South Africa's largest textile and clothing group Seardel has announced what could be its first round of retrenchments, which will leave 1400 workers without jobs.
The restructuring is an attempt to return the company to profitability after it recorded operational losses in its latest interim reporting period, ending in December.
Several divisions of the Frame Textile Group will be closed, including weaving and finishing, denim and spinning.
Employees who will lose their jobs include members of the South African Clothing and Textile Works Union, whose investment arm is a major shareholder in empowerment group Hosken Consolidated Investment (HCI).
HCI controls 70.2percent of Seardel.
The relationship between HCI and workers has raised questions of a conflict of interest between unions' drive to protect jobs and the agenda of shareholders to maximise profit.
Seardel, along with the rest of the industry, has been battling because of low-cost imports from China.
Massive hikes in input costs, such as electricity, have also had an impact and these could not be passed on to customers.
But some analysts have said the company under-performed. They say the operational setbacks are not to blame for poor results.
Seardel said that over the past 10 years more than R360million has been spent on plant and machinery to raise efficiency levels, but it became clear that improved efficiencies alone would not be sufficient to compensate for the structural issues facing the industry.
An industry insider said there was no co-operation between the various units within the group. "The clothing and textile units did not co-operate with each other," said the insider.
There has been recurring speculation that the clothing and textile conglomerate might be asset-stripped in an attempt to realise maximum profit for shareholders.
Some shareholders have said the only way to access value would be to close down non-performing operations, sell land and return cash to shareholders.
Seardel employs 15000 workers.