Steel industry in crisis - Irvin Jim

Adam Wakefield, News24

Johannesburg - The steel industry is in crisis, says National Union of Metalworkers of SA general secretary Irvin Jim.

Jim said on Monday that something needed to be done urgently before a "blood bath" of retrenchments took place.

"It's not like all the companies here have [not] been speaking to government. Government's aware there is a crisis that needs to be addressed," Jim told reporters in Johannesburg.

He said they had resolved to "go all out" and would "occupy Pretoria to make sure that government must move with speed". Jim was speaking at a joint press conference held by labour, business and steel industry associations regarding the sector's current predicament.
Industry stakeholders met with government on Friday where they presented a 10-page submission outlining their "collective call for government to urgently address the current crisis in the steel industry, failing which we will be faced with a disastrous and devastating impact on our economy".

The stakeholders were the United Association of South Africa, the Metal and Electrical Workers Unions of SA, ArcelorMittal SA (AMSA), the Steel and Engineering Industries Federation of Southern Africa (Seifsa), Numsa, Evraz Highveld Steel, Cape Gate, the Scaw Metals Group, Macsteel Coil Processing and Solidarity.

Core demands

Government was represented by Trade and Industry Minister Rob Davies, Economic Development Minister Ebrahim Patel, and senior government officials from public enterprises, trade and industry, transport, and the National Treasury. The leadership of Transnet was also in attendance.

The core demands the group made in their submission included:

- Immediate trade remedies for steel;

- Urgent roll-out of government's infrastructure programmes;

- Transparency of current state-owned enterprises' capital programmes;

- Monitoring of imports;

- Banning of steel scrap exports;

- Fair pricing for steel versus Import Price Parity

Jim said Numsa's position was that government should buy back ArcelorMittal SA, formally known as Iscor. This would allow government to protect South African jobs and South African industries, which was what the Chinese government does, as shown by the Chinese devaluing their currency recently.

"For the purposes of meeting government this Friday, we needed to sit down and have one voice," Jim said.

'Test of the pudding is in the eating'

"Government has committed two DGs to work with us. I think the test of the pudding is in the eating."

It was imperative to make sure what needed to be done was done quickly. There were "no guarantees" about what was going to happen.

"We were very categorical that we were hearing that there is huge public infrastructure spend, everybody is saying it's in the pipeline. Where is the pipe? Now is the time for government, for these [state-owned enterprise] companies, to put together a stimulus package for the economy," he said.

"Steel must be brought locally to boost the economy."

While labour was working with business and the associations, there was no consensus when it came to stopping retrenchments in the short term. Numsa would do everything in its power to stop retrenchments.

AMSA CEO Paul O'Flaherty said: "Let's be very clear. In South Africa, do you think we sit here and we want to retrench people? We have companies to protect and limited financial resources," he said.

While the meeting was a positive step for the long term, it could not fix anything in the short term.

"It's not a lifeline and I think we must be clear on this. The issues we are facing are very very critical," O'Flaherty said.

He said from a steel perspective, the industry was in a recession, with demand comparable to 2009, the year after the global financial crisis.

'It's a perfect storm'

Also contributing to this was the increased market share of imported steel. In 2009, 7% of South Africa's steel was imported, but in 2015 this figure had risen to 30%, and "a lot of those imports is China".

Asked how many jobs in the industry were currently under threat, Seifsa chief economist Henk Langenhoven said around 10 000 within the basic sector, where the biggest companies operated.

He said it was important to remember steel was highly dependent on what happened in other industries, such as mining, the auto sector and infrastructure spending.

Depending on what happened in those sectors, that figure could be three or four times higher.

Seifsa president Ufikile Khumalo said: "We are talking about an impending ... blood bath."

"As a country we should not say it is one or two companies. This is a fundamental issue about the structure of our economy and the structure of the industry."

Companies were hiding debt, and battling to survive. It was important to distinguish between long term and short term issues.

"The short term issues, it's too late to address them, that's my view," Khumalo said.

"This intervention is a start and I think is very useful for the long term perspective. If we address them and arrest the challenges quick enough, we will be able to make sure the industry will be there for the future."

He said the current crisis facing the industry was "unprecedented" and something he had "never seen".

"It's a perfect storm. We are not losing hope, we are mindful that the intervention by government, business and labour will be useful. If we do nothing today, there is no industry to talk about," he said.