Stimulus package for Volta Star Textile ready – Carlos Ahinkora

Ministry of Trade and Industry said $25 million stimulus package set aside for 80 companies this year will have Volta Star Textile as the number one company to be catered for.

The distressed company which was shut down in 2005 faces an imminent shutdown if government does not inject some capital.

The company owes GH¢4 million in electricity bill, owes workers salary arrears and uses obsolete equipment dating as far back as 1955

Volta star originally Juapong Textiles was set up in the 1950’s to manufacture grey baft.

Over 60 years after it its first production, the company still uses equipment that are over 70 years old.

Based on this there are constant shut downs to either repair equipment or totally abandon.

A visit to the company leaves much to be desired – a warehouse which houses cotton used for manufacturing was almost empty. The cotton here is not for Volta Star Textile.

An arrangement with GTP is the only reason why Volta Star is running.

An off taker agreement affords Volta Star some cotton bought and delivered by GTP before the company can work.

In no time GTP trucks begin to fill the warehouse with imported cotton from Burkina Faso.

Marketing Manager for GTP, Stephen Badu said they need Volta Star to work since their company depends on their operations.

He wants government to revamp the company to operate at full capacity since they have to import grey baft before they can stay profitable.

“We will be able to buy everything they produce if they operate at full capacity,” he said.

Ministry of Trade and Industry promised a stimulus package for Volta Start in the next three months and one of the key areas the package will be tackling is raw materials for the factory.

Minister of Trade and Industry, Allan Kyeremateng at parliament, about a month ago, assured workers and the management that government is going through their documents to make sure they will be given priority when government disburses the stimulus package.

In an interview with the Deputy Minister for Trade and Industry, Carlos Ahinkra, has guarantees the package is ready.

He said, “We are waiting for the minister of finance to release the money, it should be done in a matter of weeks”.

Weak cotton industry and its effect on textiles

The issues are however deeper than that, a cotton development board set up to look at the cotton industry is failing.

When the company is able to buy their own cotton, they will be forced to still import 94 percent of the materials used by Volta Star are imported from Burkina Faso and Ivory Coast, while Ghana produces only four percent of the demand.

So far the ailing Volta Star is hardly able to export grey baft to Ivory Coast and Cameroon which it used to do, loosing those markets.

Volta star is hardly able to meet even the local demand from GTP, they currently do less than one fourth of the demand.

The capital injection will be key at the equipment section.

At the blow room where the cotton is fluffed and separated from all impurities, only one line out of the three works – thus less than 40 percent of the company’s capacity.

The equipment here cannot be fixed because there are no spare parts available, as most of them were manufactured 70 years ago

Spinning manager of Volta Star, Jerome Kwaku Dunyo said once they are given money for retooling they can pay for the rest of their debts including what is owed ECG.

The company’s debt stock currently stands at GH¢13 million which includes salary arrears.

It will need about GH¢20 million to be able to stand on its feet and the ministry of trade says the money will be provided.

However a strategic investor is needed to continue the operations of the company to make them profitable.

While spare parts are not available to fix broken down equipment, workers will have to make do with what is available by painstakingly separating yarns, a process that takes days.

Looms working now to spine yarns are 696 instead of 936 making the company work at 70 percent capacity.

At an original 24 hour shift, the company now does 15 hours.

Juapong Pillow Industry

The local economy hinges on the prosperity of Volta Star and the pillow market is not left out.

Spread along the road traders say business really booms. More than GH¢300 worth of pillow is sold on a good day especially when students are going to secondary school.

“When the company shuts down our pillow business also suffers because we buy cotton from them to fill the pillows. The whole town becomes virtually dead,” Dorothy Dumenyo, one of the traders said.

Government’s one district one factory Policy

A pledge by government in the famous ‘one district one factory’ campaign promise will be one of the push factors for which government will pump money into the distressed company.

The ripple effects are many as the textile industry will slowly be wiped out since Chinese textiles have totally reduced the market share for domestic companies.

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