|Stretchline goes global
The Company already went global this month, with their UK partner Charnwood Elastic Group and its subsidiary Tubbs Elastic Group, UK., which are also into the elastics manufacturing business, changing their names to Stretchline.
Stretchline is a joint venture between the MAS Holdings Group, Sri Lanka, Charnwood and MAST Inc., USA, and was set-up at the Biyagama Export Processing Zone in 1995 as the first backward integration project of the MAS Group to service the garment export market of Sri Lanka and to directly export elastics to neighbouring countries.
Established with an initial investment of US$ five million, this equity investment has now grown to US$ 12 million, with plans to go up by another US$ three million said Speldewinde. The Company at present employs a labour force of 560 in Sri Lanka, with plans to increase it to 650 under the current local expansion programme.
"We expect annual turnover to grow from the current US$ 16.5 million to US$ 25 million in our local operations," said Speldewinde. He also said that they plan to start their Mexican project in November/December, with three Mexican technicians being flown into Colombo tomorrow for training for this purpose.
"All our overseas ventures are joint venture projects, with the partner in Mexico being a manufacturer of lingerie with an annual turnover of between between US$ three to four million," Speldewinde said. So, the international partnerships that we are forging under this expansion programme, are all with partners with existing garment businesses that we are capable of servicing, he said.
Speldewinde further said that Stretchlines investment in Mexico would be in the region of US$ seven million, providing employment to 150. He said that the reason why the Company decided to branch out into Mexico was because they wanted to take advantage of the North Atlantic Free Trade Agreement (NAFTA) which offers duty free, tax free and quota free exports to the USA, because of which large garment manufacturers have moved their production base from the USA to Mexico, said Speldewinde.
He also said that the US market for elastics alone was in the region of US$ 230 million annually, of which, we have none of it at the moment, said Speldewinde. He further said that their investment in Indonesia would be in the region of US$ six million and in China, US$ four million, with employment provided to 400, in each of these countries.
"Our desire is to become the first global elastic manufacturer supplying the major retailers and brand houses in the intimate apparel trade.When a brand is set-up, this goes global," said Speldewinde.
He further said that labour, water, electricity, diesel and furnance oil which are necessities in running this type of factory operations were cheaper in Indonesia and China, than in Sri Lanka.
"But that is not the reason why we are shifting our operations to those countries," said the Managing Director of Charnwood Elastic Group UK Norman Collier. Those countries already operate garment factories catering to the European and the US markets. In fact China, after Mexico, is the second biggest exporter of garments to the USA and we want to service these industries, it is the speed of turnaround that matters in this business, he said.
Collier also said that a company in South Africa wants them to come over and establish operations there, so as to take advantage of the duty free and quota free concessions afforded to the US market under the Sub-Sahara treaty. "But we want to first consolidate our operations before planning for further expansion," said Speldewinde.
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