Manufacturer CBC Fasteners is in a position to take advantage of opportunties that will arise, should the recent provisional antidumping duties placed on the import of fully threaded set screws with hexagonal heads, excluding steel screws, from China, be fully implemented come year-end, says financial director Israel Bender.
Imports of such screws acquired a hefty antidumping duty of 104.5% last month. This ensued after an investigation by the International Trade Administration Commission of South Africa (Itac) had found that the imports were causing local manufacturers to lose business.
South African Fasteners Manufacturers Association (Safma), headed by chairperson Rob Pietersma, who is also the MD of CBC Fasteners, submitted the application.
The association provided evidence of dumping to Itac. This showed undercutting, depression, and suppression of prices by Chinese imports; resulting in a decline in capacity use, output, sales volumes and the profit of local manufacturers; and an increase in inventory levels.
Bender emphasises that the duties must not be misconstrued.
“Some people view this as South Africa simply banning imports to save jobs. This is only 20% true. We are not banning imports as a whole; we are banning uneconomical imports that are hurting our local market, because it is due and correct to do so.
“For whatever reason, China is selling products to our market at a cheaper price than to its own domestic market and that is a classic test for dumping,” he says.
Internationally, Bender says, manufacturing operations are closing down for those reasons.
“China is producing jobs at a tremendous rate. It is taking people out of rural areas and putting them into urban ones. The country has to find jobs for them, so it is producing mass volumes of product.
“To get rid of the product, it dumps the product onto the international market and, as a result, international manufacturing has fallen by the wayside in favour of cheaper Chinese imports,” he says.
Bender says the association recognised that if something was not done, the South African fasteners industry would face the same fate as other industries internationally.
“Every player in the industry, including CBC Fasteners, is now in a position to restore jobs, and manufacturing capacity in areas where it has been dormant for a long time.
“We anticipate that this industry is capable of responding to market needs, and if it is not, then it will do what any good industry does – acquire the machinery and personnel to fulfil the local demand,” he says.
Bender adds that the rand/dollar exchange rate will hopefully also be of assistance.
“The rand is showing the correct level of strength against the dollar. We hope this will, at least, allow us some export opportunity and with that, the long manufacturing runs that our industry needs to be able to show growth,” he says.
He notes that, although the fasteners indus- try is small, it is an important one that needs the support of the broader South African industry.
“People have to realise that to support a local industry, one must buy local products. Big projects and players must also recognise this, as we are producing fasteners at an internationally competitive and fair price.”
Bender notes that when faced with dumping in the past, local fasteners companies had to be smart to avoid closing down.
“At CBC, we developed niche products where the requirements were more technical and the price was a bit higher, as they were special fasteners as opposed to standard fasteners.
“When you face imports you have to react, and react we did, by allocating a certain portion of our capacity to a market where the price was right and rewarded us for our work,” he says.
Bender adds that the fasteners industry is a difficult one to be in because it relies heavily on factors it cannot control.
“We rely heavily on electricity supply, for example, which poses difficulties as the price continues to rise. The industry is also dominated by one steel supplier, another factor outside our control,” he says.
The company has also put other initiatives in place to mitigate the import challenge.
“Our tool room is a prime example. We manufacture not only our own tools, but also spare parts for our machinery, which has allowed us to be less dependent on imports.
“We have also developed and responded to new fasteners requirements for power stations that have been implemented in Europe, and have been able to satisfy this market in South Africa,” says Pietersma.
The company has made skills development and training for its employees a priority.
“The skills and training our employees need is not always covered by the sector education and training authority-approved generic training, so we have had to develop our own in-house training manuals and programmes, using the experts in our factories to train those who are less skilled. So far, it has proven successful for us,” says Bender.
He adds that the company has invested a lot of time and money in its in-house skills training, and has a skills development committee, which meets twice a month.
“We review the skills development plans aggressively in these meetings and constantly promote our employees.”
Meanwhile, Bender says the company wants to fulfil the requirements of government and the market.
“If government is considering assisting the manufacturing industry, it would want to see that we really need it and that, without this assistance, there will be no growth in the industry,” he says.
For the future, Bender says CBC is optimistic about the duties being permanently imple- mented and the period of growth ahead.
“We are very positive about witnessing a period of growth ahead and hope to produce at full capacity, or close to it, again,” he says.
The company has suffered an employment loss of about 15% over the last seven years, taking its number of employees from 250 to 210.
“In the short term, we hope that we will be able to re-employ and recreate those jobs. In the medium term, we look forward to growth for the industry as a whole.
The company also hopes to regain its position in the export market.
“In the past, exports contributed about 30% to 40% of our turnover, and we should be able to get back to this. We have been an exporter before. We know and understand the export market.
“However, we will always strive to satisfy the local market, first and foremost. If there is growth in the manufacturing industry, it will push the other industries to grow with it,” he says.
Further, the company has recently introduced lean manufacturing practices.
“We are trying to approach a philosophy of lean manufacturing and also introduce the lean factor into every other part of our business,” says Pietersma.
Bender adds that the new approach is dynamic and efficient and hopes that it will assist the business in being more competitive, locally and internationally.
Meanwhile, CBC Fasteners has 12% of its equity in a trust fund, for the benefit of its broad-based black economic-empowerment (BBBEE) staff.
“During the next couple of weeks, our board of directors and senior management are going to reflect this, as changes have already been implemented,” he says.
Pietersma notes that about 50% of the board will be BEE employees.
“The fasteners industry does not attract much by way of outside investors, like public figures. We decided long ago that our employees are dear to us and, therefore, we should empower them through a share-trust scheme, which we have been doing successfully for five years.
“We are taking those people who have shown loyalty and commitment to the company and promoting them to the ultimate position of board representation,” says Bender.
The employees who are being promoted, he notes, have mostly started at the bottom ranks of the company and have earned a promotion by showing drive and enthusiasm for their jobs, and commitment to CBC Fasteners and its stakeholders.