Source: Manufacturing sector in dire need of support – NewsDay Zimbabwe May 29, 2017
Local manufacturing companies are under capacitated to supply mining consumables, due to capital constraints, obsolete equipment and high cost structures, mining executives have said.
By Fidelity Mhlanga
Alex Mhembere, Zimplats chief executive officer and chairman of the joint suppliers and producers (JSP) committee, said while mining can provide business opportunities, the manufacturing sector was facing a plethora of challenges, making it impossible to supply mining companies.
“The subsector is not sufficiently capacitated (capacity utilisation 30%), and is largely uncompetitive due to ageing equipment, low uptake of products, capital constraints, high cost structure and unreliable power supply among other challenges,” he told delegates at a Chamber of Mines meeting recently.
Subsectors that were identified include engineering, iron and steel, belting, chemicals and protective clothing.
The JSP committee, which comprises the Chamber of Mines and a Confederation of Zimbabwe Industries committee, was established to improve the availability of local products in mining, with an exclusive mandate to develop linkages between the mining industry and the upstream sector.
“While the mining industry can provide opportunities to local producers, the sector has little capacity to meet the local producers’ financial requirements for working capital and retooling,” Mhembere said.
The committee, Mhembere said, has already identified key manufacturing subsectors with strong linkages in the mining sector with a view to assessing their current capacities and requirements to adequately service the mining industry.
“Where products are available, they remain highly uncompetitive in prices, quality, reliability of supply and poor back up services,” he said.
“The study, however, reveals that the mining sector offers an immediate market for local producers of mining sector input requirements.”
Mhembere said findings of the assessment programme point to the need for adequate support programmes for the local manufacturing sector through various initiatives.
He said the mining industry, despite its current challenges, is committed to supporting government policies by pursuing the beneficiation agenda through building more beneficiation plants.
“Thus, there is need for all stakeholders (government, mining sector, local producers and bankers) to agree on strategies to implement the current local content development initiatives,” Mhembere said.
“In the long term, there is need for medium to long term financing frameworks to support retooling and replacement of ageing and obsolete equipment with a view to improving efficiencies and competitiveness, through engaging the financial sector to participate in the development of linkages.”
COMMENTS
Your comments seem to indicate that money alone can fix this, I say not. The hygiene factors must be in place to accommodate growth and investment. There is the hairy question of where does any money come from? in any business environment there is a chart of the growth / production vs the capital costs etc. I highly suspect you are in the impossible zone because you spend too much on simply standing still. Really severe cuts are required to try and get put of this zone; Although frankly the feasibility of of even being able to do so, is highly questionable.
Equipment cost mega money, there is no point in struggling on with obsolete stuff as the rest of the world has the better gear to make things with. Now a days business, manufacturing is largely automated and employs few hands – so returns in employment numbers will be small yet for the elite employed the returns will be attractive and rewarding, to the country life giving. You say you had lots of money from the natural resources but this appears to have vanished. Therefore you ended up in this mess and the wrong side of the graph line. It could be augured that as things stand it’s a no win situation – impossible. A chicken and Egg, you make nothing, so nobody will lend you anything, so you make less of nothing and the positive feedback loop keeps going – downhill
The taxation system appears to be based on simply making money through one after another imposition, this will not help as it simply grinds the mess into a deeper hole. The situation over ready cash shouts as to the cause – no money being made. All I read about is sticking plaster to try and cover up the route cause. So it’s no good simply begging you need new capitol to work with, because it will not come to you – you have to go to it. Highly complex and difficult situation