Glodina

G LO D I N A

GLODINA

R150 Million Investment Brings Iconic SA Brand

Back to Life

PRODUCTION: Manelesi Dumasi

After the Glodina towel manufacturing facility in Hammarsdale, KZN closed in 2017, the IDC stepped in with a cash injection to bring production back online. Now, the company is looking to the future with renewed vigour as new opportunities and new facilities begin to boost confidence around the iconic South African-made brand. What is the key to reviving this much-loved institution? CEO Mark Goliath tells Enterprise Africa.

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Two years ago, if you had walked into any of the big hotels in South Africa – or any of the big retail chain stores – there’s a strong possibility that you would be able to pick up a towel manufactured by Glodina, at its Hammarsdale factory close to Durban.

Established more than half a century ago, Glodina grew to become a powerhouse in the South African towelling sector – a trusted brand, manufactured to top quality standards, produced locally. But in early 2017, after a period of sluggish business, dark clouds began to form over the company. Its owner, JSE-listed KAP Industrial Holdings, decided that the brand was not returning requisite value for shareholders and, following an unsuccessful 12-month period through which KAP had tried to sell Glodina, no progress had been made and the business looked set to close with ca 550 jobs under threat.

Having only recently witnessed a big round of retrenchments following the closure of Rainbow Chicken in the area where 2000 jobs were shed, the Hammarsdale community was not ready for more unemployment. The Industrial Development Corporation (IDC) was also not keen for an iconic South African brand to be lost, so a plan was developed where the IDC would assist in funding a preferred bidder to purchase Glodina.

However, after several hurdles were unable to be jumped, the process broke down and the preferred bidder was not suitable, resulting in the IDC withdrawing its funding offer. The plant closed in November 2017.

Local, municipal and national government was not impressed with the situation, ca 550 former employees were left jobless, and customers and suppliers of Glodina were left with a hole in their operations. For the IDC

- set up to promote economic and industrial development - this was simply unacceptable and so it prepared an offer to take all assets from KAP and revitalise the brand. The IDC already had knowledge of the industry, being a 100% owner of Cape Town’s Colibri Towelling. This meant that, for the next 10 months, the IDC had to move its acquisition of Glodina through the Competition Commission to ensure a monopolistic market situation was avoided. After receiving its approval, the IDC re-launched Glodina in November 2018. Nearly 200 previous employees were re-hired and strong efforts were started to re-establish communication and reputation among clients.

MEC for Economic Development, Tourism & Environmental Affairs, Sihle Zikalala along with formerIDC CEO Geoffrey Quena, and many other government and business

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INDUSTRY FOCUS: MANUFACTURING

delegates were present at the factory in November for the reopening, with Zikalala saying: “We are here to say that the province of KZN is alive with the great possibility for investment.”

Mark Goliath, the IDC’s Senior Deal Maker, was seconded to Glodina thanks to experience in the industry, and he has the reins as CEO for 18-months during the company’s start-up phase.

“We are currently running at around 30% capacity and we are busy re-establishing our sales channels which were lost during the closure,” he tells Enterprise Africa.

RE-GROWING To bring Glodina’s business back to the levels of previous years, but to ensure it does not eat away at the market owned

by Colibri, the company is looking to improve product quality and service delivery by investing into new technology and automation processes. With a R150

million injection from the IDC, the target for Glodina is to position itself as a leading African manufacturer that produces to international standards.

“We have developed a plan that looks at modernisation in both entities,” says Goliath. “We will be modernising in the weaving shed, dyeing and finishing, as well as upgrading the make-up and sewing areas where we are looking at levels of automation. The upgrades are focused on improving historical manufacturing weaknesses which will allow the new entity to become more competitive. The Glodina management team recently travelled to Europe identifying areas of excellence as we want to benchmark against the best mills in Europe, India and Turkey – the market leaders in towelling manufacturing. On that basis, we have settled on a package of improvements that we need to make across both facilities with the view of improving product offering and reducing

cost through modernisation.”

Today, management is considering its options for the upgrades and preparing to make investments.

“The IDC has approved the necessary funding for us to acquire assets at both entities and we have engaged with many suppliers. Right now, we are making decisions on who are the preferred suppliers for equipment. We envisage being in a position to place orders with those suppliers in the next few weeks,” explains Goliath.

When all the upgrades are complete, Glodina will have a fleet of machinery that will rank alongside some of the strongest in the industry. “We are definitely going to have world-class manufacturing facilities,” says Goliath. But he is also extremely keen on service delivery. “Quality is not only what you manufacture, it’s also about how you treat your clients so service delivery for our clients will be a key benchmark for us,” he says.

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Delivering its weaving machines every year to more than 50 countries, Itema features in South Africa important installations, such as the one in Glodina, an historical Customer of the Italian based Company.

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INDUSTRY FOCUS: MANUFACTURING

Along with the growth of automation in the company, Glodina is also hoping to re-employ more people that were retrenched in 2017. As a large employer in the region, the company provides opportunity for many people and their dependents.

“As production grows, we want to create 230 employment opportunities grow to 230 full-time employees, excluding ancillary services, by July 2020.

Our thinking is that through natural growth in the business over the next few years, we will be in a position to create 300 employment opportunities, but I don’t think we will get back to the 550 that were here under the previous ownership.

With the equipment changes that we are bringing in, you don’t need as many hands to achieve the same output, so we want to grow output through growing business which is a two to three-year process. The founding principle of what we are trying to achieve here is to create a sustainable entity that can look after itself for the next 20 or 30 years,” says Goliath.

Both the IDC and Glodina are clear that sustainability will come through realising of opportunities that were

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lost while the company was closed.

Reopening communication with the hospitality sector will be vital over the coming months as Glodina looks to increase from 30% capacity.

“The hospitality sector will remain a cornerstone of our business going forward as Glodina was the market leader in that space historically so we have placed a lot of emphasis there as that is where our brand recognition is highest,” explains Goliath.

“The retail sector will remain important for us but will no longer be the holygrail going forward. We now have two brands, Colibri and Glodina, under one stable and the level of product diversification and segmentation will lead us into new avenues. We have not discounted the possibility of export, especially for Glodina,” he says.

The potential for export is also being explored, with Glodina having a brand presence in Malawi, Namibia, Zambia and Zimbabwe. The African continent will be the focus in the short and medium term, and the long-term could, potentially, hold opportunities further afield. The company is working with agents and hospitality

business around the region to try and build new partnerships and showcase its capability with big-name organisations.

“We are not geared to do that in the next year but there will be opportunities for that to expand in the next three years, where we get better at what we do and we improve our product offering,” says Goliath.

LOCAL MANUFACTURING It’s well-known that South Africa’s manufacturing sector has been under heavy pressure for a number of years, with a number of entities facing challenges that have forced them to drastically change the way they do business. Clearly, Glodina has not escaped the challenges of the wider manufacturing industry but in the future it wants to contribute to improvements in the local sector by delivering excellent products combined with fantastic service, taking market share back from imported brands.

“In the current South African market, around 85% of products are imported,” details Goliath. “This poses a big opportunity for us,” he adds. “A lot of

GLODINA

the discussions we are having, whether it’s with retailers or hospitality businesses, are resulting in people saying that they are delighted we are back and they are excited to see our product offerings. But, we cannot compete purely on price with imported products. Towels imported from Pakistan and India are manufactured considerably cheaper than we can offer – the scale of operation is one hundredfold what we can achieve here. Where we do have advantage is through service delivery and the ability to give clients what they want with the flexibility they require. We can also assist with allowing providing clients with smaller runs of products which assists in their planning.

The towelling industry is moving towards a fast fashion model and we are looking to bring that same ‘apparel feel’ to the sector.

It’s about having the flexibility to change to what your client wants. For example, if our client orders six colours but only two sell very well, they can call and tell us to only deliver the popular lines. If they are importing by the container load from Pakistan or China, it becomes very difficult as they are committed to the colours.

We are trying to provide some value-add which customers will pay more for.”

Bringing this flexible approach will allow local retailers and hospitality businesses to partner with Glodina and its vision for the future. An investment into Glodina now means an investment into South African jobs

and South African industry.

“There has been a lot of uncertainty around Glodina for the past two years.

The one thing that the IDC brings to the party is certainty,” says Goliath. “We have made the investment in Glodina and we are backing that up with investments into equipment and technology, and the market is enjoying that as the previous shareholder was not willing to make investments into technology to move the company forward.”

He reminds that the IDC does not get any financial assistance from government and is run on sound business principles.

“The onus on companies such as Glodina is to contribute positively to the IDC bottom line,” he says.

BRIGHT FUTURE? With a new lease of life, backing from the IDC, a healthy brand, and strong hunger from customers, Glodina is well positioned to regain its industry-leading position.

Operating at just 30% capacity, there is certainly room to improve and Goliath points out that diversification could also become part of the Glodina strategy soon.

“If you look at some of the big global towel manufacturers, they offer home textile products beyond just towels such as bedding, curtains and similar. There is definitely an opportunity, utilising the Glodina brand, to spread our wings into that area. The IDC also owns a home textile manufacturing company and over

the next 18-months, we will be exploring opportunities with them where we will be able to offer a suite of products to clients and test the market with that concept.

If there is a market for Glodina-branded bedding or sheets then it will be an easy test case for us with our sister company,” he says.

The sharing of knowledge, through the IDC, between Glodina and Colibri will also bring benefits for both businesses.

“The intention is to make it the number one towelling manufacturer in southern Africa. We anticipate that this is very much achievable, looking at the demand we have had in just the last two months since our reopening,” says Goliath.

He adds that the loss of Glodina was clearly felt by all retail chains, independent retailers and hospitality businesses and now, just small tweaks are needed to return the company to the top of the pile.

“There is no doubt in my mind that if we fix the inherent problems that were here before, we can make a success of this and grow it to even greater heights than what it used to be.”

Zanele Gumede, eThekwini mayor, was clear that the Glodina factory was vitally important to the region and she was delighted at the reopening. Following the closure of other manufacturers in the region, she said Hammarsdale resembled a ghost town and that was unacceptable.

For Mark Goliath, Glodina is now at the start of a remarkable journey, and management is looking at everything possible to build the community, Glodina brand, and wider manufacturing industry.

“It is a very exciting period,” he admits. “We are now a start-up with a 50year history and the brand presence has left us with a lot of goodwill, opening a lot of doors. We want to ride the wave but also improve on the perception that has been left behind.”

WWW.GLODINA.CO.ZA

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APR IL 2019