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
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