The country has been wracked by general strikes and rioting in the two months since a Dec. 16 presidential election between incumbent Didier Ratsiraka and Marc Ravalomana, the mayor of the nation’s capital, who charged that his opponent rigged the election and on Feb. 22 declared himself president of Madagascar. On Thursday, Ratsiraka declared a state of martial law.
With government officials, including the national Customs service, on strike and the roads from the capital city of Antananarivo — where most factories are clustered — to the main port in Toamasina blocked, industry sources said it has become extremely difficult to get finished goods off the island.
Officials at the Malagasy Embassy in Washington did not return phone calls.
Madagascar, which is located in the Indian Ocean off the east coast of southern Africa, was one of the first nations to qualify for duty- and quota-free treatment for its apparel imports to the U.S. under the terms of the Africa Growth and Opportunity Act. Last year, its shipments of textiles and apparel to the U.S. surged 62.4 percent, to $178.1 million. It was the U.S.’s sixth largest source of women’s and girls’ wool knit shirts and blouses.
Local manufacturers said the shipping disruptions come at a terrible time for the nation’s developing apparel industry.
“This is alarming. Madagascar has no more credibility,” said Nicholas Godley, who for the last seven years has manufactured raffia handbags in the town of Majunga and sold them in the U.S. under that name.
The 140 employees of his factory have continued to show up for work, partly because the factory is located away from the capital city, on the west coast of the island.
Godley said his company had shipped most of its initial spring deliveries before the unrest brought commerce to a near halt. Getting the company’s final shipments out required a trip into the capital city to find striking Customs workers.
But with the nation’s gas supply cut off, he said his primary air carrier — Air France — has stopped flying into the country, eliminating his first choice for shipping goods to the U.S. Air France officials could not be reached for confirmation. With gas unavailable, he’s also had to switch back to using coal to power his dye vats.
Godley, who is president of his company, said a bigger concern is that banks are now closed, leaving him unable to pay his workers. While he does not want to close his factory outright, he said he planned to lay off 20 workers on Friday.
“I want to stay open as long as we can pay salaries,” he said. “If the situation does not improve in a significant way, then next week we may close for a week or two weeks. We won’t go out of business. If I lose every order, I’ll shut down for the season.”
While Godley is committed to remaining in Madagascar, Hong Kong-based apparel manufacturer Novel Denim Holdings is considering vacating its operations there.
In a recent financial statement, chief executive officer K.C. Chao said the general strikes forced the company to send orders out by air, rather than using ships as it prefers. That added $1 million to its cost of delivering those orders.
“After having experienced limited financial benefit due to lower efficiencies [than at its plants in Mauritius and elsewhere in the world] and greater production uncertainty, we plan to evaluate the near-term and long-term effects on our overall business,” he said, adding that the company produced $9 million worth of goods on the island in the quarter ended Dec. 31, but lost about $300,000 on those operations.
An executive at a major ocean carrier serving the island said his company has been unable to get containers off the island for the past two weeks, since the road to the main port was closed.
“I don’t want to make it sound like gloom and doom, but it’s gotten serious, where people can’t get their merchandise out and the supply of material going in is stuck at the ports,” said Brian Moore, director of apparel sales at Maersk Sealand Inc. “It’s becoming rather difficult to get anything done there right now. We’ve brought ships in and there’s no cargo. You can discharge at the port, but nothing can get from the port to the city.”
He added that he hopes the situation is resolved soon.
While apparel importers said they didn’t yet regard the situation as enough of a crisis for them to pull their orders from Malagasy manufacturers, they said that they’re preparing backup plans if it remains impossible to ship goods from there.
“Right now, we haven’t had any significant impact on our orders, which are limited mostly to swimwear products,” said Peter McGrath, president of sourcing at J.C. Penney Co. in Plano, Tex. “We have 168,000 units shipping in the next couple of weeks and we are not panicked that we’re not going to get it. But we make contingency plans if things go wrong. We figure out a plan B and a plan C.”
Similarly, at New York-based Nautica Jeans Co., Sandra Campos, senior vice president of women’s, said the company has some fall orders placed at Malagasy factories and has not yet seen shipments interrupted. But the company is keeping a close eye on the situation.
“We can’t wait and see for too long. We’re looking at our options,” she said. “You have to be shipping a product.”