Sep 23, 2011
Afsa calls for development of a national manufacturing strategyBack
Engineering|Expertise|Africa|Industrial|PROJECT|Projects|Transnet|Waste|Welding|Africa|China|South Africa|One Foundry|Energy|Equipment|Manufacturing|Manufacturing Industries|Overseas Products|Power Generation|Power-generation|Products|Services|Adri El Mohamadi|Afsa|Fabrication|Mark Krieg|Power|Waste|Far East
© Reuse this
Afsa executive director Mark Krieg notes the strong rand has resulted in imported goods being cheaper than locally manufactured goods in many sectors. Many businesses are unable to withstand this competition and close down, which contributes to the deindustrialisation of South Africa.
The federation has assessed different ways for companies to improve their ability to compete against imports; however, this is difficult, as imports from countries such as China are incentivised by at least 13%. “For many engineering companies, that is their whole profit,” says Krieg.
He believes there is an uneven playing field in the aluminium industry, owing to the export incentives on overseas products coming into the country.
Afsa is concerned that it has taken too long for government to recognise the severity of the impact of imports on local companies, as this has resulted in many companies closing down, with subsequent losses in jobs and potential export opportunities.
Local foundries will have to work towards becoming more competitive, and the only way for them to become more competitive is to invest in new equipment, says Krieg. “The adoption of technology would drive down costs, but this requires large amounts of investment. It is difficult for local businesses to justify large amounts of spending in the current economic climate.”
Other countries have bigger markets and have made greater technological advances that enable companies operating in those countries to lower their costs.
The ability of the Far East to produce products effectively and efficiently at a lower cost is another threat to manufacturing industries in western countries, says Afsa.
In these countries, people are prepared to work for lower wages. Further, these countries often incentivise exports, as well as the raw materials used by companies. This provides industries with greater economies of scale, which results in more productive industries.
“In China, the total foundry industry is able to produce 40-million tons of casting a year. One foundry alone employs over 375 000 people. South African companies have to be more flexible and look for opportunities in niche markets, where their ability is valued,” says Krieg.
Afsa fully supports free market principles, but states that trade must not only be free but also fair and sustainable, which is not the case.
He explains: “Some countries have export duties on their scrap metal while other countries have resorted to banning the exportation of scrap metal because they recognise the importance of scrap metal as a strategic resource.”
Krieg feels the export of scrap is an important topic that Afsa has been dealing with for the past 11 years. He says the federation has been lobbying government for control over the export of scrap metal for years.
He emphasises it is important that Southern African governments support local manufacturing industries.
Plans to build new power generation plants and plans to renew State-owned Transnet’s rolling stock are some of the major economic stimuli that could benefit the local aluminium industry.
All the products and expertise needed for these projects can be imported; however, the challenge at hand is to manufacture such products locally, which will assist in growing the manufacturing industry, increase economies of scale and generate investment, says Krieg.
There are initiatives that have been set up through the Department of Trade and Industry’s Industrial Policy Action Plan to support the aluminium industry. One such initiative is the National Foundry Technology Network (NFTN), the culmination of a government and industry association-led effort to develop a globally competitive South African foundry industry.
NFTN project leader Adri El Mohamadi says that, because foundries are seen as possible job creators, it is important for government to have input in this industry.
NFTN provides many services to aluminium foundries, including skills development and technology transfer innovation, which involves upgrading the foundry industry by focusing on specific subjects, such as energy or waste management, which will help to improve the industry’s competitiveness.
It also aims to ensure that information sharing takes place between foundries.
Afsa has been impressed by the success of the NFTN programme and has proposed that a similar scheme be set up for the welding industry. “Welding is a scarce skill vital for a successful fabrication industry if it is to be capable of producing safe, high-quality fabrications such as structures, vessels and vehicles,” says Krieg.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines (150 word limit)
Other Metals News
Updated 5 hours ago Information and communication technology services group Gijima on Tuesday announced that it would undertake a rights offer and restructure its existing trade receivables securitisation funding programme to ensure that it had sufficient working capital to underpin the...
Updated 6 hours ago Public Enterprises Minister Lynne Brown has urged that the best candidates be nominated to serve on the boards of State Owned Entities (SOEs). “Help me identify your brightest and our best,” said Minister Brown as she launched an initiative to obtain the best pool of...
Updated 6 hours ago The Square Kilometre Array (SKA) has brought art and science together in an exhibition celebrating ancient humanity’s appreciation of the night sky. In a first for the SKA Organisation, indigenous and local artists from South Africa and Australia have collaborated in...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
The South African new vehicle market is likely to reach around 630 000 units in 2014, down from the 650 000 units recorded in 2013, says Toyota South Africa Motors (TSAM) president and CEO Dr Johan van Zyl. Van Zyl is also president of the National Association of...
Efforts by the Kenya government to increase energy generation by 5 000 MW over the next three years received a major boost following the award of a $2-billion contract to build a coal power plant in Lamu. Despite allegations of irregular tendering process, the...
Using crafty wordplay on a well-known Internet meme, brilliant South African-born US entrepreneur and businessperson Elon Musk announced that Tesla Motors would not initiate patent lawsuits against anyone who, in good faith, wanted to use its technology. Instead,...
August new vehicle sales declined by 1.4%, to 55 722 units, compared with the same month last year. Assisted by the car rental market, the South African new passenger car market, at 37 953 units, contracted by 1 047 units, or 2.7%, compared with August last year.
With South Africans facing the challenge of reducing electricity consumption, the biennial Eskom Energy Efficient Lighting Design Competition, to encourage the integration of energy efficient lighting in architectural, engineering and interior design, received a...