WHY YENKETSAMY CUT AND RAN…

Finweek English Edition - - Business strategy -

VIC­TOR YENKETSAMY’S 50-em­ployee cloth­ing busi­ness – Talia Fash­ions – went the way of most owner-man­aged busi­nesses that close down. There was no great ac­ci­dent, fire or rob­bery; nor a com­pelling case of bank­ruptcy. With a turn­around strat­egy it prob­a­bly could have pulled through.

The rea­son why Yenketsamy closed his Dur­ban-based com­pany af­ter 13 years in busi­ness was that he was fed up.

Due to the flood of cheap im­ports and sub­se­quent un­even work­flow, Talia Fash­ions fell be­hind in bar­gain­ing coun­cil levies and fund con­tri­bu­tions to the tune of R120 000. He claims that at the last ar­bi­tra­tion meet­ing at the NCBIC he was fined R13 000 for out­stand­ing con­tri­bu­tions of R27 000.

Yenketsamy says he reg­is­tered with the bar­gain­ing coun­cil four years ago af­ter a client in­sisted that he joined. He re­ceived ex­emp­tion from the min­i­mum wage of R560/week and was al­lowed to pay his work­ers R430/week. But there’s no mercy shown for fall­ing be­hind with levies and fund con­tri­bu­tions.

The last straw for Yenketsamy was dur­ing a dis­pute with 18 of his work­ers, whom he ac­cused of drag­ging out their work.

With the help of their union of­fi­cial, Prince Pakkies, they also dragged out the dis­pute, he says.

Pakkies de­nies Yenketsamy’s ver­sion. He claims Talia Fash­ions went out of busi­ness due to bad man­age­ment.

How­ever, cut-make-and-trim (CMT) out­fits such as Talia are cer­tainly ex­pe­ri­enc­ing hard times. Th­ese busi­nesses have no de­sign func­tion; they’re pure pro­duc­tion fa­cil­i­ties, putting gar­ments to­gether for large cloth­ing com­pa­nies that give them the raw ma­te­ri­als, the pat­terns and very tight dead­lines. They also dic­tate the price that they’re will­ing to pay. CMTs have vir­tu­ally no bar­gain­ing power.

Yenketsamy says that, typ­i­cally, he’d pro­duce a shirt for R10, the large cloth­ing com­pany would sell it to a re­tailer for R50 and the re­tailer to the pub­lic for R100. “And then they ex­pect me to pay the same wages as the large com­pany.”

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