Steel master plan gets into gear as the industry discovers collaboration

The sector’s competitors from abroad are all hunting as packs for markets in the country’s backyard, Africa

On November 1 30-odd individuals gathered in an unprepossessing, mostly beige and brown meeting room in Block C on the campus of the department of trade, industry & competition in Sunnyside, Pretoria. Several more joined online.

Coffee and muffins were served in the morning, and there was a light lunch of grilled chicken, chips and salad. Everyone was on their best behaviour; there was no lecturing, no hectoring and no grandstanding.

The media was not invited — not because this was a clandestine, under-the-radar get-together but because the organisers did not think there would be much of a story emanating from the proceedings on Tuesday. In the event, a brilliant story did come out of that one-day gathering.

The meeting was called a workshop, and it was designed to develop an effective, all-party export strategy for SA’s steel sector after all the work that had gone into the Steel Master Plan over 18 months. For steel — and most of the other parts of our economy for which master plans have recently been developed — exports are the pointy end of generating job-creating growth.

If local steel businesses can compete effectively in foreign markets, they are likely to be competitive on their own and should be sustainable in their domestic markets.

The meeting was organised, hosted and led — adroitly — by the department, with Business Unity SA moderating. In attendance were development finance institutions, private sector bankers, manufacturers, researchers, consultants and as many business associations as you could shake a stick at (the Manufacturing Circle included).

At one point the boss of one development finance institutions, evidently speaking on behalf of the likes of the Development Bank of Southern Africa, the Industrial Development Corporation, the department and the Export Credit Insurance Corporation, acknowledged that all of these august (public sector) acronyms had never before seriously tried to work together to promote SA exports. Not just for the steel and manufacturing sectors, but for anyone.

There were murmurings and mutterings from the private sector along the lines of: “Well, shouldn’t you have picked up the phone ages ago and at least talked to each other?” The murmurers and mutterers had a good point. But there was no private-public, “us” and “you” rancour because the private sector people knew (and acknowledged on the day) that they were just as guilty of operating in self-imposed silos when it comes to selling this country abroad.

What everyone present in the Red Room in Block C that Tuesday acknowledged was that other countries are eating SA’s breakfast in its own backyard — Sub-Saharan Africa. Breakfast we had bought the ingredients for, marinated and cooked. They were doing so because we (SA) identified opportunities and nudged open doors, but on an individual, unco-ordinated basis and then did not have the stamina or resources to follow through.

Everyone present acknowledged that our export competitors are running rings around us because they go into the business of selling as a team. Our competitors energetically and constantly corral embassies and high commissions, bankers and other willing funders, domestic development finance institutions, manufacturers and engineers to work on big tenders and big investment and sales opportunities. We have simply never worked like that before. But on November 1 the steel sector began to think differently. And committed to acting differently. All role players committed to working together as SA Steel Inc.

At the workshop bankers and development finance institutions explained how, today, government departments across Africa all have their own agendas and their own project pipelines. But most governments can only afford a handful of priority projects per year. The big private sector investment projects are easily identified, as are the ones with the greatest likelihood of actually getting to closure.

However, those promoting most of these projects want bidders to give them the whole enchilada: they want the project financing solution, engineering, procurement and construction contractors and subcontractors and component, competitive manufacturers. And they want to know that the supply arrangements are not going to break down.

As South Africans we can point to spectacular successes in pulling off large infrastructural projects (which, incidentally, all consumed large amounts of steel) in Mozambique, West Africa and elsewhere by bringing multiple parties to the table. Projects in which the finance and insurance, the project-management, manufacturing capability and logistics were brought to bear on work that creates wealth and jobs. We just don’t do enough of it, and we don’t do it at scale.

Steel is harder to export competitively over longer distances than many other products, so our steel value chain has a stronger focus on big infrastructural projects in Africa (and their subsequent operation). For most of the infrastructural megaprojects on the go in SubSaharan Africa, our engineering, procurement and construction contractors lack the necessary scale and, often, skills. But the big international players lack on-the-ground (or nearby) boots with skills. We have world-class engineering skills. We also have softer skills, including project research and project delivery skills, and we have an Africanness that the Europeans, Asians and Australians will never have.

We just need to be far more aggressive in our marketing at least as aggressive as our competitors, which are all hunting as packs for markets in our backyard. And who are already working hard to cash in on the recently enacted African Continental Free Trade Area.

That November 1 meeting achieved lots of good things. One of these was agreement on our need not only to aggressively go after feasible projects with a compelling, kitchen-sink offering, but to consistently and aggressively market SA Steel Inc. We are mostly strong in the Southern African Customs Union countries, and we still have opportunities in East Africa. But we are far weaker than we should be in West Africa and in the northern bits of Sub-Saharan Africa, where we are more heard about than actually known.

I am by no means given to hyperbole or exaggeration, but something promising happened in the Red Room, C Block, Pretoria on that Tuesday. For the first time you could feel the Steel Master Plan getting into gear.

● Rodseth is executive director of the Manufacturing Circle, which is organising SA’s inaugural Export Forum — Teaching the Tricks of the Trade on November 28-29.