“Uncertain times for the textile industry amid Covid-19”
LESOTHO’S textile sector faces huge viability challenges due to the Coronavirus (Covid-19) induced lockdown from 30 March to 5 May 2020. Nien Hsing is one such company. The company employs over 12 000 workers. It is faced with an acute shortage of imported raw materials amid revelations by management that its current stocks will only last a month. The management (NH) this week sat down with Lesotho Times deputy editor Silence Charumbira (SC) to explain some of the measures they are putting in place to resume production after the lifting of the lockdown. They also spoke about the company’s aim to preserve jobs in the face of global market uncertainty. Below are excerpts of the interview.
SC: The Coronavirus (COVID-19) pandemic has hit global markets hard. Even the world’s biggest economies have not been spared. Will Nien Hsing Textile Company weather the storm?
NH: Nien Hsing Group has eight factories across the globe including Lesotho, Mexico, Vietnam and Taiwan. We hope to reduce our costs by improving our production process by ensuring that the sales teams work closely with our main customers to maintain the orders and get through these difficult times.
SC: You employ in excess of 12 000 people in Lesotho. What kind of assistance are you giving them in this difficult time when they are not earning their salaries?
NH: Our month starts on the 21st and ends on the 20th of the following month and this means the workers got about 20 to 30 percent of their salaries in April. Apart from the partial salary, the company will provide a M400 relief grant to each worker for them to get through this period.
SC: The government has promised an M800 subsidy to factory workers but this has not been paid to the workers. What is causing the delay?
NH: The company has provided the list of workers to the Lesotho National Development Corporation (LNDC). The subsidies will be paid to each worker’s bank account on a date to be announced by the government.
SC: What measures have you put in place to safeguard workers’ health when they resume work after the lockdown?
NH: Nien Hsing has complied with the government guidelines for COVID-19 prevention. Apart from the required actions by the government, Nien Hsing has installed thermal scanners in its factories to monitor workers’ temperatures.
Nien Hsing is the only company in this sector in Lesotho which has so far been approved by the Ministry of Labour and Employment to re-open. The ministry officials inspected our factories yesterday (Tuesday). All workstations at Nien Hsing have been re-engineered to ensure a space of one metre between workspaces as per World Health Organisation (WHO) guidelines and these are clearly marked. Workers will also work in shifts to meet the spacing and productive requirements. We have also included staggered meal breaks per department, with safety announcements being made at each workstation each morning.
SC: Commentators all over the world have said after this pandemic, the global economy will not operate as we have always known. What challenges are you anticipating when you finally resume operations?
NH: It is difficult to predict but the months ahead will probably be volatile and dynamic as we see restrictions being lifted gradually. This will depend on how we manage the months ahead, with governments making significant interventions in response to the coronavirus. Businesses are rapidly adjusting to the changing needs of their customers and suppliers while navigating the financial and operational challenges. However, it is still difficult to predict what will happen.
SC: A huge chunk of the global workforce has been out of work for over a month and it is unlikely that they will afford clothes soon. What are your expectations in terms of the uptake of your products when you resume operations?
NH: The world economic outlook and growth projections will be severely impacted across all regions registering an average decline of 3 percent of gross domestic product (GDP) for 2020. We therefore project a loss of sales at 20 percent across our product ranges for 2020. Growth is only expected in 2021.
SC: Lesotho has a unique geographical setting by virtue of being completely surrounded by South Africa. Lesotho is yet to record any Covid-19 cases but South Africa has surpassed 7500 infections. What challenges do you anticipate on commencing operations? How do you hope to overcome shipping challenges in transporting your products to buyers?
NH: Yes, inbound and outbound logistics are going to impact all of Lesotho’s manufacturing entities. Nien Hsing’s raw material stocks and accessories are stocked to the end of May. Our stocks are frozen in SA ports awaiting clearing. This is true for other garment factories in Lesotho. Nien Hsing urges both SA and Lesotho governments to work together and come up with a solution for our industry.
SC: How much were you exporting to the US market before the lockdown? How is the coronavirus pandemic likely to affect your African Growth and Opportunity Act (AGOA) exports?
NH: For the period 2019, Nien Hsing Lesotho exported more than 800 containers to the US market.
The current AGOA is expected to continue until the end of 2025. The lockdown will impact negatively on Lesotho’s GDP and the financial performance of the local manufacturing entities of Lesotho.
SC: There is obviously a need for cost reductions given the anticipated slump in demand. Are we likely to see you laying off workers?
NH: Nien Hsing is working hard to retain our orders and reduce unnecessary costs to safeguard the business and jobs of every employee. However, if the market demands and the situation deteriorates, there is a possibility for Nien Hsing to lay off staff.