The South African Valve and Actuator Manufacturer’s Association (Savama) predicts that the valve industry may experience a slight downturn, corresponding with the current economic climate.
Savama chairperson Ted Atkins explains that the valve industry has the tendency to follow the state of the country’s economy. “When the country’s economy is booming, so is the valve industry, with the reverse also being true.
It appears that the South African economy, and the world economy, will experience a slowdown, which means the valve industry will consequently also encounter some difficulty. The valve industry certainly cannot keep on going up when all other industries are going in the opposite direction.”
Further, Atkins says that the local valve manufacturing industry is being heavily pressurised by valve imports, especially from Eastern countries. He attributes this to the rise in costs of locally manufactured valves, which is in line with the rising costs of raw materials.
“Steel prices in South Africa are significantly higher compared to those of its trading partners. The steel price has a considerable effect on the cost of locally manufactured <link _top>castings. That, together with the fact that there is no control over the export of <link _top>scrap metal in the country, means that the <link _top>casting costs in the country are notably higher than those of some imported products,” says Atkins.
He notes that the government has put a <link _top>scrap metal scheme in place, whereby import and export duties can be regulated. However, the scheme has not been applied to date, even though the legislation has been around for almost 18 months.
Atkins notes that fully machined <link _top>castings can be imported from China at 60% of the cost of local <link _top>castings. “Consequently, a number of Savama’s members are importing some of their products and components from other countries, to the detriment of the local industry,” he comments.
Atkins says fewer people are employed in the valve manufacturing industry today, than were employed five years ago, though this reduction has not been reflected by the valve industry’s buoyancy in past years. “This means that there has been a negative growth of labour within the valve industry, mainly owing to issues beyond the association’s control,” he adds.
Further, the association has seen a 20% drop in membership owing to mergingbetween a number of valve companies over the last couple of years. “The association expects this trend of consolidation to continue for years to come, consequently reducing the number of valve companies in the country,” says Atkins.
In addition, Atkins notes that it is extremely difficult to encourage young people to participate in the valve industry. This can be attributed to the industry’s narrow profit margins. “Profit margins are continuingly being pressured by the imports of valve products,” he comments.
For these reasons, Savama is currently realigning itself with the changing requirements of the industry. “A number of the association’s members are importing parts of their products, and assembling them locally. Today, the local manufactur- ing industry is being measured on who owns the intellectual property, rather than where the valve is being manufactured,” says Atkins.
Savama recently changed its constitution to accommodate the broadening of its membership. Atkins concludes that if the association wishes to progress and remain a force within the industry, it will continue to adapt to ever-changing markets.
