By Vera von Lieres

Cape Town - The clothing industry is in a cyclical downturn driven by the
strength of the rand, according to Jack Kipling, the president of the
Clothing Trade Council of SA (Clotrade).

This followed four years of solid growth during which exports had risen at a
compound rate of more than 35 percent a year while exports to the US had
grown 151 percent in the past two years, Kipling said yesterday.

However, exports were now down and imports up due to the rand's appreciation
and the cyclical downturn in the sector.

This downturn had to be seen in the broader context that the clothing
industry was not the only manufacturing sector affected by the strong rand,
Kipling noted. All companies in export were affected, he emphasised.

Clotrade and the Export Council for the Clothing Industry - two bodies that
represented most professional clothing companies in the industry - recently
presented proposals to grow the sector to the department of trade and
industry. These included strategies to minimise the effects of cyclical
downturns and were particularly aimed at maintaining employment levels.

The main challenges facing the industry were related to exports and imports,
Kipling said. On the export side, the two factors affecting performance were
rand volatility and fabric limitations placed on South Africa under the US's
Africa Growth and Opportunity Act (Agoa).

>From 1999 to June 2002 export growth was phenomenal. However, last July the
industry warned of a slowdown in exports as a result of a shortage of
fabrics that were eligible for Agoa and suitable for the US market.

To qualify under Agoa, South Africa is limited to using yarns and fabrics of
southern African and US origin while surrounding Agoa-eligible countries had
access to third country fabrics.

At the time, the local clothing industry warned that this requirement would
seriously limit the growth potential of exports, which became a reality in
2002.

But Kipling pointed out that South Africa was currently in talks with the US
over a proposed free trade agreement between the US and the Southern African
Customs Union (Sacu).

of origin for all Sacu countries - were accepted, the sector could be set
for a revival, he believed.

Rand volatility was the other key issue affecting exports.
"An exchange rate of R9 to the US dollar would suit the industry. At that
level exports are viable for wide ranges of products and companies and
imports are balanced for strength," Kipling observed.

Clothing exports could decline in 2003, leading to some job losses, but
should return to current levels in due course.

For the period January to May this year clothing exports still showed modest
growth of 2 percent, with South Africa still featuring as a net clothing
exporter.

Imports to the country were increasing - a natural consequence of South
Africa having embraced globalisation.
"Imports themselves are not an evil," Kipling noted.

But the niggling point was that the extreme volatility of the rand over the
past year had presented real challenges to the clothing industry, resulting
in massive and rapid shifts in sourcing patterns among retailers.

The main reason for importing clothing into South Africa had been price. The
industry had appealed to retailers to consider the long-term effect on their
supply chain of dramatic switches in sourcing.

"It is the responsibility of the clothing industry to implement strategies
that will ensure that their products are internationally competitive and
meet the needs of local consumers better than imports," Kipling said.

He added that the industry had and would always take a strong stand against
illegal imports and unfair trade practices.

Country-of-origin labelling regulations would soon be introduced, requiring
all garments to bear a label indicating their origin.