Speech to the Metals and Engineering Indaba in Sandton, Johannesburg by Dean Macpherson MP, Democratic Alliance Shadow Deputy Minister for Trade & Industry

26 May 2016

Ladies and Gentleman and special guests, I want to thank you for this opportunity to address you today on something that is very close to my heart.

This year South Africa goes to the polls which will be a referendum on the performance of the ANC government.

Will people line up this election with security of work and the hope of a better future? Will they stand in line confident in the chances of large sectors like   manufacturing to create jobs?

The sad reality is that they will not.

I have been on both sides of the coin, in the manufacturing industry and now a part of the political sphere. For 10 years, I directed a manufacturing business that my grandfather started 15 years ago.

I find it astonishing and a problem, that in government, too few people have ever been in the corporate environment.

They have never had to employ anyone, never had to deal with a VAT return or had to deal with a bank manager finding out if you will be making the instalment on that new machine you bought or dealing with unions pushing you to concede to above inflation wages.

Their view point is normally born out of one that is shaped by ideology, that being state centred and left leaning.

What we urgently need is for government to start treating you as their partner and not as their enemy if we are to grow our economy. 

We know that as a contributor to GDP, manufacturing has declined year on year to 12,4% in 2015. 

We know that we have slipped from 36 in the ‘Ease of Doing Business Report” in 2011 to 73 in 2015. 

We know that in the first quarter of 2016, we have lost 100 000 in the manufacturing sector alone.

We saw a 74% decrease in FDI in 2015 and we have again revised our growth estimate to 0,4% for 2016.

These are the cold and hard facts facing job seeking South African’s.

Regrettably, the much celebrated Manufacturing Competitive Enhancement Program, which many of you have benefitted from is sadly no more. 

I told the Minister and Director General in June 2015 that the MCEP needed another R2.2 billion to meet its existing funding commitments, let alone new funding   applications through to 2017/18. 

Many of you have by now received your funding withdrawal letters despite having bought your machines. It is a story that has flooded my inbox.

I also want to touch on an issue that many of you in the downstream metals industry will be aware of that needs serious attention.

In August 2015, ITAC granted ArcelorMittal a 10% tariff protection on various steel lines in an attempt to protect them from cheap Chinese imports.

The agreement reached was however conditional, one of them being that there would be “no price increases for the steel products in question” however since then, there have been 4 increases just in this year, so what have Minister Davies and Patel done?

Absolutely nothing.

They have dragged their feet, wrung their hands and tripped over themselves to make excuses for AMSA at every turn which is odds with a statement Minister Davies issues on 5 February 2016 saying, “It is of course extremely important that tariff protection measures for primary steel producers do not result in higher steel prices being ‘passed on’ to downstream, steel intensive manufacturing sectors. These sectors are labour intensive and any measures, which might erode the competitiveness of secondary steel intensive manufactures, must be avoided”.

Well, all of you know that this has not happened and rings hollow after the statement by President Jacob Zuma in Durban this week when he said, “We are working   together to remove obstacles to investment and to unlock economic growth”.

In December 2015 the President struck a hammer blow to investment when he signed into law the Protection of Investment Act, which ironically does nothing of the sort.

From the American Chamber of Commerce, to the European Chamber of Commerce, it was roundly condemned as “another nail in the coffin of the economy”. This was the very constituency we are trying to speak to yet we ignored their concerns and so it seems unbelievable when President Zuma says “South Africa is open for business”.

How do we ramp up manufacturing and thus create jobs?

This is the question that faces us today.

We need less regulation, not more.

We need incentives to grow and create jobs, robust and attractive incentives.

We need local governments to come on board and rebate manufacturers so they can succeed.

We need government to quit making grand speeches that promise a better tomorrow, but behind the scenes deepen the state hand in industry. 

I strongly believe that with the right people in place, policy certainty and treating business as a partner, we can see manufacturing employ hundreds of thousands of South African’s once again.

I thank you

Issued by Dean Macpherson, DA Shadow Deputy Minister of Trade and Industry, 26 May 2016