Details of dti bail-out deals imminent

Readers may already have
read about minister of trade
and industry, Rob Davies,
announcing details of the
government-supported bail-out
packages for recession-stricken
industry sectors.
That’s if Nico Vermeulen,
director of the National
Association of Automobile
Manufacturers of SA (Naamsa),
was correct when he told FTW
in an interview last week that
“the minister is due to be
making an announcement,
which you can expect within
days”.
Vermeulen will be very happy
if he has, recounting as he was a
tale of woe surrounding a lot of
members of the auto components
industry, who “were having
cash-flow difficulties, because
both the export and domestic
markets have collapsed”.
These companies have
already been to the financial
institutions.
“But,” Vermeulen added,
“they are loathe to lend to
vulnerable companies, and have
become a lot tighter in their loan
policy toward granting credit.”
That makes the fact that
Davies has already stressed
that the Industrial Development
Corporation (IDC) is definitely
involved in the bail-out plans
that much more attractive to the
auto industry.
“The IDC has had a policy
in practice since about March
to extend loans to vulnerable
companies,” Vermeulen said,
“but only with strict lending
principles.”
However, this proved a
winning deal for auto parts
companies, a number of whom
have already taken advantage of
this facility.
After talks between the
car makers and government,
Vermeulen is certain that the
package of support measures
that the minister is due to
announce will also include this
‘bridging loans’ strategy.
Although he doesn’t know the
specifics of the bail-out plans as
yet, Vermeulen is positive that
this heightened level of help will
be welcome.
Equally unaware of the
details, but also welcoming any
help, is the textile and clothing
industry sector – which, along
with automotive, mining and
capital goods, Davies has
already targeted for government
assistance.
Brian Brink, executive
director of the Textile
Federation, told FTW that there
had been a bit of talk and a
number of press articles about
the bail-out issue – but still little
indication of the specifics of
the plan.
“I can speculate to some
extent,” he said, “but I’ve yet
to be informed in writing or
verbally of what would be in the
bail-out packages.”
He felt that the IDC would
definitely be involved, and
they would ultimately have the
discretion over who gets what.
“But one thing it mustn’t
be is bailing out individual,
terminally ailing companies.
That won’t work. It must be aid
spread amongst everyone in a
specific sector.