The Misr Spinning and Weaving Company. Also known as Ghazl Al-Mahalla is a large state-owned textile company in Al-Mahalla Al-Kubra, a manufacturing centre in the Nile Delta. It is Egypt's largest industrial facility and employs over 18,000 workers, many of whom have played an active role in Egyptian labour struggles. Large protests and strikes at the company after 2008 contributed to the collapse of the regime of former president Hosni Mubarak three years later. On 21 October 20,000 workers at Ghazl Al-Mahalla began an 11 day strike after the company refused to pay the 10 per cent pay increase decreed by President Abdel-Fattah Al-Sisi in July. The government considered Al-Mahalla workers not eligible for the raise because they already receive an annual seven per cent cost of living increase. This argument was refused by Mahalla workers saying who consider the 10 per cent “a cost-of-living adjustment package that the workers have been entitled to since 1987. It is a right that we gained as a result of protracted struggles.”One Mahalla worker told the weekly in early November.” Besides, the increase is not adjusted to the real annual inflation rate which is much higher.” He added. When workers of another textiles company, Kafr Al dawar, started a strike for the same reason, the government did not only pay the striking workers their dues , it also decided to give all the workers of the holding companies in the public enterprises sector the annual raise. This came after Prime Minister Sherif Ismail , met with representatives of different trade unions who advised him to give in to the workers' demands to contain the strike and prevent it from spreading to other sectors. Ghazl Al-Mahalla workers claim the strike cost LE30 million in lost revenues. The company currently sells about 70 per cent of its production on the domestic market, with the remainder being exported primarily to Europe. Egypt's total textiles exports reached $2.5 billion in 2014, a modest figure compared to the $25 billion in annual exports by Bangladesh, which plans to increase its sales of textiles to $50 billion within the coming five years. Although the textiles industry is one of the largest employers in Egypt, providing a quarter of all industrial jobs estimated at one million, and accounting for 27 per cent of the country's non-oil exports, it suffers from various problems. Textiles producers say that the vital industry is at risk despite positive factors such as Egypt's proximity to European markets, international trade agreements and comparatively low labour and utilities costs. There are around 7,200 textiles-related companies operating in Egypt today, according to the General Authority for Investment. But around 6,000 textiles factories are facing difficulties and are in danger of shutting down. More than 600 textiles factories have closed in recent months in Shubra Al-Kheima, an industrial district of Cairo, and several hundred more have closed in Al-Mahalla in the Nile Delta. Textiles manufacturers complain that the financial support provided by the government to exporters has been cut from five per cent to 2.5 per cent of the value of exports since the beginning of the 2015 fiscal year, making it difficult for Egyptian exports to compete with lower-priced products in international markets. China currently supports its exporters with a 17 per cent subsidy, but Egyptian exporters say that they can hardly get 2.5 per cent due to the government's excuses or delays. The Misr Spinning and Weaving Company was founded in 1927 by a group of Egyptian businessmen in collaboration with Banque Misr, which was established after the 1919 Egyptian Revolution. The Bank was designed to be “an Egyptian Bank for Egyptians only.” It began by providing capital for large-scale Egyptian industrial facilities, and considered the Misr Spinning and Weaving Company to be its flagship enterprise. The company was the first to be nationalised by then-President Gamal Abdel-Nasser in 1960. It began to diversify its cotton sources and products in 1975 after it established a garment unit to complement its cloth factory. To help modernise the company, the United States Agency for International Development provided $96 million in loans to the government in 1976. In 2005, company facilities were expanded to include eight spinning mills, ten weaving factories, processing units and labs, and recreational centres. The company is still state-owned, despite the large-scale liberalisation of other sectors of the Egyptian economy. Efforts to privatise many textiles companies, including Misr Fine Spinning and Weaving in Kafr Al-Dawar, were blocked by strike action. Like most players in the industry, the Misr Spinning and Weaving today no longer depends on the locally produced long- Egyptian cotton because it is too fine and too expensive to use in denim garments and T-shirts, the main items manufactured for Western markets. The cloth for exported garments is today mainly imported from Southeast Asia. However, experts say Egypt should make greater use of Egyptian cotton by expanding its use in related industries. The total value of Egyptian raw cotton exports is currently $500 million, and this could be increased to $2 billion if it was exported after spinning and $8 billion if it was sold in the international markets as finished fabric. Egypt's textiles sector, like many others, has also been negatively impacted by the recent dollar crunch. The country relies on the Suez Canal and tourism as main sources of foreign currency, two sectors strained by the political instability that followed the 25 January Revolution. The result was that the country's foreign currency reserves fell from $36 billion before 2011 to about $16.4 billion in October 2015, leaving the Central Bank of Egypt (CBE) with little firepower to defend the Egyptian pound from mounting pressures. In February the CBE imposed restrictions on the amount of dollars companies can deposit in the banks. The aim was to shut down the dollar black market, but the move made it difficult for companies to open letters of credit. The dollar shortage also hit the manufacturing sector, depriving industries the foreign currency it needs to import raw materials. Manufacturers have even complained that raw materials have been held up at the ports due to a lack of foreign currency. Manufacturing growth in Egypt fell to two per cent in the first nine months of 2015, compared to nine per cent in the same period of 2014, according to figures from the Federation of Egyptian Industries. Not only manufacturing growth was reduced: the non-oil private sector also dropped to its lowest level in more than two years in November 2015 as output and new orders declined. A survey conducted by the Emirates NBD Purchasing Managers Index reported that the main reason behind the fall was the weakness of the Egyptian pound against the US dollar. The shortage of fuel is another problem that has affected the industrial sector in 2015. Egypt had been suffering from shortages of the gas used to operate its power stations, and power outages have become routine over the past few years, especially during peak use in the summer. As a result, the government has given priority to providing domestic electricity while reducing the power available to factories. The energy shortages have caused companies great losses. For example, the Misr National Steel Company has registered losses of some LE1.4 billion over the past three years due to power outages. Some factories have reported shutdowns, while others have not been able to operate at full production capacity, particularly those making cement, steel and fertilisers. In an attempt to solve the problem, the government has given permission for energy-intensive industries to run on coal, an option that was previously only allowed for cement factories.
