Easy imports bury jobs in concrete



As many as 7 000 direct jobs and 35 000 indirect jobs in the local cement industry are at risk of being lost as a result of cheap cement imports, says the managing director of The Concrete Institute (TCI) lobby group, Bryan Perrie.

He says that imported cement from Vietnam and China is undercutting the industry by up to 45%. “Combined with low levels of demand due to slow economic growth, the industry is facing an existential crisis which threatens to undermine the industrial capacity of the country.”

The TCI says that imports from Vietnam and China have increased by 136% since 2016, placing a strain on the local industry. Imports from Vietnam totalled more than 300 000 tonnes whereas South Africa only accounts for 1% of total exports to Vietnam.

The local cement industry is able to provide 20-million tonnes of cement but is currently only producing 13-million tonnes. Perrie says this is as a direct result of cheaper imports entering an industry that is “scrambling to survive”.

AfriSam’s head of sales and marketing, Richard Tomes, says bulk imports are largely channelled through construction activities in the retail and household sector.

He says local cement is subjected to rigorous technical, social and environmental standards. The regulation allows for strict quality controls ranging from labour and employment to sustainability. “There are smaller construction companies that are starting to use imported cement, hence we also have concerns around standards and quality of the cement because it does have long-term implications for our infrastructure like low-cost housing projects. If we are not confident of the quality then we are likely to spend quite a bit of money on repair and maintenance in the future,” he says.

JSE-listed cement producer PPC has begun the process of shedding a further 13% of its workforce across the country in a bid to streamline the organisation and to cut costs. The company has offered voluntary severance packages to 248 of its 1 982 employees countrywide.

For the year ending March 2019, PPC reported that sales declined 2% to 3%, partly as a result of increased competition from imports, which rose by 84% in 2018.

PPC chairman Jabu Moleketi says a combination of factors, including the slowed activity in the construction sector and the growth of third-party cement blenders has contributed to weak demand for local cement.

“This combination of factors makes it difficult for the industry players to achieve sustainable pricing and to grow their business, which, in the long term, could adversely impact cement producers’ ability to create job opportunities in the sector,” Moleketi says.

PPC, along with four other local cement producers, AfriSam, Dangote Cement, Lafarge Industries and Natal Portland Cement have approached the International Trade Administration Commission (Itac) to impose tariffs on cement imports from China and Vietnam.

TCI says it had no choice but to approach Itac in an attempt to save the ailing sector.

Four years ago the sector was aided by Itac when it approved the TCI’s application to impose a 77% tariff on imports from Pakistan. It followed an investigation by the body that found that Pakistani cement imports were causing harm to the local industry.

Perrie says that the decision to apply for the tariffs is to ensure the sustainability of the sector: “The cement, concrete and affiliated industries employ thousands of South Africans whose jobs would be on the line if the government does not step in to protect local cement production.”

Apart from the Itac application, TCI has approached the department of trade and industry for a special designation. If successful, local cement producers would be able to partner with the government to ensure that only South African-made cement is used in state infrastructure projects.

Although there is no specified date given by Itac on its decision to approve or reject TCI’s application, Perrie says that he hopes the process would be concluded by the end of this year.

In April, members of the National Union of Mineworkers (NUM) embarked on a strike at PPC’s Hercules plant in Tshwane, where the lowest-paid worker earns R7 000 a month. Workers demandedsalary increases of 12% across the board, a R1 500 housing allowance and a transport allowance of R750 for shift workers. After a month-long strike at the plant, workers received a 6.1% salary increase.

The largest jobs losses for PPC are at its three Gauteng plants and one in Limpopo where 104 out of 350 employees took the voluntary severance packages.

In coastal provinces, PPC is in the process of shedding 91 out of 1 142 jobs while in the other inland provinces the company is will lose 53 workers out of a staff complement of 490.

The process began in June and the managing director at PPC South Africa, Njombo Lekula, says the company expects the process to be concluded in September. Lekula says most employees who have been granted voluntary severance packages are of retirement age.

“There have been so many job losses in the construction sector, which means that there is no activity and subsequent to that it means the industry in totality is suffering,” he says.

“Demand is not meeting capacity right now and this has an impact on fixed costs. We chose to go this route in order to fully optimise our business operations,” says Lekula.

“Will we be able to survive as an industry? I don’t know … that’s why we are lobbying to have the tariffs put in place,” he says.

Thando Maeko is an Adamela Trust Business reporter at the Mail & Guardian

Thando Maeko
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian

Unfinished business: We need self-examination to heal from apartheid

Physical and psychological violence will continue unless we self-reflect on our apartheid scars

Coronavirus: South Africa will evacuate citizens from Wuhan

The government is expected to evacuate citizens from Wuhan, where the coronavirus outbreak originated

Primedia CEO Essack leaves following internal battles

Omar Essack leaves the 702 and 94.7 owners after a protracted standoff with the board

‘We’re satisfied with SA’s land reform policy’— US Ambassador

Top US official is lobbying multinational firms to invest in South Africa

Press Releases

Over R400-m given to businesses since launch of three-minute overdraft

The 3-minute overdraft radically reduces the time it takes for businesses to have their working capital needs met

Tourism can push Africa onto a new path – minister

The continent is fast becoming a dynamic sought-after tourist destination

South Africa’s education system is broken and unequal, and must be fixed without further delay

The Amnesty International report found that the South African government continues to miss its own education upgrading targets

Business travel industry generates billions

Meetings Africa is ready to take advantage of this lucrative opportunity

Conferences connect people to ideas

The World Expo and Meetings Africa are all about stimulating innovation – and income

SAB Zenzele Kabili B-BBEE share scheme

New scheme to be launched following the biggest B-BBEE FMCG payout in South Africa’s history

Digging deep

Automation is unstoppable, but if we're strategic about its implementation, it presents major opportunities

TFSAs are the gymnasts of the retirement savings world

The idea is to get South Africans to save, but it's best to do your research first to find out if a TFSA is really suited to your needs