Supply chain disruptions present opportunities for local manufacturers

The COVID-19 pandemic is having an unprecedented impact on the global economy and supply chains across the world are feeling the pinch. According to Databuild CEO Morag Evans, this presents an ideal opportunity for South African companies to support local manufacturers.

As more countries go into lockdown, world leaders and health care workers across the globe are working non-stop to contain the spread of infection and put an end to the pandemic as speedily as possible.

Deloitte is predicting that the slowdown in economic activity – including transport restrictions – in countries affected with the Coronavirus, will have a detrimental impact on manufacturing and in raw materials used in manufacturing.

According to Industry Insight, around one hundred Chinese builders have already closed their doors and factory closures and production halts in the country are delaying the importation of materials.

“South Africa’s construction industry, and local cement manufacturers in particular, has been hard hit over the past few years by cheap imports from countries such as China, Vietnam and Pakistan,” says Evans.

“Our country has numerous cement-producing plants which are more than capable of keeping up with local demand, but government’s failure to stem the tide of Chinese imports has led to a steady decline in local manufacturing output, and negatively impacted the competitiveness of our local manufacturers. This is despite the fact that independent reports revealed the imported products to be of sub-standard quality and in contravention of cement quality regulations.

“The current constraint on China’s manufacturing output provides a golden opportunity to local manufacturers to reclaim the supply chain of these products as well as other locally produced materials.

“This will not only give South Africa’s economy, which was already ailing prior to the outbreak of the virus, much-needed impetus but also boost job creation.”

Evans calls on all South African contractors to support local manufacturers in the coming months. “Now, more than ever before, local role players, including government, need to work together to uplift and expand our country’s construction industry,” she says.

“Time will reveal all the lessons learned from the Coronavirus pandemic, but the risk of sourcing from single suppliers cannot be ignored. It only serves to render the supply chain vulnerable in the event of a crisis such as the one we are currently experiencing.

“Economic recovery after the Coronavirus will be long and slow, but if South Africans stand together and timeously seize opportunities to strengthen local capabilities, we can turn it around,” Evans concludes.