Wheels come off Archer Clothing

Roberta Katunga, Senior Business Reporter
ONCE promising Bulawayo textile company, Archer Clothing has shed more than 200 jobs in the last few months as capacity utilisation has gone down to 24 percent from 70 percent as local orders have taken a nosedive, Sunday News Business can reveal.

Last year, rising as one of the success stories in the manufacturing sector, Archer Clothing employed about 631 workers but is now down to 389.

Paramount group financial director Mr Jeremy Youmans said the downward movement of the Archer employment graph which was targeting a staff complement of 850 before the decrease was as a result of a drop in local orders and export competitiveness which has constrained their ability to grow export orders.

“This is caused by the relatively high cost of production in Zimbabwe. Although the quality of our product is fine and we have sufficient stocks and production capacity to compete, our high cost is an issue. This has been exacerbated by the devaluation of the Euro, Rand and Zambian Kwacha, our three biggest export markets,” said Mr Youmans.

He said operating at 24 percent was not economically sustainable for the company adding that there was an urgent need for a greater drive on local procurement from the Government, parastatals, local municipalities and the private sector.

“The mining sector spends 11 percent of its purchasing on locally manufactured goods as opposed to locally acquired goods, like diesel etc. That industry could have a significant effect on the local manufacturing industries but the flow down is not happening at the moment,” he said.

Speaking on the challenges Archer Clothing is facing, Mr Youmans said apart from the high cost of production, the high cost of doing business and lack of local demand, they were still hopeful that they can get back to a position they were operating at 70 percent capacity utilisation and above.

He said the company has everything in place to do so.

“We continue to identify products which are normally imported which can be manufactured by us, the sales of our leather products are growing, and we have put POS in our retail outlets and improved their layout and service provision,” he said, adding that the company would soon be increasing its marketing trusting this will drive more local orders.

On the clothing sector, Mr Youmans who is also the Zimbabwe Clothing Manufacturers Association chairman said at a recent ZCMA meeting, four challenges were identified which they want to alleviate as a start to improving the environment for the sector.

The challenges include access to affordable finance, high cost of employment, import compliance and local procurement legislation and initiatives.

“The industry does not require much in the way of machinery and it is not a capital intensive industry anyway. But there is urgent need for working capital which has been eroded due to prolonged low levels of capacity utilisation. We need the finance to be affordable and by that we mean that it can be recovered within our prices without making ourselves uncompetitive.

“As an industry, our employers pay more than 16 percent on top of the basic wage in statutory wage-related payments. These include NSSA contributions, Clothing Industry Pension Fund contributions, National Employment Council levies, Workers Compensation Insurance Fund levies, Skills Development Levies and Manpower Development Levies,” he said.

According to the clothing sector, the industry needs further amendment to the Labour Act and more clarity and consistent understanding on the employment of labour.

Mr Youmans said the clothing sector was not visible in the market saying although a lot of work in marketing the sector has been done, it is not enough as many people do not believe that there are over 80 clothing factories still operating and that they can meet local demand.

He said there was no need to import any clothing as it is a waste of scarce export earnings, and a destruction of local demand, to continue to employ foreign nationals to manufacture our clothing items.

“Some of the range of clothing demanded is cotton and increased orders for these locally can help us develop our own cotton to clothing value chain via the utilisation of locally grown cotton and locally manufactured fabrics.

The value chain is not functioning well at the moment due to many reasons, but the best way to develop competitiveness through the chain will be via increased demand for locally manufactured products,” he said.