CGM delays re-opening

MASERU — China Garment Manufacturers (CGM) says it has delayed re-opening one of its factories due to a serious shortage of skilled labour.

CGM was forced to shut down its United Clothing factory last year after experiencing financial problems.

A M30 million bail-out package from the government’s Lesotho National Development Corporation (LNDC) has since helped the company recover. 

CGM chief executive Madhav Dalvi said the company’s plans to use part of the bail-out package to revive the factory had stalled because “there is a shortage of qualified sewing machine operators”.

“We had wanted to re-open the factory this year but we have since postponed to next year,” Dalvi said. 

“The main reason is that we are finding it very difficult to find qualified manpower to operate some of the machines. This is a specialised area that needs people that are well trained.”

But even those plans to re-open next year will depend on the availability of qualified personnel, said Dalvi. 

He said the LNDC bail-out had helped stabilise the textile group.

Before the capital injection the company was struggling to access lines of credit to buy raw materials and other supplies. 

Orders from source markets were also drying up because buyers had lost confidence in the company’s ability to deliver on time.

“After the bailout we have witnessed a steady growth in business. Suppliers are now confident to give us raw materials because they    know that we can pay. They know that their money is secure because the government is involved.”

“We are also getting orders because the market is aware that we can deliver.” 

Dalvi said the company also employed more people after getting the loan.

The number of workers has increased to 3 500 from 2 500 six months ago.

He said the new factory will require 1 000 more workers. 

Under the bail-out package the government had an option to transform part of the loan into equity in CGM. This means that the government will be able to get a significant stake in the textile company that has contracts with global brands like Levis and Wal-Mart.

The company also supplies South African chain stores like Pep, Ackermans and Woolworths.

“With the bail-out we can be able to re-open the factory but at the moment we are not yet ready because there are no qualified operators. Perhaps the government must push more on training programmes,” Dalvi said.

LNDC’s outgoing chief executive Peete Molapo told a press conference last Thursday that the bail-out was meant to protect the textile industry which he described as “very fragile”.

“Often buyers divert their orders elsewhere where they feel that there is more stability. When the confidence of the buyers is gone it is very difficult to regain it,” Molapo said.

“In the backdrop of the financial crisis there would have been massive job losses, which would lead to poverty and this could have affected the economy of the country negatively.”

Molapo said under the loan arrangement CGM was required to appoint a full time chief executive and chief financial officer as well as aggressively reduce costs. 

“They (CGM) cut the number of expatriates working in the company from 240 to 110, and this has reduced their costs. They have also increased the number of orders around the globe, ” said Molapo.

He said there was nothing unique about the loan that the government gave to CGM.

“Mauritius had forked out US$330 million to save 1 700 jobs and our neighbour South Africa has put in place a five-year plan worth R5 billion to save jobs in their country,” Molapo added.

“It is important to protect the industries that have origins in the country, and as LNDC we encourage other companies to follow the lead of CGM and have fixed assets based in the country.”   

The government recently instructed LNDC to establish a fund to help distressed companies.

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