Aug 01, 2008
Engineering, construction industry grows despite global market volatilityBack
© Reuse this
Saace CEO Graham Pirie says that even though the local infrastructure roll-out programme and the infrastructure investments from emerging markets such as China were initiated before the period of global market volatility, infrastructure builds cannot be halted as they are vital to the economic growth of countries.
“Government’s commitment of R500-bil-lion, in addition to the money invested in the 2010 FIFA World Cup stadiums, to be spent over three years, means that 2010 is a small component of a larger investment that government is encouraging,” says Pirie.
He comments that the infrastructure roll-out programme is necessary, given the 20-year infrastructure investment backlog that South Africa needs to resolve.
Pirie says that events hosted in the country since 1994 have encouraged infrastructure reinvestment. “Prior to 1994, South Africa didn’t host sporting or political events that would draw an influx of tourists into the country, so the need for infrastructure reinvestment was minimal. “From 1994, with the 1995 rugby World Cup looming, government got serious about resolving this. Certain sporting events, such as the 1995 rugby World Cup, the 2003 cricket World Cup and the 2010 soccer World Cup, focus the right amount of attention on infras- tructure reinvestment at the right time,” says Pirie.
The foremost challenge is the skills crisis. “Because of the 20-year backlog of noninvestment, there was very little focus on building the country’s skills base. “South Africa started to feel the effects in 2005, but the real effects of the crisis are being felt now. Companies are realising that they have to work smarter in order to survive,” says Pirie.
There are a number of initiatives being rolled out to decrease the effects of the skills crisis. Pirie reports that one such initiative is the promotion of engineering as a lucrative career to pursue. “This is predominantly being promoted through the Young Engineers Forum, which is a forum made up of engineers between the ages of 20 and 35. “The Young Engineers Forum visits schools, promoting the selection of engineering as a career path,” says Pirie. He adds that, in the interim, South Africa is importing skills and enticing engineers out of retirement.
In addition, Pirie reports that the 470 Saace member companies currently contribute about R100-million a year towards education and training. Pirie further adds that, should government reinstate bursaries for study towards a career in the public sector, the skills crisis will improve considerably.
Estimations show that China’s consumption of steel, a key component in international infrastructure expansion programmes, will grow by 11,5% in 2008 and a further 10% in 2009, accounting for 35% of the world total in 2008. This is expected to reach 36,7% of world total by 2009. Indian steel forecasts show that apparent steel use will increase by 8,9% this year and a further 12,1% in 2009.
China and India are following the lead of the United Arab Emirates, a country that has seen a plethora of infrastructure expansion initiatives since 2000.
Pirie says that the quality of South African training and education in the past has placed South African consulting engineers and construction firms in high demand oversees.
Pirie reports that there has been a significant amount of capital investment in Africa, which is helping to drive infrastructure reinvestment on the continent. “One has to look at Mozambique and Angola and the transformation in those countries after the attainment of relative political stability,” says Pirie.
“Political stability plays an important role in infrastructure investment. “There is a feeling in the industry that if Zimbabwe can attain political stability, there will be a significant amount of post conflict reconstruction, which will present many opportunities to companies in that market,” says Pirie.
He adds that, in the past, companies found it easy to go into Africa and set up businesses, but found it difficult to move around Africa owing to inadequate road infrastructure.
Pirie says that one has to commend the efforts of the New Partnership for Africa’s Development (Nepad) for promoting interconnectivity within Africa.
“Nepad has done a significant amount of work in improving the state of the roads and related infrastructure so that companies operating in Africa are able to do so without any constraints,” concludes Pirie.
Edited by: Laura Tyrer© Reuse this Comment Guidelines (150 word limit)
Other Infrastructure News
Phase 3 construction of the Maclear Wastewater Treatment Works (WWTW) upgrade project, in the Eastern Cape’s Joe Gqabi district municipality, will start in June this year, says South African black-owned engineering firm Gibb, This phase will include the construction...
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.