TEXTILES: ACA Sews Up A Surprise Deal
Recent Western Cape Business News
One Cape Town textile company is bucking that downbeat trend by buying out its main competitor.
The Brackenfell-based sewing thread manufacturer ACA Threads announced it had bought competitor A&E South Africa for an undisclosed sum.
A&E is the South African subsidiary of US industrial thread manufacturer, American & Efird.
It seems the Americans – who CBN hears initially had a supply agreement with now defunct SA Nylon Spinners - have opted to pull out after reassessing the viability of the business.
While no financial figures are available for Epping-based A&E, CBN understands the business has been struggling for the past few years.
A press statement from ACA discloses that the combined turnover of the two companies will be around R70 million.
The A&E business was acquired as a going concern. The 55 staff members from A&E’s Epping premises will be incorporated with the 86 staff at ACA Threads Brackenfell factory during the course of the year.
Eckhard Marshing, CEO of ACA Threads, reckons the deal will ensure a world class supply base to satisfy existing and growing needs of retail for strong local manufacturing businesses.
“There is an increasing trend to look inside of South Africa and its neighbouring countries as the Chinese are starting to retain their goods for their own use, and import prices and logistical challenges attached to importing increase.”
Asked whether ACA was confident of turning around A&E, Marshing says there is definitely a future for the combined businesses. “The A&E business is about 5% smaller than our business. We took a long time to make a decision, but I think we are going to be pleasantly surprised. There is a future in this business.”
He says ACA Threads has signed a licence agreement with A&E International to combine the respective technologies to service its Southern African client base.
Clients include Toyota, Bravo Group, Vitafoam, Seardel, Jonssons Workwear, Jockey, Peter Blond, House of Monatic, Coricraft, Reebok, Bata, Jordan, Watson Shoes and Palm Footwear Group.
Marshing intimates the deal is a logical step for ACA, which was founded by Marshing’s father in the early fifties.
“The reality is that the threads industry has been taking a beating. Those remaining have been competing hard…maybe ruining each other. As a private company we had to decide whether we were ‘in it’ or ‘out of it’. We decided that the recession of the last two years created opportunities for us. We’ve been waiting for the threads industry to clean itself out. Now good things are starting to happen in the sector…and when you really think about it; thread goes into practically everything.”
Marshing says ACA is currently profitable, and historically has been a strong business.
Asked about the secret of ACA’s continued success, Marshing reckons it probably boils down to continual re-investment in the company.
“We are in a capital intensive business, and there is always the risk of a technology gap appearing if you don’t keep investing. We are a family business and have been inclined to keep the profit in the company. We’ve never drained the business…”
Marshing stresses that ACA has always maintained high global standards – which is perhaps understandable since the company has a four decade long association with the Amann Group, the German textile giant.
He believes the A&E deal will give ACA a leadership role in the marketplace. “I view the deal as giving us the critical mass to afford continued investments into technology, logistics and people and a long-term positioning for Africa’s role in textile manufacturing.”
ACA’s main products include Seralon (thread manufactured from 100% polyester), Serafil (polyester suitable for heavy-duty sewing application in the footwear and automotive sectors) and Madeira embroidery (to industrial and semi-industrial markets).
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