8 February 2022
By: Lucio Trentini
To view the original article in Business Day please click here
SA businesses in the metals and engineering sector have faced enormous challenges over the past few years, with the Covid-19 pandemic compounding an already difficult situation.
A shrinking domestic market, declining production, weak production sales, a smaller contribution to the economy, increasing joblessness, cheap imports and low investment levels are just some of the issues they now face.
These challenges do not plague the metals and engineering sector only, and their knock-on effects are felt throughout the economy due to its role as supplier and customer into the auto, motor, mining, construction and other manufacturing sub-industries.
Manufacturing companies play an integral part in the supply chain of the SA economy and the sector will struggle to recover without support. It already relies heavily on demand from government projects to boost its production and sales, especially for products such as steel and other downstream products.
This is why the government must speed up the implementation of its infrastructure investment plan and implement reforms across state-owned enterprises (SOEs), as the lack of progress on these and other projects is delaying the revival of our economy.
Some form of protection against the dominance of imports while promoting domestic manufacturing and suppliers can also make a difference, though in the longer term the international competitiveness of the sector will need to improve before local producers can assume the role of preferred supplier to both domestic and international markets.
There is also help at hand in the form of the African Continental Free Trade Area agreement, which offers new opportunities for trade on the continent in the metals and engineering sector.