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Raw materials shortage hits coatings sector

by Madelein
Raw materials shortage hits coatings sector
Aggie Argyrou, chairperson of SAPMA.

South Africa’s political instability, as well as the pandemic’s effects on the economy, are causing severe hardships for the coatings sector, office-bearers of the South African Paint Manufacturing Association (SAPMA) stated at the SAPMA online annual general meeting on 19 August.

Aggie Argyrou, chairperson of SAPMA, said coatings producers are extremely concerned about the declining South African economy – “fraught with corruption and rotten politics” – which is having a severe negative impact on most industries. “It has resulted in a volatile rand-to-dollar exchange rate and significant increases in the costs of all raw materials as well as fuel shortages,” he commented.

Argyrou said the continuous breakdown in electricity supplies, global companies in force majeure and lack of high-quality water supplies are also making it very difficult for SAPMA members to operate. “The cost of electricity, for example, has escalated by nearly 16% since April this year, with an additional impact on power costs. This has called on manufacturers to invest in larger power generators to supplement the unpredictable and limited power supply.”

Sanjeev Bhatt, co-vice-chairperson of SAPMA, said it is unlikely that the coatings sector will experience significant business recovery before the second quarter of 2022, at the earliest. This sector is still facing “supply chain nightmares”, such as soaring freight costs and the recent cyber-attack on Transnet delaying shipments.

He said among Covid-19’s logistical effects on business is a growing trend towards de-globalisation. “As economic difficulties mount, the inevitable growth of nationalism and politics will encourage companies to localise business operations that favour national and regional supply chains. Unfortunately, the rioting and looting witnessed in July in Durban and Johannesburg were not conducive to such sentiments. It was indeed an episode our country did not need amidst Covid-19 economic pressures.”

Stephen Reynecke, SAPMA’s other co-vice-chairperson, said the industry has had to cope with unprecedented price increases of between 80% to 100% for critical raw materials, such as polymers and titanium dioxide, over the past six to 18 months, in addition to higher costs for plastic and tin packaging.

“These increases have severely affected gross profits over the past six months, where margin recovery is unweighted. The situation may force customers to shop for cheaper, inferior products which could lower the entire coatings sector’s reputation and integrity,” Reynecke added.

He urged SAPMA members to show unity to ensure that SAMPA is empowered to protect the coatings industry’s status by preventing inferior products, which do not adhere to local manufacturers’ standards of quality and sustainability, entering South Africa. “It is important that only high-quality, high-specification products are used to protect and decorate South African assets,” he urged.

For more information, visit www.sapma.org.za.

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