Long Road Back for Madagascar

NEW YORK — Months of unrest that followed a disputed presidential election on Madagascar have left the island nation’s apparel industry in disarray. After seeing its imports to the U.S. rise 62.4 percent last year — as a result of it...

Two days of looting followed the pullout of rebel forces from the city of Mahajanga. Many buildings and shops were damaged.

Two days of looting followed the pullout of rebel forces from the city of Mahajanga. Many buildings and shops were damaged.

WWD Staff

NEW YORK — Months of unrest that followed a disputed presidential election on Madagascar have left the island nation’s apparel industry in disarray. After seeing its imports to the U.S. rise 62.4 percent last year — as a result of it gaining duty- and quota-free status through the African Growth and Opportunity Act trade law — the growth rate of its shipments to the U.S. has slowed sharply in 2002.

This story first appeared in the August 6, 2002 issue of WWD.  Subscribe Today.

Sources estimated that about 80,000 of the nation’s approximately 100,000 garment workers have lost their jobs since the disputed December presidential election that began the turmoil. Workers in the capital city of Antananarivo were hardest hit, as supporters of former president Didier Ratsiraka — who lost the election but for months refused to cede power — blocked the city that is home to former mayor and now-Madagascan-president Marc Ravalomanana.

Months of violence rocked the nation, resulting in about 70 deaths, and only came to an end last month, after Ratsiraka and a band of his closest supporters fled the country.

Last year, Madagascar was the U.S.’s 50th-largest supplier of imported apparel and textile products, with its major categories being cotton woven bottoms and knit tops.

Officials at CIEL Textile and Compagnie Mauricienne de Textile, two Mauritius-based companies that together employed 13,000 workers in their Antananarivo factories before the unrest, said their Madagascan operations remain suspended, with all their employees still out of work. Both those companies said they planned to resume operations as soon as possible, although another major maker has pulled out: Hong Kong-based Novel Denim Holdings Ltd. closed its Madagascar factories early this year and took a $5.2 million charge in the quarter ended in March to write them off.

Businesses in the capital, where most of the nation’s apparel factories are located, were hardest hit after Ratsiraka supporters blockaded the road to the main port of Toamasina, on the Indian Ocean side of the island.

Outside the capital, some companies managed to continue operations.

Nick Godley, president of Majunga, a maker of raffia handbags in the city of Mahajanga, on the coast of the Mozambique channel, said his factories closed for only May 13-16, during a period of looting in the town after supporters of Ratsiraka pulled out and Ravolamanana’s army came in.

Those were four harrowing days, Godley recalled.

“When the legal army came in, that’s when the looting started…for two days, the people did the looting and the army was watching them…it was fairly indiscriminate,” Godley said in an interview in Manhattan last month. Many stores in the town were burned down, he said. “It lasted way too long. For two days, people were shooting machine guns and throwing grenades…I have a thatched roof in my home, and I was afraid of stray bullets.”

Godley still has 70 workers employed at his factories, off from his company’s peak strength of 140.

Godley was able to keep running through most of the turmoil by flying shipments off the island. But that’s partly because he didn’t need to worry about shipping materials onto the island — he uses locally produced raffia and ebony.

Workers at the Toamasina port went on strike in early March, making it extremely difficult for apparel makers to ship fabric into the country.

“We were able to operate at 50 percent of factory capacity in Madagascar from January to April due to strikes and non-availability of raw materials,” said François Eynaud, executive director of CIEL, which had 12,000 employees making T-shirts and sweaters, as well as woven shirts and pants. The company also has operations on Mauritius, but 40 percent of its capacity was on Madagascar. He said the company stopped shipping materials into Madagascar after the secondary port of Tamatave closed, but managed to make all its fall deliveries by shipping goods out by air and shifting some production to Mauritius.

François Woo, managing director of Compagnie Mauricienne de Textile, said: “At the outset of the unrest, we managed — in spite of all the hassles and pressures on the workforce to stop work — to maintain at a reduced momentum the flow of our operations. By mid-March, we were constrained to cease all the activities.”

He added that the company racked up $1 million in airfreight charges to ensure that its Madagascan goods made it to customers on time, and shifted fall production to Mauritius. Woo said the unrest drove the company’s Madagascan operations $4 million into the red this year.

Despite the turmoil, the dollar value of Madagascan imports of all apparel and textile products to the U.S. was up 20.5 percent through the first five months of the year, according to the Office of Textiles and Apparel. But that’s off from a 62.4 percent growth rate last year, when Madagascan imports hit $178.1 million.

Brian Moore, director of apparel sales with Madison, N.J.-based ocean carrier Maersk Sealand Inc. estimated that his company has handled 60 to 70 percent fewer shipments out of Madagascar so far this year, compared with last year.

“We’ve been going in all along, whenever there was anything to bring in or out,” he said. While the road from the capital to the port is now open, he added, it still bears the damage from a cyclone that hit this spring.

“Now people are starting to clear the goods out of the port, and bring fabrics up to the factories,” he added.

At the Madagascan Embassy in Washington, Olga Ratsiraka — a daughter of the former president who continues to serve as counselor for trade and commerce but who expects to be recalled — said that the country’s infrastructure will take time to resume running smoothly.

“If the roads are open again, they could ship goods, but honestly, it will take a little time,” she said in a recent phone interview. “It will take a few months for things to come back to normal.”

Rosa Whitaker, assistant U.S. Trade Representative for Africa, said: “The new president will have to do a lot of work to restore the confidence of investors, but he does have a demonstrated track record of supporting private-sector development. He was one of the early champions of AGOA and he was also responsible for bringing a lot of industry into Antananarivo when he served as mayor.”

She estimated that the crisis has cost Madagascar’s economy $600 million in lost production and 150,000 jobs.

One encouraging sign for the nation’s apparel industry is that the violence and destruction largely spared the former French colony’s apparel plants. Sources said most plants are still standing and equipped.

Eynaud of CIEL said: “We are currently studying the reopening of some of our units — the new government salary and monetary policy has not been made clear to us yet.”

The crisis also has taken its toll on buyers’ confidence, he acknowledged.

“Our U.S. clients are keen to place orders in Madagascar, but much less than before the crisis,” he said. “They want to have clear backup options from our Mauritius factories.”

Majunga’s Godley, who opened his operations in Madagascar in 1994 and has lived part-time in the country since then, expressed feelings of frustration and of hope.

“They blew it. The [Madagascans] blew it. They have to reap what they’ve sown,” he said of the effect the crisis has had on buyer confidence.

But he said he has no plans to close his Madagascan operations.

“This year is a lost year…but it’s going to come back,” he said, describing orders from American customers. “There are always going to be people who are willing to take the risk.

“It’ll take time,” he continued. “It’ll take time.”