Business News of 2014-02-26

Who’s collapsing the textile industry?

The textile industry, which was once the leader in Ghana’s industrial sector, has been declining over the years due largely to trade liberalization policies and programmes, making it impossible for Ghana’s textile products to compete with cheap imports from Asia.

The industry, which once employed about 25,000 workers, now employs less than 4,000 and with no help in sight for the industry, this number is set to see further reduction.

In terms of taxes, revenue from the local industry is shrinking particularly at a time when the government is hard pressed for cash to accelerate its development agenda. Meanwhile, the floodgate seems to have been opened to a few to smuggle into the country what can be produced here to meet the demands of the market.

The Textiles, Garment and Leather Employees Union (TEGLEU) of the Ghana Federation of Labour has warned of massive job losses within the local textile industry if government fails to check the incessant smuggling of pirated textile products into the country. China has gradually taken over the Ghanaian market with a primary focus on the textiles industry where the growth of its exports constitutes a double agony for the country.

For instance, Akosombo Textile Limited (ATL), one of the leading fabric companies in the country is on the verge of collapse as a result of cheap imports from China and other countries, Ebenezer Kwasi Darko, Human Resources Manager of the company disclosed during a familiarization tour of the company site by the Eastern Regional Minister, Ms Helen Ntoso at Akosombo last week.

“The situation has compelled management of the company to cut down staff from 1,600 to 1,250,” he lamented.

Apart from Akosombo Textile Limited, other textile companies such as Ghana Textile Print (GTP) and Printex have all shut down their spinning and weaving departments due to cheap imports from China. These sections employed a chunk of the labour in the industry. However, the companies could no longer afford to accommodate these numbers and pay over 30 times the amount of cheap imports from China.

Textiles that come from China do not only carry the designs of Ghanaian cloths, but are imitated to let them appear as if they were produced in Ghana. Although the Chinese textiles are not durable, compared to made-in-Ghana ones, they sell far below Ghanaian textiles.

Consequently, most retailers of local textile companies such as ATL, Printex, and Ghana Textiles Prints (GTP) are said to have abandoned the local cloth and are now selling wax prints from China, which is far cheaper. Due to the hardships, the companies have all resorted to the importation of gray baft and semi-finished cloth for printing in the country.

Though stakeholders in the country have made frantic efforts to revitalize the textile and garment industry, this seems to have hit the rocks since the economy is recording a rapid surge in the sale of fake logos and designs of Chinese textile firms on the market.

Industry watchers are thinking about the fate of tertiary graduates who pursue Industrial Art programmes with textile option on the labour market as the sector faces imminent collapse. No wonder students now opt for business programmes at the tertiary level rather than Arts courses.

Some members of TEGLEU recently revealed that the problems with Ghana's textile industry still existed and were getting worse each day. They argued that there was the need for government to find out why the sector is collapsing and why Ghana cannot compete with China in order to find lasting solutions rather than taking a defeatist approach.

According to the General Secretary of TEGLEU, Abraham Koomson, since the local industry players were not being supported to survive against the competition of pirated textiles, they would have no option than to lay off workers.

In what he described as condoning of “criminal activities” by those supposed to protect the local industry, Mr. Koomson chided the Trade Ministry for deciding to suspend the operations of the taskforce which he said would adversely affect the already ailing industry.

TEGLEU believes that the dwindling fortunes can be addressed if the state strengthens agencies such as the Customs Excise and Preventive Service (CEPS) intensify border patrols. They further suggested that port operations should be tightened to ensure that cheap imports do not slip in.

But how well and soon will the authorities respond to the calls that remain an issue of concern to industry players whose hope of continued survival in the business depend on it?

The Human Resources Manager of ATL, Mr Darko said most of the foreign textiles on the market were smuggled into the country without payment of any tax which made their prices cheaper than the locally-manufactured ones.

He called on the government as a matter of urgency to put some control measures at the country’s ports and other entry points to check smuggling of textiles into the country in order to save the local companies from collapsing.

According to Mr Darko, ATL was not calling for the banning of importation of foreign textiles but stated that, the smugglers had a responsibility to stop their criminal act and pay the right taxes and duty to make the playing field level to engender competition.

“A ban does not give the consumer the right of choice and we also believe that it is not everybody who can afford every textile on the market because of the prices, but let us have a fair competition,” he maintained. He said there was the need for the government to ensure a level playing field in the textile industry before the local industries collapsed.

The General Manager of ATL, Lau Arthur also said, more than 9600 people depended on the company to survive and if care is not taken and the unfortunate happened, all these people would be in serious trouble.

He stated among other things that, the importers of the pirated textiles do not only evade taxes on imported textile prints but do not provide adequate labeling information on country of origin.

Mr Arthur said, based on the price and texture of the print, buyers could distinguish between the substandard and the genuine textiles since the former is cheaper and usually hard, while the latter is soft and a little costly.

He said the wide disparity in the product pricing was due to low energy cost and interest rates as against high cost of raw materials and high interest rates in Ghana.

The Eastern Regional Minister in response described the situation as serious, adding that, the issue of pirating has been identified as a major challenge to the global economy.

She said, governments had used punitive measures to deter both existing and prospective traders from exploiting works that have been done by people through hard work, but the problem seemed not solved

The Eastern Regional Minister, Ms Helen Ntoso promised to forward the concerns of the company to the president for immediate action to be taken to save the company from imminent collapse.

Source: Business Day
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