The Covid-19 pandemic, which closed borders last year and resulted in an increased reliance on domestic manufacturing in countries around the world because of supply chain disruptions, is expected to give South African clothing manufacturing a shot in the arm.
The local clothing manufacturing sector - after struggling to compete with the likes of China - has also been boosted by the Retail Clothing, Textile, Footwear and Leather (RCTFL) Master Plan signed between the government and SA's major clothing retailers in 2019, which aims to create 160,000 jobs by 2030.
Even before Covid-19 and the master plan, clothing retailers had been looking to increase local manufacturing to improve lead times for getting on-trend fashion items into stores at an affordable price.
The fallout from the pandemic is expected to reinforce these trends.
Lawrence Pillay, global head of sourcing for Woolworths, said there are "multiple dynamics" causing a "rethink of global sourcing strategy" at the moment thanks to Covid-19 and China-US trade tensions.
"Whether you're a practitioner in SA or a global practitioner in the US or Europe, everyone is thinking of trying to solve the same problems. All of the solutions for these same problems point to hyper localisation," he said.
Scaling up
"Covid has merely magnified some of the issues that have been brewing anyway - the first thing is protectionism. [Former US president] Donald Trump and China started an avalanche of issues across multiple countries around world because of trade disputes, with the result that countries are starting to look after their own borders and create walls and impose tariffs and duties on each other."
Pillay said Covid-19 took this to the next level when countries "physically closed borders".
Retailers also found they had to react more quickly to changes in demand from customers.
We had warehouses of fabric ready for the season … When the ports got clogged, the other retailers could trade
— Graham Choice, MD of TFG’s merchandise and supply chain
but they couldn’t trade as well as us
"For instance, we had to shift quickly from a more formal-wear market to a more casual-wear business as people worked from home during the various lockdowns," said Pillay.
"The closer you are to a product, the quicker you can react to changes. Supply chains became completely disrupted so the shipping lines, because of less movement of products, were choosing the port routes that were most economical for them and therefore if you were importing, you were impacted because there were delays."
One retailer that has been pushing local content for more than a decade is Foschini owner TFG, which said its local manufacturing capabilities have helped it speed up fashion lead times. The group has bought manufacturing facilities from Prestige Clothing, Seardel and Playtex over that period.
Graham Choice, MD of TFG's merchandise and supply chain, said before Covid-19 some retailers paid lip service to local manufacturing, but this is changing.
"South African retailers are definitely looking more and more to local manufacturing - they have to. Covid has become a game changer. Not for us but for other retailers," said Choice, who headed up clothing manufacturer Prestige Clothing before it was bought by TFG in 2011.
Because of the group's major manufacturing capabilities, he said, at the end of March last year, when SA had to shut its clothing factories during the initial hard lockdown, TFG was able to seamlessly start manufacturing masks and then quickly resume clothing lines - and adapt these.
"The minute stores started trading again we were able to quickly switch over from what the customer no longer wanted . because we had a nice big manufacturing capacity."
He said a major headache for some retailers during the various levels of trading restrictions over the past year was that there were logjams in ports around the world and they couldn't get fabric into SA.
Because of TFG's existing manufacturing capacity, this wasn't a problem for it.
"We had already got warehouses of fabric ready for the season, and for the next season in some cases. When the ports got clogged, the other retailers could trade but they couldn't trade as well as us," said Choice.
TFG CEO Anthony Thunström said in October last year that the group intended to double the manufacturing capacity of its factories to further improve lead times and get on-trend fashion into stores faster. He said at the time that the group's apparel brands "can be anywhere from 35% to 55% local", depending on the product.
Choice said manufacturing capacity is being ramped up at all six TFG manufacturing facilities and the group expects to have 5,000 people working for it by the end of the year, from 3,170 at present.
"Within three to four years, we will be at around 7,500 people purely in our manufacturing stable."
The group, which employs 22,000 people in total in SA, manufactured 12-million garments last year, and expects to boost this to 30-million by 2025/2026.
Pillay said Woolworths as a brand "has always been a strong supporter of local strategy", with almost 50% of its buy coming from Southern Africa. "Of that about 30% is out of South Africa and 20% is from . Lesotho, Eswatini, Madagascar and Mauritius."
Pillay said Woolworths' five-year target is to increase its sourcing of local clothing manufacturing by 40%.
He said another factor that is positive for South African manufacturing is that China is "coming off the boil as far as a region is concerned because of political tensions between the US and China".
"Big American retailers are all pulling out and America is the engine room for consumption, so by default the stance the Americans are taking against China is making China less attractive.
"But in saying that, in the years of dominance China created certain industries that are very hard to replace, for instance a fabric manufacturing sector.
"We can locally put up a garment manufacturing factory overnight but a fabric manufacturing plant is a much bigger investment and would take much longer. China still owns that dominance."
Mr Price said the group has over the past few years been intentionally increasing its "contribution of locally procured merchandise".
"Despite the impact of recent global events such as US-China trade wars and Covid-19 supply chain disruptions, our shift in localising more production has been driven by a long-term strategic objective more than as a result of any external forces," said Natasja Ambrosio, head of sustainability at Mr Price Group.
"However, during the Covid-19 pandemic the group's approach to partnering closely with suppliers paid off. We worked together to ensure that we carefully manage the impact both on the business and our local suppliers.
"The group provided financial assistance where needed to ensure suppliers were not penalised for orders produced prior to the lockdown period. This partnership also forms the basis upon which we plan to unlock additional units for production in South Africa," she said.
Ambrosio said that as a signatory to the RCTFL Master Plan, Mr Price "continues to work collaboratively with government and industry to develop meaningful interventions to unlock a competitive and sustainable local manufacturing industry".
Mr Price has "identified opportunities to unlock further local production over the next 10 years", she said.
"To achieve our goal of producing over 100-million units in South Africa, we require scaled production at competitive price points."
In the financial year 2021, local procurement of about 80-million units equated to about 40% of the group's total sourcing.
"We estimate our increased units to unlock a significant number of new jobs, which was one of the key reasons we became signatories of the [RCTFL Master Plan].
"In addition to the production volume we require, opportunities exist to localise more technical apparel and home furniture."
Global brands
Ambrosio said the group also has an established supplier development framework where it works with "key suppliers to improve performance and to develop what is required to increase their volume of supply to the business".
The benefits from the group's "partnership-based supply model are real and our long-standing local supplier relationships give us good agility to respond promptly to market demands, which has been clearly demonstrated during the pandemic".
Meanwhile, global clothing retailers operating in SA are also looking at local procurement.
Natalie Wills, country manager, Africa, for Australia-headquartered Cotton On, said "some great opportunities have presented themselves in the South African market" and the group is "exploring partnerships with suppliers to help deliver our much-loved denim and T-shirts locally".
"We believe this is the start of a great domestic sourcing strategy in the South African region," said Wills.
Caroline Nelson, country manager, SA, for Swedish group H&M, said that in 2019 the group "tested local production" with the launch of its "first global African designer collaboration" with local fashion designer Palesa Mokubung and her Mantsho fashion label. "We continue to look at innovative ways we can partner locally to make great design available to everyone in a more sustainable way," said Nelson.
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