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Roofing Matters: How has the industry fared so far?

Roofing Matters: How has the industry fared so far?

By Ntsako Khosa
The impact of political instability, world steel price fluctuations and local legislation can be seen throughout the steel industry in South Africa.

As macro-economic factors (political landscape, steel price and legislation) continue to influence the business landscape in South Africa, Justin Jackson, head of sales and operations at Safintra, shares his view on the past year and his thoughts on the future of the steel industry in South Africa.

Jackson’s view is that 2017 was a challenging year for the steel industry in many respects. 

“It started with the implementation of duties on steel imports on hot rolled coil in March 2017.  The stated motivation from the government is to protect the about 36 000 jobs in our steel sector. This duty has probably had the effect of protecting a steel manufacturer but has placed severe hardship on the downstream industries. This has been a major contributor to the general increase in steel prices in South Africa.”

Factors that ruled 2017

It is estimated that South Africa’s GDP growth for 2017 was 0.90%, which resulted in disappointing growth for the construction industry. Therefore, the biggest challenge for 2017 has been the general downturn in the economy, which coupled with the price increases, resulted in a general decline in business in the construction sector of about 20% year-on-year. 

2017 was a challenging year for the steel industry in many respects.

“This downturn and the political fracas have affected Investor confidence in 2017. This can be attributed to the political uncertainly of the ANC elective conference in December and the various state capture allegations. There is however some good news on the horizon. Forecasted growth for 2018 should exceed that of 2017, and we have seen a slight up-tick in business during Q4 of 2017. This will result in a more sustainable business climate. There are of course various factors that could swing the general sentiment negative again. For example, if Moody’s downgrades the country in February, this will have severe ramifications for the economy and our business sector, in particular.”

2018 and beyond

Jackson describes the industry as a reflection of the growth in the market, “When there’s not much growth in the market, there’s not much opportunity to supply developments.” A small growth rate translates into lower margins.

According to him, the major aspect that characterised the year and should be implemented in future are cost containment, debtors management and margin management. “Have the right cost structure to manage the volumes coming through is crucial to keeping a business open. These are the three pillars by which we manage our business,” he advises.

Jackson’s outlook on 2018 remains conservatively optimistic with some opportunities awaiting the industry in 2018.

“Things won’t change too much. I don’t think there’s going to be massive growth in the market, but there will be some growth.”

He is however optimistic about the growth potential in the medium term; “Depending on government stance on the various issues we are facing and the outcome of the election in 2019, growth as we know it will return from about the second half of 2019. For 2018 we should focus on the micro environment and as a business, focus on what we can control!” he says.

The wrap

“Businessmen by their nature have to be positive about the future. All we need in South Africa is for a few small things to fall into place (mostly out of our direct control) and things will recover quickly. South Africans are resilient, and we will be there when the up-turn comes!”

About Justin Jackson

Jackson is the head of sales and operations at Safintra South Africa and has been with the Safal Group since 2008. He has an honours degree in Marketing and Supply Chain Management from the University of KwaZulu-Natal. Jackson joined the group in sales and has built a highly successful career over the past 10 years, including managing various branches (large and small) within the Safintra Group. 

 

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