“Despite a challenging economic climate, cheap imports threatening our local manufacturing industry, expensive operating costs and other obstacles, the South African plastics industry has managed to achieve impressive growth in all areas this past year.”
Speaking at the Annual General Meeting of Plastics|SA – the umbrella body representing all the sectors of the South African Plastics Industry including polymer producers and importers, converters, machine suppliers and recyclers – Chairman of Plastics|SA, Philip de Weerdt congratulated members on their performance, can-do attitudes and positive contributions to boosting the South African economy.
“Few industries in South Africa, and indeed around the world, have seen such rapid growth, technological advancement, innovation and a changing business environment, as we have in the local plastics industry this past five years”, De Weerdt said. “We were forced to embrace change, adapt and face enormous challenges in a struggling economy that doesn’t always facilitate local manufacturing. However, we not only managed to make headway on many important challenges facing the plastics industry this past year, but we are also proud to look back and report on encouraging growth figures that have been achieved this past year”.
CONTINUED GROWTH OVER THE PAST 5 YEARS
Reporting on the plastics industry’s successes this past year, De Weerdt said the industry has seen a consistent year-on-year growth since 2008. “Last year the South African Plastics Industry grew by 5.4 %, despite the fact that the GDP only achieved a 0.9 % growth for the same year. Plastics manufacturing contributed approximately 1.6 % to South Africa’s GDP and 14.2 % to the manufacturing sector during 2013. The combined turnover of the industry is currently in the region of R50 billion per annum and consumption is approximately 1,370 million tons per annum,” De Weerdt said.
The Chairman told Plastics|SA members, media and other interested parties who attended the AGM that this marginal year-on year improvement is expected to continue in 2014 as a result of investments made by plastic manufacturers and recyclers. “It may be very gradual, but all the signs are there that this growth will continue during the coming year,” De Weerdt said.
DEVELOPING NEW EXPORT MARKETS
Europe has continued to be the largest export market for plastic products during 2013, although a growing demand for plastic packaging has also been noticed from other African countries. “Africa has seen major investments and expansions in its infrastructure, energy, telecommunications and manufacturing activities. These growth areas have had a direct impact on the economies, resulting in the demand for plastic packaging in Africa growing by approximately 8 % this past year. This is higher than the current demand for plastic packaging in Western Europe and we are preparing to see growing competition from other African countries competing to meet this demand as international companies are becoming aware of this lucrative, new market,” De Weerdt said.
Proving that South Africa is improving its global competitive status, De Weerdt mentioned that the country was recently ranked as the 53rd most competitive country out of 148 surveyed in the 2013/14 World Economic Forum’s Global Competitiveness Index. “We were the second highest ranked country in Africa after Mauritius (45th). We overtook Brazil to take second place among the BRICS’ economies, with China at 29 and Brazil dropping to 56th place (from 48). All of this bodes well for the South African plastics manufacturing and recycling industries as we are gaining a reputation for good quality products that adhere, and sometimes even exceed, international standards”, he said.
PLASTICS AND SUSTAINABILITY
Rising energy costs and decreasing energy supplies are a worldwide challenge in the plastics industry. The global population is growing and the demand for energy is rising proportionately. Generating energy requires precious natural resources such as coal – which is by no means inexhaustible. The manufacturing of each and every product requires energy from the beginning of its lifecycle, during use and end-of-life. Recognising the important role it has to play in managing resources to ensure its own survival and that of the planet; Plastics|SA continued to make good progress on improving recycling rates through its Sustainability Council. Various initiatives took place throughout the year, such as beach and river clean ups, recycling awareness campaigns and sustainability initiatives, to help raise the public’s awareness about the importance of ensuring that their plastics are recycled and that they view plastic as a valuable resource that needs to be recycled instead of being sent to landfill.
De Weerdt highlighted the plastics industry’s recently adopted vision of “Zero plastics to landfill”, which it hopes to have achieved. “We are committed to this objective and realize that we need to do even more and if this objective is to be met”, he said. De Weerdt also added that the demand for recycled plastic as a way of combating the growing costs of importing virgin raw material is expecting to impact the local plastics industry in the years to come. “The growing number of environmentally conscious consumers will continue to put pressure on brand owners and retailers to include recycled material in their products. However, Government’s identification of the plastics industry as a potential growth area should be beneficial to the plastics manufacturing industry,” he explained.
LABOUR
The South African plastics industry currently employs more than 60 000 through formal employment. As a result, disruptive and unlawful labour strikes threaten the prospects of an industry that is vulnerable to disruptive wage disputes and excessive labour demands. In order to protect the interests of plastics manufacturers, the Plastics Converters Association (PCA) has formed a separate plastics negotiating forum within the MEIBC that will allow the plastics industry’s interest to be considered during labour negotiations.
FACING THE FUTURE CHALLENGES HEAD ON
Looking ahead at which challenges the industry will be facing in 2014, De Weerdt said that they do not expect a drop in the demand for plastic in the coming year, as plastics have proven to be a vital element of modern life. “However, we are expecting that local manufacturing costs will continue to be negatively impacted by escalating electricity costs, increased labour costs versus reduced worker productivity, higher transportation costs and the continued threats of cheaper imports and dumping of inferior plastic products,” he said.
Other challenges it will need to overcome in the coming year, include:
- Technological upgrading (which may prove difficult because it requires high capital input)
- Increased delivery costs (due to the nature of plastics manufacturing, industries are not in close proximity to their markets)
- Skills shortage
CONCLUSION
“We wish to thank all the members and role players in the South African plastics industry for the positive contributions they have made during 2013 to help grow and build the sector. We recognize that our future growth relies on competitiveness and innovation, skills and productivity. We are ready to do what it takes to achieve this and look forward to what the future holds,” De Weerdt concluded.
