EPC Contracts for Energy Industry Online Masterclass is Now Back by Popular Demand

Due to popular demand, Infocus International Group is bringing back the Engineering, Procurement and Construction (EPC) Contracts for Energy Industry online masterclass and it will be commencing live on 23 September 2021. Throughout the five sessions, participants will learn a comprehensive analysis of EPC contracts and of the key considerations in projects and disputes where such contracts are used.

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Zutari offers pro bono services to #RebuildSA

Consulting engineering firm Zutari is offering its services for free in August to support the #RebuildSA efforts in KwaZulu-Natal (KZN).

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SEIFSA urges M&E businesses to showcase their environmental stewardship

APRIL 2021 – The Steel and Engineering Industries Federation
of Southern Africa (SEIFSA) once again calls on companies in the Metals and
Engineering (M&E) sector to submit their entries for the 2021 SEIFSA Awards for
Excellence in the Environment Stewardship Award category.

Now in their seventh year, the SEIFSA Awards for Excellence seek to promote and
reward innovation and excellence in the M&E sector, with this year’s entrants to be
assessed on their performance during the period 1 July 2019 to 31 December 2020.
The Environment Stewardship Award celebrates a company that has taken
the environmental challenges that confront the world seriously and has successfully
implemented the necessary steps to ensure that the natural environment is preserved.

The company will have demonstrated in its entry that it has gone out of its way to
invest in the environment and has successfully implemented initiatives in its day-to-day business operations.

In 2019, the Award was won by Babcock for its water conservation initiatives. The
company had taken it upon itself to protect, control and conserve water usage in the
business through several initiatives, including using water meters at its different sites
and reusing water.

“South Africa faces significant environmental challenges such as water scarcity and
air pollution. Together as the business community, we need to find lasting solutions to
these challenges. By showcasing companies mitigating their negative effect on the
environment through sustainable initiatives, we not only create a platform to engage
on how to further protect our environment, but we also offer examples that other
companies can emulate,” said SEIFSA Chief Executive Kaizer Nyatsumba.

The Award ceremony will take place on 20 May 2021 at a venue yet to be confirmed.
In addition to the Environmental Award, the other categories include:
• Most Innovative Company of Year;
• Health and Safety Award of the Year;
• Best Corporate Social Responsibility Programme of the Year;
• Customer Service Award of the Year;
• Most Transformed Company of the Year; and
• The Artisan Award of the Year.

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Increased infrastructure activity needed to boost economy

The decline in manufacturing production, at a time when increased industrial activity is important to revive the ailing economy, is very concerning, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

SEIFSA Chief Economist Chifipa Mhango said the decline once again highlights the negative impact Covid-19-induced lockdown regulations had on the manufacturing industry and the economy in general, and that this situation needs to reversed urgently. According to figures released by Statistics South Africa (StatsSA), total manufacturing production declined by 3,4% year on year in January, with a slight 0,5% month-on-month increase from December 2020. Total manufacturing sales increased by 1,4% year on year in January 2021 and by 0,9% from December 2020.

However, Mhango welcomed the 5,3% year-on-year increase in January 2021 in the performance of the Metals and Engineering (M&E) sector, which accounts for 29% of manufacturing production. Total sales across the sector’s 13 sub-industries increased by 10,6% to reach R68,3-billion. He said this performance would need to be sustained through the speedy implementation of the Government’s infrastructure plans if the sector and the economy as a whole are to recover.

StatsSA figures also showed that total capacity utilisation in the manufacturing sector was 72,3%, down from 81% in 2019. In the M&E sector, average total capacity utilisation for 2020 was only 68%, again demonstrating how Covid-19 has inhibited production within the sector.

Mhango noted that with the economy has contracted by 7% in 2020, it is imperative that the Government intensifies its efforts to revive the ailing economy and focuses on the implementation of its recovery plans. He said while the Government’s policies were attractive on paper, more needed to be done to speed up the implementation of critical interventions such as the Steel Master Plan in order to benefit both the upstream and downstream of the M&E sector.

Mhango said the current state of the M&E sector remains dire, with declining levels of employment and investment, as well as a weak trading position with the rest of the world. He said with the country’s unemployment rate now at 32,5%, it is important to ensure that the industrial base is not eroded any further. “Fixed investment is key to reviving the sector. To grow the country’s industrial base, the fixed investment share of GDP needs to move to levels above 40%, from the current level where it is below 20%,” he said.

Mhango said while the Government’s commitment to spend R791,2-billion in the next three years on various infrastructure projects is commendable, the slow rate of implementation and the mismanagement of funds have derailed progress towards achieving a higher ratio of fixed investment to GDP.

“The M&E sector is heavily reliant on demand from key Government infrastructure projects to boost its production and sales, especially for products such as steel and other related downstream products such as roofing material. The lack of progress towards the implementation of these projects will only serve as a hinderance to reviving the South African
economy,” Mhango said.

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Slow pace of recovery in manufacturing sector

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is concerned about the slow pace of recovery in the manufacturing sector, as depicted by the lower manufacturing PMI index number of 50.9 in January, which is lower than the 2020 fourth-quarter average.

According to the Bureau for Economic Research, South Africa’s Absa Manufacturing PMI rose slightly to 50.9 in January from 50.3 in December 2020. Despite the improvement, the latest reading is much lower than the average recorded in the final quarter of 2020. Indeed, the business activity index declined for a fourth consecutive month, pointing to a further loss of momentum in recovery. Meanwhile, there were gains in the sub-indices tracking new sales orders and expected business conditions in six months’ time.

The manufacturing sector remains key to the growth and development of South Africa due to its multiplier effect into other sectors of the economy, such as the construction sector, especially through the Metals and Engineering (M&E) industry as a supplier of crucial inputs such as steel. According to SEIFSA Chief Economist Chifipa Mhango, the signs of this slow pace in recovery show that the sector is in for a bumpy ride in 2021.

He said the price trends for intermediate products, which were discouraging new investment into the manufacturing sector, were also a concern. “Prices are a key component of decision-making by businesses on how revenue will be generated, either taking the approach of growing price or volume. Within the manufacturing sector, historical patterns show that on average, since January 2013, prices of goods have increased below 10% year on year. This is for both final manufactured goods and intermediate goods, of which most M&E products are part,” Mhango said.

Producer price index data suggests that in 2020 electricity prices increased at a much faster pace than that of intermediate manufactured goods. However, prices for mining products increased more than both electricity and intermediate manufactured goods between January and December 2020. Mhango said this reflects the prevailing difficulty in the operating environment, characterised by rising intermediate inputs costs from the mining sector.

He said there is a prevailing discouraging trend of generally decreasing price patterns in both the intermediate and final manufactured goods PPI since 2016.

“It is important to keep electricity price increases under control in order to ensure business’s sustainability since their negative effect on turnover can lead to the shutting down of businesses and more job losses in the short to medium term.”

SEIFSA Chief Economist Chifipa Mhango

He said the massive surge in prices of mining input products to 32.5% in 2020, according to Statistics South Africa, which is above price increases of intermediate manufactured goods, was a concern for the survival of the M&E sector. Had said the high electricity prices had compounded the existing gap between the selling prices for M&E intermediate goods and production.

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Committed to gender parity: Schneider Electric encourages industry to level the playing field

As South Africa celebrates Women’s Month this August, Schneider Electric encourages the engineering and technology industry to embrace this time as an occasion to look at how organisations can work towards levelling the playing field for women in these sectors.

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Laboratories costing concrete suppliers dearly

An urgent meeting of the technical committee of surface mining industry association, ASPASA, was convened to address inaccurate and procedurally incorrect laboratory tests that are costing the sand and aggregate industry hundreds of millions of Rands every year.

ASPASA is receiving ever-increasing complaints from its members with readymix concrete subsidiaries about stock returns and even litigations as a result of erroneous laboratory results conducted on concrete. In many of the instance’s tests used in evidence against members have been compiled by unaccredited laboratories or without a proper paper trail.

ASPASA director, Nico Pienaar, said the problem was being compounded by the closure of the Southern Africa Readymix Association (Sarma), which previously championed the fight against incorrect testing procedures, as well as tests from non-accredited laboratories. Whether the proliferation was as a result of laboratories taking chances due to the demise of Sarma, or simply a growing trend could not be established.

Crackdown coming

Pienaar added that laboratories need to understand the excessive costs experienced by suppliers when incorrect results have been submitted. He further added that ASPASA will have to step in to address the problem and take quick action. 

“ASPASA is on a mission to improve the quality of the products that its members produce and is prepared to crack down heavily on laboratories who provide inaccurate results on the products as supplied – especially those who we find to be repeat offenders,” said Pienaar. 

He added that they will be addressing non-compliance issues with SANAS and report any accredited laboratories that have consistently produced suspect results on the SANSA complaints webpage. 

“It is worth noting that the national standards surrounding the testing of concrete are clear and have been around for a long time. It is just that some laboratories seem to be less committed to the drive for quality testing by abiding by these standard requirements,” Pienaar said. 

According to Pienaar one of the challenges that ASPASA will face is holding commercial laboratories responsible if they submit incorrect results. This could result in entire consignments of concrete being rejected by a client.  

Costly exercise

Technical committee chairman, Barry Pearce explained that the onus then lies on the supplier to prove the laboratory’s result are wrong and this can be a difficult and lengthy process. In the meantime, the damage to the reputation of the company suffers and cash flows can become severely constrained particularly in the current marketplace that is highly competitive with very low margins for profit. In some instances, these may even lead to the closure of smaller businesses which is a bitter pill for the association to accept even more so when the results are proven to be incorrect.

In some instances, engineers may even become unwilling victims as these incorrect results influence their decision to accept or reject the constructed works.  In some cases, the use of inferior products has potentially deadly consequences. 

Pearce explained that this could result in engineers accepting incorrect results and the matter will have to be urgently addressed. He added that he found that engineers do not always have sufficient knowledge of what happens in the laboratories to evaluate the results.

“ASPASA is very concerned at the lack of accountability in some quarters of the industry where these material failures occur.  Those at fault look at every means possible to point a finger in someone else’s direction rather than look to themselves to assist in resolving the issue and admit to their own wrong doing,” said Pearce.

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