bangwe factory proposal (1)

1.0 Overview:

Government of Malawi

Investment Proposal

for the

Revitalization of MACOHA’s Factory at Bangwe

Ministry of Gender, Children, Disability and Social Welfare, Private Bag 330,

Capital City, Lilongwe3

August, 2014

2

Background to the Proposal/Situation Analysis

Bangwe factory is a manufacturing unit of Malawi Council for the Handicapped (MACOHA) established in

1975 to provide on job training and serve as a source of income for persons with disabilities and serve

as a model to change the attitudes among the local industries. The Factory is a sheltered employment

unit which has enjoyed government protection for many years.

The Factory was designed to operate on commercial basis in order to generate profits which could be

used for MACOHA’s other rehabilitation programs and service the community of persons with

disabilities.

Bangwe factory is located outside Limbe in Blantyre, Malawi and employs approximately 100 persons.

Hearing, visual and speech impaired, albinism and physically challenged persons constitute 80% of its

employees. The factory has four departments – weaving, tailoring, tie-dye and screen printing. It

produces hand woven table and kitchen ware, carpets and rugs, handcraft/gift items, tie-dye &

embroidered clothing, school/industrial clothing and promotional material.

The land, buildings and machinery at Bangwe factory are fully owned by MACOHA. The machinery and

equipment is basic and labour intensive and in most cases inadequately maintained. Salaries of the

employees are sub-vented by the government. All other operational costs are funded through sales

revenue.

Textile industry has high potential in Malawi for both the local and export markets and as such, the

weaving sub-sector presents enormous employment opportunities. However, the production growth

potential is hampered by out-dated and inappropriate technology, limited skilled personnel, limited

production capacity, and industry inefficiencies.

The proposed revitalisation of the Bangwe factory project will increase production by addressing

challenges in the production department. Bangwe factory currently markets its products mainly in the

domestic market. The sales turnover in all departments in 2010/11 fiscal year was K 15,536,3031 and

increased by over 100% in 2012/13 to a value of K 26,854,078 before tax. This feat was achieved due the

adoption of a more market oriented approach.

1 The Actual Sales value for 2010/2011 was K13,335,882 after tax

3

Figure 1: SalesValues in Norminal and Real Terms.

The figure above demonstrates that despite the potential that the factory has, growth is being stifled by

obsolete equipment and other related bottlenecks. From 2007 the factory has not experienced growth

and the situation was worse in 2010 when sales in real terms slumped. Although there was a pick in

2012/13 this was not sustained because the factory could not meet the demand (orders) due to the

breaking down of most machines in the Tailoring Section. There were only 2 sewing machines working

and 5 were brocken down. In the Tie and Die Section 3 machines were working and 2 were brocken

down.

4

Problem Statement Bangwe factory has severe liquidation challenges (cash flow shrinkage) mainly due to:

i. Inefficiencies in the production department resulting from obsolete equipment, lower staff skills levels and scarcity of raw materials.

ii. Unjustifiable overhead costs against the current production efficiency of the

factory.

iii. Failure to compete favourably in the market with the support of a higher proportion of approximately 80% labour force comprising persons with disabilities.

Proposed Solutions Repairing and acquisition of new looms, employment of new staff is a key driver for increased

production and exports; together with increased productivity, niche marketing and value addition

(weaving). Increased production will act as a stimulus to close the gap between production and

demand. It will generate additional income for MACOHA to use for its rehabilitation programmes and

will complement the National Export Strategy that is currently being developed by the Malawi

Government. This will also contribute to other efforts by the Malawi Government towards achieving

objectives set out in the Malawi Growth and Development Strategy, as well as attainment of the Post

2015 Development Agenda. Among the solutions being proposed, there is therefore need to:

i. Restructure the Factory to compete favourably in the open market;

ii. Invest in new equipment to replace the obsolete ones: Modernise with automated machines to graduate from the old hand looms. The Section should by acquire modern spinning wheels, cloth shredders, and dust cleaners; and

iii. Inject fresh working capital for acquisition of raw materials in the export orders unit. Imported raw materials should include dyes, hydros, caustic soda, drills, swiss cotton, embroidery threads, sewing threads. Main suppliers from South Africa and India.

Project Goal The goal of this project is to contribute to economic empowerment of the disabled persons in Malawi

through the commercialization of the Production Department of Bangwe Factory. The ultimate aim of

the project is: “Increasing Productivity to Promote Exports”.

5

Project Objectives The project objective is to revitalise the Bangwe factory to increase the production capacity from 40% to

80%.

Proposed Restructuring of the Bangwe Factory The proposed intervention is designed against the backdrop of a need for a market-oriented development

approach in order to increase production, create employment opportunities and alleviate poverty. The

project seeks to establish, strengthen and institutionalize the production, processing and export marketing

of the production Department.

There is need to restructure the factory into Production & Merchandising, and Finance & Administration Departments. Annex I.

Annex I: Proposed Organizational Structure for Bangwe Factory

General Administration

There should be a separate panel of directors with business administration background

who will report to the main board.

Under MACOHA senior management, the Director of Commercial Services should be

recruited, who should be reporting to the panel of directors that would be monitoring the

Bangwe Factory operation.

Production and Merchandising Department

It is being proposed that the department should consist of the following officers and

positions:

OFFICERS QUANTITY

Manager-Merchandising

Production Manager

Tailoring Supervisors

(Corporate & Local orders)

1

Weaving Supervisor

(Corporate & Local orders)

1

Screen Printing Supervisor 1

Assistant Merchandiser

Procurement Officer 1

Raw Material Stores Clerk 1

Warehouse Clerk 1

Showroom Clerk 2

6

Work Floor

Corporate Sector orders and Local Customer orders should be handled in separate work

floors

Work Force:

The work force should be the composition of persons with disabilities and able bodied

personnel. The factory staff should be located within 5 km perimeter distance from the

factory.

Disability Personnel Able Bodied Personnel

No severely persons with disability personnel will

be employed

The able bodied persons or persons from

families of persons with disabilities

Note: Able bodied personnel will be occupied in higher proportion on export orders as

well as corporate customer orders. And most of the supervisors and other management

staffs should be able bodied.

Production Unit

The production unit to consist of the Weaving Section, the Tie & Die Section, the Screen

Printing Section and the Tailoring Section.

The Weaving Section

Maintain production of hand woven in form of rugs, hammocks, bathmats, wall hangings,

shopping bags, coasters, hand bags, etc. In order to improve the current scenario where

this Section continue fail to meet customer demands or orders, the Section should have

two separate Units, thus Export and Corporate sectors.

Proposed Combination in the Export Sector Qty Specification Able bodies With Disability

1 Graduate Supervisor 1 0

10 Weavers 8 2

2 Loom Dresser 1 1

2 Finishers 1 1

Total 11 4

7

Proposed Combination for the Corporate Sector

Qty Specification Able bodies With Disability


5 Weavers 1 4

1 Loom Dresser 1 0

1 Finishers 0 1

Total 3 5

Proposed Combination for the Tie and Dye Section

Qty Specification Able bodies With Disability With or Without

Disability

1 Dye Master 1 0 0

1 Dye House Assistant 1 0 0

1 Tie-Dye Fabric Designer 0 0 1

Total 2 0 1

Proposed Combination for the Spinning Section Qty Specification Able bodies With Disability With or Without

Disability

3 Spinners 0 0 3

1 Cone Winder 0 0 1

1 Skein Winder 0 0 1

Total 0 0 5

Proposed Combination for the Screen Printing Section

Qty Specification Able bodies With

Disability

With or

Without

Disability

1 Artist 0 0 1

2 Printers 1 1 0

2 Curers 1 1 0

Total 2 2 1

8

Tailoring unit:

Proposed Corporate Section


Disability


10 Multi-skilled Tailors 6 4

2 Sewing Line Helpers 1 1

2 Finishers for Ironing 1 1

Total 9 6

Proposed Local Customer Orders section


Disability

With or

Without

Disability

1 Graduate Supervisor 1 0 0

05 Multi-Skilled Tailors 2 3 0

1 Sewing Line Helpers 0 0 1

1 Finishers for Ironing 1 0 0

Total 4 3 1

Proposed Cutting section:


Disability

With or

Without

Disability

1 Fabric Cutter 1 0 0

1 Assistant of Fabric Cutting 0 0 1

Total 1 0 1

9

Finance and Administration Department

Proposed Finance Unit


Disability

With or

Without

Disability

1 Graduate Accountant 0 0 1

1 Assistant Management

Accountant

0 0 1

1 Senior Accounts Assistant 0 0 1

1 Accounts Assistant 0 0 1

Total 0 0 4

Proposed Administrative Unit


Disability

With or

Without

Disability

1 Assistant Human Resource

Officer

0 0 1

1 Administrative assistant 0 0 1

1 Secretary 0 0 1

1 Switchboard

Operator/Receptionist

0 0 1

2 Motor Vehicle Driver 2 0 0

1 Messenger 1 0 0

12 Security Guards 12 0 0

Total 15 0 4

10

Estimated Inventory and other requirements for Bangwe Factory

Activity

Total

(MWK)

Total

(USD)

Factory’s General Purpose

Overhead Water Tank plus Water Pump 3,000,000 8,825

Electric Generator 2,000,000 5,885

Remodeling an existing structure to be used as an

additional dye house

600,000 882

Remodeling and existing structure to be used as an

additional warehouse

700,000 882

Weaving Section

Servicing 16 existing looms @ K 20,000 3,200,000 9,412

Rehabilitation of 4 existing looms @ K 20,000 80,000 235

Making 64 new looms @ K 400,000 6,400,000 18,824

Repairing 01 existing dye pot 700,000 2,060

Procuring 01 new dye pot 2,600,000 7,648

Spinning Wheels – 10 Manual Machines 800,000 2,335

Spinning Wheels – 04 Automated Machines 2,000,000 5,885

Cloth Shredder – 02 2,520,000 7,412

Dust Cleaner – 01 large

- 06 small

5,000,000

9,000,000

14,706

26,500

Electronic Weighing Scale - 01 Dye House 120,000 353

Industrial Thermometer – 01 Dye House 100,000 300

pH Indicator – 01 Dye House 150,000 445

Tailoring & Embroidery Section

Heavy Duty Over-Locking Machine – 01 Tailoring 5,000,000 14,710

Heavy Duty Straight Sewing Machines – 08 Tailoring 12,000,000 35,300

Button Trach Machines – 01 Tailoring 2,700,000 7,950

Button Hole Machine – 02 Tailoring 3,600,000 10,590

Hemming Machine – 02 Tailoring 3,600,000 10,590

Heavy Duty Irons – 03 Tailoring 3,000,000 8,825

Straight Heavy Duty Machines – 08 Tie/Dye 12,000,000 35,300

Embroidery Machines – 05 Tie/Dye 7,500,000 22,060

Heavy Duty Irons – 03 Tie/Dye 3,000,000 8,825

11

Heat Presser – 01 2,400,000 7,060

Refrigerator – 01 600,000 1,765

Get Spray Gun – 01 1,300,000 3,830

Vinyl Printer and Cutter – 01 9,000,000 26,500

Computer and Accessories – 01 500,000 1,470

Irons – 02 90,000 265

Printing Table – 02 200,000 590

Administration Department

Training for production workers:

Trainers Allowance – 02 trainers @ K 30,000 pm 90,000 265

Materials for Training – 100 kg 7/15 natural yarn 185,000 545

- Fabric 1000 mt @ K 500 500,000 1,471

- Stationery 50,000 148

- Dyes and chemicals 50,000 148

Allowances for Participants – 70 weavers, 04 loom

dressers, 02 dyers for 6 weeks @ K 18,000 pm

2,052,000 6,035

Equipments:

02 computers 1,000,000 2,940

Total 112,237,000 330,109

12

LOGFRAME MATRIX

Project Description Objectively Verifiable

Indicators (OVIs)

Sources of

Verification

(SOV)

Assumptions and

Preconditions

1

Overall Objectives

To increase production capacity

of weaving department of

Bangwe factory

Percentage increase in

production capacity

Factory

production

records

Political will

There will be no

donor fatigue

2 Specific Objectives

1. To increase production output

value from MK6 million to MK

98 million per annum


production output value

Factory

production

records

Investors and government

support production activities

2. To provide employment

opportunities and support

workers with technical skills

Number of employees

trained and supported with

technical skills

Training report Availability of training

resources

13

3 Intermediate Results

1. Bangwe Factory accessing

export markets

Amount of profits realized

from export markets

Records of sales

from each month

Availability of

international markets

2. Bangwe access to additional

weaving looms

Number of additional weaving

looms accessed

Records of repaired

and acquired looms

Availability of

resources and investors

3. Bangwe has access to raw

materials

Amount of raw materials

purchased

Records of raw

materials purchased

Availability of raw

materials

4. 80 workers practice good

management practices

Number of workers practicing

good management practices

Monthly assessment

reports

Management training

in place

5. Average production value

increases to MK 8 million per

month


production value

Factory production

records

Good management

practices

6. Quality of production improved Percentage of production

quality improved

Sample results from

buyers

Good management

practices

7. 80 workers trained and have

access to weaving looms

Number of workers trained

and have access to weaving

loans

Training report Availability of resource

and infrastructure

8. 80 workers have opportunity for

employment

Number of workers having

opportunity for employment

Monthly Pay slips Existence of Vacant

posts

14

4 Activities

1. Production of oven gloves,

carpets

Number of oven gloves,

carpets produced

Factory production

records

Availability of

resources and raw

materials

2. Servicing & rehabilitation of

existing looms

Number of existing looms

serviced and rehabilitated

Maintenance report Availability of

resources and well

wishers

3. Procurement of computers &

training materials

Number of computers and

training materials procured

Delivery notes Availability of

resources

4. Acquire new looms and dye

pot

Number of new looms and

dye pot procured

Delivery notes Availability of

resources

5. Recruit & train new

employees

Number of employees

recruited and trained

Recruitment and training

report

Vacant posts and

training resources

available

6. Re-model new dye house and

ware house

7. Import fabric off-cuts from

South Africa

Number of new dye house

and ware house re-modeled

Amount of fabric off-cuts

imported

Re-modeled dye house

and ware house in place

Delivery notes

Availability of

resources

Availability of forex

8. Bulk Production – new

product line

New machinery in place

Factory production

records

Availability of investors

bangwe factory proposal (1)

Documents