1. 1 TEXTILES, CLOTHING, LEATHER & FOOTWEAR PRESENTATION TO PPC BY Abisha Peter Tembo On 31 st OCTOBER 2012 1

2. Sector Background The TCL&F economic impact Direct employment of 120,000 people representing 11 percent of manufacturing employment. The estimated direct employment of over 160,000 people through informal establishments and SME’s not accounted for by National Bargaining Councils. Indirect employment to about 320000. The annual turnover value of R35-billion. Contribution to GDP of about 2.8 percent. Of about 2000 active companies with 1429 registered with NBC as at 2009. Employer by size and region in TCL&F sector in South Africa Source: CTFL database (2009)

3. 3 RECENT ECONOMIC PERFORMANCE TextilesClothing Leather and leather goods Footwear Production-19.6-8.9-2.8-4.1 Capacity utilisation-7.2%-2.9-9.8+1.1 Exports-5.9%-15-44.7+13.4 Imports+1.7%+18.7-15.8+24.1 Source: IDC, Manufacturing Survey, 2010 Recent economic performance

4. Challenges Stronger exchange rate Illegal imports High cotton price Sector education and skills gaps Increasing utility cost Stagnated FDI Though LDI was stagnated it is increasing due to the Production Incentives offered to the sector by the dti Employment Trends for TCL&F Sector 2000 to 2009 Source: Quantec 2010

5. Global manufacturing and trade trends Textile, Clothing, Leather & Footwear Manufacturing Profile Source: Quantec 2010

6. Textile, Clothing, Leather & Footwear Manufacturing Profile Local manufacturing and trade trends Total SA CTL&F Trade (2010R -billion$ billion% Local Sales31.234.4689.2 Exports Sales3.770.5410.8 Total Sales35.005.00100 Imports24.543.570.1 SA Production value of CTL&FW Sectors (Total Sales – Imports) 10.461.4929.9

7. South Africa still has an integrated industry in the textile, clothing, leather & footwear sector. There has been continuous loss in manufacturing capacity and employment due to downsizing and closures during last decade. Niche can be broadly defined as a comparative and competitive advantage a product or a segment in one region has over another region: The majority of the manufacturers are currently operating in the domestic market with specific or combined niches either in raw material or market segment or product or process or fast fashion coordination. The technical and industrial textiles manufacturers, however, have still been able to retain their presence in domestic as well as international markets. The review of products and process technologies involved in 150 manufacturers indicate that manufacturers have acquired operating niches either due to their presence in specific niche markets or by acquiring specific technologies divided along the process streams.

8. Customized Sector Programme Textiles & Clothing CSP 2005 Leather & Footwear CSP 2007 Textiles & Clothing Implementation 2009 Leather & Footwear Implementation 2010 Studies carried out in the sectors –Outcomes: Uncompetitiveness Illegal imports Skills shortages Lack of investment Loss of local market share

9. DTI INCENTIVES Clothing and Textiles Competitiveness Programme (CTCP) –CIP (2009) which facilitate competitiveness of sectors through process improvement –PIP (2010) provide grant calculated as a percentage of manufacturing value addition –Guidelines www.ctcp.co.zawww.ctcp.co.za Designation –Sectors re-designated through new PPPFA in December 2011 –Original designation 2002

10. IMPACT of CTCP CIP –R283 m (R36.5m) PIP –R 637.5 m ( R501 m) –49888 Jobs saved (19014) –12205 Jobs created (6668) –144 SMEs (60)

11. Impact (cont..) Retailers moving to local Purchases –Foschini approx. 68 % –Edcon approx. 45 % Footwear exporting to SADC region Cluster programmes developed to challenge footwear imports Created shortages of fashion fabrics no longer being manufactured locally (Labour, Texfed & AMSA)

12. DESIGNATION Textiles, Clothing, Leather & Footwear initially designated in 2002 Designated in December 2011 under new PPPFA Practice Note signed by Minister of Finance on 17 July 2012 All sectors designated at 100 % local content. 12

13. REGIONAL PARTICIPATION SACU –DCCS discontinued 31 st March 2010 and PIP successfully promoted and accepted as long term replacement of DCCS –SACU Industrial Policy being pursued PI and Hides Tanning identified as pilots SADC –Country of Origin Labeling –Rules of Origin

14. Thank you ! 14