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The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) has warned that rolling power cuts and logistics bottlenecks are strangling the sector, which employs over 200,000 people, and stressed that growing the economy is the only way to address the country’s woes.
Speaking to Newzroom Afrika, SEIFSA CEO Lucio Trentini shared his concerns for the industry and how it would impact the country if the challenges weren’t met with urgency by the government.
“The challenges that the industry faces over the past couple of years have had a disastrous impact on the industry, and the metals and engineering sectors are very important parts of the economy,” he said.
“The sector employs over 220,000 blue-collar workers across more than 10,000 businesses and contributes around 3% of the country’s GDP or R900 billion.
“So when this sector stutters and struggles to meet its commitments, the consequences will be felt across the entire economy,” said Trentini.
He further noted that the metals and engineering sector is a supplier and customer to major players in the economy as well, such as mining, construction, manufacturing, agriculture, and auto motor.
Trentini said load shedding has been the biggest growth killer for the industry over the past two years.
Concerningly, he added that while there are moves being made on a macro-level to try to tackle load shedding, on the ground level, many businesses that don’t have deep enough pockets to escape load shedding are not surviving – risking jobs, economic input, and revenue.
The alarm bells for the industry were also highlighted in Stats SA’s latest manufacturing report for November 2023, which showed that manufacturing production in the country increased by 1.9%.
However, Investec said that despite November’s moderate annual growth, conditions in the manufacturing sector “remain lacklustre”.
Additionally, one of the largest negative contributions to South Africa’s manufacturing production was basic iron and steel, non-ferrous metal products, metal products and machinery (-1.4% and contributing -0.3 of a percentage point).
According to the ABSA manufacturing survey for Q4.23, the index measuring confidence “has shown little improvement over the past three years and remains far below the long-term average of 37”.
South Africa’s numerous domestic challenges include an inconsistent electricity supply and logistical constraints that continue to impede optimal activity. “The intensity of load shedding was ramped up towards the end of November, while congestion at the ports will have delayed the delivery of significant inputs,” said Investec.
Trentini said if reforms aren’t addressed soon, the new year ahead will be a very tough one for South Africa’s key indicators, such as employment and economic growth.
On a positive note, Trentini added that the federation believes that there is a desire from the government to work with businesses to foster an environment of growth for business; however, Trentini said the current challenges need to be addressed urgently – much quicker than the current pace of government.
Read: State collapse and load shedding – what executives fear most in South Africa
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