The Sunday Mail
Dumisani Nsingo
LEADING textile firm, Paramount Garments Pvt Ltd’s exports have dropped significantly while prospects of growing its Bulawayo clothing manufacturing unit, Archer Clothing Manufacturers, is in limbo due to adverse foreign currency shortages.
Paramount Garments managing director Mr Jeremy Youmans, said the company’s going concern status was under threat owing to numerous constraints faced by its Bulawayo operations.
“Our export sales are down 14 percent (compared to the same period last year). This is mainly due to the capacity constraints in Bulawayo and the need to limit debtors to debt exposure,” he said.
He, however, could not disclose statistics on previous year sales volumes. Paramount Garments operates 41 production lines in Harare and Bulawayo and plans are underway to put an additional 10 lines at the latter depending on the performance of the economy. Since creditors of Archer Clothing Manufacturers approved its take-over by Paramount Garments in 2015, consequently saving it from liquidation, the firm has been one of the country’s most successful stories of a firm that was forced to close shop due to the effects of hyper-inflation, but managed to come out of the woods to attain profitability status in the shortest period of time.
However, last year the company, which had projected to employ 850 people by 2016, hit an all-time low and was forced to retrench 200 of its more than 500 workforce last year, due to power shortages and continuous shrinking of its local market. The company expects to address its power challenges before the end of this month.
“We have commissioned the new generator. We should be finalising the internal infrastructure within the next two weeks and the transformer for Zesa (Holdings) has arrived in Bulawayo. So, during October, we should be able to have everything up and running,” said Mr Youmans.
He, however, said the improved power supply at the factory was unlikely to immediately turnaround the company’s fortunes.
“We have not, and will not in the future, be able to grow and employ the extra people, if we cannot fund the raw materials needed to be value added. So, until the situation is improved, we will be constrained in what we can do,” said Mr Youmans.
He said the firm remained constrained in importing strategic raw materials due to lack of adequate foreign currency.
“We have received virtually nothing from the interbank market. Based on the last Monetary Policy, the prioritisation of raw materials for local manufacturers has not been followed with most funds going to the retail sector, who of course, sell finished goods, as far as forex allocations goes. It is being directed towards imported finished goods.
“While we export, we still have a local market to serve and with the 20 percent surrender of export proceeds, we do not have enough retained forex to pay for our imports,” said Mr Youmans.He said the company’s depleted foreign currency coffers were stifling its strategy to grow its business.
“We have plans to further develop Archer by up to another 1 000 people, but we can not do this without having surplus foreign currency. We are also pursuing the development of the leather factory in Bulawayo and still hope to grow this significantly,” said Mr Youmans.
The company ventured into leather production in November 2015 as part of a diversification strategy aimed at expanding its business. Paramount Garments exports its textile products in the region, Sudan, Kenya and Germany. The firm has set sights at exploring the West African market.
“We are pushing into the region more and also trying to get into West Africa,” said Mr Youmans.
