Several international groups are expanding their production capabilities in Ethiopia

Several international groups are expanding their production capabilities in Ethiopia

From fast-growing textile hub Mekele to expansion plans by several international groups to expand their production capabilities in Ethiopia, the scale of current and planned investments in the country appears to be accelerating. Jozef De Coster reports from last week’s 'Origin Africa' event in Addis Ababa.

The city of Mekele in the north of Ethiopia is aiming to become the country’s textile capital.

Maa Garment & Textile Factory, which has 1,488 workers and is a supplier to companies like H&M, Asos, George at Asda, Calzedonia, Primark and Tesco, plans to increase its knit capacity from 9.6 tons to 20 tons per day and to build a new plant for woven items.

DBL Group from Bangladesh, the vertically integrated knit garments manufacturer and exporter with an annual turnover of more than US$250m, is investing some US$100m in a garment, knitting and dyeing factory in Mekele.

According to Murtoza Mamum Al-Azim of Atelier Sourcing, a member of DBL Group, the factory will be operational in the second half of 2016. Initial employment is estimated at 5,000-6,000 workers, and the group will make additional investments in the coming two years. Among DBL's customers are H&M, KiK, Lidl, Esprit, Puma, George and Walmart.

The Italian hosiery and beachwear producer Calzedonia announced last year it wants to establish a factory with 2,000-3,000 workers in Mekele.

But the most ambitious investment project in the city, both in quantitative and qualitative terms, is that of the Indian entrepreneur Siddharth Sinha. His Velocity banner (the manufacturing arm of the Vogue group of companies) will keep its five factories in Egypt, with around 4,000 employees, but plans to expand aggressively in Ethiopia.

The Ethiopian operations are due to start in January 2016 with a new garment factory that will employ around 3,000 workers and mainly manufacture knits and denim articles. Velocity plans to ultimately employ some 10,000 people in Ethiopia.

Sinha believes that investing in the most modern 'green' machinery and production technics and in 'soft skills' will pay off. Employees are educated to understand the value of product quality and the practice of kaizen or continuous improvement. Velocity customers include brands like Levi's, Vanity Fair, Target, Zara and H&M. 

Also in the North of Ethiopia, Almeda Textile (brand name Altex), located near the airport of Axum, has big expansion plans. The company currently has 5,500 workers, and according to export market chief Tedros Berhe, plans to double its workforce to 11,000 by 2017 and to triple it by 2018.

Other expansion plans

Several international groups with production capabilities in Kenya are currently investing in Ethiopia.

Among them is the vertically integrated Taiwanese group New Wide Garments, which already employs some 500 workers in a knitwear factory in Addis. According to production manager KRW Bandara, when the plant is completed in March 2016, around 1,150 people will be employed. New Wide Garments plans to ultimately employ 5,000 workers in three factories in Ethiopia.

The Dubai-based Atraco Group started manufacturing woven and knitted clothing in the Bole Lemi Industrial Park in Addis in October 2014. Managing director Fakhruddin Amiji says that in four months employment increased from 400 to more than 2,500 workers.

Foundation Garment (Jinadasa Group) from Sri Lanka is currently mainly investing in Kenya where it will put 6,600 workers on the payroll (3,600 in Nairobi and 3,000 in Mombasa). However, it also intends to invest in Ethiopia.

Business development manager Dinuka Wickramanayake says that a factory employing 3,000 workers is scheduled to start in Ethiopia in January 2018. It should produce 1.75m pieces of clothing per month. Foundation Garment is a supplier to companies like H&M, PVH and Victoria's Secret. 

Nazareth Garment Share Company, in Adama, is 50% owned by the Israeli suit tailoring firm Bagir Group. Its new ambition is to become Africa's leading manufacturer and exporter of high level tailored garments. The modest annual capacity of 7,500 jackets and 82,500 trousers will jump to 142,500 jackets and 450,000 trousers in 2016 and increase further in 2017. 

The integrated knitwear producer Yirgalem Addis Textile Factory Plc (brand name 'Adey'), in Addis, is expanding several departments of the factory. This will grow employment from its current level of around 1,000 people to between 1,500-1,700. Among its customers are KiK, Terranova, and the Ethiopian army.

Polo and T-shirt producer Desta in Addis, which employs 600-750 workers, is in the process of expanding its knitting and sewing lines to about 2,000 workers. The principal customer is Superior Uniform Group in the US. Other customers are Miss K London and Navigare. Desta is also due to start working with H&M. 

Not surprisingly the leading machinery, service and accessories providers are also eyeing the Ethiopian market. At Origin Africa companies like Saurer, Lectra, Gerber, Pfaff, Dürkopp Adler, Brother, Juki, Veit, Freudenberg, Coats, American & Efird and YKK were all represented. 

“Ethiopia needs a lot of technical backing. We are good in that,” says Hanna Shoshana, VP of marketing at the Israeli Haama Group, which counts firms like C&A, Marks & Spencer and Levi's among its customers. 

Click on the following links for more reports from last week’s 'Origin Africa' event: