Textile Exporters Looking To Compete On Efficiency

Textile exporters are not just worried with the firmer rand and capacity constraints at the Durban container terminal but inefficiency of government in issuing import permits for raw materials is also hampering their ability to meet deadlines.

Walter Simeoni, the president of the Textile Federation and group managing director of the Frame Group, says: "Although some government officials are efficient, others seem not to have woken up to the fact that we operate in a global environment."

While the rand has appreciated almost 50 percent against the dollar since hitting an all-time low of R13.84 in 2001, other developing countries' currencies have depreciated, making exporting from South Africa a marginal and intensely competitive business.

Pakistan, India and China are examples of countries using their currency for a competitive edge.

Thys Loubser, the chairman of the Textile Exporters Council and chief executive of Sans Fibres, says: "The rand is strong and we believe that is good for the country. We are trying to rise to the challenge and compete on efficiency."

Exporters who have worked hard to access international markets are desperately trying to keep their market share and need all the help they can get.

"We aim to ship in on a just-in-time basis and ship out as quickly. With delays at the ports we are going to lose customers. These are huge global contracts which we have worked hard to get. If the container terminal closes for two weeks we are out of business," Loubser says.

He says the situation at container terminals is reaching crisis level. Sans Fibres relies on 100 imported raw materials and exports 50 percent of production.

Exporters need to be part of the logistical solution, he says, but "we are not sure how to help".

Simeoni's criticism of the government is in reference to delays experienced in issuing import permits for cotton and torn materials, for which the department of agriculture and the department of trade and industry are respectively responsible.

The textile industry imports about 80 percent of its cotton requirement

. Cotton importers require a permit to avoid paying duties. However, delays at the department of agriculture in issuing permits have resulted in many instances where the cargo arrives before the permit has been issued.

This gives textile manufacturers two options: to pay the duty or halt production. With clients waiting for orders halting production is not an option. But for many companies carrying the cost of duties is onerous. Simeoni says it can take six to 18 months to receive a rebate on duties paid.

About 64 000 tons of cotton a year are imported, which could incur duties of R102 million if permits are not issued before the cargo arrives.

Billy Morokolo, a senior manager for marketing at the department of agriculture, says the industry is putting the department under undue pressure. In terms of procedure, applications for permits must be lodged with the department between April 1 and April 30. The permits are then issued after the closing date.

"In fact some permits are already ready and we are waiting for them to be collected," he says.

"This is an incentive for the industry, and the government has no obligation to offer it. In fact these permits for importing cotton are a disadvantage for the local cotton industry."

The same inefficiency has been experienced with the department of trade and industry issuing permits for the import of torn material, which is broken down into fibres.

Between October 2002 and March this year delays in receiving permits for torn material cost the Frame Group R465 000 in demurrage (a charge levied when containers are not cleared within a specified period), overstay and storage charges.

These were all caused by late and incorrect issuing of permits, as well as bureaucratic procedures at the permit section of the department, Simeoni says. "In order to be an effective exporter we have to ensure that the service from the government and the port authorities improves."

At the time of going to press the department of trade and industry had not responded to requests for comment.