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Silently brewing on the outskirts of Newcastle, Northern KwaZulu-Natal sits a ticking time bomb in the making. Newcastle’s Clothing and Textile sector, an industry hiring numerous nonskilled labours in the area, continues to grow weary.
According to Alex Liu of the Chinese Chamber of Commerce, the Clothing and Textile Industry is essential to Newcastle’s economy, employing approximately 10 000 people.
With the focus of late being placed on political and municipal issues, the once proud industrial area has progressively and silently eroded in the background.
Over the past two years, the sector has endured numerous obstacles. Among these are protests, the 2021 July unrest and a new challenge, the R350 grants. But more on that shortly.
Over the past two years, the number of local factories has dropped from approximately 150 to approximately 100. This means 1/3 and counting have already packed up shop, according to Liu.
A glimmer of hope was shone on the sector in August 2021.
Following the dire implications of the social unrest and the impact of the pandemic, the KwaZulu-Natal Provincial Government Premier, Sihle Zikalala, pointed out that the Provincial Government developed the KwaZulu-Natal Economic Reconstruction and Transformation Plan.
At the time, he noted that this plan aimed to promote Public-Private partnerships to accelerate inclusive economic growth and distribution and create employment.
According to the Premier, the provincial government disaggregated the economy into 15 critical or priority sectors to successfully implement the economic recovery plan, attracting investment while driving exports. The Clothing and Textile industry formed part of these sectors.
Zikalala noted that the Provincial Government was working on establishing the Clothing and Textile Special Economic Zone. The zone would be located in the corridor from Newcastle to Ladysmith, with the hub being in Ladysmith.
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While planning is still apparently underway for the Clothing and Textile Special Economic Zone, the local clothing and textile sector struggles to remain afloat.
Local businessman, Andy Hsu, notes that he has seen a decline in the number of factories operating in the Newcastle area. “I know of 10 factories that have recently closed. The owners were simply fed up with the current situation of virtually no profits and the environment in which business is done.”
Hsu says one of the biggest challenges faced is the labour force, with many individuals simply not wanting to work anymore due to the R350 grants.
Furthermore, he explains that factories pay minimum wage. This apparently does not bode well with employees, who opt instead for the said grants rather than continue working.
In turn, this leaves the affected factories forced to replace the staff as quickly as possible to ensure they do not lose orders and can continue operating in town.
With business becoming more challenging and facing continuous obstacles in the pursuit of running a profitable business, Hsu says he now knows of other factory owners who want to shut their doors and look for greener pastures.
“This will mean there will be massive job losses in Newcastle, affecting the local economy.”
Alex Liu adds that while the clothing and textile sector is currently maintaining its size, with approximately 100 factories in the area, he says he is also aware of businesses planning to withdraw from Newcastle.
“However, it is difficult to sell at the moment, with a number of owners still looking for buyers of their machinery.”Alex Liu
Liu agrees with Hsu that the reason for wanting to leave is the current environment in South Africa, with the clothing and textile sector facing numerous hurdles, from labour issues to how business is conducted.
As for the upcoming Clothing and Textile Special Economic Zone: Liu states that while the local textile industry has not received any formal information as of yet on the project, and while he commends the government for attempting to assist in the development, he says that there is one issue that the government needs to take into consideration with the project.
“I always maintain that it is difficult for the government to maintain a close eye on the market trends, but it is important.”
Concluding, both Hsu and Liu believe it is essential to re-evaluate how business is done. The private sector, the labour force, and the government are working together to find an amicable way forward.
What are your thoughts on the matter? Share your views in the comment section below.
Also cheap imports from Swaziland, Lesotho,China and Bangladesh has ruined this industry. Government must keep to the resolution on imports so that our local manufacturers can survive. Currently majority of the work that was done in newcastle is being manufactured in Swaziland. Newcastles productivity has dropped by 40 percent in the last quarter.