Members of trade organisation South African Machine Tool Merchant Association (MTMA) have adapted to Covid-related impacts, such as importing delays, as 2021 progressed. However, unforeseen events, such as mass unrest in July last year and flooding along the South African east coast, have added to challenges experienced in the industrial and manufacturing sectors.
The unrest and rioting in KwaZulu-Natal and Gauteng in July 2021 caused property damage and a loss of business confidence in those regions. This has added pressure to “already reeling manufacturing and industrial companies”, explains MTMA chairperson Joanne Canossa.
The impact of the unrest was then exacerbated by South African rail, port and pipeline company Transnet’s declaration of force majeure over a cyberattack, which caused a backlog at South African ports.
“The situation became more desperate day after day as a knock-on effect was seen across industries such as road freight, manufacturing, agriculture and several other industrial sectors,” adds Canossa.
She explains that maritime freight logistics remain critical as vessels bypass ports owing to congestion. Container restrictions because of congestion in global supply chains can cause delays of up to six months for imported goods from European countries as well as inflated container prices globally.
Failing infrastructure at local harbours along with “devastating weather conditions” and its resulting infrastructural damage on the South African east coast will also severely impact manufacturers.
“We can only hope our shipping industry gets better towards the end of 2022,” says Canossa.
She adds that the steel industries strike in October 2021 resulted in a huge financial loss to both business owners and workers and the unethical loss of life.
Factory floors were abandoned for almost three weeks, resulting in a R200-million loss in wages and R500-million in revenue for steel manufacturers. Further, load-shedding resulted in a loss in revenue of R1-billion a day.
The Russia-Ukraine conflict since February 2022 has had a negative impact on the availability of machinery and components as well as energy prices globally. However, the conflict has also to some extent had a positive impact on the South African machine tool industry, says Canossa.
With the rand currently performing well against the US dollar and the Euro, sales look to increase over the next few months. There has been increased demand for South African commodities overseas to fill the gap caused by Russian sanctions. As a result, local manufacturing and processing companies are looking to upgrade their facilities and equipment to cope with the demand for export, explains Canossa.
Outlook for 2022 and Beyond
As an association, it is imperative the MTMA looks to the broader industrial sector to help its members, says Canossa.
Investment in the manufacturing sector is required to ensure a boost for both MTMA members and the local economy’s benefit. South Africa has a well-established manufacturing sector which provides various opportunities for investors to diversify their portfolio.
“This year, the MTMA would like to investigate how to work collaboratively with overseas machine merchant associations and, in turn, help these manufacturers, investors and our members take advantage of this lucrative environment,” says Canossa.
Despite the challenges experienced last year, MTMA member statistics for the last three years show a big jump in sales for 2021. Additionally, MTMA 2020 statistics show a 4% increase in revenue compared to 2019, while 2021 revenue increased significantly by 81% compared to 2020.
“This confirms that even though South Africa has been hit negatively for the past two years, businesses are investing in machinery and upgrades,” says Canossa.