The R-CTFL Masterplan, 5 years on – Part IV ‘Growth? Not only has there been no growth, business has dropped’

All the South African-owned factories who speciaiise in supplying volume orders to chains, and who agreed to comment, said volumes had dropped and that some of their chain customers openly said they had gone back to China.

There have been casualties: In KZN, Nikkita Footwear Manufacturing, Prisaan Footwear, De Javw/Footech and Everstrong Shoe Manufacturers have closed. Labora closed for months for ‘restructuring’, and Caprini is undergoing the same strategy.
It’s an open secret that most – perhaps all – manufacturers which specialise in synthetic upper chain business have seen orders drop.

“It’s been really, really tough with regards to local footwear,” said Shiraz Jeewa, director of The World Focus Group, which includes footwear manufacturer Foot Style. “The Masterplan was set for all the local manufacturers to increase their volumes with all the retailers, and initially I think they tried to stick with the plan, but for summer and winter last year, and going into this summer, our local manufacturing volumes have dropped drastically.

“It’s becoming quite tedious. With most chains, we go there, we show ranges, and nothing comes of it.

“It doesn’t seem as if they are sticking to the Masterplan. They are doing whatever is convenient for them.

“In my opinion, the one group that has been pushing localisation is the TFG Group. Whenever we discuss styles with them, they ask ‘What can be made locally?’

“A lot of the other chains are going back to China for whatever reason – I’m not too sure why – but I’ve got a couple of emails saying they’re going back there.

His views were shared by another manufacturer/importer.

“In 2021-2022 I was making big volumes – multiple thousands of pairs/day – mainly assembling imported components. Now I’m barely making 2 000 pairs/day. Come June I’ll have to retrench most staff because there are hardly any orders.

“They say they are going back to China ‘because our turnaround time isn’t sufficiently better than China’, or that they ‘want to cut out the middleman’. We’re not a middleman. We’re adding value and creating jobs.

"With the rates going up right now on freight they are all in panic and hopefully will come back to us."

EVA Industries manufactures EVA sheets and makes 3.3 million pairs of flip flop sandals/year for a number of surf brands and for chain customers.

Marketing director Brandon Geyser said the footwear manufacturing industry was worse off.

“We have gained some customers, managed to retain (and grow!) some customers, and unfortunately, lost some customers. Overall, in my opinion, the footwear sector is worse off now than it was 5 years ago, and this despite all initial good intentions by government, chains, and other stakeholders, at the time of signing in the Masterplan.

“The fact of the matter is that pricing is still the main criteria for securing business and while we have been supported by amazing companies, like TFG, we have been let down by other chains, and this all due to price which is some instances has been cents in the Rand.
“Unfortunately, compliant local factories can’t always meet the chains’ price points and so the work is lost to imports, and very simply local factories then close. The pricing issue is exacerbated further by cost factors such seasonality of product (summer / winter), fashion (medium to long term) and fads (short term) and maintaining draconian regulatory compliance.

“These factors weigh heavily on local factories, who are also juggling ever increasing labour costs, unrealistic overhead increases, and raw material fluctuations.

“We, EVA, have benefited and remain grateful, for the IDC (government) assistance and the extended support of those chains that have supported us. At the end of the day though, we appreciate the goals set by the Masterplan, but realise that the chains are also under massive pressure and the competition is rife for the same ‘decreasing’ disposable income so unless this situation changes, manufacturing will remain a bit of a lottery.”

Jinbo Trading sales & marketing director Nashie Singh and MD Peter Huang…Ordering components early to avoid delays.

Nashie Singh, sales and marketing director of Jinbo Trading, which assembles flip flops from imported components, and which has a smaller fully moulded EVA footwear plant, wrote: “Basically business has just stayed the same. Right now it’s about paying the bills and surviving.

“We’re hoping that summer is going to be better than last year but will await customers feedback and importantly confirmed orders.

“Mini chain business has improved, but big chain store businesses are very indecisive. Because of shipping and Customs delays, we have ordered components to arrive in June for August delivery.”

Another Durban manufacturer, requesting anonymity, wrote: “There seems to have been no change to sales to local large retailers – if anything, they are buying less from local manufacturers.

“We were told to gear up and get more machinery to cater for the increased demands, as local suppliers grew the business. It hasn’t happened, leaving many with the costs of growing their capacity.

“Some of us are still here when the retailers get serious about buying local.”

Peter Adams, who previously worked for TFG in local procurement, then for the now defunct Footwear & Leather Industry Cluster (FLIC), and who now consults to manufacturers seeking chain business, wrote: “Retailers continue to explore the local market, and strategically, local procurement makes business sense.

“However: The 3 major challenges still facing the footwear industry viz. 1) lack of working capital, 2) access to components and raw materials, and 3) skills development and retention, will continue to hamper significant growth in the local Industry.”

Several other manufacturers who concentrate on synthetic upper footwear declined to comment or didn’t respond to requests for comment.

Manufacturers which specialise in leather upper footwear have mostly lost whatever chain business they had.

Chains account for a “small percentage” of Angel Footwear’s production, member Ashley Ramlakan said. “We’re a leather factory, and the chains seem to want synthetics almost exclusively.

“However, we do have leather footwear which would be appropriate, but that business hasn’t grown.

“Most of our business is with mini-chains and independents, which is good, but our factory isn’t full – it would be very helpful to have some volume chain orders.”

He said he hoped the recent PMO meeting, in which Minister Ebrahim Patel took part, would lead to a change.