Zimbabwean company says it may have to pass Disney job because of exchange rate

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.

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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.

——————————————–

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

(95 VIEWS)