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manufacturing production

Subdued Domestic Demand Likely To Constraint Promising Manufacturing Production Outlook, Says SEIFSA

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Johannesburg, 11 October 2018 – The latest manufacturing production data released by Statistics South Africa today confirms the resilience of the Metals and Engineering (M&E) cluster of sub-industries, despite the country officially stuck in a technical recession, Steel and Engineering Industries Federation Southern Africa (SEIFSA) said this afternoon.

SEIFSA Economist Marique Kruger said surprisingly, production in the M&E cluster of industries continue to trend upward in August 2018 from July 2018, in line with the broader Manufacturing sector, despite signs of headwinds underpinned by weeks of uncontrollable petrol price increases, generally weak exchange rate, high energy costs and municipal tariffs.

“The official output statistics released today is good and encouraging to businesses in an environment interlaced with doses of economic, policy and political uncertainty,” she said.

Output for August 2018 in the M&E cluster improved to 3.9% on a month-on-month basis, from a lower 3.2% recorded in July 2018, while there was a corresponding year-on-year increase of 4.6% in August 2018 from 3.4% in August 2017. The annual performance of the sub-industries was generally in line with the broader Manufacturing production which increased on an annual basis by 1.3% in August 2018 when compared with August 2017.

“Moreover, it is encouraging to note the dominant performance of key M&E cluster of industries, which were the largest positive contributors to the improved performance of Manufacturing. Specifically, the basic iron and steel, non-ferrous metals products, metal products and machinery all registered 2.1% improvement in the volume of production and contributing 0.4 of a percentage point,” Ms Kruger said.

She added that the improvement in Manufacturing output was generally good for the economy

“The current subdued domestic demand is likely to constraint Manufacturing production outlook. The expectation is for its cluster of sub-industries, including the metals and engineering industries, to continue to benefit from a possible up-turn in domestic demand (albeit mild) in due course. However, the continuous improvement in domestic growth will depend, amongst other factors, on the rapid implementation of the President’s stimulus plan – with the detail to be revealed in the upcoming Medium-Term Budget Policy Statement.

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

METALS AND ENGINEERING INDABA CONFERENCE DELEGATES

METALS AND ENGINEERING INDABA CONFERENCE DELEGATES PASS A RESOLUTION FOR GOVERNMENT TO BE EFFECTIVE IN IMPLEMENTING AND MONITORING DESIGNATION OF LOCAL CONTENT

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Johannesburg, 21 September 2018 – Delegates attending the 4th Southern African Metals and Engineering Indaba organised by the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) at the IDC Conference Centre in Sandton passed a resolution for Government to be effective in implementing and monitoring designation of local content.

During discussions in the 5th and 10th sessions, delegates expressed a strong need for the Government to be much more effective in monitoring the implementation of designation of local content in production processes across all value chains, and also expressed disappointment about the awarding of tenders by State-owned enterprises to foreign companies, when there is capacity for local businesses to manufacture the same products.

Delegates stressed the fact that designation of locally-sourced products (towards improving local content) should be complied with and that infrastructure investment without designation of products that can be sourced locally will be futile.  However, delegates acknowledge that there may be instances where domestic capacity may be less than stated demand, owing to the contraction or closure of some sectors or in the event of new product ranges. In these instances, delegates felt that a temporary allowance for imports may be granted, after full utilization of domestic capacity, with the knowledge that the supply deficit would undoubtedly induce expansion investment.

During the 3rd, 6th and 10th sessions at the conference, delegates made up of captains of industry, labour leaders, academics and senior international partner organisations also called on the Government to include the local manufacturing industry, and the diverse metals and engineering cluster within it, in decision making regarding foreign and domestic direct investments in order to promote beneficiation and job creation. Specific reference was made to Chinese investments which are often concluded without involving business with potential negative effects on local jobs. Given that it is important to create jobs and not lose them, the delegates repeatedly highlighted the importance of investment deals to be concluded transparently and with the maximum participation of the local industry.  

Recognizing the need for local manufacturers to be more competitive, in plenary session 8 delegates nevertheless called on Government to prioritize local businesses in all investment and construction projects, including Black Economic Empowerment partners in order to comply with South African rules designed to address racial disparities which continue to exist more than two decades after the end of apartheid.

During the 11th plenary session at the Indaba, delegates reflected on some constraints to South Africa’s international competitiveness, highlighting the need to benchmark the local cost curves with international standards with the aim of reducing skyrocketing costs. While also acknowledging the continuous efforts made by the government to protect local manufacturers from cheap, subsidized imports from Asia, via the imposition of necessary tariffs, delegates resolved that equal support should also be made available to the mid and downstream group of industries of the M&E cluster.

Delegates also resolved to call on the Government to reconsider its position on the introduction of a carbon tax in South Africa, arguing that it would amount to a production tax, which would further squeeze businesses’ margins. They warned that the introduction of carbon tax would impose additional costs to business, harm the economy and impact negatively on jobs at a time when South Africa badly needs more jobs to be created. Arguing that the country cannot afford carbon taxes, delegates said that it was vital for the Government to follow Australia’s example and abandon its plans to introduce carbon tax, as it did with its nuclear ambition earlier in the year.

 

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

Metals And Engineering Sector’s Performance To Be Better Than Originally Expected

Rebound In The Purchasing Managers’ Index For July 2018 After Months Of Subdued Performance Is Encouraging

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Johannesburg, 1 August 2018 – The rebound in overall business activity in the broader manufacturing sector is encouraging and bodes well for the future, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

Commenting after the release of the latest Absa Purchasing Managers’ Index (PMI), SEIFSA Economist Marique Kruger said the results of the lead indicator for August, which provides forward-looking insight into manufacturing’s health,  were encouraging.

The index improved from 47.9 percent in June 2018 to 51.5 percent in July 2018, placing the data above the neutral level of 50, which separates expansion from contraction. Ms Kruger said the improvement provided some relief following two consecutive decreases in May and June 2018, and that it was expected that it would also have a positive knock-on effect on output levels.

“The PMI data specifically provide hope and modified expectations for companies in the metals and engineering (M&E) cluster going into the month of August, especially given that all the sub-indices improved in July relative to June,” said Ms Kruger.

Ms Kruger said it was particularly encouraging that the employment sub-index improved from 46.0 percent in June to 50.8 percent in July, providing hope for an eventual improvement in the unemployment rate. She said that was important following Tuesday’s release of the Quarterly Labour Force Survey results which captured a total loss of 105 000 jobs in the manufacturing sector, which compounded the official unemployment rate to 27.2% in the second quarter of 2018.

Ms Kruger said the PMI data continued to reflect the burden of fluctuating input costs, fuel and energy costs borne by manufacturers, largely underpinned by the weaker rand.

“We welcome the data and hope for a continuous improvement in business activity in the short term, as the information provides some promising indications for the broader manufacturing sector, which has the largest indirect job creation potential,” she said.

Ends

Issued by:

Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za

SEIFSA PIPS A FUN FACTS GUIDE 300x300

SEIFSA CAUTIOUSLY OPTIMISTIC FOLLOWING A REBOUND IN METALS AND ENGINEERING SECTOR OUTPUT IN MAY

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JOHANNESBURG, 12 JULY 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is cautiously optimistic following the release of production data reflecting an increase in output in the Metals and Engineering (M&E) sector, despite a corresponding decline in business confidence and a volatile rand, the Federation’s Chief Economist, Michael Ade, said this afternoon.

The latest preliminary seasonally-adjusted data, released by Statistics South Africa today, captures an increase in output in the sub-industry, in line with the broader manufacturing sector, which also increased by 2,3 percent in May 2018 when compared with May 2017. After adjusting for the sectoral weights, the data indicated that production in M&E sub-sectors increased by 6,2 percent in May 2018 on a year-on-year basis, and by 10,8 percent on a month-on-month basis.

“The acceleration in output in the M&E cluster is welcome, albeit with a slight level of apprehension, given THE existing global trade war with the potential of constricting global demand, benign local demand and generally low domestic business confidence. However, the improvement in output augurs well for manufacturers in the M&E cluster and is necessary towards lifting the real Gross Domestic Product (GDP) figures for the second quarter of 2018, especially considering that current production conditions are relatively better when compared to some few months ago,” Dr Ade said.

Moreover, Dr Ade said that the rand has been very resilient in the face of headwinds, including prevailing uncertainty in the markets and heightened rhetoric from the world’s two largest economies about trade war.

He is optimistic that the relatively strong rand will help in reducing imported input costs, thereby enabling companies to bolster their margins.

“However, it should be pointed out that while this is generally good for importing businesses in the M&E cluster, there will be a slight set-back in export volumes, warranting the need to continuously monitor the trends,” Dr Ade concluded.

Issued by:

Ollie Madlala

Communications Consultant

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.seifsa.co.za

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.
Kaizer Nyatsumba

From the Chief Executive Officer’s Desk – March to April 2016

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In this space in the last issue of this publication, I bemoaned the fact that everything looked like 2016 would be yet another tough year for the country. Since then, more evidence of that reality has become available.

Thankfully, however, there appears to be a rainbow on the sky. Finally, it would seem that there is consensus among the different stakeholders groups – including the governing party – on the seriousness of the situation confronting South Africa. In an unprecedented manner, President Jacob Zuma’s State-of-the-Nation Address on 11 February focused quite heavily on the parlous state of the economy, with the President acknowledging publicly that the Government alone did not have all the answers.

In his annual Budget Speech, Finance Minister Pravin Gordhan went even further and stressed that it was only with the cooperation of the business community that the country may avoid a junk-status downgrade by the international ratings agencies. Indeed, both in the run-up to the State-of-the-Nation Address and the Budget Speech, President Zuma and Minister Gordhan had a series of meetings with business leaders, thus continuing the South Africa Inc. approach that they had adopted ahead of the annual World Economic Forum summit in Davos, Switzerland in January.

In March Minister Gordhan led a team of business leaders on an investment road show to the United Kingdom and the USA, during which they again spoke the same language. Amid some background noises about his relationship with current (at the time of writing) South African Revenue Services Commissioner Tom Moyane and the South African Police Service’s Directorate for Priority Crime Investigation (commonly known as the Hawks), Minister Gordhan has single-mindedly focused on the job at hand with great equanimity.

Although these are early days, and although it may be too late in the day to avoid a ratings downgrade, nevertheless this serious partnership currently on display between the Government and the business community is encouraging. Indeed, it is long overdue.

In fact, it is as if the Government has just woken up to the reality that business is a partner, and not an enemy. It can never be in business’s interest for South Africa to fail economically and/or politically. Instead, in order to thrive, business requires a politically and economically stable environment in which the rules of the game are consistent, known by all and adhered to.

Therefore, belated though this rapprochement between Government and business is, it remains something to be welcomed and commended. We need more such interactions and an even stronger partnership between the two stakeholder groups for South Africa to prosper.

It is important that, regardless of whatever reservations we may have about the lateness of this newly-found maturity, we commend President Zuma and Minister Gordhan for reaching out to business leaders in the manner in which they have done since the latter’s re-appointment into the Finance portfolio following the 9 December 2015 imbroglio that caused South Africa enormous harm domestically and abroad.

I hope that this newly-found partnership with the private sector will be replicated throughout all Departments in Government and throughout all tiers of government. This partnership worked remarkably well during the Mandela and, to some extent, the Mbeki presidencies, but was very much absent during the Zuma presidency – until now.

However, even with a rock-solid partnership between the Government and the business community, South Africa will still not achieve its full potential. Important though the two stakeholder groups are, by themselves they are not enough to take South Africa forward. The labour movement is a very important part of that equation.

Predictably, the toenadering between Pretoria and the business community has led to some concerns among the labour movement, which has watched events from a distance. It is vitally important that everything possible is done to bring the labour movement fully on board as a matter of extreme urgency. After all, labour instability is one of the main concerns that investors have about South Africa as an investment destination.

We wish the team well in its commendable – albeit belated – efforts to save South Africa from a junk status from the international ratings agency. They deserve our full and enthusiastic support. Long may this trilateral partnership continue in the country’s interest.

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The SEIFSA Awards for Excellence for 2015 are upon us. This is yet another opportunity for us to recognise excellence in our sector.

If you care enough about manufacturing in Southern Africa in general and the metals and engineering sector in particular and believe that you are one of the companies that excel in one or other part of business, then you also don’t want to miss out on the opportunity to enter for the SEIFSA Awards for Excellence so that you can be recognised publicly for your excellence and be rewarded for it.

There are seven categories in which you can seek to be recognised by a panel of independent experts. These are:

Most Innovative Company of the Year, to be awarded to a company that has shown the best level of innovation in Research and Development or Production, in the process either gaining market advantage or reducing production costs;

Health & Safety Award of the Year,  to be awarded to a company with the best legal compliance record when it comes to Health and Safety or the lowest Lost Time Injury Frequency Rate (LTIFR);

Best Corporate Social Responsibility Programme of the Year, to be awarded to a company with a CSI project that makes the biggest impact on the lives of its beneficiaries;

Customer Service Award of the Year, to be awarded to a company with the best/highest rating by its customers for its performance in customer service;

Most transformed company of the Year (X2), to be awarded to the most transformed company in terms of the composition of its Board of Directors, Executive Management and Managerial Team: one category will pit companies employing fewer than 100 people against one another, and the second category will pit companies employing more than 100 companies against one another.

Decade of the Artisan Award, to be awarded to a company with the highest number of artisans trained each year (for itself and/or the industry).

 

Among the awards to be given out in the CEO’s Awards category will be one for the SEIFSA-affiliated Employer Association of the Year, to be given to an Association that has worked hard to grow its membership and to ensure alignment with the Federation and its other Associations.

So, does your company excel in anyone of the categories mentioned above? If so, enter the SEIFSA Awards for Excellence and stand a chance to be recognised for your excellence. Such recognition should help you to improve morale among your employees, to motivate them and, through your marketing efforts, to get your company to stand out among its competitors. For more details, please visit www.seifsaawards.co.za.

Winners of the SEIFSA Awards for Excellence will be announced at a breakfast that will take place on 26 May 2016, the first day of the Southern African Metals and Engineering Indaba 2016. Now in its second year, this vital conference will take place on 26-27 May at the IDC Conference Centre in Sandton, following our conclusion of a strategic partnership with the Industrial Development Corporation.

The 2016 Southern African Metals and Engineering Indaba will be bigger and better, with speakers from our sector and related sectors, such as auto manufacturing, construction and mining. Former President Kgalema Motlanthe will open the conference. For more details, please visit www.meindaba.co.za.

Register now. In recognition of the current state of our sector and the economy, delegate fees have been reduced – and there is a 25% discount for those registering before 31 March 2016! Don’t miss out. Book now.

I look forward to seeing you at the second Southern African Metals and Engineering Indaba in Sandton on 26-27 May.

Kaizer M. Nyatsumba

Chief Executive Officer

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