Sep 23, 2011
Afsa calls for development of a national manufacturing strategyBack
Engineering|Expertise|Africa|Aluminium|Export|Fabrication|Industrial|PROJECT|Projects|Rolling Stock|rolling-stock|Sustainable|Transnet|Waste|Waste Management|Welding|Africa|Energy|Equipment|Manufacturing|Power Generation|Power-generation|Products|Services|Power|Waste
© 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
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.