Axe hangs over 3, 000 steel industry jobs

A survey by the SA Institute of Steel Construction has found the industry's major players are considering halving their labour force in the next few months.

That could affect about 3, 000 jobs.

Institute industry development executive Kobus de Beer said the power line and cellular mast industry was in crisis.

"We are reaching the point where practically all the fabricators and constructors in this industry are facing a situation of severely reduced activity in 2010 and further," De Beer said.

In spite of considerable local capacity and capability, about 200, 000 tons of power pylon steelwork has been imported from India in the past two years or so, and contracts have also been awarded to foreign firms.

"It is interesting to note that while there is no duty for importing these goods into SA, there is a 10% duty in India. They have the sense to protect their local industry and so should we," De Beer said.

There was no reason for the local industry not to be competitive, he added. "All it takes is basic government support and some co-operation between Eskom and the suppliers.

"For example, Eskom's practice is to order in relatively small bundles over the short term. If they were to order in large tranches with longer-term contracts, local suppliers would more easily be able to budget and plan, with one of the positive results being a reduction in prices," De Beer said.

The institute has approached the International Trade and Administration Commission of SA with a view to getting a 25% tariff imposed on power lines and cellular-mast imports. The commission is expected to adjudicate on this application by the end of the month.

In its submission the institute said it had calculated that from 2008 to 2012, assuming continued imports of the products, the loss to SA would be about R1.5-billion in earnings and 6, 000 jobs, affecting the livelihood of 24, 000 people.

"The price of a product is only part of the story, especially for a state-owned enterprise. The whole picture has to be taken into account, including lost taxes, job losses, investment losses by suppliers and the socio-political knock-on effects of significant job losses," De Beer said.

"It would be a tragedy if the local power line and cellular-mast industry were allowed to disappear. There really is no need for that to happen, and the entire local steel industry is expecting the authorities to do the right thing for both the industry and the country as a whole," De Beer added.

It was imperative that the industry convinced the government that products could be produced locally, said Dawie Mullins, head and founder of Conningarth Economists.

He said the industry was bleeding as a result of unfair competition from China and the strengthening rand. "I am not saying that we should ring-fence our economy. But our economy is replete with examples of this scenario today.

"Where is our textile and clothing today? Where is our footwear industry?"