Wednesday, October 18, 2006

African Textiles Market

As more premium denim brands use those amazing Zimbabwe cotton denim for their jeans (Kato, Stronghold, 45RPM) I ask you this: How well do you understand the sub-Saharan African supply market.

I sure didn't know it well so I welcome this top story article from Business Day (South Africa).

It introduces us to Frame Textile MD and International Textile Manufacturers Federation president Walter Simeoni who laments South Africa's disadvantages.

...local manufacturers face additional costs compared with other countries. In China and India funding for capital equipment for textile makers can be obtained at 1,5%, while France, Korea and Israel's textile industries receive billions of dollars a year in financial assistance.

"What do we get in SA? Nothing! The limited advantages of the duty credit certification scheme comes to an end in March 2007," he said.

He also cites a volatile exchange rate, and expenses for security, HIV/AIDS pandemic management, and turnover as issues making South Africa less competitive globally.

Emigration of experienced staff, additional costs associated with black empowerment and employment equity, the costs of losing skilled black staff once they were trained, even though Frame paid the highest salaries in the industry, were expenses overseas competitors did not have.

"In certain skills categories we've reached the stage where white people work for 30%-50% less than blacks," Simeoni said.

The cost of employment for local textile operators averages about $600 an employee a month, while some local retailers are being supplied from manufacturers in the east, which pays workers $30-$40 a month.

Business Day (South Africa) Article

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