EDITORIAL THOUGHT LEADERSHIP
Reindustrialisation
Reindustrialisation requires shifting procurement from short-term deals to longterm local partnerships.
By Mervyn Naidoo, CEO of ACTOM
South Africa’ s procurement mindset must urgently evolve from transactional buying to strategic, long-term procurement if we are to achieve meaningful reindustrialisation, because our reliance on transactional procurement is undermining longterm industrial growth. By chasing short-term savings, contracts are structured to squeeze suppliers on price and cash flow, leaving them unable to sustain operations.
The recent collapse of transformer manufacturing company SGB-SMIT Power Matla( SSPM) is a case in point. Pushed on pricing, stripped of milestone payments and forced into single commissioning contracts, the company ran out of cash and entered business rescue. The result is that local manufacturing capacity was wiped out, and prices for imports rose by 10 – 20 %.
This is the paradox: transactional procurement destroys domestic industry, only to leave the country paying more for foreign supply. Strategic procurement offers the alternative. It means forward visibility, multi-year commitments and support for working capital so suppliers can invest, expand and deliver sustainably.
58 SA PROFILE www. saprofilemagazine. co. za