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Textile giant retrenches 200 workers in Bulawayo

by Staff Reporter
24 Mar 2019 at 06:10hrs | Views
BULAWAYO textile and clothing giant, Archer Clothing Manufacturers has been forced to lay off 200 of its workers because of inadequate power supplies at its factory and dwindling local orders.

Managing director Mr Jeremy Youmans told Sunday News Business that the company was forced to retrench part of its workforce last year due to insufficient electricity supply to power its factory.

"Our workforce has reduced at Archer, in July last year it was discovered that the electrical infrastructure supplying the factory was not sufficient. We have been working tirelessly with Zesa to resolve the problem but it is taking far too long. We have paid for a new transformer to come from the UK (United Kingdom) on behalf of Zesa and are currently working on upgrading all the other cables and boards to cope with the new transformer. We are not fully in control of the process and so it is very frustrating. We had to release 200 people who we had employed but could not let them work as the excess demand put on the infrastructure could have led to a disaster and loss of life. We could not take that risk," he said.

Mr Youmans also said the other reason the company had to retrench was premised on the continuous shrinking of its local market.

"There is a lack of demand locally which is reducing our order book. This we are dealing with by not replacing everyone who leaves," he said.

After creditors of Archer Clothing Manufacturers approved its take-over by Harare-based Paramount Garments in 2015, saving it from liquidation, the company had projected to employ 850 workers by year 2016.

However, a myriad of economic challenges chief among them the prevailing foreign currency shortage in the country for the procurement of strategic raw material has over the past years stifled the company's production culminating in it downsizing its workforce from time to time. Mr Youmans said improved capacity utilisation buoyed by the Reserve Bank of Zimbabwe (RBZ)'s export incentive saw the company's export revenue surge by 35 percent last year.

"Last year our exports grew by 35 percent. This was on the back of aggressive marketing and better price competitiveness due to improved capacity utilisation and the export incentive from RBZ," he said.

Mr Youmans said South Africa remains the company's biggest export market but the influx of cheap imported products from Asia had impacted negatively to its market share.

"South Africa remains our largest opportunity because of its size but it is flooded with imported cheap goods from Asia, many of which enter without paying the correct duties, and it is very hard to compete there. We will continue to export what we can to SA but we have also employed resources to develop both East and West African markets and we are finding ways to make ourselves more competitive to more customers in the EU (European Union) where we have duty free and quota free access via the Economic Partnership Agreement signed in 2008," he said.

Mr Youmans said the arrangement to allow duty free access either through a bi-lateral trade agreement or another mechanism between the two neighbouring countries which was discussed at Bi-National Commission was likely to spur the growth of the country's textile and clothing industry.

"The recent devaluation has given us a chance to compete on a costs basis with the biggest clothing sectors in the region, Lesotho and Swaziland, and also the Asian suppliers. What is vital is that we do not give away too much of this opportunity through irresponsible cost increases.

"Labour is our biggest overhead and we must partner with our employees to develop the sector into a sustainable industry which can compete with everyone. If we do, we can employ another 28 000 people in our sector and have the upstream and downstream effects on the value chain," he said.

The company continues to receive enquiries from the United States of America but access to the market remains elusive due to lack of the duty free quota free advantage under the African Growth and Opportunities Act (AGOA).

Only seven political states on the African continent are excluded from AGOA and the USA remains one of wealthiest market in the world.

Mr Youmans said there was a need for the RBZ to equitably allocate foreign currency across sectors and industries.

Source - Sunday News