In just 14 months, Da Gama textiles has managed to increase production by 40% by reducing machine downtime and productivity. Managing Director, Greg James has been a big part of this turn-around and he tells Enterprise Africa more about the company’s on-going plans to install further improvements.
South Africa’s textile industry is often understated. It holds huge potential and importance within the economy. In 2013, a department of the dti stated that the Clothing, Textiles, Footwear and Leather (CTFL) industry accounted for about 14% of manufacturing employment and represented South Africa’s second largest source of tax revenue, supporting an estimated 60-80,000 jobs and contributing around 8% to the country’s GDP.
However, in recent times, with the economy making the business environment increasingly difficult, many local textile companies are losing out to cheap imports from places like China, Vietnam, India and Bangladesh.
Back at the beginning of the global financial crisis in 2009, negative effects on South Africa’s economy started to filter through the system and in 2011, things became even more difficult for the textile manufacturers with volumes being squeezed and retailers and manufacturers looking abroad for savings.
Zwelitsha based Da Gama textiles is a perfect example. The company produces textile products for a wide range of customers across three main sectors: Home sewing, furnishing and workwear/government tenders. Once a hub of activity with high productivity and employing thousands of workers in the 80s, it lost ground due to its ageing fleet of machines, its slack order book and the bleak nation-wide economic outlook.
But just over a year ago, the fortunes of Da Gama began to turn. New shareholders brought new strategy, new processes and renewed vigour, allowing the factory to achieve high-levels of efficiency and competitiveness.
“Da Gama went through a shareholder change at the end of August last year. It was held by a German industrialist and he wanted to exit as the factory was not performing, the machinery was 30-40 years old and there was a lot of downtime so the possibility was to sell or close and the main supplier to Da Gama, Cowie Trading, bought his shares and we’ve really turned the company around in the past 14 months. We’ve increased production by 40%, improved the machine availability and put in proper systems to run the factory efficiently,” explains Managing Director, Greg James.
“Da Gama was started in 1946 and that was post-Second World War where people came out of the UK where the textile industry was quite big. They started a textile industry here in the Eastern Cape and it grew from there through until the mid-80s when Da Gama was biggest textile factory in South Africa, employing just over 9000 people and producing about 80 million metres of cloth each year – that was in the height of SA’s textile industry,” he says.
BATTLING CHEAP IMPORTS
Ever since China joined the WTO in 2001, the global textiles and garmentsindustry witnessed competition of a new kind. The low prices and high-efficiency were, for many, just too much to deal with.
But following Da Gama’s investment and focus on increasing productivity and output, James is confident that the factory can be competitive in not just local, but also international markets.
“When we have the factory running at full capacity, we will produce on par or cheaper than imports. Currently, we can weave at cheaper than what you can import cloth for. As we get the volumes up and the throughput in the business, this factory can compete internationally. Also, if you buy local you don’t have to tie up cash in terms of getting letters of credit. It’s about educating the market and getting them to understand the benefits of buying local,” he says.
These benefit include; cost reductions, reduced lead times, supporting local employment and the benefit of being viewed as a ‘local company’ which, in marketing terms, is now a huge advantage.
“This is a very important industry,” says James. “It currently has government support in terms of putting in new machinery and as we start changing towards the retail industry we will grow. Our local retailers are up against international retailers like Topshop, H&M and Zara and this means our local companies will have to secure local production because it’s now about speed to market. The whole industry is changing and local fashion retailers can’t rest on their laurels and think they can import ready-made product; they have to produce locally just to stay ahead of the fashion. Companies like Zara will change fashion within six weeks and if you can change fashion in this time by producing locally then you can compete.”
Working with local retailers looks set to become important for Da Gama who traditionally have not worked with SA’s high-street fashion retailers. Typically, the company has produced shweshwe which is the traditional African cloth that goes into the informal home-sewing market. Shweshwe accounts for about 50% of Da Gama’s work and the other 50% is workwear related cloth that is made for heavy industry related activity with mining, power generation and other government contracts. All production is done locally for a local market. However, as the economy slowdown has increased, mining and construction activity has seriously deteriorated which has forced Da Gama into a strategy change and bought about the focus on working with local retailers.
“The slowdown has definitely hit the workwear market. 30-40% of the volume from the mining industry has disappeared. What we’ve done is look towards retail where we will make retail-type products for companies like Foschini, Truworths, Woolworths and the like. That market is a lot bigger and we haven’t focussed on it in the past as the workwear market was sufficient,” explains James.
When it comes to building markets outside of South Africa, Da Gama is ensuring this is done in the right way and is not rushing into a big export push. Often, SA companies can become overstretched resulting in a loss of productivity because of over ambitious plans to expand into Africa and countries where growth is high without looking at the true market potential.
“Growth in emerging African markets is relative. If you’re expanding off a zero base then growth comes quickly. Everyone forgets that South Africa is a well-established African country and hence growth won’t be as rapid as it will be in these emerging countries as they’re coming off a zero base,” he adds.
Of course, operating in a ‘well-established market’ has its benefits including spending power of potential customers, logistical infrastructure and the availability of tried and tested suppliers and if Da Gama, along with local retailers, can begin to build an integrated value chain for the local fashion market, the possibilities for growth of textile manufacturing could add to accomplishments of the last 14 months for this reputable Eastern Cape company.
“Our major success in the past 12 months is installing a proper maintenance program so that we have managed to increase the availability and productivity of our ageing machinery. Being able to achieve this has made us more competitive. There’s not a lot of downtime, we’ve increased the throughput in the factory and by making these improvements, we’re able to deliver on time and keep customers happy and that is the biggest success story,” concludes James.