Four of South Africa’s major clothing retailers — Foschini, Truworths, Woolworths and Edcon — have issued a statement citing their concerns over the state of the local clothing and textile manufacturing industry, but “unequivocally” rejecting calls by unions to sign a code committing them to prescribed local procurement targets.
Responding to renewed calls by the Congress of South African Trade Unions (Cosatu) and the South African Clothing and Textile Workers’ Union (Sactwu) for retailers to pledge to a local sourcing code, the retailers said stifled competition is not the solution for the ailing clothing and textiles industry.
“Gross interference in the competitive dynamics of the supply chain is just bad business, and ultimately bad for the consumer and for the economy,” they noted.
“The requirement for retailers to sign a code guaranteeing local procurement levels irrespective of price, quality and variety seems to suggest that retailers can simply insist their customers pay more and control their preferences and tastes.
“To remain competitive and responsive to the demands of their customers, retailers must continuously source innovative, quality products at competitive prices, and they must be able to do this freely from many sources.
“Forcing retailers to commit to quotas for local procurement would inevitably narrow the range of choice available to their customers, and would materially raise prices, and harm the local economy.”
The retailers said they are equally concerned about the local textile industry, as this is still the source of the majority of the apparel sold in their stores. However, the problems are complex and related to the industry falling behind its international competitors over many years.
These had been exacerbated by the strengthening rand over the past two years, resulting in a substantial decline in exports.
“This is certainly one of the major causes of the job losses affecting the industry. Previously the undervalued rand enabled manufacturers to export significant volumes at competitive prices. The revalued rand has removed the protection that existed, which enabled cheap exports.
“There is also evidence to support the fact that there is still illegal import activity, and this hurts both manufacturing, and those listed retailers who follow the letter of the law. The local clothing and textile industry has, however, struggled to effectively cope with modern consumer demands, and the existence of the global market place.
“The government has, correctly, maintained its strong stance on opening up free trade and has urged the local manufacturing industry to improve skills, retrain, retool and develop niche competencies.
“Only in this way, and with greater innovation in employment practices, can the local industry start to compete globally rather than to continually call for protective restrictions on trade agreements, and protective duties that will continue to mask inefficiencies and cause the consumer to pay higher prices.”
The retailers added it is important to note that the local textile manufacturing industry cannot offer the variety, volumes and prices currently demanded by the South African consumer. For the local industry to supply 75% of all local retail requirements (as demanded by Cosatu and Sactwu) is “simply not feasible”.
In respect of the footwear industry, for example, there are not sufficient factories in South Africa to supply even 10% of the demand.
They said South African retailers are committed to the local industry.
They will continue to source locally, provided the local industry leverages the advantages it has of proximity to market, local knowledge, faster turnaround times in product development and manufacture, shared language, niche competencies and relationships with buyers.
“Competition does not rely on price alone, although this does provide a sharpening edge in improving business efficiencies,” they noted. “The local industry will fail in trying to compete on this basis only, against the globally competitive, and growing giants, of China and India.
“Unemployment and poverty are problems that can only be solved by all South Africans working together in a complex and competitive world. That’s why retailers have continually called for a cohesive strategy, encompassing government, labour, manufacturers and retailers to address the problems faced by local clothing and textile manufacturers.” — I-Net Bridge