ECONOMICS AND
COMMERCIAL DIVISION
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n line with SEIFSA’s mission, the Economics and Commercial (EC) division’s aim is to enhance the profile of SEIFSA by providing input to the national discourse on economic, trade and commercial matters. This is aimed at generally improving business conditions in the metals and engineering (M&E) subindustry of manufacturing. To this end, the division provides the following services: • •
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Annual economic research and statistical analysis of the sector; Overview of the domestic and international macroeconomic environment and insightful industry market appraisals to SEIFSA member associations, the government and other key stakeholders; Continuously update the Price and Index Pages (PIPS) (a flagship product for the metals and engineering sector), with the latest statutory and sector specific cost indices for relevant economic indicators including materials, services and labour. The PIPS indices are useful for cost tracking, benchmarking of standards and best practices, calculating of contracts (or tenders) price adjustments or escalation and for generally updating price lists; Contract Price Adjustments (CPAs) workshops where delegates are guided through the process of using the PIPS indices to substantiate price adjustments and how to use model formulas for computation of price adjustments; Ad hoc consulting services in industry-related matters aimed at improving business savvy and operational excellence.
ECONOMIC OUTLOOK
The 2017 financial year was yet another challenging year for the M&E sector, following several years of
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SEIFSA ANNUAL REVIEW 2017
poor performance, post the 2008 global financial and economic crises. However, despite the economy being stuck in continuous low growth levels, high unemployment (particularly amongst the youth) and rising input costs, the sector was resilient. The sector’s share of manufacturing in Q1 of 2017 was 29.10%, effectively contributing about 3.5% to the gross domestic product (GDP). On aggregate, the sector seemed to have recovered from the contraction recorded (-4.5%) in the financial year end of June 2016, by slightly posting a moderate growth of 0.1% by the end of the full calendar year (2016). The resilience of the sector is highlighted and all indications are that the positive growth trajectory will be maintained even though currently growth in the sector seems to be laggard and more laterally trending. Generally, there are signs of a slight up-tick in business activities adjudging by the performance of key relevant macro-economic indicators. Production of companies in the sector stood at R580 billion, with value added to the domestic economy at an estimated R834 million. The sector recorded a decrease in employment in the full year of 2016, losing 3,864 (formal) and 7,525 (formal and informal) jobs, respectively (or 1.2% decrease), comprising a cumulative trend of 11, 389. The loss of jobs further added to the demise of the sector, given the initial loss of about 25,000 jobs by the second half of 2016. Given that the decreasing job trend in the M&E sector form an integral part of the 4000 (or -0.3%) job losses recorded in the broader manufacturing sector in Q1 of 2017, it is a course for concern. The M&E capacity utilisation improved in Q2 2017 to 80%, against a sectoral benchmark of 85%. This is good
