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Jul 12, 2012

Civil engineering showing signs of life, but Safcec warns on response rate

Engineering|Africa|Projects|Africa|South Africa|Product
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South Africa’s civil engineering sector, which has been experiencing difficult conditions since 2010, is showing signs of recovery, with turnover having increase 28% in real terms during the first quarter of 2012 when compared with the corresponding period last year.

The latest South African Federation of Civil Engineering Contractors (Safcec) industry update for the first quarter of 2012, shows that turnover also increased by about 12% quarter-on-quarter, which, in nominal terms, translated to R11.3-billion from R10.1-billion in the last quarter of 2011.

Order books benefited from improved contract-award activity in 2011, fewer civil projects have been postponed, the outlook for input costs is favourable for the next two quarters and companies are increasingly satisfied with the rate at which contracts were being awarded.

But the ‘State of the Industry: Second quarter 2012’ report also warns that confidence, which improved marginally in the first quarter, remains fragile, while tenders during the quarter disappointed, following several quarters of positive growth.

Nevertheless, most respondents are satisfied with the current tempo of activity, and an increasing number of Safcec-affiliated firms are also forecasting a “busy” third quarter.

For this reason, Safcec believes the worst may “finally be over” for the industry, which has endured a protracted period of contraction, resulting in major job losses.

Employment (excluding subcontractors) is still lower, at 98 837, than it was during the first quarter of 2011 and is well off the 2008 high of nearly 200 000 – a time when investment in South Africa as a percentage of gross domestic product peaked at 22.7%, having fallen to 12.3% in 1992.

The report says 44% of firms are indicating that they are considering hiring in the next quarter.

Safcec is concerned, however, about what it describes as a poor response rate from the industry to market studies and surveys, which it says will undermine informed decision-making by industry stakeholders and policymakers.

“Without support from individual players, industry representatives are not able to form a ‘unified’ opinion and the ‘outlook’ for the sector will become fragmented rendering stakeholders paralysed in their attempts to act for the better of the future of the industry,” the national employers’ organization, formed in 1939, cautions.

Resistance to sharing market-related information (within the boundaries of what is allowed by the Competition Commission) seems to have “become and industry-wide cancer”, Safcec laments.

Edited by: Creamer Media Reporter
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