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South African apparel giant Seardel to layoff workers
06
Feb '12
Seardel Investment Corporation Ltd., the largest clothing and textile manufacturer in southern Africa, plans to retrench around 1,500 workers at its Western Cape and KawZulu-Natal factories, in its effort to battle low margins.

Currently Seardel has started the consultation process with Southern African Clothing and Textile Workers Union (SACTWU), as required by section 189 of the Labour Relations Act.

The consultation process, which is expected to last about 60 days, would decide on dismissal of 1,000 workers from the company's Western Cape factories and another 500 workers from the KwaZulu-Natal based Ladysmith manufacturing unit.

The consultation would also decide on compensation to retrenched workers, in addition to retirement benefits.

Seardel's move to layoff workers has come at a time when the South African Government is making efforts to save and create jobs in the country.

For the six months to September 2011, Seardel registered an operating loss of 50 million rands in its clothing operations, compared to its loss of 20 million rands recorded during the same period in 2010.

It is for the second time that Seardel has run into financial difficulties. Earlier in 2008, Seardel was rescued by Hosken Consolidated Investments (HCI), but it still had to lay off 4,000 workers and shut some divisions.

Stuart Queen, Seardel CEO, said the company has informed the workers' union that it proposes to downsize the number of workers owing to margin pressures.

He said the firm's clothing division has continued to run into loss and this has affected its input costs. Hence, the company has decided to analyse and remove low-margin manufacturing across the board, he added.

He revealed that the retrenchment move would also help in balancing the company's order books.

South African textile and garment industry is currently facing difficult trading situation with increasing cost of raw materials and retailers preferring imports to locally made goods.

In 2009, the Industrial Development Corporation had rejected the application of HCI seeking financial distress relief funds for Seardel.

Fibre2fashion News Desk - India

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