Textile sector braces for financial ‘Armageddon’

Textile sector braces for financial ‘Armageddon’

MASERU-TEMPERATURES are rising in Lesotho’s textile sector as the impact of the Coronavirus begins to bite.
Just over 40 000 people could lose their jobs in the next few days, with buyers in the United States and South Africa postponing orders.
The factory owners have been in crisis mode since January but events in the past three weeks have sent them scurrying in panic.

In a crisis meeting with the Lesotho National Development Authority (LNDC) yesterday the factory owners said they are facing bankruptcy unless the government intervenes.
Sources that attended the meeting said most factory owners said they might shut down in the next few days.
“It appeared that they were saying the government alone should shoulder the burden of helping the workers who will lose their jobs,” said an official who was in the meeting.
“The LNDC said it will take their concerns to the government but rejected the notion that the workers are the government’s responsibility alone. The LNDC officials were saying the employers too should play their part to help their own workers.”

“The point was that this should be a shared responsibility as a social cause during a time of crisis.”
Four problems, all triggered by the global Coronavirus crisis, are giving them sleepless night.
The first is that the United States, their main market, is going through a massive economic slump due to the disease. Buyers are either cancelling or postponing orders as the market continues to slow down.

Food and medical bills are swallowing the incomes that people would have used to buy jeans, Lesotho’s main textile export to the United States.
In the throes of a pandemic that has infected 450 000 people and killed 20 000, new clothes have become a luxury.
But even if there was some residual market left it has become tough to export the textiles because of the government’s stringent port controls in the face of the crisis expected to last weeks and is already pushing the US economy into a recession likely to be worse than the 2009 financial crisis.

The second problem is that South Africa, whose confirmed coronavirus cases passed 600 yesterday, will be on lockdown which makes it hard for the factories to export textiles to the United States.
South African buyers, the second biggest takers of Lesotho’s textiles, are postponing because shops have either been closed or customers are now more concerned stocking their pantries instead of wardrobes.

Many have either lost their jobs or will be on the streets soon. Others are unlikely to receive a paycheque this month and the next.
Third, even if the buyers are willing to receive the orders Lesotho’s factories are not getting raw materials like fabrics from China where mills have either cut production or closed altogether.
China, the first to be hit by the virus in December, is only starting to recover and it will be weeks before its mills fulfil their orders.

Still there is problem number two to surmount: The fabric might not reach Lesotho because they still have to go through the Durban port and border which have become hard because of the lockdown.
Last night the factories received more bad news when the government announced a lockdown that starts Saturday. That will be a blow to a sector that was already wobbling.
Production will be suspended and workers sent home.

Tšepang Makakole, the deputy secretary general of the the National Clothing Textile and Allied Workers Union (NACTWU), is predicting a disaster for both the factories and the workers.
He said even before the lockdown which was announced last night the union was already estimating that 95 percent of the factories in Maputsoe will shut down in the next few days.
“The owners and managers of most of the factories in Maputsoe are South Africans so cannot cross into Lesotho because of the lockdown. They have left for South Africa and will only come back when the lockdown is over,” Makakole said.

He said several companies have also reported that their orders have been cancelled.
“This is a disaster for the factory workers and the Lesotho economy. We fear for the worst,” he said.
“One company has already sent 1000 people home after its orders were cancelled. More are likely to do the same”.

The secretary general of NACTWU, Sam Mokhele, said he predicts major job losses if the government does not intervene.
“People will not be going to work so there will be no salary at the end of the month. Now is the time when the government has to help the workers with the basics like food and rent,” Mokeke said.
“These are tough times not only for the textile factories but the economy as well,” said Bahlakoana Lebakae, the coordinator on textile unions at Skillshare, an NGO.
“There will be little or no production at all. What makes it worse is that this is the time when factories are already low on orders. So they are already struggling.
“Some were already on short time while others had sent temporary workers home.”

Staff Reporter

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