Sanata Squeezed By Central Bank

Clothing Manufacturers Face Closure

SMALL garment manufacturers say they face imminent closure because Sanata Textiles Limited is no longer selling them its cotton fabrics.

The manufacturers claim the ‘no cotton’ decision by Sanata is driving hundreds into the unemployment ranks and dozens of businesses might have to shut their doors.

Sanata however, says its has to export its cotton fabrics or watch the curtains come down on its own operations.

As the small manufacturers tell it, they had, over the years been encouraged by government to use local materials in their operations.

“About 90 per cent of the materials we have been using were locallybased,” one garment manufacturer said. He says he has 50 sewing machines and could employ over 60 persons. His staff now is just around 30 and this he says, is because his machines are idle since there are not enough materials.

“We depend on Sanata for our cotton fabrics but they have told us they have been instructed to export all their top-grade finished goods,” another manufacturer said.

“Several of us small garment manufacturers have already gone out of business or have closed down because of this decision,” one of the affected disclosed.

Sanata’s Marketing Manager, Mr. Titus Dazzell, confirmed the export decision.

KIMBIA

The plans to supply Sanata with cotton from Kimbia have fizzled out. The Ruimveldt mills have seen no Kimbia cotton for over two years and Sanata has had to import most of its cotton almost from its opening in 1980.

Sanata plans to import 610 000 kilos of cotton this year and this, at current average prices, would total about $1m (US), Dazzell said.

“We have been told by the Governor of the Bank of Guyana quite plainly that if we do not earn our foreign exchange to buy inputs, none would be forthcoming from the bank.”

“For us to earn enough foreign exchange for cotton alone, we would have to sell about 50 per cent of our production on the export market.

“And to meet all our offshorebased inputs, including dyes and other stuff, we have to export more than 50 per cent of our production.”

Dazzell says Sanata “sympathises with the plight of the small manufacturers. It is genuine but they should seek government intervention.”

“We are desperately trying to stay afloat and keep surviving,” he argues and added, “we have to earn our keep, our foreign exchange and we also have to show a profit.”

Dazzell also disclosed that out of a conservative annual estimate of 23 million metres of fabrics for the local market, Sanata is scheduled to produce only 3.2 million metres this year.

“And out of this 3.2 million, we can put only about one million metres on the local market this year,” he said.

The small garment manufacturers are also unhappy with the current price for the polyester-cotton, the only fabric available to them from Sanata now.

Imported poly-cotton sells at $42 $45 a yard the manufacturers say, and contend that although this is cheaper to produce than cotton, Sanata is selling at prices higher than those for its cotton (or at the imported prices).

Dazzell acknowledged this but argued that since Sanata does not yet have its own retail outlets, and because the situation is a demandsupply one, the prices would still be high “even if we sell at lower prices. The middle men would put on their own fantastic prices.”

Sanata he said, intends to set up at least the first of its own retail outlets this year but until then “we have to mazimise our local revenue.

“We have to let the local market subsidise some element of loss on the overseas market,” he said.

Dazzell also says Sanata is open to dialogue with the small manufacturers on possible joint ventures to produce for the export market using their skill and locally produced cotton fabrics.

“We are willing to work out a model joint venture,” he said.

Some small manufacturers however feel the government and the Bank of Guyana should look at the “social implications” of their decisions.

“Sanata is entitled to make a profit but not at our expense. It could for example improve its efficiency,” one manufacturer argued.