At least 1 000 metal workers at the Scaw Metals Group are being processed for retrenchment, the latest casualties of the impact of cheap steel imports into the country from China and India, as the group said it had over the past year been running with numerous cost-saving initiatives that included lay-offs and short time.
Scaw chief executive Markus Hannemann told Business Report that it was contemplating restructuring, and had issued a notice in terms of Section 189 of the Labour Relations Act.
“This unfortunate decision has been necessitated by the current conditions in the steel industry both locally and globally;” he said. “This process could potentially impact about 1 000 of our employees throughout our local operations.”
The development at Scaw comes on the heels of Evraz Highveld Steel pulling the plug on its South African iron operations, citing a lack of working capital as a reason.
Evraz, which at the time said that it planned to stop its steel plant, has been in business rescue proceedings for three months to protect it from creditors.
The company warned that it could cut as many as 1 000 jobs as weaker demand for steel and cheaper imports from China also hit its sales.
South Africa’s biggest steel producer, ArcelorMittal South Africa, also announced it was starting a retrenchment process, but backtracked for procedural reasons and will make its intentions clear soon.
At least 30 000 jobs in the steel sector are likely to be lost as the impact of cheap imports from China and India knocks the local industry.
According to the SA Iron and Steel Institute, imports of primary carbon and alloy steel products – excluding semis, stainless steel and drawn wire – amounted to 111 150 tons during June, 2.7 percent more than the 108 188 tons imported during May and an increase of 9.6 percent on the 101 422 tons that were imported during June last year.
Imports of primary carbon and alloy steel products during the 12 months from July last year to June amounted to 1 319 053 tons, an increase of 20 percent compared with the 1 099 239 tons of primary carbon and alloy steel products that were imported during the previous 12-month period.
During the first six months of this year, the imports of primary carbon and alloy steel products amounted to 777 467 tons, an increase of 57.1 percent compared with 494 829 tons of primary carbon and alloy steel products imported during the corresponding period last year.
Hannemann said that Scaw was heavily hit “by cheap imports combined with weak demand from the mining and infrastructure and construction industries”.
Scaw, which employs slightly more than 5 000 workers, is a producer of a diversified range of steel products with key operations in South Africa and Australia, as well as a presence in Zambia, Zimbabwe and Namibia.
According to its website, The Industrial Development Corporation holds a 74 percent stake in the group, 21 percent is held by a black economic empowerment consortium and 5 percent by an employee share ownership plan
“An immediate solution would be to introduce import duties that would provide an almost immediate relief to local companies. We need to take away local obstacles which impede on our competitiveness and provide growth opportunities,” Hannemann said.