VALVE manufacturers and foundries are poised to experience a resurgence in product demand following years of decline in market share lost to foreign companies, according to the National Foundry Technology Network (NFTN), the South African Institute of Foundrymen (Saif) and the Valve and Actuator Manufacturers Cluster of South Africa (Vamcosa).
This expected recovery is credited to the Department of Trade and Industry’s designation policy, under which state organs will procure minimum levels of certain products from South African suppliers.
South African manufacturing has been in decline for years, as its labour costs are high relative to the likes of China and parts of Eastern Europe, and much of the manufacturing workforce in South Africa is nearing retirement age.
The department believes it needs to promote local procurement.
According to the NFTN, Saif and Vamcosa, focus and collaboration had been lost, but localisation would return stability.
"As a result of the localisation strategy in public procurement, some estimates have put anticipated revenues for the industry as high as R4bn to R5bn over the next three to five years. Industry stakeholders see this as an attractive incentive for action to turn around the ailing sector," the organisations said in a joint statement.
Tapiwa Samanga, director of capital equipment and allied services at the department, on Thursday outlined the context of the designation process and the importance of leveraging public expenditure. "SA reported a negative trade balance of more than R2bn in 2011, and clearly there are challenges impeding localisation.
"Some of these problems originate at state-owned companies and others are issues of industry. The scale of the problem is such that during 2010-11, 67% of valve tenders amongst state owned companies were granted to non-South African firms," he said.
Conrad Mmako, a commercial manager at Eskom, said valves were one of Eskom’s priority areas to provide a platform for sustained demand through its operational and projects spend.
"The execution of our valve strategy will result in the development of the local valve industry through capital investment and stable demand, not to mention skills development in the valve value chain.
"Through localisation, we anticipate the creation of 2,000 jobs over 10 years," he said.