Textile exportsv to US collapse
Mbongeni Mguni | Thursday February 13, 2014 20:19
In previous years, the local industry flocked to the US market empowered by the African Growth and Opportunities Act (AGOA), which provides duty free access and also allows manufacturers to source their fabric from other countries.
Although textile exports under AGOA peaked at US$15.5 million in 2011, they have generally been declining for years due to factors such as the effects of the global recession, greater competition for the US market with giants such as China and Vietnam, higher quality and volume demands from the US and local capacity constraints.
Producers have also attributed lower exports in 2012 and 2013 to the uncertainties surrounding the renewal of a key AGOA provision allowing manufacturers in participating countries, such as Botswana, to source fabric from other countries. Figures sourced from the US Office of Textiles and Apparel (OTEXA) indicate that the drop in export values from Botswana last year was also reflected in volumes of material exported.
OTEXA data shows that Botswana exported textile and apparel measured at 1.5 million square metres last year, more than 48% down from 2012.
On Monday, the chairman of the Textile and Apparel Sector within the Botswana Exporters and Manufacturers Association, Fazul Zahir, told Mmegi Business that the US market was fraught with challenges. “AGOA is important due to the benefits of exporting there,” he said in an interview. “The challenge is that it is not easy to access the market because the buyers there have certain standards and many manufacturers are not competitive enough on the quality, except for a few.
“The prices paid by the US buyers are also low because they are comparing us with China, Vietnam, Cambodia and others where unit prices are much lower. “On top of that, other challenges within the sector have made input costs high, which is why exports to the US have been declining.” Zahir said the US market was lucrative in terms of being voluminous and was of benefit to manufacturers who could access it. “It is a very voluminous market and if you are able to increase your capacity, then it’s one of the best markets to look at, but it is not the easiest,” he said.
Over the years, local textile exporters to the US have dwindled to just one, Carapparel Botswana, which has been the sole AGOA textile manufacturer since 2012.
Yesterday, the firm’s director, Sam Lin, said orders for 2014 have improved greatly over last year’s due in part to improving global economic conditions as well as the petering out of AGOA provision fears.
“This year is better and the orders have come back as buyers are more confident,” he said in an interview.
“We are, however, faced with the same problem we had in previous years of manpower and we are trying to develop our own machinists through training. “We need to boost our capacity to satisfy the orders.”
Lin said the firm was also offering incentives to attract more labour such as target-based bonuses. In addition, Carapparel is also looking to sub-contract another firm to share the US orders and thus address the capacity constraints.
“The problem is that some of the other firms also do not have capacity,” he said. “They are focused on the local market and South Africa, which have peak seasons and as a result their capacity is inconsistent as they rely on seasonal workers.
“We need production throughout the year and some of the firms are in their rest season right now.”
The local textile sector’s export markets include South Africa, the US and Mauritius, Tanzania and other African states.