A Zimbabwean company which had furnished 1 300 rooms for Disney’s Animal Kingdom said it had been offered another job to furnish 1 600 hotel rooms but it might have to pass the job because it could not do it at the current exchange rate.
Wilson International, which employed 850 people, said the exchange rate of Z$5 800 to the US$ had made the company‘s exports uncompetitive.
The company was thinking of relocating to Zambia.
Full cable:
Viewing cable 05HARARE125, BIG MANUFACTURER HALTS U.S. FURNITURE EXPORTS
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241342Z Jan 05
C O N F I D E N T I A L HARARE 000125
SIPDIS
STATE FOR AF/S
USDOC FOR ROBERT TELCHIN
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON
E.O. 12958: DECL: 12/13/2014
TAGS: EAGR PGOV EFIN ECON ETRD EINV ZI
SUBJECT: BIG MANUFACTURER HALTS U.S. FURNITURE EXPORTS
Classified By: Classified by Ambassador Christopher Dell
under Section 1.4 e/g
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Summary
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¶1. (C) Once Zimbabwe’s largest exporter to the U.S., local
furniture manufacturer Wilson International’s head recently
told Econoff that he now considers his firm uncompetitive in
the U.S. market. Due to an overvalued zimdollar and the
GOZ,s revocation of export incentives, Wilson currently
ships only up-market billiard tables to North America.
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No point in exporting at this exchange rate
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¶2. (C) In the early 2000s, Wilson International Managing
Director Jim Wilson said his firm furnished 1,300 rooms for
Disney’s Animal Kingdom and filled a large order for Drexel
Heritage. These contracts, plus the billiard table business,
made Wilson International Zimbabwe’s largest exporter to the
U.S. in 2002. However, Wilson said he no longer believes his
family-run business (850 employees) can compete in the
ultra-competitive U.S. furniture market while converting
revenue at the official Z$ 5,800:US$ exchange rate. Wilson
told us his labor, raw materials, property taxes and
utilities expenses rose on average by 300-400 percent in
2004, yet the exchange rate appreciated from Z$6,500 to
5,600:US$.
¶3. (C) Wilson said Disney has asked him to bid on a new
1,600-room hotel project, but without a devaluation his firm
simply cannot compete against Chinese producers. He
expressed hope that Reserve Bank Governor Gideon Gono would
devalue the zimdollar after March’s parliamentary elections.
However, Wilson noted that Gono has rescinded tax advantages
for locally-owned companies like Wilson International that
operate from Export Processing Zones, depriving exporters of
a key incentive.
¶4. (C) On a positive note, Wilson said he was especially
pleased that the educational television series, “World’s
Best,” just selected his high-end billiard tables, marketed
in the U.S. through Presidential Billiards
(presidentialbilliards.com), as the highest quality anywhere.
The television show will send a film crew to Zimbabwe in
February to tape Wilson’s production process.
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Comment
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¶5. (C) If the GOZ does not devalue its currency, or better
yet return to a float, we have no doubt manufacturers like
Wilson International will eventually shift operations
elsewhere. Wilson admitted that he has been considering
relocating production facilities to neighboring Zambia.
DELL
(72 VIEWS)
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