They design high-end infant and children clothing and outsource the manufacturing to small Cut-Make-and-Trim operators.
The business was not adequately capitalised due to limited resources. When the operating and economic conditions deteriorated in South Africa, the cash flow constraints of the company became evident. The company had been design-driven without paying adequate attention to optimising its efficiencies. It also provided clients with an inordinately large range of products.
A turnaround plan was established to place the company in a financially viable state. The plan hinged on the company reducing its range and increasing its contribution margin, as well as implementing more effective management information systems and marketing strategies.
Development impact
• Sustainable employment through the retention of 10 direct and 50 indirect jobs;
• Entrepreneur and SME sector growth by increasing efficiencies and competitiveness; and
• Increased localisation by maintaining local capacity.
Another company that has benefited is Propet which approached the Industrial Development Corporation (IDC) in 2012 to assist with the purchase of the Cape Town-based Hosaf Fibres, the biggest polyester fibre producer in South Africa. At the time, it was a division of Feltex Holdings which was in the process of shutting down the plant.
The local impact of the closing of the plant would have been significant. The supply gap would have been filled by imports as the only other local supplier did not produce the required grades or volumes of fibre. The raw material used by Hosaf consists of 85% recycled polyester.
Due to the increased volume forecast in the new venture, an additional recycling plant was installed at the Cape Town premises. This was linked to the continued operation of the recycling plant in Gauteng and has resulted in the creation and saving of almost 12 000 jobs. It was estimated that an additional 5 000 jobs would be created in the informal sector for people who collected the plastic bottles for recycling.
Development impact
• Sustainable employment through the creation and saving of more than 12 000 jobs;
• Environmentally sustainable growth through a positive environmental impact;
• Expansion by maintaining the strategic importance for downstream manufacturers and improved competitiveness; and
• Creation of opportunities for expansion into international markets and future medical application possibilities.
This article was supplied and approved by the Mail & Guardian's advertisers. It forms part of a larger supplement.