SATMC: Why we proposed the tariffs on imported tyres

The manufacturers’ story: Nduduzo Chala – SA Tyre Manufacturers Conference managing executive.

FIFI PETERS: We are following up on the tyre story that we reported on, on Tuesday, I think it was. What has happened since then is that we had the local importers on the show telling us why they were against the protection that the manufacturers were seeking from imports out of China. If you missed the show on the day you’ll remember that the local importers argued that the imports, if put in place, could increase the price of tyres by 17% to 41%, depending on the vehicle that you drive – a truck, a bus, a taxi and the like.

Now to hear the other side of the story, I am joined by the South African tyre manufacturers themselves, the South African Tyre Manufacturers Conference, SATMC. They represent the likes of Goodyear, Continental, Sumitomo, as well as Bridgestone. We’ve Nduduzo Chala, the managing executive of the SATMC. Sir, thanks much for your time. The importers that we spoke to there are against this move; why then as manufacturers are you in favour of import duties from China?

NDUDUZO CHALA: Good evening, Fifi and to the listeners. I think we firstly have to look at local production from a sense of contributing to the industry or, let me say the economy of South Africa firstly. I think that is the first reason why we need to have that top of mind.

And certainly I think the aim of putting an application for an investigation into duty is to equalise things and to normalise the playing field because we believe that we have been unfairly [prejudiced] in the previous years of products that have been coming from China.

I think from an importer’s point of view they would have benefited all those years [to] the detriment of our local manufacturers, and if you consider the magnitude of how many employees and jobs that we need to retain the sustainability of also production in the country. So I think it is a topic which is very, very delicate and [one in] which we need to look at the bigger picture as opposed to just the one-sided view, and also unfounded statements that have been made currently.

FIFI PETERS: Except their depiction of what the bigger picture looks like is quite confusing, because they’re saying that you as manufacturers already import a whole lot from China, and therefore they’re quite confused as to why in effect you’d be wanting duties placed on yourselves as manufacturers. So can you dispel that notion? As the local industry, how much do you import from China presently?

NDUDUZO CHALA: Again, I think it goes back to saying that we need to be very careful of, let’s say, some of the statistics that have been shared, which are unfounded, because we are the manufacturers. Firstly, I think there is no company that will put [down] a manufacturing base without it making sure that they will utilise the capacity, because that comes with the capital investment.

So for all four of our manufacturers who employ more than 6 000 people direct, [so] also direct employment. And if you consider the value chain, which also is linked to them, more than 90 indirect jobs also.

And in the last three years, which were Covid-particular years, you are looking at a contribution to the SA economy of R16.9 billion, so they [have] no founded statements of what they think. So if we consider the number [in] 2021 of tyres sold in South Africa, 70% of those were locally manufactured tyres. So that’s why I’m saying we need to be very careful of how [we] look at the statistics which are being shared, because we have data which is verified and 70% of their own sales last year were locally manufactured products.

FIFI PETERS: All right. I’m just trying to get some of their numbers here, because essentially one of the arguments that they made is that 3 200 tyre products or so here that are made locally, and of that 80% of the inputs are imported. I’d like to understand if you are saying that that figure is wrong. Okay, wait, I’ve got the statement that they make here. They say that, given that almost 3 200 tyre products sold in South Africa, [that] as applicants – you as applicants, as the manufacturers – import 80% of the variety of tyres that you sell. So are you saying that that is not true?

NDUDUZO CHALA: That is unfounded. I hear nothing of it looking at the merit of why you would want a manufacturing facility in a country. I don’t think you would put up a manufacturing base only to import, because all of the labour, all of the running costs [of] the companies and the raw materials that we purchase – then it doesn’t make any logical [reason], any sense for us to be doing that.

But again, I think the focus here is not necessary to say the SATMC nor its members are wanting to hike prices. What we are essentially saying is that we want an equalisation of [the] playing field, so tyres which are manufactured locally are really competitive. So the prices [at] which they land their products here in South Africa make us uncompetitive, and that is why we submitted the application to Itac [International Trade Administration Commission], who is the independent government body currently investigating the situation.

We as the SATMC and its members have complete faith in Itac in that they will do the due diligence in terms of the investigation. We are waiting for a preliminary determination probably in the coming weeks or months, which will be shared by Itac in terms of what they have found, because we have submitted information as part of this application and the importers as well will allow them an opportunity to also submit their own information so that Itac can have a view of both sides and then make the determination.

So I think we have saved them the process and that’s why we want Itac to carry out the investigation. And if it is true, let’s say in the favour of the SATMC, then I think South Africa will start to then also understand to say that these are local manufacturers who are committed to the country, who are committed to the economy of the country because, if you consider the livelihoods that benefit out of the employment of the tyre industry, it is our own South African people. And the beneficiation, which has been a major problem in many other sectors of industry …

FIFI PETERS: Nduduzo, sorry, I’m going to interject there. I’m going to interject there. You say the price of the tyre that lands here from China compared to the price that you sell [at] is very different. Can you give us the average price of a tyre? You can compare apples and apples here in terms of whether we are talking about a tyre for a bus or a tyre for a truck, a taxi, or the like, that is made locally, and the price that comes from China.

NDUDUZO CHALA: Again, I think let’s leave that process to Itac, because I think it’s then going to be a situation of ‘they said, we said’. As a South African tyre manufacturer, Itac I think is best placed as the independent body to then give us the determination to say: do they also see or believe that there has been undue pricing of tyres landing in South Africa versus what we have as the local manufacturers?

FIFI PETERS: Just lastly, then, what do you make of their claim? The importers’ claim that if these duties do go ahead, you guys, as local manufacturers, are going to increase your prices by an arm and a leg, that they’re putting prices up around 41% potentially if you guys get this protection. So what will happen to prices?

NDUDUZO CHALA: From a South African point of view or the local manufacturers, for us there’s no reason why. Again, it’s sensationalism to say that we will increase prices. What we are essentially saying is that products that come into the country from China are making us uncompetitive, so there’s no reason why the local manufacturers are going to increase prices. Maybe we need to flip the table to say the importers are going to increase their pricing. We are seeking here to say we want the equalisation of the playing field, the unfair trade, and we have Itac investigating that for us as the local tyre manufacturers.

FIFI PETERS: Yes, I suppose that we are all keenly then waiting for the Itac report when it drops. So you say what – the end of August or in the next couple of weeks?

NDUDUZO CHALA: In the next couple of weeks. So we seem to believe that it’ll be in the month of August.

FIFI PETERS: All right. Okay. Thanks so much, Nduduzo Chala, for sharing the side of the manufacturers’ story. We do have both now. I suppose the jury does lie with Itac now, and what they will do – whether they’ll protect or not.

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