could be a game changer

The Western Cape clothing industry is uniting behind a bold proposal to re-establish local clothing manufacturing by creating new quick-response clothing factories in an arc of small towns around Cape Town that can compete with cheap Chinese imports.

It could provide the province with a way to mop up many thousands of unemployed entry-level workers (especially unskilled youths without matric) in semirural places that other big job creators, such as tourism and call centres, can’t reach.  

Justin Barnes: We have to scale up volumes again. Picture: Supplied

The plan, which is being facilitated by industry consultant and B&M Analysts chair Justin Barnes, and driven by TFG merchandise supply chain MD Graham Choice and the Cape Clothing & Textile Cluster, aims to emulate TFG’s success in apparel manufacturing and seed it across the province.

More than a decade ago, TFG adopted the idea that clothing factories could become quick and flexible. It took the methodology from efficient industries and integrated that into apparel manufacturing to enable it to start running leaner, more efficient, quick-response processes. 

It took some time to perfect and TFG invested significantly in its localisation strategy. The five quick-response factories it now owns in Maitland, Caledon, Epping, Durban and Joburg have allowed it to become the largest clothing manufacturer in South Africa.

Now, instead of taking 1½ weeks for a garment to move down a 25-person production line, it can be done in less than four hours. This means that instead of waiting six months for an order to arrive from China, TFG can get a similar product into its stores in a matter of weeks.

This is why it is possible for TFG to source more than 76% of its garments from South Africa and the region, against the industry average of about 45%. In 2017, TFG’s quick-response supply chain produced 6-million garments locally; in 2023 it produced more than 17-million and it plans to grow that to 30-million in the next three to five years. 

What TFG has shown is that it’s possible to reverse the historic process of deindustrialisation in the clothing industry that started with the flood of cheap Chinese imports about 15 years ago. 

What has changed since then is that, in addition to TFG having provided a template for how to be globally competitive in clothing manufacturing, South Africa has also become a substantially lower-cost producer in dollar terms because of steady rand depreciation. 

Choice, who spearheaded TFG’s quick-response journey, believes the clothing and textile industry can once again become the Western Cape’s largest employer if it replicates the blueprint of TFG’s plant in Caledon — a wheat-farming centre on the N2 perhaps better known for its casino —  in other small towns in a ring around Cape Town. 

Choice started the Caledon clothing factory in 2008 with just eight unemployed women workers. The municipality helped by charging him a low rental on a disused barn and the government supported the purchase of some assets. With this he was able to do a number of worker-centric interventions, including subsidising worker transport. 

Today, he says, Caledon has one of the most modern T-shirt plants in the southern hemisphere, employing just under 900 workers, all of whom have been trained from scratch.

 “What we did in Caledon was so meaningful and easy,” says Choice. “It [shows what is possible] if a municipality and an entrepreneur with a proven track record in clothing manufacturing work together with a retailer who is prepared to offer them an offtake agreement and perhaps some funding.” 

The clothing sector’s advantage is that it requires a relatively low level of capex to start up and minimal amounts of employee training compared with other types of manufacturing. So it can be very helpful in providing entry-level jobs to unskilled people, especially young school-leavers, as they need only to be trained up to NQF level 2 using learnerships. 

“There is no reason every Boland town can’t have a clothing factory,” says Choice. Though he stresses that TFG is not offering to open a factory in every town, it certainly is looking at the non-metro areas with an eye to future expansion.

But while TFG may be bullish and there are other pockets of success, the industry’s overall position has declined over the past 15 years in terms of fixed investment, total employment and its manufacturing capabilities.

By June 2011, the total South African clothing industry employed only about 56,000 people compared with 150,000 in its heyday in the 1980s. However, that number has dropped another 25% over the past 12 years.

In June 2023, the industry supported only about 42,445 formal and informal jobs, with about half of these (21,342) in KwaZulu-Natal and about 30% (about 13,000) in the Western Cape. 

“A critical inflection point has now been reached,” says Barnes. “Either we will have to scale up volumes again or in 10 years there won’t be an industry left.” 

The problem isn’t that wages are too high but rather the inability of firms to run their plants for extended work hours. This means the industry lacks the volumes and critical mass to be globally price competitive.

It creates “a vicious cycle of limited investment, low productivity and ultimately suboptimal cost and product capabilities,” he explains. 

“The clothing industry worldwide is a low-margin, high-volume business. But in South Africa right now, it’s a low-margin, even lower-volume business. We need to flip that around.” 

The goal is to create a virtuous cycle of investment, volume production, healthy returns, and more investment that will drive down costs and broaden the industry’s product capabilities. 

“It’s time for South Africa’s clothing industry to show bravery if it is to realise its potential,” Barnes adds. “For too long vested positions on the part of government, business and labour have maintained a status quo that has contributed to the ongoing decline of an industry (and its value chain) that could take a generation of youth out of poverty.” 

The plan is to replicate the TFG Caledon model with a host of modern apparel manufacturing plants in an arc around Cape Town. Though detailed mapping has yet to be done, the most likely towns include Atlantis on the west coast, the winelands towns of Wellington and Paarl, some other Boland towns, and possibly Hermanus.

All are in well-functioning municipalities within a two-hour drive of Cape Town. This is crucial given the logistical linkages that will need to be forged with the large design houses and five big clothing retailers headquartered in the city, as well as the Cape Town harbour.

Unpacking the plan

The model relies on several crucial elements. The most important is that each factory must be allowed to employ two labour forces that work in 12-hour alternating shifts, four days on and four days off, like nurses.

This will translate into each workforce still working a 42-hour work week on average, but it will allow the factory to run seven days a week, boosting volumes and productivity as expensive assets such as specialist machinery are sweated much more efficiently. 

The catch is that this will require a concession from the South African Clothing & Textile Workers Union (Sactwu) that double-time rates not apply to these workers on Saturdays and Sundays. Those days will form part of workers’ standard hours. 

The target is initially to create 30,000 new jobs, though if the plan manages to increase the proportion of locally made clothing from 45% to 65% (a clothing master plan goal) it could create up to 70,000 new jobs by the end of the decade.

The trade union is, however, not falling over itself to welcome the idea.  

Sactwu’s national industrial policy officer, Etienne Vlok, though open to constructive engagement, says he is “hesitant” about the proposal, which he describes as a “radical departure” from the existing dispensation. It will require changes to the sector’s bargaining council agreement and a mandate from Sactwu’s members. 

Sactwu is concerned mainly with the practicalities, including whether employers would provide day care for workers’ children on weekends when schools are closed, as well as worker transport, and whether there would be enough demand for the scheme to consider the wage proposals.

Still, Vlok seems prepared to meet manufacturers and retailers halfway, saying: “Had you asked me 20 years ago, was there space in the bargaining council agreements for a [4.30pm-11pm] twilight shift, I would’ve said, ‘No’. It has since been agreed to, so if the parties agree you can amend the bargaining council agreement.” 

Importantly, Vlok notes that there is less antipathy these days between industry stakeholders, partly because the clothing master plan process has engendered some stability and co-operation in the sector over the past few years. 

“So, when a proposal like this is made to us … it’s a discussion … and hopefully we’ll find solutions to these practical problems,” he says. “If our major issues can be overcome and our members give us a mandate then we will see if we can find each other.” 

Other key conditions for the model to work are that factory premises must be available at competitive rentals and that there is safe, affordable transport for workers when the factories need them, especially late at night. 

“The current paradox,” Barnes tells the FM, “is that though the manufacturing sector is declining, we can’t get factories cheaply because they’re all being converted into distribution warehouses for importers. So the price of factories is going up, not down.” 

Various funding options need to be explored, including whether it is feasible to build new factories with the help of development finance institutions that are then long-leased to clothing manufacturers.

His biggest fear, however, is that local retailers won’t buy in because the plan, which essentially creates a vast factory chain, doesn’t work unless it is matched by an equally substantial increase in demand. This means retailers will need to be offered an unbeatable commercial value proposition relative to the cost of importing. 

Johann Baard: Retailers will play a crucial role in getting the ball rolling. Picture: Hetty Zantman

Johann Baard, executive director of the South African Apparel Association, the industry’s largest employer association, is part of the strategic alliance that has formed around the project.

“Retailers will obviously play a crucial role in getting the ball rolling,” he says. “The flipside is that we, as clothing manufacturers and project leaders, need to present them and the Western Cape government with a value proposition.” 

Michael Lawrence, executive director of the National Clothing Retail Federation of South Africa (NCRF), says the idea has “100% in principle support” from the nine major clothing retailers the body represents. 

He says there’s no question that NCRF retailers, which collectively employ 130,000 workers, will shift to buying locally if they can achieve similar cost, quality, supply and responsiveness metrics as offered by China, the subcontinent and Southeast Asia.

 

Michael Lawrence: Municipalities have to come to the party. Picture: Supplied

In fact, they would even be prepared to pay a small price premium because of the market-responsiveness and quality-control benefits of buying closer to home. The greater speed and flexibility mean that retailers get the clothes earlier, less working capital is tied up in inventory, there are fewer markdowns and, ultimately, greater profitability.

“Retail is very simple — most manufacturers know our price points and turnaround times,” he adds. “It’s just a case of getting in there and setting up something that’s fit for purpose.” 

However, Lawrence says participating municipalities will have to come to the party. At a minimum they will have to provide reliable electricity and water as well as have serviceable roads. But the most important thing, he feels, will involve guaranteeing workers’ safety and shielding new factories from protection rackets. 

He would also like municipalities to provide businesses that employ a certain number of workers with a discount on their municipal rates bills, saying: “We need people to think outside the box for once.”

An ambitious plan is on the table to fight fast fashion competition from China and re-establish the local apparel industry.

A cut above 

Like Vlok, Lawrence notes that the industry has become far less adversarial since the clothing master plan process began.

“In 2006, we met seldom as value-chain stakeholders but when we did the only mandate was to make sure you bled the least before you left the table,” he says. “Now, the master plan is about looking for solutions all the time. It’s a much nicer space to work in. We have very robust conversations but it’s always about where we can work commonly and find solutions and it’s much more sophisticated than ‘Buy more! Sell cheaper!’” 

To be clear, Barnes’s new proposal is not the central strategy of the clothing master plan, which is a much older document. The master plan also has a national remit, so provincial distinctions are sensitive and generally avoided. 

Graham Choice: There is no reason every Boland town can’t have a clothing factory. Picture: Hetty Zantman

Though Choice talks about making the clothing, textile, footwear and leather (CTFL) industry the largest employer in the Western Cape again, the plan is not to do so by bringing manufacturing back from KZN or by competing with KZN; it’s about competing with the East. It is about localising or onshoring the 55% of clothing sold in South Africa that is currently being imported from China.

Certainly, the proposal’s backers have chosen the Western Cape partly because, as the most politically stable and well-run province, it is more attractive than KZN as an investment destination, especially since the July 2021 riots. 

The country’s main clothing retailers are also concentrated in the Western Cape, as are some large fabric and design houses. It has all the complementary services and underlying digital, technical and creative skills that make up the industry. 

Moreover, the province has yet to make the most of the non-metro wage advantage in what is a labour-intensive and price-competitive industry. 

For instance, an experienced machinist in Cape Town earns about R1,700 a week. In “non-metro A” areas such as Paarl, the wage rate is R1,380. This drops to R1,280 in “non-metro B”, which includes more rural areas such as Caledon. 

Another key element of the plan is that the new, outlying factories must be able in the off-season (southern hemisphere winter) to export summer clothes to Europe through Cape Town harbour.

 Exporting will be necessary to allow firms to maintain high production volumes all year round because switching to producing winter clothing requires different, more expensive machines and fabric, so it is not a viable option, explains Barnes. 

The goal is to target the northwestern corridor of Europe (mainly the UK, Belgium and the Netherlands) where South Africa is already well connected and enjoys reasonably short shipping times, giving it an advantage over Asian exporters. 

One of South Africa’s biggest competitors in this market will be Türkiye, which can ship clothing from Istanbul to London in four days by land and seven-11 days by ship. South Africa does it in 19 days. 

Türkiye’s problem is that many of its clothing factories are a two-day drive from Istanbul, whereas the plan in South Africa is to locate factories within a two-hour drive from Cape Town. This puts the country back in the game.

What the province can do 

Importantly, the plan’s backers aren’t asking the Western Cape government to subsidise industrial rentals or bus transport for workers or get involved on the wage side, they just want its general political buy-in and support.

But Barnes isn’t very optimistic, given the province’s  reluctance to take a sectoral approach in its overarching provincial growth strategy, the Growth for Jobs (G4J) plan. 

He doesn’t think the G4J plan’s reliance on “trickle-down economics” and “horizontal enablers” (which reduce the cost of doing business across the board) are going to be nearly enough to revitalise an industry such as clothing, or create low-skilled jobs by the thousands. In his view, it will require a detailed micro-strategy, and value-chain alignment, which is what the new proposal seeks to do. 

Mireille Wenger, the provincial minister of economic development & tourism, says that while the province’s G4J plan does indeed focus on boosting the overall business environment, this does not preclude the province from providing sector-specific support.

In fact, the province already backs a R30m public-private partnership programme in the clothing and textile industry that involves the provision of stipend support to young people undertaking learnerships of between four and 12 months. These are topped up by their respective employers. Nearly all the learners are placed with these companies at the end of the programme. 

Choice notes that there is also plenty of funding for learnerships through the National Skills Fund and other government entities. In addition, the Industrial Development Corp has three funding programmes that support CTFL start-ups as well as the expansion of existing clothing manufacturers. 

The initiative’s ultimate success, he says, will be entirely dependent on the degree of retail demand and this initiative’s ability to meet it.

Given the extensive hollowing out of skills and capacity in the industry over the past 20 years, coupled with the current challenging economic climate, it is extraordinary that Choice and Barnes are willing to drive such a bold, expansionary scheme.

Barnes is not naive about the level of ambition required, saying: “The people involved will give this their best possible shot, but it will take time to achieve our objectives because there’s a lot of risk too.”

Fortunately, there is also a palpable sense of hope among industry leaders these days. Whereas before the clothing sector was riven by politics, now there is openness and co-operation. If the stakeholders can all pull together, who knows what might yet be achieved.  

Berzacks

Mr Price Sport partners with American sports brand, Everlast

Image supplied

Mr Price Sport has announced a partnership with American brand, Everlast. This Everlast SA collaboration brings together two well-known names in the world of sports with the aim of providing customers with an exclusive range of sportswear, athleisure, and equipment.

Everlast, a brand that has been the pre-eminent name in boxing since 1910, is known for its products in the field of boxing, mixed martial arts, and fitness-related sport goods.

This partnership with Everlast aligns perfectly with their mission to make quality fitness products more accessible to all individuals.

The exclusive license agreement between Everlast and Mr Price Sport allows the latter to design and create a limited-edition range at a value price point. This means that customers can now get their hands on the wide range of Everlast products at Mr Price Sport without breaking the bank.

The collaboration between these two brands also aims to merge their expertise in fitness and sportswear to empower individuals of all fitness levels to pursue their active lifestyles. By combining Everlast’s legacy of producing performance-driven gear with Mr Price Sport’s commitment to accessibility and value, this partnership seeks to make quality fitness products more attainable.

This not only encourages individuals to lead active lifestyles but also supports a healthier and more active community.

Speaking on behalf of Everlast, Kerri Jenkins of Leisure Brands Group shared her excitement about this partnership and expressed her belief that it will have a significant impact on the fitness industry. She believes that by offering innovative designs at affordable prices, this collaboration will make a positive change in the lives of many individuals.

“The partnership between Mr Price Sport and Everlast goes beyond just providing high-quality and affordable products. It also reflects their shared values of inclusivity and diversity. As a brand that is deeply committed to diversity and representation, Everlast has been working towards creating products for people of all shapes, sizes, and backgrounds. This aligns perfectly with Mr Price Sport’s vision to cater to a wide range of customers and promote inclusivity in the fitness industry,” said Jenkins.

Philippa Feher, Mr Price Sport marketing manager, expressed her excitement about the collaboration with Everlast, stating that it will elevate the shopping experience for all sports enthusiasts.

“This partnership between two industry leaders is sure to be a game-changer in the world of sports retail. Customers can expect to find a wide range of technical apparel and athleisure that cater to their specific sporting and leisure needs. Whether you are a professional athlete or a casual fitness enthusiast, this exclusive range has something for everyone,” said Feher.  Bizcommunity

Homechoice – AGM, IAR and director appointment

The 2032 Integrated Annual Report for the year ended 31 December 2023 is available online on HIL’s corporate website at: homechoiceinternational.com/integrated reports/.

Notice of the annual general meeting
Notice was given that the annual general meeting of shareholders will be held electronically on Thursday, 13 June 2024 at 15:00 (MUT) 13:00 (SAST) to transact the business as stated in the annual general meeting notice. The notice of annual general meeting will be distributed to shareholders on Tuesday, 30 April 2024.

Appointment of non-executive director
The board announced the appointment of Gregoire Lartigue as a non-executive director to the board with effect from 29 April 2024. He returns to the board after stepping down as CEO in December 2022.

Polka dots are named after the dance – and simply because, the dance was super popular back then!

As it happens, this pattern is named after a Bohemian dance, the polka. ‘Tis a lively jig, apparently, that was introduced in Parisian ballrooms in 1843. My research tells me it involves “three quick steps and a hop” – and that the big-dot print which for it was named, has nothing to do with it. According to the internet, the pattern and the dance are unrelated, but were both popular at the same time

 

Editorial Submission:

Please remember to send me your news so that we can share it with all our readers in the weekly newsletter. Although editorial is neither guaranteed nor implied, suitable editorial for consideration may be submitted to:-

Unsubscribe