Manufacturing in KZN still picking up the pieces after July unrest

Manufacturing businesses in KwaZulu-Natal continue to suffer from the impact of the July 2021 unrest, and the ongoing Russian-Ukraine conflict is likely to exacerbate the situation.

Serco, one of South Africa’s largest truck and trailer building companies, reports that it started the year with its lowest order book since the 2008 global financial crisis as the unrest led to a tougher trading environment for businesses.

The company – which has its head office in Durban and branches in Johannesburg, Cape Town and Gqeberha – specialises in the design and manufacture of insulated and dry freight truck bodies and trailers.

Many of southern Africa’s leading transporters and long-distance hauliers rely on these trailers to carry everything from ice cream, day-old chicks, beef and bread – safely, hygienically and at the right temperature.

Serco CEO Clinton Holcroft says business confidence dropped drastically following the large-scale burning and damage caused during the riots.

The unrest “took the wind out of our company’s sails, evident in that our usual end of year peak period failed to materialise”.

“I attribute this to a large extent to the loss of business confidence and the extensive property damage which resulted in many businesses not being able to resume trading by the end of the year, if at all,” he says.

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Holcroft points out that the Russia-Ukraine conflict will cause further harm as hikes in the prices of fuel and raw materials have already been seen. The increases will not only put more pressure on businesses but on consumers’ already stretched pockets as well.

The transport sector was already experiencing uncertainty about 2022 in terms of business prospects, and operators that delayed capital expenditure over the last two years will experience mounting pressure to replace older trucks and equipment due to higher maintenance and breakdown costs.

Serco saw an increase in inquiries during March that has continued into April as customers reexamine their vehicle replacement programmes, and was recently awarded a tender to build refrigerated bodies for Imperial Logistics, which it says will go a long way towards restoring order volumes.

However, there is a third hurdle to contend with.

“Clients wanting to replace vehicles have had some difficulty in securing truck chassis as suppliers are still battling to keep up with demand due to global shortages of silicone chips,” says Holcroft.

“Unfortunately, I think the war in Ukraine will put further pressure on supply chains and prolong the parts shortages.”

He advises businesses to plan at least six months in advance to help alleviate some of the challenges in sourcing new commercial vehicles, including truck bodies, fridges, tail lifts and similar items, and allow for timeous delivery.

Palesa Mofokeng is a Moneyweb intern.