As US buyers Levis Straus&Co, Kontoor Brands cut orders
MASERU – Thousands of Nien Hsing II textile factory workers will be without jobs by the second week of May, as the firm closes three of its departments.
Warning signals began flickering as early as mid-March, and Business Eye reported at the time that following the closure of Glory Garments as a result of economic stress due to the COVID-19 pandemic impact, over 3 000 textile factory workers at sister company, Nien Hsing II, faced the axe.
The employees have remained uncertain of their fate as workers since then. A lot of controversy has similarly shrouded the factory, with speculation that firm has run out of orders, but this publication established that in light of the status quo the factory’s old and new sample of orders are being send to other factories such as C&Y Firm and Global Factories.
This situation was, however, made complex by continued rehiring of workers retrenched at the start of the 2020 lockdowns, workers continued to reach their set targets and received their wages in the firm. They continued to work and were being paid over time and weekly bonuses, according to the paper’s findings, and this made them play down the eventuality they faced.
But, this Monday Independent Democratic Union of Lesotho (IDUL) deputy secretary general, May Rathakane, confirmed Business Eye’s findings during an interview. He revealed that the firm will be closing its sewing, cutting and packing departments after experiencing a cut in orders from its United States buyers Levis Straus&Co and Kontoor Brands.
Upon receipt of notification of closure from Nien Hsing, the union contacted the US buyers who, according to Rathakane, mostly showed dissatisfaction with doing business in Lesotho due to existent COVID-19 regulations and restrictions that impact negatively on production.
Rathakane noted that Levis Straus&Co, Kontoor Brands, and other buyers, revealed that they were reducing their orders to Nien Hsing II “because of the country’s Public Health (Covid-19) Risk Determination and Mitigation Measures Regulations of 2021 prohibitions meant to curb Covid infection spread.
The regulations restrict full operation of all textile factories operating in the country, and as a result Nien hsing II is unable to meet market demand per orders – which affects their businesses.
He said Levis Straus&Co explained that they have given orders that were supposed to be serviced by Nien Hsing II’s to its sister companies. “The buyers confirmed to us that they reduced their orders due to the countries COVID-19 Regulations that only allow 50 percent operational capacity for textile industries. They said because of the Regulations, they took their business to countries that allow 100 percent operating capacity.
They said their orders arrive late from Nien Hsing and as a result of the local restrictions their businesses suffer. This means that all people working in Nie Hsing II’s cutting, sewing and packing departments will be retrenched on the second week of May,” he said.
Rathakane was optimistic, though that an earlier agreement signed between local trade union, US workers’ rights groups and Nien Hsing Textiles is likely to be effected and “not all business will be lost to the local factory.”
The agreement was entered into by the five local trade unions, women’s rights organizations, the US-based Workers Rights Consortium Centre, Workers United, Nien Hsing Textile, Levis Straus&Co, The Children’s Place, and Kontoor Brands to address sexual harassment and gender based violence at five factories owned and operated by Nien Hsing in Lesotho.
As a result of the agreement US buyers are likely not to totally stop giving Nien Hsing orders. Local unions and women’s rights organizations that signed the agreement are IDUL, United Textile Employees (UNITE), National Clothing Textile and Allied Workers Union (NACTWU), Federation of Women Lawyers in Lesotho (FIDA) and Women and Law in Southern Africa Research and Education Trust Lesotho (WLSA).
Nien Hsing Group has five firms operating in the country and only Nien Hsing II is the biggest of all is facing financial problems. Contacted for comment an official from one of Nien Hsing Group firms, Fomosa, said he was not in a position to comment on the matter as they are still in consultations with trade unions about the ‘situation’ the firm is facing.
Opting for anonymity the official confirmed that they have a “sensitive” situation in the firm that they were in grapples with.
Speaking to this publication, Public Relations Manager at Ministry of Labour and Employment, ‘Mamolise Falatsa, confirmed receipt of a report from the factory would be closing some of its departments due to financial and other constraints.
She said even though the ministry is aware of this closure “our hands are tied and we cannot do anything…the matter is out of our jurisdiction.”
“The ministry has no authority to stop a firm or an employer from closing their factory when they sees fit or due to other reasons. What we do is to promote employment and regulate the industry to ensure that the labour code and other standards are abided by and employees are paid well. We also ensure that core conventions and those that Lesotho ratified are followed,” she said.
Speaking of the textile and apparel industry in his 2021/2022 budget speech finance minister, Thabo Sofonea, highlighted that that the manufacturing sector is set to record a disappointing growth of 14.2 percent in 2020/21, with textiles, clothing, footwear, and leather expected to contract by 18.6 percent due to disrupted supply chain and demand side shocks caused by COVID-19 pandemic.
He said the reduction in factory activity has led to huge cost cutting measures employed by firms, adding that these measures have let to decrease in employment of 3.5 percent in the first quarter of 2020/21, while on average 7.3 percent of the jobs have been lost to date.
In 2021/22 the sector is expected to recover to 4.6 percent before growing at an annual average rate of 5.3 percent in the medium-term. According to a UNDP assessment of the socio economic impact of COVID 19 on Lesotho released in June 2020, the country’s unemployment rate stands at 32.8 percent and even high in youths aged 15 to 24 at 43.2 percent.