By Larry Claasen
SHERATON Textiles, a bedding and linen manufacturer based in Cape Town, has launched a cutting-edge production facility in Diep River.
The new facility, backed by a R140-million investment from the Industrial Development Corporation (IDC) signalled a major investment aimed at boosting its competitiveness and production capacity.
Sheraton Textiles was founded in 1920 and now employs over 550 employees.
The investment, in conjunction with the plant’s launch, Sheraton Textiles introduced a Worker’s Trust, benefiting nearly 400 employees.
Funded by the IDC, the trust will acquire a 15% equity stake in Sheraton Textiles, marking a significant step in employee empowerment. Prior to its workers taking this stake in the business, Sheraton Textiles was 100% owned by the IDC.
The Department of Trade, Industry and Competition (DTIC), lauded this development, noting that employee stock ownership plans (ESOPs) have expanded significantly, benefiting over half a million workers across various sectors since 2019.
Getting employees to own a stake in the companies they work for has been one of the key tools in transforming the economy.
The IDC has invested R1,6-billion to support ESOPs and their related worker and community trusts, according to its Development Report 2018–2022. This has seen it establish 110 worker and 45 community trusts, which includes 24 community trusts funded under the Renewable Energy Independent Power Producer Procurement Programme.
“Established trusts are supported through trustee training on corporate governance to ensure effective management. In recent times, the weak performance of the South African economy has affected business performance and stalled the realisation of ESOP benefits,” the report said.
The report, however, noted that though it was a useful transformational tool, ESOPs had a long lead time, which meant that many of those it was meant to benefit, did not grasp how long they had to wait to see the pay off.
“The vesting of many of these structures relies on the payment of dividends and many ESOPs are underwater. The perceived and actual delay in realising the benefits of ESOPs has led to understandable uncertainty and feelings of unmet expectations, which undermine the noble intention of ESOPs.”
Even so, the government still held it in high regard, as an economic transformational tool.
“ESOPs are vital for transforming the economy, addressing inequality, and reducing unemployment,” said outgoing DTIC minister Patel.
“Sheraton Textiles, supplying major retail and hospitality brands locally and in the SADC region, is a key player in this transformation.”
The trust will also ensure worker representation on Sheraton’s board, granting employees a voice in the company’s strategic decisions.
IDC interim CEO David Jarvis highlighted the corporation’s commitment to financing more ESOPs. “We have played a meaningful role in empowering marginalised communities and enhancing productivity through employee ownership,” Jarvis noted. Sheraton Textiles, a 104-year-old company, now sees its employees becoming stakeholders, fostering a shared sense of ownership and motivation.
Sheraton CEO Saleem Mowzer expressed gratitude to the IDC for its support amid industry challenges, particularly competition from cheap imports. “The employee share scheme empowers our workers to influence the company’s strategic direction and benefit from future dividends,” Mowzer said, marking a significant milestone in the company’s growth trajectory.
