The Cape clothing industry has come through another tough year with its main customer - the South African fashion retailing sector - showing visible signs of strain of lower consumer demand, Cape Business News reported today.  

Retail downturn
Retailers like Woolworths, Edgars and Foschini have all struggled to grow profits, while smaller boutique businesses have simply gone bust. With fashion retailers remaining downbeat for 2001, clothing manufacturers are bracing themselves for an inevitable slackening of demand.

This is bad news for the Western Cape economy where clothing comprises a sizeable chunk (textiles and clothing together are estimated to make up around 30 per cent) of the entire manufacturing sector in the province. Although employment numbers have dwindled over the past few years, the clothing industry still employs close to 40,000 people.

Bernard Richards, the chairman of the Western Cape Clothing Manufacturers Association, said it's difficult to qualify the effects of the retail downturn on the industry. But he admits: "Certainly there is spare capacity in the industry at the moment."

Clearly a pick-up in local business could be some way off with consumers likely to continue earmarking their discretionary spending on new distractions like cell-phones, the lotto and casinos. Fashion retailers, already feeling the pinch on their trading margins, won't be too receptive to any price increases from clothing manufacturers. Unless interest rates can be brought down and consumer spending rejuvenated, it looks like a tight 2001 for clothing manufacturers.

But possibly the squeeze from local retailers could be a blessing in disguise, especially as there are signs that many of the major companies are competing successfully in the higher value added niches.

In addition, the continued stream of cheap imported clothing from the Far East is effectively putting Western Cape clothing manufacturers out of the running for the lower end of the market.

This has meant that the Western Cape clothing giants, especially Seardel and Rex Trueform, have recognised that their strengths lie in the production of higher quality clothing catering for the mid to upper end of the market.

Export initiatives
It is also this part of the market that sets the tone for export initiatives.

Already Cape clothing manufacturers have made good on their promises to find offshore niches for their products. Estimates suggest that the value of clothing exported since 1996 has more than quadrupled.

Cape-based Seardel, rated as the flagship clothing manufacturer in South Africa, recently reported that its export revenue increased by a whopping 42 per cent to R229m ($30m), a figure that's made even more astounding when realising that total apparel exports from South Africa total about R1bn ($132m).

Currently Seardel is exporting almost 20 per cent of its production and hopes to increase this percentage to 30 per cent. Richards, who is also the joint MD of Seardel, confirms the Cape-based clothing industry is excelling at exports. "We have created an export culture, and we now have more value adding opportunities than ever before."

Export initiatives have been given a fillip by the recent Africa Growth and Opportunities Act, which provides sub-Saharan Africa with duty-free and quota-free access to the US market.

With the rand testing new lows against the US dollar and remaining weak against most major currencies, it is reasonable to expect export revenue to spurt again in 2001.

Export success appears also to be helped by a far more stable labour force after significant turmoil in the industry in the early and mid-1990s.