Lovemore Zigara Midlands Correspondent
GWERU-based steel manufacturer, Midlands Metals, has become one of the latest victims of the firming of the greenback against regional currencies as it has been forced to reduce prices of its products in order to compete with imports. Midlands Metals supplies equipment for the farming, construction and mining industries.
The United States dollar has firmed by about 45 percent against the South African rand which has rattled local manufacturers who are also faced with a plethora of challenges, among them lack of working capital, antiquated equipment and high cost of power and water tariffs.
Midlands Metals operations director, Tatenda Karimazondo, told Business Chronicle that the company has asked its suppliers to cut their prices by the same margin.
“We’ve been forced to revise our prices downwards by an average of 20 percent because most of our customers, especially those in the mining sector, have alternatives of importing.
“This is because of the appreciation of the United States dollar against the South African rand where most of our competitors are found.
“Similarly we’ve also negotiated with our suppliers to reduce their prices on raw materials and we’ve a relief after our suppliers of coke from Hwange reduced their prices.
“The price of scrap metal which is a major component from our production processes has also been reduced by 20 percent,” said Karimazondo.
However, the Midlands Metals boss said there were many other variables which were making them uncompetitive, especially the cost of labour.
The ructions in the movement of the dollar against major markets has resulted in the company, which employs 80 people, scaling down operations and is now operating at 50 percent capacity utilisation down from 65 percent.
Karimazondo said there is a need for the government to protect the local manufacturers through the introduction of incentives or by putting in place protectionist mechanisms in light of the fluctuation of the greenback which is threatening the viability of local industry.
Recently, Redcliff-based Steelmakers was forced to abandon exports after failing to compete with regional players in light of the currency movements in the region.