Organised business and labour have warned of an economic catastrophe should ArcelorMittal SA (Amsa) close its plants and retrench 3 500 workers.
Amsa recently announced plans to wind down the company’s long steel business, subject to a due diligence and consultation process. This will affect the Newcastle Works in KwaZulu-Natal and the Vereeniging Works in Gauteng.
Steel and Engineering Industries Federation of SA (Seifsa)president and chairperson Elias Monage said: “Downstream sector, which is deeply reliant on the long products that come from the plants that are going to shut down, will also suffer. Even where these products can be imported, this will result in the exporting of jobs that are desperately needed in South Africa.
“The logistics challenges facing the country raise serious questions whether port and rail infrastructure can get product to the end manufactures.”
Amsa cited a slowing economy and a difficult trading environment due to South Africa’s mute GDP growth, the country’s steel consumption that has decreased by 20% in the last seven years and limited infrastructure spend, and project delays for the retrenchment plan.
The company also complained that scrap metals had gained advantage over iron ore.
“Compounding this is the department of trade, industry and competition’s blinkered and narrow focus on how best to create an enabling environment conducive to growth, stability and job security. Seifsa has repeatedly warned that the decisions relating to the scrap metal policy and its industrial policy consequences will yield casualties. What we are seeing unfolding at ArcelorMittal feeds directly into these warnings,” said Monage.
“The matter is now beyond urgent, and we urge the president and key ministers in the economic cluster to treat it as such, if we are to avoid a socio-economic catastrophe of gigantic proportions in the metals and engineering industry, which will reverberate throughout the economy and the continent, impacting the auto, motor, construction and mining sub-sector and all who work in it.
“The reconstruction and recovery of the South African economy, and more specifically the metals and engineering industry, must be looked at in the wider context of re-industrialising critical sectors, along with all the other challenges facing the economy from energy and logistics to the water infrastructure and crime,” said Monage.
The National Union of Metalworkers of South Africa (Numsa), business chambers from both towns on Friday told Sunday World government needed to intervene as it would be hard to recover those jobs should the axe fall.
“Numsa is concerned about job losses because if jobs are lost, they are unlikely to be recovered. We will engage Amsa to understand the reasons for the section 189. We will work with government to find a solution to prevent job losses,” said spokesperson Phakamile Hlubi-Majola.
The president of the Newcastle Chamber of Business, Louw Conradie, said it will be difficult for the town to survive the closure.
“[Amsa is responsible] for the livelihoods of most of the people in Newcastle and it will affect everybody – from major corporations, the retailers, your normal businessperson and all formal businesses, and informal traders. If you close one of the big businesses like Amsa, it will have a negative impact on an already difficult economy and a town that is already battling with stuff like loadshedding and crime,” said Conradie.
He said he hoped there was something that could be done to save the plants. “There needs to be alternatives that could be worked around or found, or if they can look at somebody who can buy them. If Amsa closes down, a town like Newcastle will suffer tremendously.”
He said he was also worried about the future engineering works businesses and other Amsa service providers, which employ more people than Amsa. “Those businesses in the industrial areas that stay open and most of steel works are being done in conjunction with them, those lost jobs are definitely going to be bigger than those 3 500 jobs at Amsa,” he said.
Jaco Verwey, the president of Vaal’s business chamber, told Sunday World that 224 employees would be affected in the town.
“What will be harder to quantify are the small businesses that rely on Amsa, like metals work firms, personal protection wear manufacturers and cleaners, among others. It is a shot in the guts because the Vaal Triangle already has double the unemployment rate of SA and we are struggling financially.”
Verwey said they would try to absorb retrenched workers.