By all accounts trade, industry & competition minister Parks Tau is a nice guy. But does he have enough fingers to stick in all the holes in the dyke that keeps our manufacturing economy together?
Tau has been frenetically trying to save the steel industry, sign trade deals with China and find R100bn to promote black businesses, and he says he is talking to Suzuki, Proton and BYD to come and manufacture here as long-standing Western carmakers reconsider their futures in South Africa.
It is all improbable. A deal to allow our exports easier access to China will quickly stall if we continue to raise barriers to their exports to us. We have seen no modelling of the consequences of this new trade deal. And Asian carmakers cannot replicate the deeply woven fabric that established producers have made of our industries and our skills.
The ANC is killing manufacturing. BAT, the cigarette giant, is closing its plant in Gauteng, stranding 30,000 local tobacco growers. Nissan is leaving. Tongaat-Hulett has collapsed. There’s talk of rescue, but sugar prices have collapsed, too.
Africa’s only integrated steel producer, ArcelorMittal SA (the former Iscor), has shut most of the capacity it bought in 2004. World overproduction is chronic, and the state’s inability to kickstart an infrastructure build means there’s no market for what it still makes.
Expensive electricity has shut down more than 45 ferrochrome furnaces, and the remaining four may go too unless Eskom keeps a promise to cut tariffs from about R1.30/kWh to 62c by the end of February. Nearly 4,000 direct jobs are on the line.
The auto industry is on the edge. Toyota SA chief Andrew Kirby warned recently that “we are prematurely de-industrialising as a country.” He said South African manufacturing’s value addition per capita had fallen from $720 in 2000 to $640 today. Morocco has comprehensively outpaced us in vehicle production.
Business Leadership SA head Busisiwe Mavuso warned this week that President Cyril Ramaphosa had ignored the manufacturing crisis in his state of the nation address last week.
Chinese imports get the blame, but the fact is we remain, with some fabricating aside, fundamentally a mining and farming economy, and we are, or were, good at it.
“We need a decisive response to the destruction of manufacturing capacity that took decades to build and remains key to employment creation,” she said. “The scale of the crisis is stark.”
Tyre manufacturers Bridgestone and Goodyear have shut down, and companies making safety belts, airbags and other critical parts have scaled back or closed. “Thirteen closures in the past two years,” she said, “with more expected.”
Chinese imports get the blame, but the fact is we remain, with some fabricating aside, fundamentally a mining and farming economy, and we are, or were, good at it. Agriculture continues to flourish as powerful farming organisations co-operate and share technical and market information to an extent that would land them in jail if they were making steel.
But mining is a disaster, kept alive by commodity price cycles and otherwise moribund as ANC minister after minister destroys investment with regulations designed to produce transformation but that merely keep investors away.
We have about $2.5-trillion, Ramaphosa said, of ore reserves, but they are still in the ground and not being mined and exported, let alone processed. We have the largest reserves of platinum group metals, 88% of manganese, 73% of chromite, and far more, but no-one has built a new mine here in nearly two decades.
If he were serious, Ramaphosa would fire mining minister Gwede Mantashe, but he can’t. Mantashe is ANC chair. And so on we go, and for all the intent and reform, for inflation coming down and our new fiscal probity, it’s hard to take seriously the hype about green shoots and recovery.
If any of the businesses shutting down today were starting up here instead, there’d be church bells ringing around the land. Ramaphosa had an extraordinary opportunity to reshape this country when he came into office in 2018, but he has perfectly wasted it.
• Bruce is a former editor of Business Day and the Financial Mail.
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