| Tue 30 Sep 2003, 11:33 | | Imports pose threat to jobs, says Searll |
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Imports pose threat to jobs, says Searll
September 30, 2003
By Vera von Lieres
Cape Town - The rand's continued strength could lead to more job losses in the local clothing and textile industry as imports increased and exports decreased, Aaron Searll, the chairman of Seardel Investment Corporation, warned yesterday.
Following the release of more muted full-year results to June by Seardel compared with a year ago, Searll said a big surge in imports from certain retailers was simultaneously accompanied by pressure on the margin of export profitability.
"The situation is of great concern," he commented.
There have been murmurings in the industry that the government should introduce a block duty on imports as a temporary measure to deal with the consequence of the stronger rand, which has led to the rise in imported clothing by retailers.
A well-placed industry source, who preferred not to be named, observed:
"The time is coming fast where the department of trade and industry will have to step in and make a temporary decision on import duties."
Searll pointed out that trading conditions until about March this year were still buoyant, with exports looking positive, but from about April/May, the picture deteriorated dramatically - linked directly to the rand/dollar exchange rate.
Clothing, textiles and yarn imports had risen substantially due to the currency.
"The strength of the rand is hurting the domestic textile and clothing industries, and import duties have further compounded the problem, having reduced by another 30 percent," Searll noted.
"The combined negative effect of the rand and import duties on the clothing and textile industries is unacceptable and has already caused massive job losses."
The SA Clothing and Textile Workers' Union claims that about 6 000 jobs were lost in the sector between January 1 and June 30 this year - in addition to the 17 000 jobs shed in the industry during 2001 and 2002.
It has filed a section 77 notice with Nedlac, the negotiating chamber, requiring the organisation to convene meetings of retailers, banks and asset managers to consider the union's socioeconomic demands.
Seardel, which employs 17 192 people nationally, was bracing itself for a tough six months ahead, Searll said.
Revenue for the first two months fell by 9 percent to R631 million compared with a year ago. This was an inkling of the tough environment the group was already operating under, he said.
Despite difficult conditions, Seardel's balance sheet strengthened in the year to June, with capital and reserves 9.5 percent higher at R1.1 billion.
The group's activities include textiles, clothing and household textiles, office automation and consumer electronics, toys and industrial products.
Its share price ended unchanged yesterday at R2.72.
