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2005 FIN – South African Fastener Manufacturers’ Chairman: Currency is Big Problem

November 15, 2005 FIN – South African Fasteners Manufacturers Association chair Rob Pietersma told Engineering News the biggest problem facing the industry is the strength of the country’s currency, the rand.

Importers benefit from a strong currency, but from an export perspective, South African manufacturers are finding it a challenge to compete, Pietersma told the South Africa trade publication.

That increases pressure in the form of pricing loyalty, which tends to support European manufacturers.

Also hampering South African manufacturers is a slow European economy.
South Africa’s fastener exports traditionally averaged 6,000 tons a year, but recently have dropped to 3,000. South Africa manufacturers produce 82,000 tons of fasteners annually valued at 1 billion rand (US$152.5 million).

About R600 million (US$91.5 million) of fasteners are imported annually, Pietersme estimated. Those include stainless steel products and highly specialized fasteners, which are uneconomical to manufacture locally.

The recent strength of the rand has increased foreign products entering South Africa, Pietersma observed.

The disadvantage is created by a number of factors, including the import parity pricing model used by steel mills in South Africa, Pietersma explained.

The country has higher labor costs than most other countries, he noted.

State-owned enterprises are allowed to run at a loss, provided that foreign exchange is generated, Pietersma added.

South African Anti-Dumping Duties

Safma has renewed anti-dumping duties against Chinese and Taiwanese nuts and bolts, but the duties are not as comprehensive as ones imposed by Canada.
China and Taiwan have dumping levels of 52% and 64% respectively, with the subsidy level being 32% and 7%, Pietersma told Engineering News.

Safma has a limited number of medium-size fastener manufacturers, but a larger number of small companies.

Smaller manufacturers tend to be more successful where they capture niche markets, Pietersma observed. The problem lies with those small manufacturers that, firstly, use old worn-out machinery and, secondly, have a tier of skills that was developed during the 1970s and 80s.

Larger manufacturers have a clear competitive advantage because they invest in training and skills development, largely conforming to the national training goals.

Pietersma suggested partnerships with fellow factories to increase capacities in the short term.

Safma operates under the umbrella of the Steel & Engineering Industries Federation of South Africa (Seifsa).

Editor’s Note: Articles in Media Spotlight are excerpts from publications or broadcasts which show the industry what the public is reading or hearing about fasteners and fastener companies.

The South African Fasteners Manufacturers Association is an organization of employers engaged in the manufacture of metal fasteners and allied products. Rob Pietersma is chair; W. Wooldridge, vice chair; and T. Botha, administrator. E-mail: Theresa@seifsa.co.za ©2005/2009 FastenerNews.com