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Faculty of Engineering and the Built Environment
Department Industrial Engineering – Skills Development
merSETA Sub-Sectors
The metal industries are at the centre of economic development, as what they
produce is used across the entire economy:
infrastructure programmes,
general engineering,
automotive production,
furniture manufacture,
home appliance manufacture,
jewellery manufacture,
defence, and
The metal industries thus form an important component of a country’s
industrialisation path and are also a key driving force of the entire
manufacturing sector’s competitiveness.
The steel refinery and fabrication components are well developed in South
Africa with South Africa ranked as the 21st largest crude steel producing
country in the world. The foundry industries have been in decline, while the
machine building industries have not been fully developed.
The stainless steel sub-sector plays a major role in the economy. Stainless steel
is generally seen as a family of chromium-containing alloys. All these alloys
contain at least 11 percent chromium; the chrome oxide layer on the metal is
what makes stainless steel corrosion resistant.
The sector incorporates the hygienic preparation or storage of almost
everything that we eat or drink; all modern vehicles boast stainless steel
components (exhaust systems, safety belt buckles, airbag gas cylinders and
catalytic converters) in critical areas. Increasingly, stainless steel is finding
new applications in decoration, signage, shop fittings, architecture, furniture,
appliances and technology.
The contribution of the metal industries to Gross Domestic Product (GDP) is
estimated at about 4.2 percent, R50.2bn in 2008. Employment in the sub-sector
was estimated at 312 235, about 24 percent of the total workforce of South
Africa (2008).
There are key areas of opportunity for growing the sector and achieving a more
significant impact. These include:
• Leveraging the public infrastructure programme which presents an
opportunity to stimulate the industry through reducing capital and
operational expenditure of state owned enterprises and all spheres of
government as a result of relying on the import of raw steel and
fabricated products;
• Export opportunities in relation to infrastructure and mining turnkey
projects – especially in the rest of Africa and in South America;
• Extending value chains through further downstream beneficiation
manufacturing which is still underdeveloped in South Africa;
• Leveraging the new Automotive Production and Development Programme
for the metal component manufacturing industries.
There are, however, constraints to be addressed. Current procurement
practices of State Owned Enterprises (SOEs) and government in relation to
large contacts are sub-optimal. The lumpy, ad hoc procurement and
unrealistically short delivery times often demanded undermine local
manufacturing and associated investments, which is also a symptom of a lack of
long-term procurement planning. Furthermore, lack of competitive financing
impedes the ability of local companies – particularly lower tier suppliers – to
compete on an equal footing with foreign companies which receive highly
concessional export financing from their country’s’ export banks and agencies.
Inadequate capital investment through three decades of low demand has led to
the neglect of continuous upgrading and replacement of plants, machinery and
equipment. Import parity pricing of major inputs such as steel and aluminium
remain an impediment to further development.
Variable and often outdated production and technological capabilities have
resulted in the sub-sector losing ground in maintaining local content and being
able to maximally capture new opportunities offered by both public and private
capex programmes. In addition, there are intense and increasing global cost
competitive pressures, particularly from low-cost imports. This is exacerbated
by downward tariff pressures on value added products.
Through a number of strategies and actions, government, in consultation with
the private sector, has planned to enhance the manufacturing competitiveness
of the South African metal industries so as to increase local content and
exports. Central to this is the increased development of research and
development, as well as the development of human resource capital.