Govt's steel intervention too little, too late - Vavi

Zwelinzima Vavi (Netwerk24)
Zwelinzima Vavi (Netwerk24)

Johannesburg - Government’s intervention in the steel sector is too little and comes too late, according to former Congress of SA Trade Union general secretary Zwelinzima Vavi.

"In my view, this is too little too late. The increase of tariffs by government is coming 22 years late," Vavi told reporters in Johannesburg.

Vavi said the slump currently experienced in the sector was due to the actions of Trevor Manuel and Alec Erwin in the Department of Trade and Industry, who insisted that South Africa should open up to "the chilly winds of competition".

"We are reaping now from what they stood for. When we were classified as a developing country under their leadership, they did nothing.

"When we were given 10-11 years to reduce tariffs, they rushed it and reduced it in six, seven years. We are paying the price for neo-liberal approaches to development as we speak today," he said.

Vavi added that the buck did not only stop with them. He said all ministers since 1994 contributed to the current situation.

"Every cabinet minister since 1994 is as guilty and they all have the blood of our people in their hands. Manufacturing was 22% of GDP (gross domestic product) in 1994, it’s down to 11-12% now,” he said.

Trade and Industry Minister Rob Davies in August approved a 10% ad valorem duty on certain imported steel products, which currently enter the country duty free.

The approval was, however, accompanied by certain conditions. They included that steel producers refrain from increasing prices for the products subject to the duty and that they honour their commitments to reduce prices on some products.

The approval also stated that ArcelorMittal SA would have to invest an additional R250m in its colour line and Safal Steel an additional R300m in its metal coating line in 2017. The two companies were then asked to make an undertaking not to retrench workers for the next three years.

Local manufacturers have been complaining about the local market being saturated with cheap steel imports from China.

Vavi added that countries throughout the world have seen phenomenal growth in their GDP from the manufacturing industry, apart from SA.

"Every country in the world except Singapore has developed at the back of a robust manufacturing sector. In SA we didn’t do it because we don’t have the political will to do it. We want to be friends to everybody. China is a friend, but China knows how to protect its interest. We just don’t know how to do that,” said Vavi.

He added that the tariffs would start to have an impact several years down the line, and not immediately.

"They will not stop the current bleeding [that is] under way. It’s too little too late, but it’s still appreciated because if we continued like this we would not have a steel market in the future," he said.

National Union of Metalworkers of South Africa (Numsa) president Andrew Chirwa admitted that the country is faced with a problem that could ultimately lead to more than 200 000 workers being unemployed.

"We are fighting. We have been served with section 189. We are involved in (a) process with the companies to say wait a bit and look at different solutions. Without the steel industry in this country, we won't be able to build manufacturing," he said.

Chirwa said labour and the unions had warned against government's plan to reduce tariffs and be loved by the world. He said government should have taken steps to protect the industry.

"Numsa warned that what government was doing when the DTI (Department of Trade and Industry) was headed by Trevor Manuel to reduce tariffs so that import could be flooded, today we are paying the price for those decisions. We have failed, we have refused to defend our industry against the world, including China. The steel industry is in trouble and there is no doubt," said Chirwa.

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 913 votes
It depends on how the funds are used.
74% - 6065 votes
No. We should have gotten the loan elsewhere.
15% - 1237 votes