More industry involvement/commitment from Government needed

We are supposed to start the new year off in a positive frame of mind after having a well-earned break during the holiday period.

However, this year has not started off on a positive note. I was greeted with the news that the dti had turned down the SAIF’s application for a national pavilion at GIFA 2019 and this has now been confirmed in a statement issued by the SAIF: “The dti has unfortunately not approved a South African National Pavilion for GIFA 2019. The reason given for this is the need to reduce events due to redirected finances to fiscal support, therefore the consideration for the return on investment when considering assistance for this event and considering the geographical spread and sectorial displacement, GIFA has fallen out of the scope of consideration for the assistance of a National Pavilion.”

As I said to the metals desk at the dti this could be very damaging to the South African foundry industry. There has always been a National Pavilion at GIFA since 1994 and with no participation at this year’s exhibition questions such as “is the South African foundry industry in trouble?” could be asked. This decision follows closely on the fact that no official from the SAIF or the NFTN attending the 73rd World Foundry Congress held in Poland last year (2018). As South Africa were the hosts for the same event in 2017 some official representation should have been sent.

Nevertheless, there is still an opportunity for industry to participate in this event through the Export Marketing and Investment Assistance (EMIA) programme. The purpose of assistance under the EMIA scheme is to partially compensate exporters for costs incurred in respect of activities aimed at developing export markets for South African products and services and to recruit new foreign direct investment (FDI) into South Africa.

Individual companies can apply for the assistance but there is a general qualifying criteria and mandatory conditions that have to be fulfilled. Financial assistance to the manufacturing and services industries is limited to the dti’s priority sectors including the IPAP sectors. Metal fabrication and automotive products and components make up this qualifying sector so if you are one of those companies that was interested in participating on the National Pavilion get your application in soon.

The other bad news is that Eskom has applied to the National Energy Regulator of South Africa (NERSA) for a 15% tariff increase from 1 April 2019 for three consecutive years compounded, on top of a 4.5% RCA price increase already awarded by NERSA for this date, and further RCA applications in the pipeline.

This is of great concern not only for industry and consumers in general but particularly for industries that are high-energy consumers.

Every foundry is different in more ways than one especially when calculating costs. Nevertheless, it is reliably taken that the costs for energy and materials used in foundries are on average responsible for 40% of all costs – as high as the expenditures for personnel. Over 50% of this energy is not used for the final casting itself, but is used for gating and risering systems, which are necessary to route the metal to and into the cavities that later contain the final castings.

Since South Africa was plunged into darkness with unscheduled blackouts a few years back most foundries have instituted reactive solutions and more importantly achieved efficient energy use. These costs to effect these solutions are still being absorbed but now Eskom wants to put industry on the back foot again.

Now it has come to light that the Forbes Brothers foundry is reportedly looking at closing its doors if the owners cannot find a buyer. At the time of going to press there were negotiations with possible new owners taking over. Lets hope this happens as it would be sad to see one of South Africa’s oldest running foundry’s closing its doors. Forbes Brothers Founders (Pty) Ltd is a family owned jobbing foundry that was established in 1951 and has been in its Heriotdale facility since 1953.