A South African company that supplies assembly plants for the automotive sector faces losing about R750m in orders from the US market as the 30% tariffs kicked in this week.
Jendamark Automation, which employs around 500 people in South Africa, now faces uncertainty as more than 50% of its international market resides in the US.
“We were quoting on a whole lot of work, about R750m worth of assembly lines and projects by US customers, essentially what it means now is that there's a good chance we won't get those orders because they're now 30% more expensive for my customers,” said Jendamark's executive director of operations, Siegfried Lokotsch.
The Gqeberha-based automation solutions provider, with satellite offices in Pretoria and East London, manufactures powertrain and catalytic converter assembly systems, among others.
Lokotsch said even though they export worldwide, the US market was extremely important to their business.
“Eighty five percent of our business is exports, and 50% of our business comes from the US, this [tariffs] is a huge blow to us,” Lokotsch said.
President Cyril Ramaphosa made a phone call to his US counterpart Donald Trump on Thursday morning, but Lokotch feels this was too little too late.
It remains unclear whether Ramaphosa's last-ditch attempt to sway Trump on the 30% punitive tariffs will yield a positive outcome.
The Presidency said the two leaders held a telephone call on bilateral trade matters on Thursday morning. They agreed to continue their engagements. Their respective trade negotiators will engage further, it added.
“The only thing that can be done is that the government needs to get into an aeroplane, fly to the US and negotiate. They should have been doing that from the third of April,” Lokotsch said.
About 20,000 jobs are at risk in this sector, affecting both OEMs and component manufacturers due to the new tariffs. In agriculture and agro-processing, about 15,000 to 20,000 jobs are also at risk
— Khulekani Mathe, Busa CEO
Lokotsch said the government has left the matter until the last minute and said the idea of a help desk set up by the department of trade & industry to assist affected companies would not help.
“The help desk doesn't help me. What must I do with a help desk? The help desk seeks to help with finding new markets and marketing my products, but for me to sell one of my semi-lines sometimes can take 18 months to negotiate the deal,” Lokotsch said.
He said he was not planning to let any of his employees go and his company is taking the knock and the only relief is for the higher tariffs to be taken away.
“I told my employees that their jobs are safe, we will look after them ... I have other options as I have the other business in India, and we've started exporting to Saudi Arabia,” he said.
He said he was working on other possible contracts and his company's strong balance sheet allowed him to keep his employees.
“It would be the last resort for me to let any of my employees go, but the problem is my supply chain which I have built up over years... and if I don't give them business for six or seven months they cannot survive that,” Lokotsch said.
Meanwhile, Business Unity South Africa called for a co-ordinated national response to US tariffs and the African Growth and Opportunity Act (Agoa) uncertainty.
Busa CEO Khulekani Mathe said the delays in finalising a framework agreement between the government and the US to mitigate the proposed 30% tariff was troubling.
“Countries such as the UK, Japan, Pakistan, South Korea, the Philippines and Indonesia, as well as regional blocs like the EU, have successfully negotiated trade deals with the US that resulted in the reduction of the original 30% tariffs,” Mathe said in a statement.
He said this demonstrated that there was an opportunity for a successful agreement to be reached even after August 1, which would have provided welcome relief for South African exporters, “provided the country adopts a co-ordinated approach and prepares a solid offer based on what we can realistically deliver in response to US expectations”.
“The US remains one of South Africa’s most significant trade and investment partners. The African Growth and Opportunity Act has supported this relationship for over two decades, bolstering South African exports in critical sectors such as agriculture, automotive manufacturing, and mining,” Mathe said.
Busa cited the automotive sector, where exports to the US total about R24.1bn, indicating that the exposure to tariffs “will be monumental”.
The sector is currently facing 25% section 232 tariffs, and the proposed 30% increase could raise total duties to 55%, rendering exports uncompetitive, according to Mathe.
“About 20,000 jobs are at risk in this sector, affecting both OEMs and component manufacturers due to the new tariffs. In agriculture and agro-processing, about 15,000 to 20,000 jobs are also at risk,” said Mathe.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.