There are some very positive stories in this issue whereby there is one on a big investment by a machining and fabricating company (Strucmac) in a new horizontal boring machine, another on how a steel supplier (Stewarts & Lloyds) overcame a challenging fabrication during Covid lockdown with material and staff restrictions and then there is the story where J.A. Engineering has completed the manufacture and delivery of 12 JAE 20-C shuttle cars for a first-time underground mining client, in record time. The customer included a penalty clause for late delivery, with a deadline for the first eight shuttle cars in just four months and the balance within six months. J.A. Engineering’s standard lead time for three shuttle cars is six months from date of order, but in this instance, all 12 were available within the 6-month period. This performance exceeded the customer expectations.
The Shopfront Focus stories cover two SME companies that have passion and are winning because of the hard work that the companies owners are putting in. The one company has also developed their own product, a spavel, which is a cross between a spade and a shovel. Because the company is not a ‘big daddy’ sponsored or financed company the owners have been very innovative in many ways on the manufacturing side and deserve recognition.
There is also a story on two ladies who have purchased a fibre laser and are getting started in an area of industry that is dominated by men. Not daunted, they are starting off small and in a niche area.
What is common amongst all of them is they all process and fabricate metal. A very important source for those processing sheet metal, and ultimately, they are all reliant on the supplier, ArcelorMittal South Africa (AMSA), South Africa’s only steel mill manufacturer. Many have tried to import metal but an uneven tariff regime protects AMSA at the cost of the downstream sector, they say. The steel and allied industries is an industry beset by multiple pressures from labour, poor industrial relations, and strike-related violence as well as a poor economic environment. An unreliable supply of high-priced electricity is a serious cost pressure for the entire industry and to add to the woes the downstream sector often faces competition from goods that enter the country at low or no duty.
In a January 2022 email to subscribers Alec Hogg of The Bizz News Insider wrote: “I pointed out how ArcelorMittal (AM) shareholders enjoyed a ten-bagging 2021 primarily due to the lobbying efforts of the Indian-owned company. A construction professional dropped me a note to confirm why users of the steel maker’s products are at the opposite end of the spectrum.”
“A cursory look at index PO151.1 from Aug 2020 to Jul 2021 shows the cost increase in Metal Roofing steel was 57%; Structural Steel 30%; and Metalwork 38%. This is a direct consequence of material availability (AM chokes the supply) with potentially competitive imports limited by duties.”
He added: “While AM whines about unfair foreign competition, it is not competitive because of its outdated plant and machinery. The plant is being run into the ground and the owners are only interested in their bottom line profit while the lights are still on in RSA.”
“Even worse than a greedy capitalist is an ignorant (or crooked) bureaucrat who writes regulations that make such excesses possible.”
Then in February 2022 we get AMSA’s latest financial report. Extracts from the report produced by the JSE SENS Department said: “Despite the volatility from the ongoing presence and repercussions of Covid-19 and its various variants, 2021 was an exceptionally strong year for ArcelorMittal South Africa. The company’s annual results were supported by a continuing strong price environment, higher sales volumes, and the benefit of robust price-cost effects, all resulting in the highest yearly EBITDA (R8 569 million) and headline earnings (R6 860 million) since 2008.”
It is no wonder the downstream industry is complaining. And they still have to rely on AMSA to stay in business.