Local fastener manufacturing in decline

20th June 2014 By: Pimani Baloyi - Creamer Media Writer

The South African fastener manufacturing industry is declining as the mining and power industries – its main customers – are not expanding, says the South African Fastener Manufacturers Association (Safma).

Safma chairperson Rob Pietersma tells Engineering News that, with the need to deve- lop power infrastructure and the push for alternative energy sources, the power industry has lately been the fasteners sector’s number one client, adding that this has changed, how- ever, “as the power sector’s steady growth market over the past six years is now coming to a close”.

In addition, the local fasteners sector’s cost structure, particularly energy and labour costs, has increased significantly in recent years, which means it now costs more to manufacture fast- eners locally.

Mining Impact
Pietersma adds that the ongoing industrial action in the platinum sector is affecting the local fasteners sector, as the strikes are significantly impacting on the demand of fasteners with some orders from mining operations having been postponed indefinitely, while others have been cancelled.

Citing Statistics South Africa’s recently released gross domestic product figures, he notes that this impact has been reflected in industry, with mining showing a 27.4% decline.

“While manufacturing was affected overall, reflected in the 4.4% decline, manufacturers more directly aligned to mining would have been more adversely affected. It is not only in the platinum industry where there are cutbacks – gold exploration is also declining.”

He adds that the mining sector’s current impact on the local fasteners industry is not without precedent, as the industry was originally built on the back of the mining industry.

Increased Imports
Pietersma states that imported fasteners have gained a greater margin in market share from local producers. “This growth can be attribu- ted to the export incentives of Far East exporters, where countries in South-East Asia, South Asia and in the far east of Russia are incentivised to export their products to South Africa. Other factors include the weak currencies of these countries.

“In some instances, local fast- ener manufacturers have been excluded completely by local companies that need fasteners, owing to imports,” he explains.

However, Pietersma adds that there have been positive industry gains with regard to imports. “The country has managed to get a greater number of import tariff headings, and imports are monitored for the use of duty and dumping applications.

We have also obtained a dumping duty on set screws of 73%; however, this was not entirely successful because of the exclusion of four Chinese manufacturers,” Pietersma concludes.