Steel construction sector seeks vote of confidence
Business in SA is “marking time” as it awaits the outcome of the May 8 elections. For SA’s steel construction industry, the hope is that the postelection dispensation will go a long way towards resolving the crisis in which the industry finds itself.
The South African Institute of Steel Construction (SAISC) trusts that after the election, public-sector policymakers will see the contribution the steel value chain makes to SA’s economy.
Steel forms the foundation of any modern economy; and is essential to every single industry sector. From a broader pan-African perspective, without a healthy local steel industry, SA will not be able to integrate and develop itself or the rest of the continent.
The steel sector — and SA — urgently need policies to instil confidence in the viability of the country to boost competitiveness and attract foreign direct investment. This will translate into projects that will stimulate the consumption of steel in all sectors.
The steel industry crisis has been fuelled by an exceptional increase in costs, very low demand, and labour costs which have risen faster than inflation, all of which combine to make running competitive steel mills and downstream steel businesses problematic.
These challenges impact the downstream steel sector adversely and affect the primary steel production sector.
Without a competitive local supply of steel, the downstream sector will inevitably look to import rather than buying locally. However, the benefit of imports is comparatively short-term: with fewer people employed, fewer people can afford
products made of steel.
It is vital that sustained attention is given to fostering the prosperity of the downstream manufacturers of finished steel goods. Without a healthy downstream sector, demand for steel will be weakened.
Regarding the issue of SA’s tariffs and safeguarding duties, the imposition of such tariffs can be a useful trading mechanism. However, this has to be managed with high levels of competence and careful thought — so that it is balanced and effectively monitored — to prevent SA becoming a dumping ground for substandard “grey” goods.
To kick-start the economy, there needs to be clarity on mining policy, including what implications the Mining Charter will have for local business. If mining gains momentum, it will stimulate manufacturing, creating the need for more construction using steel.
What SA needs to see is an infrastructure pipeline for the construction sector, and repairs and maintenance to ensure that manufacturing facilities, power generation — and other critical sectors — remain operational. Accessible, realistic government incentives to assist companies in their revitalisation are urgently needed.
Broad stakeholder consultation by the institute indicates that these views are also shared by the majority of the local steel sector.
We trust the government will take prompt, firm steps to implement the measures required, and ensure the future sustainable prosperity of the steel construction industry — and SA — as a whole.
Without a healthy local steel industry, SA will not be able to develop itself