Crisis in the steel industry a huge worry – LIMUSA

Union calls on govt to engage with their Chinese counterparts over excercising voluntary export restraint

LIMUSA extremely worried by the crisis in the steel industry 

The Liberated MetalWorkers Union of South Africa is extremely worried by the crisis in the steel industry. If reports are true, more than 50 000 workers stand to lose their jobs if this catastrophe is not mitigated. According to Statistics South Africa, economic growth had already shrunk by 1, 3 % in the second quarter of 2015. This crisis, coupled with the volatile rand, has a potential to plunge our economy into recession that we might not even be able to come out of. 

LIMUSA believes that this situation has been left for far too long and we are reaping the fruits of our collective inaction. As early as 2004 trade unions warned government that import parity pricing will have seriously destructive consequences for our developing economy. This tried, tested and failed pricing model wherein the price of steel is set based on what it would have cost if the product had been imported kills downstream jobs because it results in excessive pricing by the dominant producers.

In this case, ArcelorMittal which accounts for over 70% of South Africa’s steel production abuses its monopoly. Now that there is a global oversupply of steel, they are turning on to government for help. This is after Department of Trade and Industry had for years pushed for fairer pricing for local steel. 

LIMUSA is convinced that South Africa’s global viable advantage is our mineral resources which include our steel endowments and unless we use this endowment to grow our economy by nationalizing this commanding height of the economy we would be letting this advantage out the window. South Africa cannot afford to bequest the future of our country to the hands of a few who conduct business with the sole purpose of maximizing profits and when their profit margins decrease they threaten us with job loses if government does not protect them from cheaper imports.

LIMUSA calls on our government to engage its Chinese counterparts on the modalities of introducing voluntary export restraint as a temporary measure to mitigate the job loss blood bath. Such restraints were crucial in rescuing our clothing and textile industry which would have been totally decimated without such intervention.

Statement issued by Cedric Gina, LIMUSA General Secretary, August 28 2015