AMSA: Price Increases - Further Feedback

STEEL INDUSTRY

AMSA: PRICE INCREASES

FURTHER FEEDBACK ON THE LATEST NEWSLETTER

KEEP THE DEBATE ALIVE

GIVE US YOUR VIEW

Dear Industry Employer

Following the newsletters in this regard (if you have not yet read the original newsletter, please click here), we have received more feedback following our request to employers to share their views in respect of this very contentious and business threatening issue:

• How do we continue to run our business with these increases! We are barely surviving and now these increases are killing us. Not good at all!
• R1000 a ton increase on Galv Coil is just insane. This continues the process of reducing my local manufacturing and increasing my Taiwanese/Chinese imports.
• What happens now is, the large project houses are moving their buying operations to China and India and are importing the completed product, complete mining plants etc. From there, we do not stand a chance.
• This is another fight not worthy of our efforts because nothing is ever achieved. I have long since resigned myself to the fact that anything to do with the metal industry, as a business owner you are merely along for the ride. Gatvol.
• We have to compete against imported products – metal price increases will leave us with very little or no margins and we will not be able to compete.
• Here’s a work in the spanner. The government has imposed a law that states that all scrap dealers must sell to the local metal foundries (ferrous and non-ferrous) at a 20% discount (sometimes greater) to the international price and at last months avg exchange rate. So already they forcing us to sell our scrap at a very uncompetitve rate to the mills. And the reason behind this is so [that] the foundries/mills can sell cheaper steel and boost the industry. I see that this is not the case after 2 years of this law being imposed, the foundries still selling at a premium rate, and not helping the industry. Why then, is our government doing all this? imposing this PPS (price preference system) as well as a higher import tax of steel from China if the foundries/mills don’t keep to their word?
• Local manufacturing in Metal & Steel Industry needs support for lower competitive prices to be able to grow and to do development.
• This is not sustainable in the long run.
• This is rediculous. Give us small businesses a break – will you? We are slowly being throttled. Price hikes are killing our small family business. We have been around for 25 years and this is the worst I’ve seen the industry. Stupid decisions being made by governmental departments, ministers and CEO’s are all part of the bigger problem. Can somebody with brains please step up and say “NO MORE”. If we don’t get this pricing sorted, there will be no more “small business” and yes, your unemployment figure will increase President Zuma. Also, may I ADD…kindly Google the small business percentage in SA. It’s HUGE. You are killing off what’s left of us in SA trying to produce, employ, survive, earn.
• We cannot compete with imported parts, in some instances I cannot buy the material for the price that some components are imported from China. I am expected to create jobs, [but] if this continues I might have [to] close down; then there will be no jobs.
• A CRYING SHAME! THEY HAVE KILLED SMALL ENGINEERING COMPANIES.
• AMSA pay the labour on their floor what they want – 3 times more than equivalent jobs elsewhere in the world. They pay a huge bill for a massive maintenance team, mainly outside contractors to maintain outdated, dilapidated machines. They pay a huge bill for a massive maintenance team, mainly outside contractors to maintain outdated, dilapidated machines. They pay their sales team bonusses (for what) to sell to only SA customers at “oversees comparative” prices. Kumba is mining and selling far below market prices just to sell. Mittal should therefor be even more competitive. The money between production cost and selling cost disappears… where to? Get the old operators in and see allready a 30% price reduction. Pay world market related salaries and cut the workforce by 45% and see!!!! High output, low prices.
• How can we survive if steel keeps going up, imports of steel have 10% duties but the products we make can be brought in duty free! We will have to stop manufacturing locally and become importers, end of story. More unemployed and a 50 year old business, paying big taxes, will be decimated. So the answer is to protect ALL local manufacturing with duties.
• We were informed today by one of our suppliers for Galvanised Steel Coils that besides the increase of this month, that there will be another increase of 8% in January 2017, which will be coming from Mittal…This is definitely going to hurt my business as we cannot absorb regular increases like this. The liaison that Mittal has with Government is disturbing. I believe that he simply says if you don’t give me what I want then I will simply close up and you (government) will loose 1600 jobs. I will do it. Then Government accedes. Never mind the many more thousands of jobs spread all over the country. We cannot remain competitive with a private enterprise that is backed by Government. Mittal has to raise its own capital to become world class to upgrade its very old plant, or leave the market alone so that we can have an even playing field.
• The sustainability of the local steel industry is strategic to the future growth of our country. Currently there is a global surplus on the steel supply side. This will not always remain so, at some point in the future global economy will return to positive growth, it is at this juncture where we will need our local steel industry. However having said that, we still need our steel industry to be globally competitive in order to make our products more affordable, we cannot keep relying on Rand depreciation to make our products competitive, and even that is not helping. Everybody seems to have forgotten that the old ‘ISCOR’ was a well managed and profitable state owned enterprise before being sold on to AMSA, and herein lies the problem. AMSA have not invested sufficiently in new equipment/ technology as that would probably have resulted in job losses, making them fall foul of both the unions and government. The problems in our industry and country are many and its going to take a collective effort by all the stake holders to find solutions.
• The government has wilted to the AMSA threats to close down some of their operations in South Africa. This is a very expensive exercise to retain the AMSA jobs, the excessive price increases passed onto the small businesses to pay for this exercise, will lead to many closures and loss of jobs in small business. Very strange for a government whose stated policy is to support and develop small business. Surely the union should and other players in the industry should make their voices heard. What does minister Rob Davies and the minister of small business development have to say.
• I struggle to decide what is the “utopia” scenario for South Africa, [and] this, our industry. If we import steel, the SA steel manufacturing industry struggle and the companies can’t survive. Isn’t it what happened with Highveld Steel? So if they struggle, me and the companies who mostly work for them, (steel manuf. industries) struggle because they don’t have orders, work, because of the cheap imports and that got a influence directly on us. If you work for other field, construction, you would like the cheap imports. Then you can compete with foreign suppliers / oversea suppliers and your company flourish. If we import, they, (steel manuf. companies) must close and you got massive job losses in that field. Here is the question? If you are a farmer and it doesn’t rain you are doomed. If you are a civil contractor and it rain you are doomed. Must it rain or not?
• Do away with import tariffs. We need China steel desperately.
• The monopolist Mittal must modernise and re-invest rather than taking their profits offshore which they are obviously doing as a foreign owned company – and not necessarily in dividends either. Imports is the only relief valve. Scrap the duty to force them to invest and re-invent, the same way the processors must continously invest and re-invent to stay competitive to Chinese imports of final goods which is already eroding our markets.
• Close inefficient subsidised lines and concentrate and improve efficient lines.All levels and inputs including labour, raw materials, entrepreneurship through market entry and the cost of capital must remain competitive for the industry to survive and in SA labour and raw materials are lacking.
• They are realy making it very difficult for the small enterprises and Mittal should be force to modernise its plants.
• I am a SMALL user but this increase equates to 10% at my level of operation. This on top of previous “adjustments” makes it extremely difficult … Integrated with final products we manufacture, it puts serious pressure on product price.
• AMSA is so wrong with the comment about Chinese steel quality. The structural steel we receive from China recently is far better than any locally produced steel we received in the past 15 years. The poorest quality came from Highveld Steel.
• Such a shame that we should have job losses!!!!

Let us continue this debate – give us your valuable input.

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Kind Regards

Gerhard Papenfus