SA foundries at big disadvantage

Reuters

File photo.

South African foundries pay significantly more for electricity and certain raw materials than potential competitors in Brazil, Russia, India and China, delegates at the third Brics Foundry Forum in North West heard on Thursday.

And South Africa’s labour cost in relation to productivity are a red flag among foundries in Brics countries.

Delegates were given the data uncovered in a study commissioned by the National Foundry Technology Network (NFTN) to establish comparisons between the member countries.

The study shows similar export patterns across all the Brics countries, with most products destined for domestic markets.

Viewed as a percentage of production costs, labour costs in South Africa are the highest among Brics countries at 33.5 percent, followed closely by Brazil at 32 percent. Labour costs ranged from 8 percent to 20 percent in the other countries.

The forum was jointly hosted by the National Foundry Technology Network (NFTN), an initiative of the dti that works closely with the South African Institute of Foundrymen.

Adrie El-Mohamadi, project leader of the NFTN, says the study was commissioned to provide a snapshot of the iron foundry industry per country.

“Although the study looked at public sector support and incentives among Brics countries, the issue is a complex one with many layers that need further interrogation,” she says.

The study was conducted by Real Consulting, researchers in resource economics.

Dominic Mitchell, who presented the results to 55 delegates at the forum, warned that industries tended to buy into rumours about the incentives and support offered by other countries. “We need to explode these myths by taking a closer look at this issue,” he said.