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ARCHER Clothing Manufacturers has ventured into leather production as part of a diversification strategy aimed at expanding business in a competitive market.
The Bulawayo-based clothing firm is back on its feet following a takeover by Paramount Garments, which has rescued it from liquidation after committing $3.5 million towards working capital and refurbishment of property and equipment.
Paramount Group financial director Jeremy Youmans yesterday said diversification was critical given increasing competition from cheap imports.
“We’re working on various cost cutting and efficiency initiatives, as well as developing new products and markets. We’ve also started a leather factory in the premises to produce leather products to complement our range of protective wear and casual wear,” said Youmans.
“We’re facing increased cost competitiveness challenges, particularly in South Africa, due to the severe weakening of the rand.”
The scheme of arrangement to take over Archer Clothing Manufacturers offered to creditors by Paramount was accepted by the required majority and percentage of debt in January this year.
In March this year, the High Court in Bulawayo sanctioned the scheme of arrangement creating a court order for interested parties to comply with the scheme of arrangement.
Archer Clothing Manufacturers was subsequently taken out of provisional liquidation as a result.
Since its rebound, about 680 people have been employed to work at Archer, a majority of whom are former employees.
Youmans said refurbishment of properties has been undertaken and most of it has been completed.
He, however, expressed concern over delays in concluding the takeover process after one of the creditors, CBZ, opposed the scheme of arrangement in court, despite a majority vote endorsing it.
“There’s still capacity to open one more production area, which would create another 250 jobs. CBZ Bank has applied to the court to appeal the sanctioning of the scheme of arrangement, effectively, to reverse the takeover.
“All other creditors have complied with the court order and continue to support the revived company,” said Youmans.
“For now we’ve postponed the implementation of the last production area until we’ve a more complete order book and we’ve clarity on the appeal from CBZ Bank to take us back to square one again.
“So, if these are all successful, and the legal actions don’t retard the whole process, we intend to have Archer at full capacity by the end of June 2016.”
Online Reporter