Expert says warning signs ignored in Ramatex blunder
You have been studying Ramatex for quite some time. What is your take on what is currently hap-pening?
Yes, we are unfortunately not sur-prised at all and we had hoped that especially Government would listen to us and see the warning signs as well. We’ve studied Ramatex since they’ve come to Namibia, including the negotiations to have them come here instead of going to South Africa or Madagascar in 2002.
What became very clear, is that Ramatex came to Namibia to take advantage of what is called AGOA, the African Growth and Opportunity Act, that allows African products to enter the US market duty-free. That was especially important for the company when there was still fixed quotas in place. In other words, China, India and other countries couldn’t supply the global textile market on their own. They could only supply a certain amount of textiles.
Others had to be produced else-where, and it is in this context that Ramatex, which is a Malaysian company, decided to come to Na-mibia. They wanted to take advantage of this duty-free access to the US market and have all their goods produced here, whether it was going to the US (or not).
But then, when the quotas disappeared in 2005, Ramatex clearly planned ahead and said: “Well, in that case, it is cheaper for us to produce in China and Cambodia and Vietnam.” And they’ve expanded their production in those countries.
The writing was on the wall that Namibia – not because they were making losses, that’s actually a blatant lie what Mr (BK) Ong was saying publically and I would chal-lenge him openly on that one. They didn’t make losses, but they could make even higher profits by produ-cing in these Asian countries and supplying Europe, Asia and the USA from there.
So what Ramatex then essentially did is embark on a step by step closure. The first happened in 2005 when over 1 000 workers were retrenched and since then we’ve seen a gradual reduction. So now, we were down to about 3 000 workers. At one point, in 2004, we had about 7 000. So, Ramatex has not been honest at all.
They’ve abused all the benefits they got like publically funded infrastructure, subsidised water, subsidised electricity, which the ratepayers in Windhoek had to cough up. And then in the end, they lie once more with this so-called power outages yesterday afternoon (Wed-nesday) and just chucking workers into the street.
They did not follow the proper procedures, they did not look at alternative ways of saving the jobs as required by the Namibian La-bour Act. So once again, they’ve been very vicious in their dealings and it is really a pity that Government hasn’t seen that coming earlier, because we warned them last year still when we launched a book on the textile in-dustry in Africa that this is going to come. And the signs were there.
They are global operators, they are not inte-rested in Namibia’s development. They don’t care about unemploy-ment here, they are merely interested in their profits. And this is a very sad case that we’ve allowed them to abuse Namibia and out workers like that.
Mr Jauch, Government says that they do have a written agreement with Ramatex that they should have given twelve months’ notice and that they’re ready to chal-lenge them in court if they don’t abide by that. Given Ramatex’s track record as far as honesty is concerned, what do think the changes are that Ramatex will honour their obligations to Na-mibia?
They will not honour their obli-gations. They’ve been dishonest all along, they’ve violated our laws and regulations and they’ve fooled Government in many instances. This is unfortunately the sad truth of the matter. Also, Ramatex have shipped out part of the most expensive and valuable equipment over the months. Workers have reported that to us.
This is not a surprise. So, even if Government now confiscate what is left, the value will be limited. But, never-theless, we would of course support Government taking legal action and try and hold them accountable. However, when one looks how they’ve operated in the past, I think there is very very little chance of getting a substantial settlement and they will certainly not keep the company going for another twelve months as they were supposed to.
Mr Jauch, what will be the eco-nomic impact of nearly 3 000 people losing their jobs?
This is devastating. That is the real tragedy of it all, because these are young people, mostly young women. And we know already with crippling high levels of unemployment we have in our country, they will have nowhere to go to. They will get just one lousy month’s salary now in compensation, the way it seems. Maybe the union can negotiate a few more dollars.
But it is going to be hopelessly little and it will not enable these workers to find work elsewhere. They will still be treated as unskil-led or semi-skilled workers, and there are already so many young Namibians looking for work. So these are the worst affected of all. These are the real losers in this Ramatex game.
Mr Jauch, the unions are calling for Government to intervene and take over Ramatex and look for a new investor. How viable an option is this?
That could be an option if the machinery can be impounded. So that at least if one can find a com-pany with the technical know-how that is willing to do that… On the other hand, however, the global textile industry is exposed to such cut-throat competition that it will be very difficult to survive in that global environment.
In terms of producing for the local and regional markets, Southern African and Namibian markets that is, maybe there is an opportunity if there is a certain level of protection against foreign competition. If not, it is very unlikely that any producer will survive in the long run, given this cut-throat competition and low, low wages in these Asian countries that produce under horrific conditions and that is certainly not a scenario that Namibia wants to follow.
However, in the short term, if there is a possibility of keeping at least part of the factory going and employing those workers again, it should be explored. But in the long run, the textile industry is extremely tricky given the global environment.
Mr Jauch, it seems like this tragedy is now a given. What is the one lesson that Namibia should have learnt out of this?
Never to bend over backwards to accommodate foreign investors and to give them concessions that are now really hitting us in the face. Ramatex never paid a cent of taxes, they got their infrastructure paid with public funds, they got subsidies with water and electricity. All that are millions and millions and millions of dollars lost. We know that just the initial sub-sidy on infrastructure for Ramatex was over N$100 million.
These are lost funds. This money should rather have been spent on developing local small and medium businesses. I think strategically it was a major blunder to pump all that money into Ramatex, and we should never ever do that again. Companies must invest properly, they must carry risks of investments, they must commit themselves to medium to long term investment; and not having these fly-by-night operations coming here, taking advantage and then just running away again like Ramatex did.
To some extent our EPZ policy and these special incentives that Rama-tex got are to blamed for that. And I think that is one lesson we must learn, never to do that again.
Yes, we are unfortunately not sur-prised at all and we had hoped that especially Government would listen to us and see the warning signs as well. We’ve studied Ramatex since they’ve come to Namibia, including the negotiations to have them come here instead of going to South Africa or Madagascar in 2002.
What became very clear, is that Ramatex came to Namibia to take advantage of what is called AGOA, the African Growth and Opportunity Act, that allows African products to enter the US market duty-free. That was especially important for the company when there was still fixed quotas in place. In other words, China, India and other countries couldn’t supply the global textile market on their own. They could only supply a certain amount of textiles.
Others had to be produced else-where, and it is in this context that Ramatex, which is a Malaysian company, decided to come to Na-mibia. They wanted to take advantage of this duty-free access to the US market and have all their goods produced here, whether it was going to the US (or not).
But then, when the quotas disappeared in 2005, Ramatex clearly planned ahead and said: “Well, in that case, it is cheaper for us to produce in China and Cambodia and Vietnam.” And they’ve expanded their production in those countries.
The writing was on the wall that Namibia – not because they were making losses, that’s actually a blatant lie what Mr (BK) Ong was saying publically and I would chal-lenge him openly on that one. They didn’t make losses, but they could make even higher profits by produ-cing in these Asian countries and supplying Europe, Asia and the USA from there.
So what Ramatex then essentially did is embark on a step by step closure. The first happened in 2005 when over 1 000 workers were retrenched and since then we’ve seen a gradual reduction. So now, we were down to about 3 000 workers. At one point, in 2004, we had about 7 000. So, Ramatex has not been honest at all.
They’ve abused all the benefits they got like publically funded infrastructure, subsidised water, subsidised electricity, which the ratepayers in Windhoek had to cough up. And then in the end, they lie once more with this so-called power outages yesterday afternoon (Wed-nesday) and just chucking workers into the street.
They did not follow the proper procedures, they did not look at alternative ways of saving the jobs as required by the Namibian La-bour Act. So once again, they’ve been very vicious in their dealings and it is really a pity that Government hasn’t seen that coming earlier, because we warned them last year still when we launched a book on the textile in-dustry in Africa that this is going to come. And the signs were there.
They are global operators, they are not inte-rested in Namibia’s development. They don’t care about unemploy-ment here, they are merely interested in their profits. And this is a very sad case that we’ve allowed them to abuse Namibia and out workers like that.
Mr Jauch, Government says that they do have a written agreement with Ramatex that they should have given twelve months’ notice and that they’re ready to chal-lenge them in court if they don’t abide by that. Given Ramatex’s track record as far as honesty is concerned, what do think the changes are that Ramatex will honour their obligations to Na-mibia?
They will not honour their obli-gations. They’ve been dishonest all along, they’ve violated our laws and regulations and they’ve fooled Government in many instances. This is unfortunately the sad truth of the matter. Also, Ramatex have shipped out part of the most expensive and valuable equipment over the months. Workers have reported that to us.
This is not a surprise. So, even if Government now confiscate what is left, the value will be limited. But, never-theless, we would of course support Government taking legal action and try and hold them accountable. However, when one looks how they’ve operated in the past, I think there is very very little chance of getting a substantial settlement and they will certainly not keep the company going for another twelve months as they were supposed to.
Mr Jauch, what will be the eco-nomic impact of nearly 3 000 people losing their jobs?
This is devastating. That is the real tragedy of it all, because these are young people, mostly young women. And we know already with crippling high levels of unemployment we have in our country, they will have nowhere to go to. They will get just one lousy month’s salary now in compensation, the way it seems. Maybe the union can negotiate a few more dollars.
But it is going to be hopelessly little and it will not enable these workers to find work elsewhere. They will still be treated as unskil-led or semi-skilled workers, and there are already so many young Namibians looking for work. So these are the worst affected of all. These are the real losers in this Ramatex game.
Mr Jauch, the unions are calling for Government to intervene and take over Ramatex and look for a new investor. How viable an option is this?
That could be an option if the machinery can be impounded. So that at least if one can find a com-pany with the technical know-how that is willing to do that… On the other hand, however, the global textile industry is exposed to such cut-throat competition that it will be very difficult to survive in that global environment.
In terms of producing for the local and regional markets, Southern African and Namibian markets that is, maybe there is an opportunity if there is a certain level of protection against foreign competition. If not, it is very unlikely that any producer will survive in the long run, given this cut-throat competition and low, low wages in these Asian countries that produce under horrific conditions and that is certainly not a scenario that Namibia wants to follow.
However, in the short term, if there is a possibility of keeping at least part of the factory going and employing those workers again, it should be explored. But in the long run, the textile industry is extremely tricky given the global environment.
Mr Jauch, it seems like this tragedy is now a given. What is the one lesson that Namibia should have learnt out of this?
Never to bend over backwards to accommodate foreign investors and to give them concessions that are now really hitting us in the face. Ramatex never paid a cent of taxes, they got their infrastructure paid with public funds, they got subsidies with water and electricity. All that are millions and millions and millions of dollars lost. We know that just the initial sub-sidy on infrastructure for Ramatex was over N$100 million.
These are lost funds. This money should rather have been spent on developing local small and medium businesses. I think strategically it was a major blunder to pump all that money into Ramatex, and we should never ever do that again. Companies must invest properly, they must carry risks of investments, they must commit themselves to medium to long term investment; and not having these fly-by-night operations coming here, taking advantage and then just running away again like Ramatex did.
To some extent our EPZ policy and these special incentives that Rama-tex got are to blamed for that. And I think that is one lesson we must learn, never to do that again.
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