Jun 22, 2012
Industry’s future dependent on full implementation of antidumping dutiesBack
Engineering|Africa|CBC|MCEP|PROJECT|Stainless Steel|Transvaal Press|Africa|China|South Africa|Manufacturing|Mining|Product|Products|Reduced Manufacturing Base|Stainless Steel Screws|Steel|Israel Bender|Power|Rob Pietersma|Maryland|Far East
© Reuse this
Last month, the International Trade Administration Commission of South Africa (Itac) imposed a hefty antidumping duty of 104.5% on the importation of fully threaded set screws with hexagonal heads, excluding stainless steel screws from China.
This followed an investigation by Itac, which found that these imported screws had caused local manufacturers to lose business.
In July last year, Safma submitted evidence of dumping to Itac. This showed undercutting, depression, and suppression of prices by China, resulting in a decline in capacity use, output and profit for local manufacturers and an increase in inventory levels.
Pietersma says the association brought the application on behalf of two large South African set screw manufacturers, CBC Fasteners, of which he is MD, and Transvaal Press.
These measures are seen as an extension of existing antidumping measures against Chinese and other Far East nut and bolt manufacturers.
The provisional duty will remain in force until November 2, by which time it is expected a full investigation by Itac would have been finalised.
Pietersma says that to understand the current state of the fasteners industry, it is important to consider the past.
However, he notes that, during the last 20 years, the growth of Chinese manufacturing and dumping has been a worldwide phenomenon.
“Since the 2008 global recession, imports have continued to increase and South African manufacturers tended to decline in numbers. The net result is a reduced manufacturing base,” he says.
He adds that, in the South African domestic market, imports have now escalated into the thousands of tons and, as a result of international competition, the country’s export market has been decimated.
“Another factor significantly influencing our position in the market has been the strength of the rand. Although we have seen times of weakness, there have been more times of strength,” he says.
In addition, he states that one should consider that some duties that were at about 19% in the early 1990s were reduced to 10% by the late 1990s, a factor that also fostered imports.
“So, my estimation of the reduction of employment in this relatively small industry is a 20% drop during the past three to four years.
“Manufacturing’s contribution to South Africa’s gross domestic product has also declined – 16% was the previous low and it is now at about 14%. It should be at 25%, where it has been historically,” he says.
“The recognition by government that the manufacturing sector needs its assistance to grow and recent developments in the right direction to support growth are aimed at correcting imbalances in the industry, because it is through manufacturing that the country will be able to really create growth and jobs,” he says.
It is important to remember that South African manufacturers have not been, and are still not, assisted in any form by government, states Pietersma.
“That is why one has to look at manufacturers in the East. It is not just China that is exporting large volumes of goods to South Africa. These other countries in the East are also faced with a weak currency, as well as incentives and rebates to export.
“Those incentives and rebates are strongly supported by their governments and they are the factors that we are competing against, besides cheap labour,” he states.
Nevertheless, Pietersma is optimistic about government’s attempts to assist the local industry.
“The Department of Trade and Industry, in terms of its new Manufacturing Competitive Enhancement Programme (MCEP), has recognised the need to assist the manufacturing sector to gain the strong economic presence the sector used to enjoy,” he says.
The MCEP is aimed at inducing manufacturing firms to upgrade production facilities, sustaining employment and maximising volume addition in the short term.
Another significant contributor to the industry’s future is patriotism, asserts Pietersma.
“We find that many importers in the country are actually foreign-owned and/or foreign- managed; so the patriotism around creating South African jobs is minimal and such import distribution is actually supporting Chinese jobs as opposed to South African jobs.
“Safma represents South African companies that are locally owned,” he says.
Local businesses, like project and mining houses, which are huge consumers of fasteners, have a responsibility to buy products locally and support the local industry, he states.
“The only areas of growth for the fasteners industry of late have been power station activities. In spite of this, the industry is still smaller than it used to be.
“The prospects for the future of the industry rely on the antidumping duties being able to stick,” he says.
Pietersma adds that any implemented duties also need to be policed. He notes that Safma and CBC are willing to play any role they can to ensure that such policing happens.
“A lot of time, effort and money have gone into trying to secure these much-needed duties and it needs to be effective. Laws must not only be put in place, they also need to be policed. If you don’t police and levy the duties on the dumped goods properly, then you have nothing,” says CBC Fasteners financial director Israel Bender.
Pietersma emphasises that Safma is confident about the duties being permanently implemented.
“It is, of course, too early to say whether or not the duties will definitely be implemented, but Safma is confident, owing to the fact that we were able to submit strong prima facie evidence of dumping,” he says.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines (150 word limit)
Other Manufacturing News
JSE-listed packaging firm Astrapak on Friday said it expected to report a loss a share of between 42c and 44c for the six months ended August 31, compared with a loss a share of 23.4c in the prior comparative period, mainly owing to the impact of industrial action....
Electrical engineering and manufacturing company Ampcontrol Africa on Friday officially opened its new 10 000 m2 engineering and manufacturing facility, in Boksburg, with the facility expected to be the backbone of the company’s future growth. Market diversification...
A computing platform to ensure the availability of critical processes and control systems is receiving increased attention in South Africa to ensure that the software driving new industrial systems, including automated and robotic processes, functions continuously,...
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
While Ekurhuleni-based transformer manufacturer Reliable Transformers currently designs, manufactures and tests its products according to the SANS 780 specifications for distribution transformers and other applicable transformer specifications, it is working towards...
Global endpoint security solutions company Kaspersky Lab has introduced new measures to prevent cyber criminals from accessing sensitive data, alongside its malware-signature and heuristic device analysis detection methods. Threats to mobile devices have increased...
To ensure uptake and a positive impact, Wireless Fidelity (Wi-Fi) networks in cities must be provided at schools, community centres and commercial centres to enable citizens and government to access information that will improve access to and delivery of services....
Eco-estate Monaghan Farm, located near Lanseria airport, north-west of Johannesburg, has taken a new approach to modern living and sustainability with its 517 ha development, dedicated to farm living.
Forklift and lift-truck distributor Goscor Lift Hi-Reach launched the Genie SX-180, the tallest self-propelled super boom in Africa, in Johannesburg last month. “As the official distributor of the well-known Genie range of equipment in Southern Africa, we are pleased...