Address to the Portfolio Committee on Trade and Industry Wednesday 7 November 2012 Apparel...
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Transcript of Address to the Portfolio Committee on Trade and Industry Wednesday 7 November 2012 Apparel...
Address to the Portfolio Committee on Trade and Industry
Wednesday 7 November 2012
Apparel Manufacturers of
South Africa (AMSA)
[IPAP 2012/17]
State of the SA Clothing Industry
• Cheapest job creator at R20k per job
• Employs 57 000 formal employees
• Represents at least 50% of total clothing jobs in SA
• Biggest cost components:– Fabric (and other raw materials) 50-60%– Labour 25-35%
Cost components
1. Fabric– Only 1% of woven fabric consumption is
currently bought locally, and less than 40% of knitted fabric is bought locally
– Over 80% of consumption imported, attracting 22% duty
– Amortized this adds 15% to ex factory prices– Price differential local vs imports = 15-20%
State of the SA Clothing Industry
Cost components
2. Labour– New wage settlement for 2013 enables
better management of labour costs – Improved relationship with Labour– In spite of some job losses, many
companies have stabilised and grown
State of the SA Clothing Industry
Clothing and Textile Competitiveness Program
Customised Sector
Program
CTCP
PI CTCIPFabric Duty
ReliefSETA’s
and Training
Clothing and Textile Competitiveness Program
Two components:1. PI - Production Incentive
2. CTCIP - Clothing and Textile Competitiveness Improvement Program
Clothing and Textile Competitiveness Program
1. PI - Production Incentive– Grants for training and capital expenditure based
on % value-add – Great benefits to many companies– Not translated into job creation yet– Improved competitiveness– Cost reduction– Improved efficiencies– IDC challenges to smaller companies
Clothing and Textile Competitiveness Program
2. CTCIP - Clothing and Textile Competitiveness Improvement Program
– Cluster or Individual Company improvement projects
– 75% or 65% subsidy for training and service providers
– Many case studies of successes
Designated sector for local procurement
• Great Opportunities for clothing sector – large volumes in government procurement
• Not aware of any new entrants to state tenders
• Need improved transparency
• Need assistance in process to become a supplier through successful tenders
Opportunities and challenges
1. Fabric input costs– Duty relief immediately levels playing field to
comparative imported clothing– Slow progress – 9 years– Only 30-40% of locally produced textiles goes into
Apparel– Only 1% of Apparel’s woven fabric consumption is
bought locally, and less than 40% of knitted.– The SA Textile industry is unable to supply the input
needs of the apparel sector.– IMMEDIATE relief is needed
Opportunities and challenges
2. PI and CTCIP – Real success stories in larger firms– Expand to make more accessible to smaller firms– Red tape re applications and submissions
negatively affect the reaching of IPAP milestones
3. Local Procurement– Large volumes available in Government tenders– Assistance needed in order to open up successful
tenders to clothing manufacturers who do not currently supply Government
Opportunities and challenges4. Illegal trading and under-invoicing
– Lost opportunity for government in import duties– Lost opportunity and unfair competition to formal local
manufacturers– SARS Customs and AMSA works closely together on
reference pricing and peer group reviews.
5. Other challenges – Utility costs– Infrastructure– Transport– Fuel price– Volatile Rand
SUMMARY• Clothing jobs stabilized for last year• Great opportunities for growth
– Affordable job creator– Build on successes of PI and CTCIP– Fabric duty relief– Government tenders– Illegal trading