South African & East African Footwear and Leather Goods, Leather and PPE industry news.
Harvest outlook impressive and raises hope for agriculture sector rebound
30 April 2020 – Agriculture received some positive news this week. Firstly, it was the further upward revision to the country’s crops estimates with the South Africa’s Crop Estimates Committee (CEC) pegging the 2019/20 crop 17.52 million tons of grain and oilseed crops which is up 2.6% from March and 31.3% higher year-on-year (y/y). At 15.22 million tons, the maize harvest will be the third largest on record having been raised by 2.8% from the previous month and 35% y/y. Encouragingly, soybean output jumped 1.7% from March despite earlier yield concerns to 1.29 million tons which is up 10% y/y. While the sunflower harvest estimate came in unchanged month-on-month (m/m), it is still 10% up on last year. This is good news for consumers as food inflation is expected to remain contained in particularly the bread and cereals which decelerated by 3.8% y/y during March 2020.
Secondly, it is inevitable that fuel prices are going to fall in May and all indications are that it will be by a big margin. This comes at the time when harvesting gets in to full swing for the summer crop areas while the winter crop planting season begins. The implications are reduced costs for farmers from planting, harvesting, and distribution bearing in mind that the distribution of agricultural produce is dominated by road transport with over 80% of grain is transported by road.
Thirdly, the lockdown regulations have been eased and wine can now be transported for the critical export market to ensure that we retain our markets and improve cash flows for producers. After earlier confusion with some of the provinces, the issue of livestock has been clarified and sales can continue unhindered.
Restarting manufacturing and retail: Details expected this week
Cape Town, W Cape, SA – Following the announcement that the manufacture and retail of 'winter clothing' will be allowed from May 1, a Government Gazette spelling out the conditions is expected to be published this week.
"We're busy writing a lot of motivations and product lists which have to be with the government by midday tomorrow [today]," National Clothing Retail Federation of SA executive director Michael Lawrence said yesterday. "The lists include footwear. We've been very specific about the categories."
He said the NCRF had also asked for time ahead of the scheduled re-opening to be able to "tidy up our stores", and to train staff and install any equipment required to comply with regulations.
"I suspect the government has already written the notification, and is just waiting to finalise details. They've set the date. They must make it happen, somehow."
He said retailers were welcome to contact him. (+27 (0)82 496 0126, firstname.lastname@example.org)
On the manufacturing side, Dr Jaywant Irkhede, Director: Leather & Footwear at the Department of Trade, Industry & Competition (DTIC), asked all manufacturers' associations in the leather industry to submit proposals to the DTIC: "We will appreciate if all six sub-sector associations (SAFLIA, SHALC, SAOBC, SACIA, SATTA and GGBB&LEA) can submit their proposal in favour of how the industry in their sub-sector would like to operate during Alert Level 4 by 27th April 2020. We would like to urgently feed all proposals to the DTIC Chief Economist by close of 27th April 2020. We have already received an official draft proposal today from Ernest Heunis of SHALC on behalf of Skins & Hides sub-sector for all tanneries to be allowed to operate under Alert Level 4 and it be gazetted under new regulation."
One manufacturer said of the recommended preventative measures and procedures for manufacturers produced by FLIC and published in last week's newsletter: "If you look at the list of things your staff and factory have to now comply with, I feel first of all they will battle to work productively and secondly with the expense will it be worth opening?" [Note: FLIC's list was of recommendations, not regulations]
Said SAFLIA director Jirka Vymetal: "The little I do know is that working conditions will be very strict under COVID conditions, so most of what FLIC state will probably be a requirement. So yes, going forward there will be huge additional expenses for a factory to commence and carry on working."
So far, leather goods haven't been mentioned in the re-opening dialogue. Said Equator - the Belt Factory™ director Leon Buhr: "Winter shoes might manage to get into that definition [winter clothing], but I doubt belts or bags can make a case to be included as winter clothing at Level 4. Although you do need a belt to hold up your corduroys.... I have lowered my expectations to zero so whatever happens I can only be surprised on the upside. We fully support the extensive safety protocols in work-places and factories and had already implemented many of these soon after 4 March, and are readying for a very stringent environment at the workplace as thinking and suggestions around this evolve. At the end of the day, whether we can re-open now or later, everything depends on consumer demand. Nothing else matters really, does it?"
UIF: Few payments to Leather Bargaining Council employers so far
Several manufacturers have said they have yet to receive money from the UIF for their employees.
Moda Shoes is a family footwear retailer with 3 stores in Pretoria.
"It seems that UIF payments have started to filter through to some factories," SAFLIA director Jirka Vymetal said, "but they also battle to get through to the UIF COVID helpline. So that doesn’t help.
"This week I sent a list to the commissioner, Mr. Teboho Maruping, via Ms. Eunice Mazibuko, of our members who applied and who provided me with the info I requested. I too have not had a response. The reason for my (SAFLIA’s) intervention with the Commissioner was to see if somehow things could be fast tracked for our members."
On April 17, in response to a query from S&V, Marthie Raphael, chairperson of the National Bargaining Council for the Clothing Manufacturing Industry, said it had received payments: "The agreement between the National Bargaining Council for the Clothing Manufacturing Industry and the UIF was a historical agreement and we knew at the time of concluding the agreement that it is not perfect and that there may be some administrational burdens to overcome.
"We have been working extensively with the UIF and can confirm that payments have been made and will continue to be made during the coming period.
"The COVID-19 agreement between Employers and Trade Union as has been published in the Government Gazette, has mostly been implemented, while some items are in the process of being operationalised."
Post-lockdown regulations for factories
Once Government and the Health department announce the lifting or partial lifting of the lockdown and declare it safe to re-open the factories, our industry will then be allowed back to work. However, it is envisaged that to do this there will be a need to put certain new procedures and regulations in place, to ensure the safety of everybody returning to work.
FLIC has put together the attached document, which will serve to guide you on the new recommended guidelines which will need to be implemented prior to re-opening and post re-opening. Please peruse the attached document and start to plan your re-opening strategy accordingly. There is quite a lot to consider. We suggest advance planning for the implementation of these guidelines whilst still on lockdown, so as not to lose time when the green light is given.
Chains: Hoping for government response this week
Talks around local sourcing also to continue
Cape Town, W Cape, SA – Chain retailers are expecting "some relief" from government in terms of a resumption of trade, and the National Clothing Retail Federation of SA is suggesting models which would allow that without compromising the health measures of the lockdown, executive director Michael Lawrence said on Friday, but he said the federation didn't expect the government to announce any changes before the end of this week "at the earliest".
"Trading models for post lockdown are being considered by retail and landlords.
"Changes to the current situation will probably be in stages, and may include a blend of online and conventional shopping. Whatever solutions are arrived at will be quite a disciplined operation, for staff and consumers. Some retailers have operations in other parts of the world, and have practical advice on how other countries are easing restrictions on apparel retailing."
He said measures could include thermal scanners to measure the temperature of shoppers as they enter shopping centres, only allowing shoppers wearing masks, limiting customers from trying on certain clothing, and limiting numbers in malls and stores. He said the information the federation had was that the virus did not survive as long on fabric as it did, for example, on the metal, glass or plastic containers in supermarkets, but the Department of Health would need to offer guidelines nationally.
"Retailing does need to happen soon, to get product off the shelves which has been there too long.
"In terms of available stock, there's probably enough, locally and imported, to last a couple of months.
"In terms of local manufacturing, there need to be conversations to create support mechanisms for bigger manufacturers, and again there probably need to be exemptions from the Competition Act to allow several chains being supplied by a particular manufacturer to all assist in keeping it going, economically and sustainably." - email@example.com