Gauteng exporter confident of rebound after volumes dive

The impact of the global recession on the local export community is clearly reflected in figures provided by Woodmead-based Metalloy Fibres. At its peak the company, which produces a polypropylene and steel fibre product as a safer form of concrete reinforcement for a range of overseas markets, was exporting 45 tons a month. Current volumes are down to 5 tons. But manager Phil Walker is confident that volumes will be back to their previous levels within a year and predicts 25% growth within the next two years. “We’re slowly beginning to see enquiries coming in and although they haven’t turned to firm orders yet, supply chains are running dry,” Walker told FTW. But since those peak times there’s a lot more Chinese competition, says Walker, “and we are affected in this country by raw material quality and availability.” Metalloy is competitively priced against world class manufacturers but expensive against the Chinese, says Walker, who explains that there are two sides to the industry. “High volume, bigger users will look at Chinese prices and material. But for the more demanding applications we are competing against the US and European producers. And there we’re losing out with the stronger rand. Where we previously had a 10% advantage landed in Europe – now that’s gone.” Adding further challenge to the mix is the fact that in three years Chinese quality has improved, so it’s a tough new market to penetrate, says Walker. Coping during a recession demands resilience and innovation – and for Metalloy the local market has compensated to a degree. “Other products that sell locally have done well. With all the highway projects on the go, we have been selling into that market.” And while for the current size and turnover it’s hard to justify spending R1m a year on travel and entertainment, the company is gradually meeting new distributors with a view to growing its exports. Metalloy is part of the Nimag Group of Companies. With 80% of its business by value related to exports, it produces nickel alloys for the steel industry. Metalloy fibres was originally set up to produce stainless steel fibres for the mining industry. “We then found the product was too expensive and there were other alternatives – but fortunately stainless steel casts fibres have been used in the refractory industry for many years. After a concerted marketing campaign we approached local companies and appointed distributors, and having captured the local market we found we had spare capacity and through websites and contacts started to export the product.” At the start in 2002 the company was moving 10 tons a month, purely as LCL cargo. When Walker joined in 2006, demand was such that a new furnace was installed to cope with demand. The company exports mainly to Europe, Japan, Iran, Australia, which has huge potential, and small volumes to India. “The only market we haven’t managed to penetrate is the US – and that’s mainly because there are producers in the US and freight costs to that market are excessive.” In terms of the transport leg, pricing is very important but so is good service, says Walker. The cargo moves mainly by sea, with the occasional airfreight shipment in the case of an emergency. And on the landside leg, it’s all railed from City Deep to Durban – which according to Walker works with clockwork precision. Peaks and troughs are an inevitable part of the economic landscape and Walker believes that the recession is close to bottoming out, with growth prospects for the coming months looking promising. It’s a view that echoes the sentiments of several industry sources who are optimistic that the green shoots are more than hopeful sentiment.