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SAISC: Adapting to Changing Times

The Southern African Institute of Steel Construction (SAISC) will promote increased cooperation and dialogue between the government, the institute and the steel construction industry in general in order to maximise opportunities in a tough global construction environment. This is according to SAISC executive director Dr Hennie de Clercq.

“We live in a volatile world with historical shifts taking place across the gamut of human society including, international and local business markets, and the more we work together in dealing with the resultant powerful challenges the better chance we have of success,” says de Clercq.

He adds that from a local perspective, the institute historically got used to ‘going it alone’ without really concentrating on working with government unless it had something to do with exports. “We became proud of our independence and it worked for us, but we came to realise that global business is too complex for a single industry to succeed on its own any longer.”  

“We will work toward changing this situation and will endeavour to interact much more closely with the various relevant government departments and the myriad other industries with whom we have excellent working relationships to see what synergies exist for deeper cooperation. In short, we will do things differently in future and will encourage our industry leaders to do the same,” he says.

Meanwhile, despite the challenging times, the South African steel construction industry – via the civil engineering and building sectors – has performed surprisingly well of late. “We know of only one bankruptcy in the steel construction industry this year and many firms have reported quite buoyant business activity for 2011 and a reasonable outlook for 2012,” de Clercq says. “We have performed better than many other countries - including the U.K., the U.S. and Australia – where, in some cases, up to 25% of the steel construction industry is expected to be lost to bankruptcy in the near future.”

De Clercq says that there are a number of reasons for South Africa’s good performance.   

“Firstly, the leaders and managers of our industry businesses are exceptional. They are generally very proactive in ‘getting out there’ to get the business and they have been particularly successful at combating the Chinese and other foreign competitors.

“Secondly, the new Eskom power stations have been a significant boost to the industry, taking up a good deal of its capacity. Also, South Africa’s regional neighbours have been buoyant and South African firms have enjoyed significant volumes of cross-border business across a wide range of sectors including mining, warehousing, factories, office buildings and more.

“Thirdly, the recent weakening of the Rand has improved the competitiveness of our industry significantly.  Apart from this being a boost to our ability to export, it is definitely helping us combat the practise of local companies importing fabricated structural steel from the East,” de Clercq says.

On the question of exports de Clercq says that since International Steel Fabricators of South Africa (ISF) has been working with South African main contractors to bid on foreign contracts in conjunction with it promoting local steel fabricators to main contractors on foreign jobs, significant strides have been made.  

"We have always believed in promoting local steel fabricators to the main contractors on foreign jobs and, while this has been successful, focusing on helping South African main contractors to bid on these foreign contracts has helped as, when successful, they, in turn, are in a position to sub-contract work to our steel fabricators," de Clercq says.

He adds that he is optimistic about the ISF continuing to help open and develop new markets following this principle. "When the ISF started to explore potential opportunities in South America more than four years ago there was skepticism about the successful outcome of the endeavour. But these efforts have paid off and have spurred us on to successful monitoring of opportunities in Australia, Europe and other regions especially in the deep-level mining arena where we are the indisputable world leaders.”

He adds that exports are fundamental to the survival of the local industry. “They not only protect the industry from the ebb and flow of demand by being geographically diversified, but also, nowadays everyone must do business wherever they can, with whomever they can, because that’s the nature of the beast. In some situations our customers become our competitors and in other situations our competitors become our customers. Sometimes we win local contracts from foreign firms and sometimes foreign contracts from local firms and we would reject this way of doing business at our peril.”

De Clercq says that his optimistic view of the current state of the local steel construction industry should not give the impression that there are not some real challenges that have to be met.  “One of these challenges is that, because of the problems Arcelor Mittal has experienced with its blast furnace in Newcastle, there is a shortage of steel, especially the smaller profiles and reinforcing and, as this is only expected to be solved by the end of 2011, the compounded shortage could affect the supply of steel into the future.

Another challenge, according to de Clercq, is that while certain activities are taking up a sizeable proportion of the industry’s capacity, there is still a good deal of capacity that must be utilised. “We have to do whatever we can to take up this spare capacity or we face the risk of losing it altogether. Our clients must realise that this is an excellent time to build things. Prices of raw materials are competitive, consultant fees are lower than they have been for years, and the industry is blessed with state of the art management, techniques and equipment. We have the potential to become a world player and everyone in the industry must play his/her part to realise this.”      

De Clercq admits that while the institute’s role in this process is multifaceted, it is quite clear that it has to continue with market development for the industry. One of these important markets is the multi-storey sector, where steel, through a variety of factors, is increasingly becoming a viable alternative to the more traditional construction materials. “Light steel frame building is also having a particularly significant impact as it helps to keep the weight down while still building a structure of the highest quality both from engineering and aesthetic points of view.”

De Clercq says that, along with the rest of the world, South Africa is heading into very challenging times. “Uncertainty is the name of the game not only for our industry but for the world economy as a whole. It will take innovation and perseverance for the local steel construction industry to survive, let alone thrive. I believe we have what it takes to thrive but it’s going to require hard and, most importantly, smart work,” he concluded.

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