In a country that is already battling high unemployment rates, it is hard to imagine the social impact of the looming job losses at ArcelorMittal SA.
However, given the rising input costs — electricity, rail and ports — and global steel oversupply, it would seem that job losses are inevitable. But that does not take away the fact that they will be devastating.
Just to state the obvious, ArcelorMittal is a big contributor to local economic development in towns such as Vanderbijlpark, Vereeniging and Newcastle. In 2018, ArcelorMittal’s socio-economic development spend was R14m, while enterprise and supplier development spend was R30.4m.
So if the company flounders, the effects are widely felt.
It is nothing short of calamity that more than 2,000 employees could soon swell the ranks of the unemployed. The country’s unemployment rate stands at 27.6%.
Is there any hope of the country reversing the unemployment trend if some of SA’s largest employers are shedding thousands of jobs?
The electricity costs, as well as rail and port costs, cited by ArcelorMittal for its troubles point to two of the state of the country’s state-owned entities: Eskom and Transnet.
It is also worth pointing out that in addition to the rising electricity, rail and global steel prices, the company must also make provision for the introduction of the Carbon Tax.
The logical and easiest thing for the company to do, as is the case with cement producers, is to pass on the carbon costs to customers. But can ArcelorMittal afford to do that and still compete with imports that are not subjected to such taxes?
Sandton: turning work space into living space
As SA’s economy very slowly gathers momentum in 2019, landlords are still burdened with stubborn vacancy levels in their office portfolios.
The SA Property Owners’ Association (Sapoa) says the national rate is about 11% and it’s unlikely to shift much during the rest of 2019. Sandton, the prime commercial node of SA, has a vacancy rate of about 20%, according to data providers, including Gmaven. Given that there is little sign of new companies wanting to move into the node, even while its rentals are at their weakest level in a few years, with some offices going for as low as R150/m2, landlords should get creative.
A good start would be to convert older offices into residential properties. This has already begun, with Black Brick’s new residential concept, for example.
The company is converting 25 Fredman Drive, formerly home to the offices of SAB, into a building with 208 apartments and a hotel. The developer says residents will be part of a rewards club.
Members can use the property’s facilities, such as its café, work spaces and boardrooms, a gym, rooftop, dining lounge, cinema, library and meditation garden.
A lack of office demand doesn’t mean the same applies to residential property in Sandton. There are also numerous conversions to residential in two upper-market office nodes, Rosebank and Bryanston, as well as in the inner city.
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