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Product Knowledge
June/July 2010

Made in South Africa

Viable option or pipe dream?

As COSATU often reminds us the clothing industry has been shedding jobs with alarming frequency as more and more manufacturers lose the struggle against cheaper imports from the East. Recently Government announced the Industrial Policy Action Plan (IPAP) to try and help the ailing industry. Is this merely flogging a dead horse, or will it be the lifeline needed to revive local clothing manufacturing? CARIN HARDISTY asked two sports and lifestyle clothing industry leaders

Marketing campaigns like “Proudly South African”, COSATU holding retailers to agreements that 70% of their stock must be locally made, campaigns against 2010 FIFA World Cup products not manufactured locally have so far not resulted in a turnaround of the fortunes of the local clothing industry.

Every few months the SA Clothing & Textiles Workers Union (SACTWU) quote new figures of jobs lost during that quarter as clothing factories in the Western Cape and KwaZulu Natal reduce staff or close their doors.

Could the new Industrial Policy Action Plan (IPAP), recently announced by Government, succeed where other campaigns failed?

One of the targets of IPAP is to create more jobs within the manufacturing industry. This is all fine and well, but “to create one new permanent middle-income job in SA is estimated to cost R1,1m”, Laura Peinke of the market research firm Frost & Sullivan pointed out in an interview with Business Day. Although the cost of creating low-skilled jobs would be less, these were often not sustainable. IPAP aims to create 880 000 jobs, which means it could cost government as much as R880bn over 10 years. “This may sound like a lot, but if we can create jobs, that will contribute to economic growth and help alleviate poverty,” she added.

But, is this a viable option for the sport lifestyle industry where international brands and highly technical garments are so important?

Brett Trollip: Local manufacturing has future

Brett Trollip is MD of Second Skins, a successful Cape Town manufacturer of their own clothing brand, as well as for other well-known athletic clothing brands.

“Whilst I think that there is a need for some intervention by government, the continued pandering to all different and often politically driven interest groups will ultimately render the programme useless,” says Trollip. “This Industrial Policy Action Plan (IPAP) is a bit like another diet plan, which will sell some temporary illusion, but make no long term difference.”

He believes there is definitely a future for the local clothing manufacturing industry, because “there is such a huge variety of sports in this country, resulting in a huge variation of goods needed”.

This includes manufacturing niche products for international brands, as well as manufacturers developing their own brands. “Second Skins currently manufactures goods for international brands like Canterbury and Head Start. As long as you have an open and honest relationship with your customers and no ethical boundaries are crossed, it can be a very beneficial way to expand your business.”

He has no doubt that locally manufactured clothing can compete on an equal footing with internationally manufactured items. “Many of our more recognised brands in SA today are in fact manufactured in SA.”

Fast turnaround times is but one of the benefits local manufacturers have over international manufacturers. Others include:

  • most international manufacturers demand 90 days' payment before they despatch products, therefore placing strain on your cash flow;

  • local manufacturers do not have import issues that can delay delivery by international manufacturers;

  • the local manufacturer is local and therefore a lot easier to contact — they are only a telephone call or a short trip away, making communication a lot easier and more efficient;

  • there is a security in that you can return goods should there be a fault, at very little expense to yourself.

  • However, Trollip also warns of the danger of using a fly-by-night manufacturer. “Second Skins has a long list of references that we give out to new customers and the fact that we have been around for over 20 years adds credibility.”

  • The biggest problem that SA brands face is the lack of protection from government, he says. “There is no support or loyalty to SA brands when it comes to overseas competitors wanting to make a stake in the country.”

    Manufacturers often complain about Chinese imports and say that they cannot compete against the low prices, but “this is only a problem if you are offering what they are offering” says Trollip, who manufactures for the sporting industry.

    The difficulty in sourcing technical textiles locally and the high duties on imported fabrics, however, make it difficult to compete on price. “I believe there should be no duties on fabric import — this would lead to a higher level of competitiveness for local manufacturers.”

    He believes that the way towards expanding production and increasing employment is to start at the bottom. “Look at home. We have to take the work to the worker. The same worker who will not come to work because the cost of working simply outweighs the benefits. The same worker who does not have an admin skill to allow them to work from home, but has a physical labour skill.”

    He says that workers need to be educated to be able to own and manage their own businesses, need to receive financial guidance and be able to get access to finance.

    “Second Skins has been around for over 20 years and even through this terrible recession we have grown year on year. I recently introduced the concept of empowering micro-enterprises within my employees’ communities. This programme is geared towards helping people earn an income while working from home, thus enabling them to continue performing their most important role: parenting.”

    They currently have six projects that benefit from start-up and ongoing support. Three Second Skins employees are dedicated exclusively to these projects.

    “It would normally take 600 taxis to bring the people to work and home again over a month, whilst we send one delivery truck and one collection truck,” says Trollip. “They get to work close to home and are around for their families. Their general overheads are minimised and they are encouraged to grow and develop.”

    Steve Uppink: Limited possibilities

    Steve Uppink is a director of both Musgrave Agencies and New Pier Trading in Durban. With brands like Quiksilver, O’Neill, Sector, Volcom, Foxx etc, they just about own the sport lifestyle fashion industry.

    He does not think that the Industrial Policy Action Plan (IPAP) will be actioned or controlled properly. “I would love for someone to come up with a solution to this ongoing debate and the successful revival of the manufacturing/production sector of the clothing and textile industry in SA, but the reality is that it will never be what it was. We cannot compete with the overseas imports and manufacturing, nor the labour productivity levels and quality in China and other strong manufacturing countries.”

    Local manufacturers cannot compete on an equal footing with international imports because they can only be competitive on basic lines — labour productivity is a problem for them.

    He believes there is a very limited future for manufacturers in SA and even then, only those who make low work content products, will survive. The local manufacturers who enter a niche market catering to international brands in the fashion market can have a future in SA, but those who, for example, specialise in the manufacturing of work wear, probably have a limited future, says Uppink.

    Local manufacturers in the fashion industry can, however, not compete against the cheap Chinese imports. The Chinese are “way cheaper, especially on the high work content branded product,” says Uppink.

    He believes the best services local manufacturers can provide, which will give them an added advantage in the market, is to specialise in smaller runs and to specialise in a niche market. Make yourself a specialist in your market and people will have to use you.

    Fast turnarounds will also be an added benefit that will encourage companies to make use of your business.

    One of the main obstacles faced by the local manufacturer are the limited raw materials that are available and there is sometimes problems with on-time delivery. “You cannot get all the fabrics and trims locally, and there is sometimes a limitation on the type and quality of work local manufacturers can provide.”

    High import duties and the (lack of) policing of illegal imports have a lot of do with how well the manufacturing industry does. “The import duties have just gone up another 5% and the only people who are suffering are the legal importers and the man in the street wanting to buy affordable and legitimate branded goods,” says Uppink. “The illegal importers and counterfeiters are booming in SA. We should rather spend money upgrading our import controls to combat this, rather than penalising the legal importers. We should also focus on the corruption within our system.”

    He adds that “if we recovered half the duties from these people, we could rather use this to train and build manufacturing businesses so that SA can compete on the global market, rather than waste time flogging a dead horse.”

    Global success for SA manufacturer

    Impahla Clothing in Cape Town is a relatively small clothing manufacturer privately owned by Africans, that has achieved global success. Their biggest clients in SA are PUMA, adidas and New Balance SA.

    But, their big breakthrough came as a supplier to PUMA under the global Peace One Day project. This enabled them to begin exporting in 2008, and they now supply PUMA products to five European countries (Austria, France, Germany, Turkey, and Switzerland), Egypt, Chile, Indonesia, Japan, Singapore, the UK and the US.

    Most of their principle suppliers of machinery, fabric and other input materials are in SA.

    They have been awarded Puma's contractor compliance "A Grade" status — one of the first factories in Africa to receive the award and have also been given the status of World Cat Strategic Supplier — the first company in Africa to receive this. The Strategic Partner Concept (SPC) is a partnership that strives to create a long-term win-win situation for both the supplier and the PUMA brand.

    In addition to manufacturing to the international brands' quality standards, Impahla Clothing made clothing for Puma for the SA Para-Olympic team (2008 Beijing Olympics), for adidas for Athletics SA at various world championships since 2005, and replica kit for the Angola, Botswana and Namibian national soccer teams.

    Carbon neutral

    With the help and advice of Puma they became SA's first carbon neutral clothing manufacturer. In 2007 Impahla Clothing received a carbon footprint assessment from the Cape Town-based consultancy that provides carbon footprint assessments and off-set strategies, Carbon Calculation.

    This is the second year that they have made a concerted effort to offset their carbon footprint by planting trees in townships like Khayelitsha, where many of their employees live. Through their partnership with Food & Trees for Africa they also planted trees at schools in disadvantaged communities around SA. By planting fruit trees they are also ensuring that the communities get tangible benefits from their commitment to being environmentally responsible.

    Because they manufacture for PUMA, who has committed to reducing their carbon footprint and creating sustainability (see p13), they are committed to ensuring that the clothing that they manufacture in SA is done in a sustainable manner, ranging from ensuring fair working conditions for employees to reducing energy and water consumption. They have moved away from using PVC-based inks and make use of PUMA-approved environmentally friendly water-based CHT inks for screen printing, monitor electricity and fuel consumption, recycle waste materials where possible and in such a way that it has a socioeconomic impact on less fortunate people. They also use fabric that has a minimum organic content of 5%.

    In recognition of their work, Impahla Clothing has been awarded the status of PUMA's sole SA supplier for screenprinting and heat transfers.

    Impahla Clothing provide learnership opportunities to ensure that the industry has access to well-trained and competent machine operators. They pay out performance and zero sick leave bonuses to reward the dedication of their 170-odd staff members, of whom 93.2% is female and 97.7% are previously disadvantaged. Impahla Clothing have never placed workers on short shifts to cut costs.

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