The Sunday News
Dumisani Nsingo, Senior Business Reporter
THE country’s sole button manufacturing company, Life Gear Trading, is seeking more than $200 000 to acquire modern machinery which could brand and shape buttons in line with customer specifications, an official has said.
Life Gear Trading managing director Mr Umzingaye Mdlauzo said the diminishing performance of the country’s clothing sector over the years has had ripple effects on the company’s production.
However, if the money is made available, he added, the company is set to rise on the anticipation of quick business which might come after the import restrictions imposed by the Government on certain goods, among them clothing items under the Statutory Instrument 64 of 2016. At the moment, the company is producing plain standard buttons.
“We are anticipating that Government’s intervention through the introduction of Statutory Instrument 64 of 2016 will boost industry as well as our operations. At the moment we negotiate with our customers to pay half down before we deliver their orders because if we don’t do so we risk manufacturing products without takers,” he said.
He said the clothing sector was faced with a number of challenges mainly the influx of cheap imports and second hand products, which culminated in the company’s business reaching its lowest ebb.
“The clothing sector is performing dismally at the moment with only a few small players making an effort to stay in business.
Our profit margins are very small as we make five to 10 cents per shirt depending on the type. We are suffering indirectly from the influx of imported and second hand clothing in the sense that it has a negative impact to clothing companies which further cascades to our operations. Thus, if these firms catch a cold we sneeze,” said Mr Mdlauzo.
He said the company’s capacity utilisation was hovering between five and 10 percent.
The company has the capacity to produce two million buttons per month but is struggling to achieve optimum production targets due to few orders and obsolete machinery.
“At the present moment we can produce 1,2 to 1,5 million buttons per month but we have the capacity to reach up to 2 million if we manage to retool and get spares, which are needed for our machinery,” said Mr Mdlauzo.
Life Gear Trading has two other manufacturing lines, producing different kinds of plastic products and clothing labels.
Mr Mdlauzo said efforts to recapitalise operations have hit a snag over the years with the company failing to get funding under Distressed and Marginalised Areas Fund (Dimaf).
“We failed to get funding under Dimaf and efforts to access a loan from various financial institutions have been futile although some banks have been promising. We however, managed to attract a South African funder but we are sceptical that we might run the risk of losing our business entity in the event that our prospective foreign investor isn’t well acquainted with the country’s risky business environment,” he said.
Dimaf was launched in 2011 to revive companies in Bulawayo and other cities, with a kitty of $40 million. The Government and Old Mutual were supposed to inject $20 million each, but the former struggled to meet its end of the agreement.
Since 2011, 48 companies, about half of them from Bulawayo, have received loans worth $28 million from the fund.
Companies hardest hit by the economic challenges of the past decade were mainly located in Bulawayo, once the country’s industrial hub that employed thousands of people.
Formerly Coronet Buttons and Plastics, the company resumed operations in February 2014 after spending some decades in the woods. The company was left crippled and riddled with debt by former directors, who sold it to workers.
Life Gear Trading has a staff complement of 32, but used to employ close to 500 people at its peak.
Mr Mdlauzo said the company was looking forward to improved business on the local market to spur it to explore export regional markets in line with the country’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, which seeks to enhance the country’s Gross Domestic Product.
The company used to export regionally but was forced to halt operations in 2006 at the height of the country’s economic meltdown.
“We are looking at the nitty-gritties of ramping up our production and meeting local demand and then we gear ourselves for the export market which we aborted in 2006,” said Mr Mdlauzo.
@DNsingo
