Well, the event we have all been eagerly waiting for is finally here. I hope to see many of you at the Third SAIMC Gala Dinner on 2 October at the Maslow Hotel. Get there early for the professional photo-shoot! Once again it is a sold out event this year and with the tough economic climate our industry and country is facing, this was quite an achievement by our PR team. A special thank you is in order for Jane van der Spuy and Ina Maartens for their sterling work in driving the sales. I would also like to thank all the sponsors and table hosts for showing their loyal support for this premier event on the automation industry calendar. It is very heartening to see the captains of our industry put their money where their mouths are!
With this letter we start the three-month countdown for the end of my time as leader of the SAIMC. In January 2016 I will be handing over the reins of this highly transformed organisation to our current vice-president, Oratile Semantle. You will see Oratile playing a more prominent role in SAIMC over the coming months as the hand-over process that we started some months back progresses. I am sure all of you will give Oratile your full support during his tenure as president. He has some ambitious plans that are well aligned with our business plan, so I am excited to see these unfold. I am sure he will share these plans in his inaugural January 2016 letter.
It appears that my hope from last month did not come to fruition and spring has brought with it very cold economic data as well as a terrible cold front. The Rand has hit record lows against the major currencies and new car sales are dropping (a leading indicator to economic slowdown). It was reported that South Africa’s economy contracted by 1,3% (seasonally adjusted and annualised) in the second quarter of 2015. The picture below shows how poorly the economy is performing at the moment.
According to StatsSA, “The mining industry contracted by 6,8% quarter-on-quarter, mainly as a result of lower production in the mining of coal and iron ore. Manufacturing activity declined by 6,3% quarter-on-quarter mainly as a result of decreases in two manufacturing divisions, namely basic iron and steel, non-ferrous metal products, metal products and machinery; and petroleum, chemical products, rubber and plastic products. Electricity and trade industries were the other two industries that experienced quarter-on-quarter decreases, activity falling by 2,9% and 0,4% respectively.”
The above mentioned industries are all key to the growth and sustainability of our industry, a very worrying set of data indeed. This, coupled with the significant spend required by the newly introduced BBBEE codes is putting our industry under severe financial pressure. Income is down and expenses remain the same or have increased, almost a perfect storm that has resulted in job losses at both our end-users and at industrial automation vendors over the past months.
Fortunately it is not all doom and gloom. Moody’s rating agency, which has been very critical of South Africa in the recent past has predicted that we will not go into a recession: “While Moody’s expects South Africa to avoid recession in 2015, the rating agency forecasts growth of only 1,7% in 2015 and 1,9% in 2016, with 3% growth unlikely before 2017 or 2018 at the earliest,” Moody’s said in the statement – Moneyweb, 2 September. So there is light at the end of the tunnel, hopefully. However, what this means is that end-users and suppliers alike will need to look beyond South Africa, to our faster growing neighbours (admittedly off smaller bases) for growth.
This means that we will need to assist our neighbours in skills development and knowledge transfer to manage the sophisticated control systems that are delivered to those countries. What a fantastic opportunity this is for our region as a whole. It is also a wonderful opportunity for the SAIMC Education and Training committee to assist our neighbours and possibly get more branches established as part of this process. Whilst that is happening, we hope the SA Government starts real spending on the Strategic Infrastructure Projects and gets a coordinated policy position amongst the ministers in the economic cluster. Policy certainty has been lacking for far too long and is holding the economy back. That’s my rant for this month!
As usual, please mail me your thoughts on email@example.com. I thank you all for taking the time to read this column.
Working together, achieving more,
Vinesh Maharaj, President.
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