Changes abound in the valve industry as the formation of The Valve and Actuator Manufacturers’ Cluster of South Africa (VAMCOSA) gears up to provide significant demand prospects for local manufacturers. However, with great promise comes great responsibility, and local valve manufacturing companies need to step up to the plate to produce world-class valves that are able to compete with imported products.
The South African Valve Manufacturing industry has been in a steady decline since 1994 as a result of the higher quality and affordability that imported products provide. In an attempt to turn the industry around and promote the growth of locally sourced valves, VAMCOSA was formed in 2011. While this may mean that industry giants such as Eskom will now have to look closer to home for a supply of valves, the pressure is on to meet demanding requirements for the same level of quality as internationally produced products.
In the next five years, Eskom is expected to replace an estimated 5 500 valves in on-going operations and maintenance projects at existing power plants, significantly increasing demand for control valves, multi-turn valves, quarter turn valves, as well as electric and pneumatic actuators. It stands to reason that local valve manufacturers will benefit considerably from this massive replacement programme.
The Department of Trade and Industry’s (DTI’s) decision to designate valves for local procurement by State-owned companies (SOCs) was one of the main reasons for valve manufacturers to form VAMCOSA.
In a recent newspaper interview Greg Walker of VAMCOSA said “To create jobs in the private sector, government, through the DTI, changed the procurement document, titled the Preferential Procurement Policy Framework Act, which SOCs use to buy from predetermined manufacturers. This enabled the Trade and Industry Minister to designate products, including valves, for procurement from local manufacturers.”
Walker explains that, prior to the enforcement of the procurement designation, a comprehensive valves-industry study was conducted, which included the determination of industry manufacturing capabilities and expertise.
“The study found that valves and actuators could and should indeed be designated for local procurement by SOCs. Valves were designated for local procurement at the end of February 2013. However, the instruction note from the National Treasury to the SOCs was effective only from March 3, 2014.”
“It is now law that SOCs have to buy valves from local manufacturers,” he says, adding that if SOCs do not want to buy valves from local manufacturers, they are required to apply to the DTI for an exception whenever such a situation arises.
“The local procurement designation includes a broad spectrum of valves, from simple household taps to complex valves used in specialised industrial and mining applications, with the local content of each valve or actuator required to be 70% by value. This provides an opportunity for local valve manufacturers to develop and add to their range of products the valves that might not have been available with a local manufacturer’s stamp prior to the designation,” says Walker.
“A lot of resistance was encountered from SOCs to buy locally made valves and this was largely owing to the SOCs’ perception of locally manufactured products being of “inferior quality”.”
“This is a real crying shame because a lot of the local valve companies have been exporting their products to overseas markets for many years, with no issues. If locally made valves are good enough to export, then why are they not good enough for local clients?” questions Walker.
Addressing the challenge
“The local procurement issue resulted in the formation of working groups for specific industries, such as mining, municipalities, waterworks, pipelines, power generation, oil and gas. Various members of industry representing specific valves sectors are part of these groups,” said Walker
“The working groups were tasked with identifying three categories of valves – those already available on the local market, those that should be manufactured locally and those for which local manufacturing will not be feasible.”
Walker said, for example, the local manufacturing of the duckbill valve will not be feasible. These one-way valves prevent effluent or liquid from returning to source once flow has ceased. Although these non-return valves are not complicated to manufacture, demand for them is almost nonexistent in South Africa.
“Further, the working groups also serve as a platform to encourage familiarisation with the various SOCs and their requirements and, in turn, for the SOCs to gain confidence in local valve manufacturers.”
Walker also states that the other objective of local procurement designation is to create sustainable jobs, which subsequently require production to increase and prices to decrease, as well as quality to improve, a good export market and associated export potential.
However, Walker noted that despite there being increasing acceptance of locally made valves, SOCs continue to use loopholes in some cases to acquire imported valves because of the persistent “inferior quality” perception.
“The benefits of buying and using locally manufactured valves include enhanced problem-solving ability, as clients and technicians can consult with local valve engineers for specialised applications and service procedures. Inspection and service procedures are also simplified with the assistance of local technicians and locally based stockholdings resulting in shortened lead times, and, in turn, decreased downtime to equipment.”
“Another advantage is job creation and local skills development through the local manufacture of valves. Therefore it should be in the interest of SOCs to pursue local acquisition on their own, and with a keen uptake, rather than having to be forced by law to buy locally made valves.”
“However, a major stumbling block in buying locally manufactured valves is pricing, as they are between 10% and 20% more expensive than imported valves, but as local production increases, the prices will subsequently decrease, bringing them on par with overseas products.”
Strategic alliance workshop
In view of the above VAMCOSA and some of it members got together with foundry owners and other strategic partners for a workshop. Some of the presentations given included:
• The valve industry one year after designation
• Current status of the South African foundry industry
• Supplier and product development in the casting industry
• PED Certification and
• A case study on ‘The Journey of ISO’ at Kew Foundries
In his presentation Walker mentioned three initiatives that are in the process of being rolled out. The first of these was the creation of a new manufacturing business through the off-take of a product, which was previously manufactured in-house, that can now be branded for opposition companies. The second has seen the development of a new valve as a result of designation and a new manufacturing facility to be set up in Witbank. The third initiative will be to implement a service whereby in the future valves will be repaired in the Kwa Zulu Natal area.
The day concluded with nine action points being put forward for further development and discussion.
Delegates that attended the workshop are seen in the accompanying pictures.
Greg van Deventer of Thomas Foundry and Grant Estman of Viking Foundry
Robert Exley and Carmen de Jong of Xmeco
David Barnes of Vestcast, Wayne McLachlan of Steloy Castings and Lukas Lessing of AZ Armaturen
Anthony Rochford of IPT with Garth Hilton and Shivren Sahadave, both of Nicro Pump & Valve
Greg Walker of Mitech with Martin van Meygaarden and Richard Oblers, both of BMG
Allan Bruggeman of Matt Cast Supplies with Ben Dyson of Malleable Castings
Cobus and Minika van Aswegan, both of Ukuthela Foundry, Fred Venter of High Duty Castings and Greg Smith of JC Impellers