The Textile Industry in South Africa 2023

Introduction

This report covers the preparation of wool and cotton fibres, their spinning into yarn and weaving yarns into fabrics for use in clothing, textiles, footwear and leather manufacturing. The clothing, textiles, footwear and leather masterplan, implemented in 2019, has led to some recovery and improvement including a steady increase in employment and growth in production and revenue. Change is underpinned by strong wool production and revitalised cotton production. Stakeholders say the masterplan presents opportunities, but there is a long road ahead before substantial progress is evident in an industry which is a fraction of what it once was.

Higher revenue and production volumes in the past two years, last seen a decade ago, point to the resumption of growth.

Opportunities

Co-operation between industry players to research best practices, share learning and introduce lean manufacturing principles.

Government support through the Clothing, Textiles, Footwear and Leather Growth Programme. Long term growth in regional African demand and the African Continental Free Trade Area agreement. Quick response business models by retailers may allow local manufacturers to secure a comparative advantage relative to importers. Rising ecommerce penetration of retail and ongoing technological disruption and increasing efficiency of manufacturing. Shift towards sustainability and labour and industry standards; adoption of technology and investment in new machinery and digitalisation. The industry remains key to the overall growth of the manufacturing sector and the potential for growth of small producers and traders. Very strong focus on growing local demand and procurement through the clusters and sector masterplan. The majority of large retailers have committed to increasing their local sourcing.

Outlook

The clothing and textile manufacturing sector holds significant employment potential as it is labour-intensive, resulting in government identifying it as a priority industrial development sector.

Manufacturers are taking advantage of providing quick response solutions and supply flexibility. Government support has seen the recapitalisation of some local manufacturers, stabilisation and some employment growth. The weaker rand, disruption of global supply chains, quick response trends and localisation efforts have resulted in retailers using more local manufacturers, and created opportunities for them to increase production and pursue exports. Clothing manufacturers are collaborating with design houses and retailers to increase local supply, and this is expected to filter through to fabric and yarn suppliers. The challenges remain immense, and there is no guarantee that the textile industry, which only uses two-thirds of capacity because of insufficient demand, will be able to fully take up the opportunity.

Report Coverage

This report covers the industrial activities relating to the preparation of wool and cotton fibres, the spinning of these into yarn and the weaving of yarns into fabrics for use in downstream clothing.

It includes comprehensive information on the state and size of the sector, production and sales data, volumes and capacity utilisation, key trends and notable players. There are profiles of 22 companies including textile mills such as Standerton and Helm and manufacturers such as The Good Hope Textile Corporation (Da Gama Textiles), Samil Natural Fibres Gelvenor Africa, Ninian and Lester and Glodina Towelling.

Strengths

High quality production of agricultural raw materials.

Industrial cluster initiatives and co-operation between producers, manufacturers, and retailers. Significant local demand for textiles and clothing. Substantial and ongoing government support, including direct manufacturing grants and incentives and import tariffs, most recently seen in the provisions of the masterplan. While textile manufacturing capacity is low, the local industry is supported by a strong agricultural sector and a well-established wholesale and retail sector.

Threats

Domestic textile companies may not invest sufficiently to take up the opportunity offered by masterplan provisions amid disruptions to global supply chains.

Increasing competition from international retailers. Increasing pressure on state finances may result in smaller budgets for government support programmes. Long term negative consequences of supply chain disruption. Ongoing cheap and illegal imports, customs fraud, and under-invoicing. Susceptibility to volatile foreign exchange rates, a weakening economy, high inflation and rising interest rates, natural disasters such as flooding and drought and unpredictable weather patterns, and unpredictability and disruptive nature of loadshedding. The industry is not growing in key areas including production, sales, employment, and productivity.

Weaknesses

Capacity underutilisation. Dependence on imports beneficiated outside the country and vulnerability to the volatile exchange rate. Dependence on imports undermines local design and manufacturing flexibility and increases product lead and delivery times. Despite high levels of state support and trade protection, manufacturing remains uncompetitive relative to cheap Asian imports. High levels of illegal and under-declared imports and historical ineffectiveness of regulatory enforcement. Loss of skills and institutional memory in textile manufacturing; general shortage of skills. Manufacturers are behind in technological advances and lack specialisation. New machinery is and expensive and structural and local economy constraints, limit implementation of new technology and sustainability methods. Selling price of raw materials exported largely dictated by other larger global markets and not related to the cost of production. Severe shortage of local beneficiation and upstream manufacturing capacity. The market is heavily dominated by large local retailers and focus on domestic market has limited growth prospects.