Textile firms reap fruits of working smarter

It has become conventional wisdom that the South African textile industry is in terminal decline thanks to its inefficiency and Asian competition. However, consultants involved in the industry's two main productivity programs say there is light at the end of the tunnel.

Justin Barnes, director of the industry-backed Cluster Program, says, “While the macro data still indicate a decline, there is a core of firms, employing 40000-50000 workers, who are in no danger. If anything they are in a strong growth position.”

He argues that the clothing and textile industry “is probably” in a stable period. The companies that have survived tend to be at the efficient edge of the industry. “It was the ‘dogs' that died first,” he observes.

“These things are cyclical. The core firms that can ride out the downswing contain the seeds for the next growth cycle”, says Barnes.

However, the existence of two different programs is a troubling indication that the industry may not have overcome its tradition of antagonism between workers and management.

Delivering results

The problem may be particularly acute because productivity solutions stem mostly from improved technology and “upskilling”, a process affected critically by industrial relations.

The two performance programs in the industry are the Fast-Track Program, backed by organised labour and funded by, among others, the International Labour Organisation, and the Cluster Program, backed by local industry.

Both programs have delivered results.

At an awards ceremony last year to celebrate the completion of the first year of the KwaZulu Natal Fast-Track Performance Project, the industry heard that the R1,7 million project had yielded improvements worth more than R2m among the six participating textile and clothing firms.

The pilot project, backed by the South African Clothing and Textile Workers' Union, is a factory floor intervention focused on employing consultants to raise the skills of workers. Dave Bowen, chairman of the project steering committee and training director for Frame Textiles, argues that the biggest benefit of the project is that it has proved that managers and workers can co-operate and so improve efficiency in the industry. “Changing the mind set was like trying to turn the Queen Mary on a 10c piece.

“Yet in nine short months, things turned around completely,” he argues.

Benchmarking efficiencies

However, given the critical nature of industrial relations, it is a little troubling to note that the Fast-Track Program is organised labour's riposte to the much larger Cluster Program backed by the larger textile and clothing companies since 2005.

The Cluster Program's central thrust is to benchmark efficiencies and to try to spread best practices in the industry. It has the backing and participation of 75 of what Barnes calls the “more serious” companies left in the sector. These firms, he says, account for perhaps a third of the employees in the industry.

One difference between the two programs stands out. The Cluster Program is half financed by the participating firms, which expect a financial return for their participation. The government provides the other 50% of funding.

“These firms wouldn't still be supporting the program if it weren't producing results,” says Barnes.

Barnes and fast-track consultant Geoff Schreiner see the future — if it is to work — in markedly similar ways.

“Firms' flexibilities are critical,” says Schreiner. “The objective is to get into a range of niches in the local market where foreign companies can't compete due to logistical constraints.”

Local allows flexibility

Barnes expands on the point: “The nightmare for a retailer is that it will be committed to 10000 units already on the high seas — when it realises that line is not selling. But if they'd sourced locally they could have ordered 500 units, tested the waters and then ordered another production run.”

There are hidden costs to buying from the Far East. The cost of discounting a batch of imported but slow-moving goods can be as much as 30% of the cost of the product.

Moving goods in and out is critical because inventory costs in the retail sector are equal to a quarter of a percentage point of the cost of the garments for every day they are held.

Schreiner and Barnes agree that flexible production and small batch runs, combined with something akin to just-in-time production, are critical to the survival and potential future success of the South African industry.

To be fair to those running the two programs, the emphasis so far has been on co-operation. In fact, the Cluster Program sits on the Fast-Track Program's steering committee, and is one of its minor financial backers. However, this does not alter the fact that one program is backed by a traditionally militant labour union with a job preservation imperative while the other represents interests with a profitability agenda.

This seems to signal distrust. It may indicate that even the sort of hardship the textile and clothing industries has faced in recent years has not been sufficient to entirely pull the sector together. And that could be its ruination.

Source: Business Day

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