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On the eve of President Ramaphosa’s inauguration, his efforts to grow the economy and create jobs, culminating in the Jobs Summit of October 2018, has received a slap in the face from AVI Limited, the JSE-listed conglomerate.
 
At the Jobs Summit, Organised Business, represented by Business Unity SA (BUSA), committed to do everything possible to avoid retrenchments. AVI however, in a thumb-of-the-nose to BUSA and to President Ramaphosa’s efforts to create jobs, has decided to close its South African footwear manufacturing operation.
 
In doing so, the SA Clothing and Textile Workers’ Union (SACTWU) believes AVI may have breached commitments it made to the Competition Tribunal. The union has now asked the competition authorities to investigate this act of corporate sledge-hammering by AVI.
 
This comes after AVI chose to close a Cape Town-based factory belonging to the beloved local footwear brand Green Cross, and to subsequently retrench over 320 footwear workers in order to import all their products from abroad. This decision will plunge over 1 500 poor Cape Town workers and their dependents into further poverty. It is SACTWU’s view that this outcome was avoidable, that AVI has wrecked Green Cross since the merger occurred in 2012, and that by embarking on this decision, it has transgressed the job-protection commitments it made during the merger: that no job losses would occur as a result of the merger. SACTWU is taking a strong stand in defence of these workers, our national industrialisation imperative and South Africa’s progressive competition policies which promote the public interest. If found guilty by the competition authorities, AVI and Green Cross could face the prospect of sanctions and remedies, including having their 2012 merger revoked (an act which is allowed by Sections 15 and 16 of the Competition Act).
 
Green Cross is a well-known and home-grown footwear brand which was established over 40 years ago and has traditionally produced many of its products in its factory in Epping, Cape Town. Up until 2012 Green Cross was an unusually robust and successful local footwear company. It had survived the chaos of strong import competition in the 2000s and had even elegantly weathered the storm of the 2008/2009 global financial crisis. The success of Green Cross was so apparent and appealing that it eventually attracted the eye of AVI and, by 2012, an application was made to the Competition Commission to endorse the acquisition of the capable and strong Green Cross by AVI.
 
It is SACTWU’s view that Green Cross would not have closed its factory and retrenched its employees if AVI had not purchased Green Cross. We believe the problems in Green Cross have occurred as a direct outcome of the change of ownership in Green Cross in 2012 and the new strategic and operational decisions which this change introduced into Green Cross. In our view we may have witnessed the deliberate undermining of a formerly successful manufacturer in order to justify its restructuring in-line with AVI’s preferred operating model (imports and retail), or else the Green Cross camel has simply been loaded with too many self-made straws – accumulated inappropriate and wholly avoidable own-goals – which have steadily eroded its solid foundations. The seeds for this destruction have been sown over several years ago and the outcome cannot be divorced from the origin, despite the passage of several years.
 
Beyond the competition concerns, we view the closure of this factory and the loss of jobs as a sign of deep contempt for the workers and the poor, as well as a slap in the face to (and act of defiance against) President Ramaphosa’s Jobs Summit of October 2018.

 
Issued by The SA Clothing and Textile Workers’ Union