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Sep 14, 2012

Low-quality imports affect manufacturers

Engineering|Port|Africa|Export|Springwell|Africa|China|South Africa|Port Elizabeth Factory|Lower-priced Finished Products|Lower-priced Imported Products|Machinery|Product|Products|Andrew Ogden|Bushy Botha|Keith Campbell
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Like many other industries in South Africa, the local wire industry is faced with imports of lower-priced finished products, which undermines the local manufacture of those products, says South African Wire Association (Sawa) director Keith Campbell.

“These imports are not the same standard as the materials that would be available from domestic mills, but buyers are currently price conscious as a result of the economic downturn and are not as concerned about quality as they should be.

“We have the capacity to produce these imports locally, which would generate business for domestic mills, as well as employment,” he states.

Sawa has expressed concern about the impact of lower-priced imported products since the South African government abolished import duties on wire in 2006.

The abolition of these import duties has resulted in local wire users being able to import duty-free and cheaper-priced wire from vendors such as those in China.

In 2008, the chairperson of Sawa, Bushy Botha, told Engineering News that South Africa was one of only a few countries that had duty-free imports on wire and that imports had increased noticeably since these duties were abolished.

“Although the reason for the abolishment was to lower costs for South African consumers, there could have been more local production if there had been more protection,” he said at the time.

Campbell notes that, while imports dropped during the first quarter of this year, this was the result of a decrease in demand for domestic materials, owing to economic factors.

He adds that this cannot be seen as an improvement in the import problem.

Further, he points out that Sawa members continue to look towards export markets to improve their sustainability and competitiveness, as the local wire industry has excess capacity as a result of low domestic demand.

Meanwhile, Spring manufacturer Springwell technical director Andrew Ogden believes the only way for companies to ensure competitiveness in the local wire industry is to acquire machinery that can deliver the high volumes of commonly used wire often demanded at low prices.

Springwell has invested in machinery, which allows it to be more competitive and widen its product offering as well as improve its ability to produce formed wire for various applications.

Ogden adds that the company plans to further invest in machinery to add to the product forming capabilities of its Port Elizabeth factory.

He points out that, while the local manufacture of speciality wire could create jobs in South Africa, demand for such products is too low to make it economically viable for companies to invest in technologies to produce speciality goods.

Currently, commonly used wires are readily available in South Africa, while speciality wires have to be imported when a solution is needed for specific purposes.

Campbell says, in South Africa, wire manufacturers and consumers use wire for low-tech products, such as fencing materials and fasteners, which is why there is limited local demand for speciality wires.

“Domestic volumes are too small for wire producers to manufacture speciality wires,” Campbell emphasises, adding that raw material availability is also curbed, as manufacturers are not interested in producing small quantities of specialised materials.

Edited by: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
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