Speaking after the release of production figures, SEIFSA Chief Economist Henk Langenhoven said that the Federation had previously warned about the combined impacts of production disruptions and unfavourable economic conditions that faced the metals and engineering sector in 2014.
The full-year production data confirmed that the sector had contracted by 2,8% during 2014, when compared with performance in 2013.
“The only highlight of the December data is that on a year-on-year basis, December 2014 was 2,4% higher than December 2013,” Mr Langenhoven said.
He said that only two out of ten of the sub-industries – namely other fabricated metals, and household appliances – had recorded minor expansion over the 12-month period.
“It is clear from the sub-industry performances that they found it particularly difficult to resume normal production in December after the November electricity disruptions,” Mr Langenhoven said.
Over a 12-month period, the respective sub-industries contracted as follows:
- Rubber products – 7,2%,
- Plastics – 3%,
- Basic iron and steel – 0,4%,
- Non-ferrous – 3,9%,
- Structural steel – 7,1%,
- General purpose machinery – 12,3%, and
- Electrical machinery and equipment – 0,7%.
“Therefore, 2014 was a disappointing year. It was expected that growth would resume after the 2% contraction during 2013, but the hope of continued domestic and international economic recovery at the beginning of the year faded during the course of the year,” said Mr Langenhoven.
This meant that production levels were still 25% to 30% lower than they were in the peak of 2007. Employment declined, capacity utilization remained below optimum and profitability declined.
“With neither the demand nor prospects of growth in demand, as well as idle production capacity, profits do not materialize and little investments take place. The potential detrimental impact of the electricity constraints is unknown, but of extreme concern. The cumulative effect of the uncertainties does not bode well for 2015,” concluded Mr Langenhoven.