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.