ONE of the country’s leading shoe manufacturers, Millennium Footwear, has fallen on hard times. It manufactures shoes from exotic leathers, which include elephant, crocodile, ostrich, buffalo and giraffe skins. Company director Stuart Simali (SS) speaks to NewsDay (ND) business reporter, Mthandazo Nyoni.
INTERVIEW: Mthandazo Nyoni
ND: What is the current state of your industry?
SS: It is in a bad shape. The biggest problem is currency related. Some of our suppliers will accept payment through real time gross settlement (RTGS) transfers, but others are demanding to be paid in hard currency.
To make a shoe you need 20 components and out of these, about half of the suppliers want payment in foreign currency.
This causes problems for us such as how do I cost my shoes, locally and for the export market?
It has become very hard because we sell our products with RTGS. The result is we have a huge backlog, plenty of orders that we cannot fulfil because of foreign currency challenges.
We also need the forex for machinery spares and consumables and have applied for forex like other companies, but we don’t know if we will get it.
We are now concerned with losing time looking for raw materials and that waiting period pushes the cost of production very high. Once the cost of production shoots up, then you become uncompetitive in the export market.
ND: What are your forex requirement levels?
SS: The situation right now is such that we cannot operate at full capacity. We are now concentrating on survival. What we are doing now is that we produce per orders, instead of going out there to market ourselves. Even then, we need about US$15 000 a month to be able to meet current orders.
ND: How has that affected your operations?
SS: We haven’t retrenched anyone so far, because we are seeing the challenges they are experiencing, but at the end of the day productivity is very low. This means now the cost of labour is going up because someone, maybe is supposed to produce 200 pairs of shoes per month and is now only producing 50, but we still pay the same wage.
ND: How is your export market?
SS: We export to countries such as Zambia, Namibia and South Africa. But we notice that coming from Zimbabwe, there is an attitude towards our product.
ND: What is the best way forward for you?
SS: I think, if we are to adopt the South African rand as a stop gap measure, then we are better off. This will allow us to sell our products in rand and at the same time procure our raw material in rand too.
I think it also applies to people selling fuel, they will buy and sell their fuel in rand. Then it’s fair because you get rid of this cross rate and black market rate.
It makes life easy and our prices stable. Once our prices are stable, then we can talk of maximising on exports. But for now, there are so many factors that are affecting our pricing. It’s as if we are dealing with 10 different countries, because every supplier has different terms and demands.
So at the end of the day, we would be trying to take all terms and come up with our own price, which is very difficult. I think the only way out is to adopt the rand as the main currency.
ND: What is the outlook like of your industry?
SS: It’s so difficult to predict. It also depends on factors beyond our control. We can only go and look for orders, make good quality shoes that the customer wants, improve on our quality, designs and so on. That is within our power, but the operating environment we have no power to change it.
We are looking forward to government improving our operating environment, then as business it becomes our challenge to make sure that we grow the industry, production goes up and we employ more people.