The South African valve manufacturing industry is in dire straits, as imports continue to flood the country, and as a result the rapid implementation of valves designation for all State-owned enterprises (SOEs) is required to save the industry, Valve and Actuator Manufacturers Cluster of South Africa (Vamcosa) champion Gregory Walker tells Engineering News.

The valves manufacturing industry is still waiting for Finance Minister Pravin Gordhan to sign off on the instruction note required to bring the designation process into effect, he adds.

“Vamcosa is working closely with the Department of Trade and Industry (DTI) to designate valves for local procurement,” Walker says, noting that SOEs spent R4-billion on valves in 2012, of which only R1.2-billion went to local manufacturers in 2011, of which R800-million was for taps and cocks.

He states that, according to Preferential Procurement Policy Framework Act regulations issued in December 2011, Trade and Industry Minister Dr Rob Davies is allowed to designate certain products that all SOEs are required to buy from local manufacturers.

Walker explains that the designation process is a result of government recognising the desperate need to create jobs in the manufacturing sector.

“In 1994, the local valves industry employed about 3 800 people; however, the industry currently employs fewer than 800 people,” he highlights.

Moreover, he stresses that the consequences of the possible collapse of the valves industry will have a disastrous knock-on effect for other local manufacturing industries, including the forging and foundry industries, which are the upstream business elements of the valves industry.

Walker points out that the designation initiative is not intended to last forever, but rather for about 10 to 15 years.

“This period will enable the local manufacturing industry to increase production quantities, which will decrease the unit prices of valves, thus, enabling South African valves to be competitively priced for the local market and global exports.

“If the designation process is properly implemented and all industry players fulfil their obligations, the valves industry can potentially generate between R4-billion and R5-billion a year. This will create hundreds of jobs in the local valves manufacturing industry,” Walker adds.

“There are challenges associated with valve designation, as valve application ranges from use in simple bathroom taps to highly sophisticated control valves,” he states.

Vamcosa has been working with the DTI and SOEs for the last three years to identify the valves that should be designated and those that cannot be manufactured locally, owing to the lack of local demand.

Walker says an undersea water wellhead valve, for example, is used only by South Africa’s national oil company PetroSA. As the company uses only a few of these valves, there is insufficient local demand to manufacture them locally.

In May, Engineering News reported that Davies signed off the designation of valves on January 29.

Walker says all SOEs are waiting to receive an instruction note from the National Treasury regarding the workings of the procurement process.

He explains that, for a valve to be considered as locally manufactured, the castings have to be made locally and the valves must be machined, assembled and supplied locally.

Further, Walker says he will also encourage those companies that import significant volumes of valves into South Africa to set up local casting and machining operations in South Africa.

“Establishing operations in South Africa will enable companies that only import valve systems to benefit from the designation process and create job opportunities, which is the central aim of the designation initiative,” he says.

The DTI and Vamcosa have organised a series of roadshows throughout the last year in several locations, such as Johannesburg, Durban, Mossel Bay and Cape Town, to explain the importance of the valves designation process to several of the SOEs, such as State-owned power utility Eskom and State-owned freight logistics group Transnet.

Vamcosa was formed in July 2011 to create one forum to assist the DTI in matters pertaining to the designation of valves and actua- tors. The cluster consists of 14 members and is affiliated with the South African Capital Equipment Export Council and the South African Valve and Actuator Manufacturers Association.