Targeted investment and incentives rescue Prilla 2000 from the brink

Targeted investment and incentives rescue Prilla 2000 from the brink

Anyone associated with the textiles sector in the 1990s would have been justified in believing this industry had been lost to cheap, imported goods. While serious harm has been done, new energy and greater competitive advantages have injected a belief that local textile manufacturing can stand on its own two feet.

This new-found confidence comes on the back of strategic interventions by government such as the Clothing and Textiles Competitiveness Programme (CTCP). As the name suggests, the only sustainable option available to the local industry was to tackle the challenge head on by improving product quality, production processes and skills.

This may sound like hollow management-speak were it not for the story that Enrique Crouse, CEO of specialist yarn manufacturer Prilla 2000, has to tell.

The Pietermaritzburg company has taken full advantage of government’s incentive programmes, administered by the IDC, and has emerged stronger and better equipped to compete.

Prilla 2000’s story is reflective of the dire circumstances the clothing and textiles industry has faced over the past 20 years. But it also reflects the value that can be created from occupying a strategic position in the industry’s supply chain.

As a producer of yarn, Prilla 2000 is positioned at the very start of the textile manufacturing chain. It was therefore fully exposed to the industry’s downturn when South Africa was flooded by cheap imports from Asia.

This very position was also a strength, as its history over the past 17 years has shown.

It has taken many long, hard years for the company to recover from the dire position it found itself in by the end of the 1990s. It had hit rock bottom when it was bought outright by the IDC as a strategic investment in the skills and capacity resident in this more than 50-year old business.

At the time of the acquisition the business was on the brink of closure due to cheap imports that had decimated the clothing and textiles industry.

With an injection of new capital from the IDC, management support to turn around operations and access to incentives like the CTCP, Prilla 2000 today is a very different business.

The CTCP is composed of two main areas of support. The first is the Competitiveness Improvement Programme (CIP) that addresses the long-term sustainability of the entire value chain. It does this by promoting a cluster approach whereby companies are encouraged to collaborate to beef up the supply chain.

These businesses receive funding to invest in improvements in people, production capability, processes, supply chain integration and market development initiatives.

The Production Incentive Programme (PIP), on the other hand, rewards companies for pursuing local value addition in their manufacturing process. Under PIP, companies receive a cash incentive valued at 7.5% of the Manufacturing Value Addition in their production process.

The combination of these two incentives proved decisive in enabling Prilla 2000 to strengthen its position in the market.

The foremost improvements have been secured through new equipment to modernise its production processes. This allowed it to produce a superior product, while improving efficiencies and margins.

Prilla 2000 is now fully empowered to take advantage of its new equipment and optimise production to meet market demand and challenges.

The long term sustainability of the business, however, is based on the investment it has made in its people and management processes. Whereas the investment in new equipment addresses product quality, the focus on the human component of the business sets it up for longer term resilience and adaptability.

Most importantly, the investment in skills is crucial to ensuring that the local textile industry can continue to operate on an equal footing with international competition.

Key to this strategy was retraining maintenance staff to keep Prilla 2000’s new state-of-the-art machinery fully functional, which required intensive training in the domains of electrics and electronics. Naturally, machine operators had to be trained on efficient use of the new equipment, which are skills that will stand them in good stead in an increasingly mechanised workplace.

Such is the confidence that the business has achieved from this process that Crouse believes it can easily take in unemployed people from the local community and train them to be fully qualified artisans.

This ability is central to the aims of the CTCP of boosting the confidence, skills and capabilities of the country’s industrial economy.

The full impact of these programmes will only be felt if these interventions are made in a co-ordinated fashion. Which is why the CIP, for instance, emphasises improvements across the supply chain that benefit all participants rather than introducing piecemeal interventions in a reactive manner.

It is for this reason the Prilla 2000’s CEO is rightfully concerned about the supply sources of his raw materials. His company cannot operate in a vacuum, and the impact that cotton farmers have suffered from the industry’s downturn are as much Crouse’s concern as it is the farmers’ concern.

Although local supply had declined significantly over the past 20 years, Prilla 2000 is looking to source at least 30% of its raw materials from local suppliers. As his business continues on its path of recovery so too, he believes, will a recovery be seen in the local cotton farming sector.

Crouse is confident that the local textiles market is now in the best position it has been in for decades in this country. This is based not only on the recovery of his business, but also the many interactions he has had at international committees and conferences that support this view.

The renewed energy and focus on building an integrated supply chain are certainly being felt, and being helped by local retailers’ emphasis on turning their attention to sourcing gods and materials closer to home.