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Jun 01, 2012

Imports curbing local industry’s potential

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South Africa is importing thousands of tons of consumerware products, such as cookware and cutlery, from Asian countries, despite having the capability to manufacture these products itself, says Southern Africa Stainless Steel Development Association (Sassda) executive director Bill Scurr.

Rather than importing these, the local manufacture of consumerware products, as well as many other products not related to the stainless steel industry, has the potential to create jobs, create wealth and drive skills development, which would be beneficial to the domestic economy, he adds.

As an example, Scurr points out that, in 2011, about 10 000 t of hollowware was imported from China, Hong Kong, Taiwan and Vietnam.

He attributes the high amount of stainless steel and related product imports to a combination of the unfair provision of various subsidies in the countries of origin, the inconsistent application of import regulations, the misrepresentation of products and the misleading use of packaging.

“There may also be a lack of capacity within government to enforce the applicable import regulations,” he adds.
Further, Sassda notes that, while the stainless steel industry does receive support from government when facing challenges, this can be a time-consuming process. “When companies are in trouble, they often don’t have time to wait for assistance.”

Scurr adds that the products being imported from Asian countries are also, in many cases, a lot cheaper than locally produced goods, as a result of cheap labour and the absence of labour laws in these countries.

“Sassda would never advocate the exploita- tion of labour or the absence of safety standards in the workplace, but we are urging government to look at the current import situation and to provide a level playing field by allowing the stainless steel industry to manufacture the products it is capable of producing.”

While concerned about imports, he comments that, with certain products, imports may be a natural result of South Africa not being able to competitively manufacture the products in question.

This is, however, not the case with con- sumerware, which comprises cookware, cutlery and utensils.

While many participants in the consumerware sector remain competitive, rising electricity and transport costs, coupled with South Africa’s complex labour laws, are potentially making it too expensive to locally manufacture consumerware products, such as knives and forks, which is a labour-intensive process, says Scurr.

Twenty years or so ago, there were a number of cutlery manufacturers in the country. Now only one such manufacturer remains and it is on very shaky ground, he notes.

Scurr adds that the South African industry has not yet been given a fair chance and adequate support to see whether it could, in fact, competitively manufacture cutlery.

Sassda often interacts with government to ensure it understands what the local stainless steel industry is capable of, so that it will allow the industry to contribute to the nation’s economic growth, and benefit from government’s planned major infrastructure programmes.

“We are not asking government to unreasonably or unfairly favour us in any way, but Sassda strives to represent a world- class industry and needs the support of government.

We believe the stainless steel industry’s inability to compete in some areas is the result of unfair economic practices,” says Scurr.

Growth Opportunities

State-owned freight logistics group Transnet, in April, announced plans to spend R300-billion on infrastructure between 2012/13 and 2018/19, which is expected to create 588 000 job opportunities in the country. This is part of government’s overall long-term plan to invest in infrastructure in general, in South Africa.

“This is a major growth opportunity for the South African stainless steel industry,” says Scurr.

He adds that Sassda needs to ensure that it helps its members from all industries, such as architecture, building and construction, consumerware, castings, tube and pipe manufacturers, fabricators, welding, services and stockists to position themselves and benefit from government’s planned infrastructure spend.

In addition, Scurr states that South Africa’s Industrial Policy Action Plan’s development integration, which aims to boost intraregional trade in Africa, also holds many growth opportunities for the South African stainless steel industry.

“Lifting the restrictions on trade and ensuring free trade between African countries could hold many advantages for Sassda member companies, as well as all other indus- tries, as businesses will be able to expand into new territories.”

Another major consideration for the local stainless steel industry is skills, he adds, stating that education, training and skills upgrading are three of the most important factors to ensure growth in the industry. The use of Sassda’s existing training and education programmes provides a tool to deal with this issue and plans are being developed to expand such programmes, as well as make them more accessible to more people through elearning technology.

Meanwhile, the United Nations Industrial Development Organisation (Unido) has helped benchmark manufacturing companies to see how competitive they are in comparison with the rest of the world and to increase their competitiveness.

“Unido equips manufacturing companies with the necessary tools to become more competitive in the stainless steel industry,” says Scurr.

Environment Friendly

Sassda urges its members to comply with environmental regulations and ensure that production processes are environment friendly.

The association has incorporated environment-friendly judging criteria into its Stainless Steel Awards for 2012. “This is a way of encouraging our members to be environment-friendly and recognising those who are,” says Scurr.

Stainless steel is 100% recyclable, which adds to the industry’s green footprint.

Scrap metal is used as the primary raw material in its production, with up to 70% of the product coming from recycled material.

“Stainless steel is the preferred material for green building throughout the world,” says Scurr.

Further, he says, going forward, Sassda’s main goals are to ensure the conversion and promotion of stainless steel in South Africa, to provide the association’s members with the ability to be competitive and to provide the users of stainless steel with the necessary knowledge of the material’s uses and applications.

He adds that the association also aims to ensure the provision of technical support and education and training for its members and to interact with government and resolve issues that impact on the local stainless steel industry.

“As a fundamental objective, Sassda aims to increase the amount of stainless steel that is locally converted,” says Scurr.

Edited by: Chanel de Bruyn
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