Where to from here?
"Welcome to Ghost Town."
The title of an article published in the Clothing industry Pursuit magazine. Dimbaza once a thriving hub of clothing and garment factories now lies deserted with 110 of the once 120 active factories mothballed, 5000 job losses in 18 months.
Unfortunately this is not an uncommon story but rather one which is becoming all the more frequent as the local Clothing, Footwear and Textiles industries are ravaged by the competitive global juggernaut, China!
But surely this could have been avoided the lament rises.
The truth is that global move to free trade and the effects of a rampant Rand in recent years have all but blindsided an industry which for years existed in a artificial vacuum, blissfully ignorant to the slumbering global forces that would change the market for ever.
And laments there have been! COSATU have held national strikes, Retailers have diplomatically fended off local procurement commitments and the government has steadfastly remained stoic help yourself and we will assist the continued view. A divided sector in a time when division is not only ill-advised but tantamount to suicide!
Where to for here?
This discussion analyses the contributing factors and outlines policy recommendations, vital to the survival of the sector in ANY form. CONTENTS
2.1 Formation of the South African Clothing, Footwear and Textiles Industry4 2.2. The current reality is bleak!4
3. CONTRIBUTING FACTORS6
3.2. Trade liberalisation6
3.3. Local Competitiveness8
3.4. Less protectionism and compromised competitiveness = more imports9 3.5. Reasons for Chinese dominance of world markets9
4. REACTION FROM STAKEHOLDERS10
4.1. SACTWU and COSATU10
4.2. National Retailers Response11
4.3. Governments response12
4.4. China's response13
5. POLICY SUGGESTIONS14
5.1. Short Term Measures14
5.1.1. Consensus must be achieved!14
5.1.2. Short-Term Protectionism is key14
5.1.3. Stem illegal and under-invoiced imports15
5.1.4 Outcome of Short Term Measures15
5.2. Longer Term Interventions15
5.2.1. Industry assistance15
5.2.2. Reduce raw material prices16
5.2.3. Relaxation of current labour legislation16
5.2.4. Increase trade opportunities16
5.2.5. Repositioning of the industry model17
5.2.6. Skills, technology and process improvements17
5.2.7. Outcome of longerterm initiatives17
The South African Clothing, Footwear and Textiles Industries are in crisis!
Once cosseted by the protection offered by high levels of trade restrictions and international isolation, and a blissful period of Rand weakness the past three years have seen it being harshly exposed to international competition especially from the dominant Asian giant, China.
The industry context, major contributing factors and stakeholder reaction is examined with policy recommendations being presented in defining an effective strategy going forward.
One thing is clear. Business as usual is no longer an option, only radical and focused effort will meet with any measure of success!
2.1 Formation of the South African Clothing, Footwear and Textiles Industry
The South African Clothing, Footwear and Textiles industry developed in an environment of heavy protectionism with restrictive import tariffs and quantitative quota's shielding the local industry from international competition. In addition to the market interventions the apartheid regime provided direct support to the industry formation through investment support from by the state-owned Industrial Development Corporation (IDC).
The focus of the industry was largely internal with exports only forming 6% of production in the 1970's growing sedately to 15% in 1989 (Democratic Alliance, Hanging by a...