The following article was written by Lucio Trentini, CEO of the Steel and Engineering Industries Federation of Southern Africa (SEIFSA). This is Part 1 of a two-part series.
Lucio Trentini, CEO of the Steel and Engineering Industries Federation of Southern Africa. Supplied by SEIFSA
Following an inaugural sectoral engagement between Minister Tau representing the Department of Trade Industry and Competition (DTIC) and the steel and engineering value chain on 20 November 2024, it was unanimously agreed that in order to arrest the rapid decline in the sector’s performance, interventions need to be as radical and ambitious as deemed necessary under the circumstances. The matter of urgency was also stressed as mission critical in light of the problem possibly becoming harder and more expensive to fix, or potentially, not fixable at all.
The de-industrialisation trajectory that has been observed in the sector can be attributed to the lack of a well-considered and all-encompassing metals sector industrial policy. To date policy responses have tended to be not clearly thought through in some instances and/or partial in their consideration, without taking into context the full value chain effect. The problem at hand is the result of a toxic combination of the following factors:
- the absence of an all-encompassing, holistic metals/steel and engineering sector policy that balances the needs of up and downstream
- lack of demand from both the state and the private sector
- Increasing erosion of the industry’s competitiveness in the export markets and inadequate support for increased export efforts in the context of a small and shrinking domestic market
- a structured arrangement which favours offshore rather than local capability
- the most immediate challenge facing the sector (and the policy maker) now is how to manage pedestrian demand/consumption in an environment of over-capacity
While it was agreed that any vision and outcomes for the future of the sector must be co-created by industry and the Ministry, in the final analysis for the steel sector to survive, government must take the lead.
The DTIC has requested industry to make submissions on defining the problem and growth areas; what interventions should be actioned in the immediate to short-term to bring stability to the industry; as well as defining long-term growth targets for the industry and what would be the measures of success.
