The local and international foundry sectors need to work together to deal with the challenges that affect the industry, as every foundry faces these challenges, says industry-led, government-funded National Foundry Technology Network (NFTN) project leader Adrie El Mohamadi.
South African Institute of Foundrymen (Saif) CEO John Davies agrees and notes that the challenges in the industry pertain to environmental legislation compliance, the lack of artisanal skills in the foundry sector and, in some cases, a lack of management skills.
Further, in recent years the low uptake of new technology and high input costs, such as increasing energy prices, have and continue to be challenges that affect all foundries.
He notes that the 8% electricity tariff increase recently granted by the National Energy Regulator of South Africa to State-owned power utility Eskom does not bode well for the industry. Even though Eskom did not receive the 16% increase it lobbied for, the increase will still have a significant impact on the industry.
El Mohamadi says, during the third Brics Foundry Forum, held in the North West in March, a comparison among Brics countries Brazil, Russia, India, China and South Africa revealed that South Africa’s energy costs are one of the highest.
The study was commissioned by the NFTN, which hosted the Brics Foundry Forum with Saif to draw important comparisons between the various countries, focusing on iron-casting foundries.
The results of this study also indicate similar export patterns across all the Brics countries, with most products destined for domestic markets.
Further, the dominance of the automotive industry as a consumer of the foundry industry is not as pronounced in South Africa, where mining dominates.
Also, when viewed as a percentage of production costs, labour costs in South Africa, at 33.5%, are the highest among Brics countries, followed by Brazil at 32%. The other countries have reported labour costs ranging between 8% and 20%.
However, despite the challenges, El Mohamadi and Davies agree that there are many local growth opportunities for the South African foundry industry.
They believe that it is the responsibility of those in the industry to respond to the opportunities in a positive way, exploit them and still remain globally competitive.
Davies says the State-owned enterprise procurement programme is the biggest driver and a significant buyer of castings and adds that government has assured the industry that it is not a one-off initiative.
He says the programme will result in a sustainable future for the foundry industry for about 10 to 15 years, which makes investment in the industry a viable option.
Government has also introduced programmes to assist the foundry industry with investment. The NFTN and Saif hope that the industry will buy into these programmes and use the opportunity to recapitalise their ageing plants to deal with the resulting challenges.
“Government has highlighted a compelling localisation programme and has announced expenditure of about R800-billion over the next three years. Through this, infrastructure development is focused on 18 strategic integrated programmes and many of these projects involve rail infrastructure, which consume a high volume of metal-cast products. Of the R800-billion that government will spend in three years, about R50-billion in castings has to be procured,” Davies states.
El Mohamadi says, in recent years, more foundries have become aware of opportunities presented by the localisation programmes offered by government.
Further, she notes that, other than public entities that have the drive for localisation, private companies are also showing interest in the initiative, wishing to collaborate with local foundries.
“Government is assisting the foundry industry and it is important for foundries to collaborate with government and seize the opportunities being made available, as the potential maximum capacity of the local foundry industry is not used effectively,” El Mohamadi advises.
Davies adds that the weakening rand, owing to the trade deficit, also presents a greater opportunity to export products.
He says the traditional export markets of North America and Europe are currently depressed because of the current economic situation and exports to new areas, such as South America and Africa, present growth opportunities for South African foundries.
The growth rate in Africa has been exceeding 5% in recent years and El Mohamadi says South African foundries have a competitive advantage because the country has an abundance of mines, and she believes that South Africa is not exploiting this sector and the opportunities it presents enough.
Meanwhile, Davies points out that many foundries are producing rough castings as a saleable product, but that value-adding processes, such as machining, should be taken advantage of.
He says the two leading technologies that may assist foundries are computational or simulation-based technology, which are used to decrease the lead time to production, avoid defects in primary batches and improve the yield of casting production.
He says another technological advancement, which has been in use for some time, but is still in its infancy, is additive manufacturing. This can be used by foundries to rapidly move to a patentless casting system, as well as towards the production of castings directly from a mould made using computer technology.
Davies says foundries also need to be more energy efficient in their operations and that efficiency levels should be measured regularly to compare the results with the generally accepted best practice.
In line with this, El Mohamadi points out that the NFTN has published an Energy Management manual, which aims to highlight the relative ease with which improvements can normally be made within a foundry, in terms of increasing energy efficiency and reducing energy use.
“Through initiatives implemented by the NFTN and government, a lot of assistance is directed to the foundry industry and is increasingly being taken up by foundries, as the benefits of these initiatives are realised. This assistance is expected to make a significant difference in the industry in future,” adds El Mohamadi.