Can New Hair undo CMH damage?

At the recent mohair producers’ conference held in Port Elizabeth in early June, the buying houses, for once, were not the hot topic of debate. Gordon Wright was there and shares his view of events that played out at the conference.

The only words producers seemed interested in hearing at this year’s mohair producers’ conference was New Hair, a new project in the industry. The ­conference was dominated by these two words, with vastly differing views as to whether New Hair was the next big thing in the SA mohair industry or whether it should be hastily dispatched like a rabid dog.

More than 15 years after the industry raised in the region of R10 million from producers by way of shares to found the now liquidated Cape Mohair Holdings (CMH) – not to be confused with Cape Mohair and Wool – the subsequent collapse of CMH and loss of virtually all shareholders’ funds has left more than a bitter taste in many a mouth.

Allegations of corruption, directors lining their pockets with CMH funds and conflicts of interest run rife to this day. Of greater concern seems to be the fact that producers will probably get very little, if any of their initial investment back, with very little recourse seemingly afforded to them.

Peter Cawood, director of the now ­liquidated CMH, stated to a packed ­conference that a forensic audit had been completed and no directors or ­management were found to be culpable for the state of affairs at CMH. Critics, on the other hand, counter that no ­forensic audit was actually ever done and Cawood was misrepresenting the facts.

The fact remains that millions of rands of ­producers’ money is down the tubes and no one has taken ­responsibility. If this had ­happened to a listed ­company, one ­questions whether the ­directors, after ­happily ­taking their hefty fees, would be able to absolve themselves of all ­responsibility and walk away from the mess so freely. The whole New Hair project was punted as a way to wipe the slate clean and start anew with the noble cause of ­empowering mohair producers once again. However, it too has stumbled but this time before it even got off the ground.

Of the initial R1,1 million raised, once again from producers, the project has ­suddenly been shelved. The initial ­investment has been reduced by over R800 000 by consultant fees and travel costs to promote the new venture to mohair ­producers around the country. New Hair says it was shelved due to the ­apathetic response by producers.

Producers say they were not fully informed as to New Hair’s intentions and should not be blamed for being ­hesitant to plough yet more cash into another ­venture with the shadow of CMH still ­hanging so ­heavily above. Whatever the case, the mohair ­producers’ conference turned into a bit of a fiasco, with mud-slinging and political ­posturing seemingly the order of the day and New Hair dominating proceedings.

Proponents of the idea feel that the new venture will help to better regulate prices paid to producers by adding a new buyer to the market and thus stimulating competition and sourcing new markets.Those against the idea cite ­producers’ bad track record, a lack of genuine ­marketing expertise amongst producers and a lack of trust in the structures ­representing New Hair. A lack of transparency and the perception that only a few will ­benefit from the new project and that New Hair will lead producers to lose focus on ­production were other concerns raised.

The buyers’ views are that there are only a few players in the market due to the fact that it is a very tough and specialised business. There is a proven history of bad business when ­producers try to do their own thing and there are already ­specialists in the industry paying fair prices based on supply and demand. Therefore, why try to reinvent the wheel when they already have the infrastructure, expertise, skills and markets in place?

All parties have merit to their arguments as well as their fair share of counter. In the end a resolution was passed to resend letters to the 900 or so producers outlining the objectives of New Hair and eliciting the level of support once again for the venture and the volume of clip producers would potentially be prepared to make available.

Whether or not this will ­rekindle the interest needed to make the project viable, only time will tell. One thing is for sure. After such a long and proud history of mohair ­production in this country, it is a real pity that personal agendas and petty grudges have been allowed, so openly and ­shamelessly, to be aired on such a public platform.

All the while, the agents and buyers are watching bemused from the ­sidelines, just too happy that they are not the ­centre of attention for once and ­happily ­muttering the dictum “stick to what you know” under their collective breath. Regardless of the outcome of New Hair, it seems largely to be the ­symptom of deeper underlying problems and a possible lack of strong, clear leadership to take the mohair industry to the next level.