KZN Clothing Factory Owners Raise Alarm Over Crisis Due to Exodus of Immigrant Workers

Iqbal Ismail, chair of the eThekwini Clothing and Leather Association, reports that clothing factories in Newcastle are closing as immigrant workers flee xenophobic violence.

“If migrants vanish from our factories, our industry will undoubtedly collapse,” asserts Iqbal Ismail, a third-generation garment manufacturer and leader of the eThekwini Clothing and Leather Association.

Ismail employs 150 workers, with only 30 of them being South African.

In May, the association urged for a “complete shutdown of CMT factories in eThekwini” in the latter part of June to underscore the industry’s dependence on immigrant labor. CMT stands for Cut, Make and Trim, which refers to factories—mainly in KwaZulu-Natal—that produce clothing for retailers.

The closure did not take place; however, Ismail reports that factories continue to shut down as immigrant workers leave the country.

He noted that the association, representing 102 CMT businesses, was formed “in response to ongoing demands that no foreign nationals be permitted to work in factories.”

“We are simply trying to survive,” he stated.

To investigate the impending collapse of CMT businesses further, GroundUp visited Newcastle.

Depending on whom you consult, the town has between 140 and 300 CMT factories, primarily owned by residents from Taiwan and the People’s Republic of China who hold permanent residency in South Africa.

“It’s true that removing foreign workers from the factories will lead to the closure of nearly every CMT,” commented Alex Liu, a long-time unofficial spokesperson for the Newcastle factory community and a PR councillor.

“The core issue is the scarcity of skilled machinists. While local machinists can perform most tasks like overlocking, very few can handle the specialized duty of inserting zippers, a job mainly done by foreigners. With investments in training local machinists, this could change, but the industry currently lacks the necessary time and support, which contradicts the unfolding scenario,” he added.

The CMT sector in the town is currently under increased scrutiny regarding “sweatshop” conditions following high-profile government inspections in September 2025 and February 2026.

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The inspections revealed wages significantly below the minimum, substandard worker dormitories, unsafe factory conditions, and a heavy reliance on immigrant labor from other southern African nations.

The business impact has been significant.

“Since February, nearly all factories have been operating with reduced hours,” Liu stated.

In Madadeni, located within the industrial park managed by the Ithala Development Finance Corporation, Ronghua Yan—known in the industry as David Old, a nod to his business, David Old Tailor—is struggling to maintain his operations.

“This is the darkest time of my life,” Yan lamented. A combination of rising input costs, low CMT pricing, and negative publicity “is crippling the CMT sector.”

“When I arrived in the early 2000s, the industry was in decline; tall grass and broken windows were everywhere. I invested, and others followed. Support was there, and business began to flourish. About ten years ago, storms hit: a low-price storm, a union and bargaining council storm, a load shedding and looting storm, and now, a foreigner storm,” shared Yan.

Every CMT factory owner in Newcastle is facing the same grim predicament, he explained.

“We can either leave while we still have the chance or adapt, perhaps by marketing our own brands. We cannot maintain this status quo. Retailers will not pay more as they confront their own challenges—globally, consumers simply do not have the money to buy clothes today,” he mentioned.

He used the Chinese term 轮回 (lun hui), meaning a cycle of death and rebirth, to describe his experience in South Africa.

Except for one recycling business, all tenants in the Madadeni Industrial Estate are Chinese CMT owners, most of whom reside in or near their factories. GroundUp spoke to several owners, all of whom requested anonymity due to fears of being targeted.

Alongside the low rates offered by suppliers, factory owners cited penalties for late order deliveries as one of the most significant threats to their business sustainability.

“If I’m a day late, the supplier deducts 10% from my payment. Conversely, if my business faces interruptions due to their issues, I cannot charge them because they hold the financial control,” explained one owner.

20 cents to cut a piece of cloth

In Madadeni, no workers stay on-site, but in eMabodheni, many do.

At a shop on Marconi Drive, a Chichewa greeting of Muli Bwanje elicited smiles from a group of young men who responded, “Ndili bwino, kaya inu?” [I’m fine; how about you?].

However, upon discovering we were reporters, the Malawian youths grew cautious. One, a fabric cutter in a nearby factory, agreed to connect via WhatsApp and provided insights into the working conditions at his factory.

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“We are paid per piece of fabric cut: 20 cents for a small piece and 30 cents for a larger one,” he revealed, referencing the globally criticized practice of paying workers based on garment components rather than hourly wages.

He noted that most workers preferred living on-site as it enabled them to work longer hours, earn more, and save the R40 to R55 needed for daily commutes from Madadeni and Osizweni’s informal settlements.

Immigrants residing in the settlements are increasingly fearful of being targeted by supporters of the March and March movement, he noted.

To comply with the minimum wage set by the National Bargaining Council for the Clothing Industry for experienced machinists in a non-metro area like Newcastle, factory owners would need to pay R32 per hour, resulting in R1 443.50 for a 45-hour work week, slightly exceeding the national minimum wage of R30.23 per hour.

To earn a similar amount through “piece work,” a worker would need to cut roughly 7,500 pieces or 167 pieces hourly.

“It is achievable,” stated Gift (not her real name), a machinist from Lesotho, “but only for exceptionally fast workers. Slow workers might earn as little as R20 [per day], while quicker workers can make up to R80 daily,” she mentioned.

Skilled machinists can earn significantly more in Lesotho—over R3,000, per Gift’s account.

However, jobs are scarce, with many factories closing recently, some due to the 50% tariffs imposed by US President Donald Trump in April 2025.

In eSwatini, machinist positions are more available, but some report monthly salaries as low as R200.

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Gift and several others from neighboring countries reside in a dormitory room behind a factory off Albert Wessels Drive, which she described as “unclean” and without bathing facilities.

According to the Newcastle Municipality’s rates collection summary for June 2025, the contribution from Ward 34, which includes the riverside industrial area, a small residential neighborhood, and the Newcastle Mall and Blackrock Casino at the southern tip, amounts to R761 424 823—approximately 47% of the municipality’s total income from all wards.

Primarily, businesses in Ward 34 are clothing and textile enterprises, with most being CMT factories.

Liu estimates that the factories employ between 15,000 and 20,000 people, producing around ten million garments monthly.

“Let’s conservatively estimate that the average price for each garment [the CMT price] is R5. This suggests the sector generates R50 million each month.

“Wage expenses for CMT factories account for about 50% of total costs, indicating that at least R25 million is directed into workers’ pockets every month, most of which is spent within Newcastle,” Liu noted, who has been involved with Newcastle factories since 1993.

Historically, Newcastle Municipality actively encouraged investments in its textile industry from Taiwan and China during the 1980s and 1990s, but reportedly has neglected the sector in recent times.

Efforts are now being made to catch up.

On June 12, the municipality’s Local Economic Development Unit sent out a call to CMT business owners to provide essential business information to improve “stakeholder engagement and develop targeted support initiatives for the sector.”

Retailers withdraw work from Newcastle factories

Following the inspections of Newcastle’s CMT factories in February, retailers hurried to send compliance teams to assess all CMTs with which they had placed orders.

Responses to GroundUp from Pepkor, Pick ‘n Pay, and Mr. Price indicate they have withdrawn work from Newcastle factories.

Several compliant garment manufacturers told GroundUp they were approached to fulfill orders extracted from Newcastle, but were unable to accommodate the work at the proposed prices.

“After the Newcastle scandal surfaced in February, a prominent retail partner requested we estimate the cost of a jacket that had been taken from a Newcastle CMT. My labor costs alone matched their target price, not including fabric, trims, and profit margin,” said a Cape Town-based clothing manufacturer, who remains anonymous due to reliance on the retailers for smaller orders.

“The reality is we face a stark choice between compromising standards and bankruptcy,” she explained.

Joe Tau, managing director of Allwear, Newcastle’s largest clothing business focused mainly on producing school uniforms, dismissed claims that compliance is unattainable at the prices offered by retailers. However, he noted that Allwear, adhering to bargaining council rates, would need to invest in new machinery.

“A major retailer recently approached us with a shirt, asking, ‘what do you charge to produce this?’ Upon research, I realized I would need to invest R15 million in new machinery,” Tau disclosed.

He says he presented his case to the Allwear board, which approved the investment contingent on the retailer committing to a three-year supply agreement.

“When I returned to the retailer, they inquired about my cost control strategies and similar details. I told them, ‘I’m willing to share my process because I’m a sincere businessman, but I expect transparency in return’,” remarked Tau, who has not had any further communication from the retailer since requesting their commitment.

“I know they [retailers] continue to pursue orders from non-compliant factories even now,” he asserted.

“However, I believe we are preparing this factory for a better future for those interested in purchasing 100% locally made and fully compliant clothing,” Tau observed, overseeing over 1,000 staff, 98% of whom are women, he claims.

Compliance

A procurement officer for a major South African retailer indicated that since the inspections, many retailers have shifted orders to factories in Lesotho, eSwatini, Madagascar, and China.

He mentioned that the eSwatini government has initiated its own compliance efforts, with Minister of Labour and Social Security Phila Buthelezi visiting various factories in May and June, threatening action against non-compliant owners.

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“We find ourselves in a difficult position regarding where to source [clothing] at prices we can afford while still claiming those garments are ethically produced.

“Truthfully, we have become victims of our price wars, which started in the early 2000s when certain retailers began importing clothes under incorrect codes, undermining responsible retailers and evading scrutiny.”

“It didn’t take long for others to start cutting corners—and I mean everyone. And when Sars [South African Revenue Service] became aware of the smuggling practices, the subsequent strategy was to manufacture clothes in places like Newcastle, where CMT owners could meet urgent demands by subcontracting certain tasks to family and friends.”

“Now that this has come to light, the race is on for alternative solutions,” he concluded.

This is the first of two articles exploring the textile industry in KwaZulu-Natal. On Wednesday, we will publish: “The clothing industry is being hit from all sides.”

© 2026 GroundUp. This article was first published here.