Experience has taught me that when you’re under attack it’s best to stand still. Most critics of columns are either just plain wrong or have something else to say and wrap that up as a critique of you, or they are just doing what they’re told.
Certainly the last applies to both Bernie Fanaroff and Lael Bethlehem, who were both afforded generous opportunities by Business Day to reply to a column I wrote suggesting trade, industry & competition minister Ebrahim Patel is doing damage to the downstream steel fabricating industry by protecting SA’s one large (and largely obsolete) primary steel producer, Arcelor Mittal SA (Amsa), with relentless duties on imported steel (“Essential for SA to retain primary steel industry”, February 15, and “Tariffs alone can never secure the long term health of an industry”, February 18).
I don’t really know either of these people. Fanaroff, the government’s long-time pet “science” adviser, is writing a steel master plan for the minister and starts by telling me that I “should know that it is advisable to talk to a wide range of firms in the steel and steel products industry before writing about a contentious issue, rather than quoting the views of one industrialist, whose views are not representative of the views of business across the industry, upstream and downstream”.
Jeez, I had no idea! I’ve only been a journalist for 47 years so I know nothing about talking to people. Just because I don’t quote people who would agree with him doesn’t mean I haven’t called them. They just didn’t say anything interesting. Why not ask Macsteel (missed them in your wide consultation?) why they are taking the government to court over steel duties?
Fanaroff completely missed the point of my piece. Probably deliberately. I don’t care whether we have a primary steel maker in SA or not, as long as it can make steel at a competitive price, which Amsa clearly can’t. The import duties protecting it, including the third or fourth extension (not “temporary”, as he put it) of an extra 8% safeguard duty, are testament to Amsa’s inability to compete. If Fanaroff’s master plan is going to be premised on a local primary steel producer then I suggest he go and find another one.
The fact is there is a glut of steel slab or coil in the world and it isn’t just the Chinese who can supply it. There’s nothing to fear in losing Amsa. Stopping our deindustrialisation will depend on our fabricators getting the best possible steel at the best possible prices. At the moment they’re losing market share in the rest of Africa because of the duties Fanaroff defends.
His broadside was nothing compared to Bethlehem’s. “Peter Bruce’s recent column was a comprehensive attack on SA’s industrial policy ... the reader is entitled to ask for the evidence of Bruce’s damning conclusions. Price controls? Has anyone suggested this in serious policy circles ... did he talk to the companies involved in the clothing and textile, poultry or sugar master plans? In relation to the steel master plan, he draws only on the views of a businessperson who advocates complete removal of import tariffs, and to some scrap metal exporters. Not a great export, scrap metal, especially when it drives the large-scale plunder of rail and municipal infrastructure.”
Phew! All finished then are we? I have not yet written a single word about the poultry master plan, but boy I’m keen now. And all stolen scrap is being exported? Does she have proof? They clearly had the same brief — there’s the same “single source” complaint. Here, let me do them both a favour. GroundUp carried a piece last week that movingly told the story of long lines of people queuing daily at the gates of a wire plant in Germiston. GroundUp’s reporter painstakingly talked to the desperate people in the queue, then to the company.
“There are normally 30 or 40 people standing outside hoping that they can be called to fill up a position, but it can’t simply work like that,” said Wireforce HR manager Alsie Hoole. “We feel great sympathy for the people standing outside our premises in the hope of working for us.” And then he adds: “Currently we are not hiring and may not be hiring soon as we are in short supply of metal. Our suppliers are failing to supply the demand that we are asking for.”
Maybe Wireforce slipped through Fanaroff’s extensive inquiry net or doesn’t quite meet Bethlehem’s onerous requirements for evidence. But the queue is real nonetheless. Neither Wireforce nor its customers, nor the people outside, would give two hoots about whether their steel came from Amsa or a local scrap smelter or from Indonesia.
Meet Gerhard Papenfus, CEO of the National Employers Association of SA (Neasa), who has many hundreds of steel fabricators among his members. They don’t count (in fact, they might not even exist) for Bethlehem or Fanaroff or Patel because they are not part of the central pay bargaining structures in the metals industry. But they employ hundreds of thousands of citizens.
“A survey done by Neasa a few months ago revealed that more than 95% of steel companies support the immediate scrapping of the duties,” he wrote last week. “The downstream’s condition for Amsa’s presence in the SA steel market is that Amsa has to prove its value as a primary steel producer without duty protection. A further, very recent, survey once again confirmed that there is absolutely no appetite for the duties to protect Amsa.”
Ignore Papenfus if you want. But his members are already doing what Patel says he wants local industry to do. If you drive them out of business with the high steel prices that inevitably follow protective duties our re-industrialisation will become just another policy failure.
Oh and yes, Bethlehem, price controls already apply in steel. She’s on the board of the Industrial Development Corporation, so how come she doesn’t know? Here’s the minister in his affidavit in the Macsteel case: “The impact of this basket price is that it removes the right of Amsa to increase prices simply as a result of tariff and safeguard duties, and disciplines their pricing to be no more than that same as a basket of international steel producers.”
Needless to say, 70% of the Amsa steel price control basket is based on the expensive steels from the EU and US, Canada and Mexico. No China. That’s the way to do it. Money for nothing.
• Bruce is a former editor of Business Day and the Financial Mail.
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