The South African Pump Cluster (SAPC) welcomes the decision of the National Treasury to place an obligation on State-owned enterprises (SOEs) to buy designated pumps and medium-voltage (MV) motors from local manufacturers.
National Treasury issued a practice instruction note in terms of Regulation 8(3) of the Preferential Procurement Regulation of 2017, issued in terms of Section 5 of the Preferential Procurement Policy Framework Act 2000 for the designation of pumps and MV motors, with effect from January 10, 2018.
“The designation of local pump products would theoretically limit the number of imported products being supplied, which, in turn, will increase the volumes of local content through local companies, subsequently allowing for growth and job creation in the South African manufacturing sector,” says SAPC chairperson Ernie Muller.
This comes after a market study, commissioned by the Department of Trade and Industry (DTI) in consultation with the SAPC, on the designation of pumps and MV motors and to determine the local content percentage.
Muller says the DTI has requested a single point of contact for all queries related to a noncomplying request for quote (RFQ) from a potential supplier that cannot meet the local-content requirement or for an application for exemption from the instruction note by a potential supplier that cannot meet the local-content requirement.
“The DTI is thus looking at the SAPC to fill that role. The SAPC and industry, therefore, has a role to play in ensuring that any RFQ that does not comply with the instruction note is mitigated.”
He says SOEs and muni- cipalities have no preference for local content and have a tendency to buy imported products through a locally based agent, without regard for quality, suitability or product applicability.
Muller indicates that the local pumps industry comprises about 120 companies, of which 62 either manufacture all or some of their products locally. There were once 12 local manu- facturers in the borehole pumps industry, but only two remain, the rest have been taken over by imports.
“Many of the companies are subsidiaries of international groups or supply under a licence to an international group. Inter- national subsidiaries have set up major manufacturing facilities in South Africa and have been operating in these factories for the past 90 years.”
He says the total number of people directly employed in the local pumps industry is about 5 200, of whom 3 680 are employed by 62 companies that manufacture some or all of their products locally.
Muller points out that the major threat to the local industry is the import of cheap pumps from countries such as Mexico and China.
He is adamant that the designation will also increase the sales of ancillary equipment to be supplied with the pumps, such as MV motors and other pumping equipment or structures required.
Muller concludes by noting that the pumps industry is mindful of the need to remain price competitive and does not regard the designation as an ‘open cheque book’.