We need buyers, regardless of rand
MANUFACTURING was the sector that played havoc with the country’s economic performance in the first quarter. Its contribution fell by a whopping 7.9% though, as economist Philip Mohr warns in his book Economic Indicators, quarterly gross domestic product (GDP) figures may hide any number of aberrations and need to be treated with care.
However, given that manufacturers have been bleating about the need for a weak currency to restore their competitiveness (and margins) in international markets, why didn’t the sector deliver when it got what it wanted? “If the rand was the only thing that mattered,” responds Manufacturing Circle executive director Coenraad Bezuidenhout, “we’d be doing well; unfortunately, there are a host of other factors.”
Some of these are temporary but others are structural and will require months, perhaps years, of effort to correct. The problems that hit the sector over the first quarter included steel shortages caused by an extensive fire in early February at ArcelorMittal’s Vanderbijlpark plant, which resulted in the company declaring force majeure on its deliveries.
Shortages of tin plate and difficulties in securing the correct grades of coal didn’t help; nor did continuing problems with rail and port capacities. Managers also expressed concern about the security of the power supply, a problem that weighs heavily on those whose product is intimately tied to constant electricity availability.
Labour instability is yet another factor. It seems that those retrenchments that take place are tied directly to ensuring business survival.
But one of the biggest areas of worry is the effect of administered prices. Bezuidenhout says it seems that no one in the government is applying their minds to this problem. “Prices are being set without regard to the impact these have on the economy and without considering the effect of timing, both of which can be disastrous,” he says.
Administered prices are a matter of endless concern. Every recent Reserve Bank governor has expressed worries over the manner in which these are handled. It is not before time for a single department, logically the Treasury, to assume a supervisory role.
On the demand side, Bezuiden- hout’s comment is short and sharp: “The US isn’t buying; the Europeans aren’t buying.” This reflects exactly what I observed in an earlier column: irrespective of how competitively priced commodities may be (in this case, courtesy of the weak rand), if buyers have gone away there won’t be any sales.
Bezuidenhout emphasises that one quarter’s results don’t make a trend and says anecdotal evidence, supported by the Circle’s own data, suggests “a significant improvement from where we are now”.
GOVERNMENT websites everywhere are easy targets for hackers. The CIA reckons 40% of US government websites are vulnerable. More than 1,000 Indian government sites have been hacked in the past three years.
So it was no surprise when news broke that the South African Police Service website had been hacked. What was worrying was the indiscriminate publication of information on nearly 16,000 whistle-blowers, thus needlessly endangering them. A few weeks ago an IT specialist at the Council for Scientific and Industrial Research (CSIR) hacked into the website of a South African secret service agency. He did so to demonstrate its vulnerability, and called the agency to report what he’d done. Instead of being greeted with thanks for highlighting the problem, he was met with arrogant hostility.
That’s probably about what to expect from people in these positions. This country’s civil servants need some sharp lessons in civility. This may explain the government’s urgent need for that secrecy bill. It is terrified we might find out what it’s been up to.
And the CSIR man’s action underlines the aphorism that no good deed ever goes unpunished.
E-mail: david@gleason.co.za Twitter: @TheTorqueColumn