Financial Mail

Sactwu puts boot into AVI

With 336 jobs on the line, the union wants authoritie­s to revoke the merger allowing Green Cross into the AVI fold

- Ann Crotty crottya@bdfm.co.za

It took food and clothing company AVI just seven years to bring a 44-year-old Cape-based shoe manufactur­er to the verge of collapse. Weeks before the 2018 year-end holidays, 336 employees of shoe manufactur­er Green Cross were simply told that an in-principle decision had been made to “import all products”.

Jse-listed AVI, which owns a portfolio of branded consumer goods including Five Roses tea, Provita biscuits and footwear outfit Spitz, says it had no choice.

AVI argues that the comfort footwear segment of the market in which Green Cross operates is highly competitiv­e and “is supplied mostly by imported product”.

It is a familiar complaint and seems borne out by Green Cross’s most recent results, which show wafer-thin operating profit of R6.2m in the 12 months to June 2018.

But the Southern African Clothing & Textile Workers’ Union (Sactwu) isn’t buying it. And, in a novel response, it has approached the competitio­n authoritie­s and asked them to revoke the merger approval granted in 2012 which allowed Green Cross to become part of AVI in the first place. For good measure, Sactwu wants penalties to be imposed on AVI.

It may sound like a desperate attempt at unscrambli­ng eggs, but the move could have some far-reaching consequenc­es.

Sactwu seems determined, and if it’s unsuccessf­ul at the Competitio­n Commission and Competitio­n Tribunal, it is prepared to take this case to the Competitio­n Appeal Court.

Etienne Vlok, the union’s industrial policy officer, says approval for the merger was granted on the basis of an undertakin­g that there would be no retrenchme­nts. That undertakin­g had no time limits, he says.

In its submission to the Competitio­n Commission, Sactwu says: “If companies can transgress their jobs commitment­s with such ease, and are allowed to simply and successful­ly shift all responsibi­lity for their actions onto external factors — in this case allegedly cheaper imports — then the fact of having public interest-related commitment­s is rendered meaningles­s.”

The union also isn’t persuaded that Green Cross’s “challenges” are due to external factors over which the company has no control. Instead, it reckons the job losses are a direct result of the

2012 merger.

As Sactwu sees it, the only issue up for discussion is whether the job losses were intentiona­l. If they were intentiona­l, says Sactwu, it would bring Green Cross into line with AVI’S business strategy of importing — rather than manufactur­ing — brands for local retailing. If they were unintentio­nal, it points to management problems — which might indeed be the case, given that AVI has had no fewer than four MDS since 2012.

Either way, AVI does not emerge well in

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