PETROLEUM AND BASE CHEMICALS CHAMBER
What is the Petroleum sub-sector?
- The production, refining, manufacturing, supply, storage, marketing, transportation and distribution of crude and used oil, synthetic fuels, any petroleum fuel, any lubricant, including gasoline, fuels, oils, illuminating oils, lubricating oils, greases, jet fuels, kerosene, gas oil and any other substance which may be used in the same way petroleum fuel or any lubricant may be used.
- The annual turnover of the petroleum industry is estimated to be about R32 billion. Employment in the sector is estimated to be between 15 000 and 17 000 workers. Petroleum and related products are consumed across the economy. Apart from direct consumption by households, large amounts are consumed as intermediate inputs by most economic sectors, particularly transport and storage, agriculture and the trade sector. Petroleum products are used locally as well as in African countries with Mozambique, Zimbabwe and the Democratic Republic of the Congo as the major destinations. Petroleum products are also imported from refineries situated in the Mediterranean, Middle East and the Asian-Pacific regions.
What is the Base Chemicals sector?
- The base chemicals industries sector includes the manufacture and distribution of basic industrial organic and inorganic chemicals; for example: dyes, solvents, rubber processing chemicals, and wood chemicals, Ammonium nitrate, Hydrogen peroxide, Magnesium carbonate, Iodine, Sodium nitrate, Potassium nitrate, Dry ice (solid carbon dioxide), products of these processes
- Synthetic resins, Polymer emulsions, Polyvinyl alcohol, Plastic materials, Solid and liquid resins.
- Gases such as oxygen, nitrogen, liquid fuel, petroleum gas and chlorine which are manufactured and distributed in South Africa
- The annual turnover of the sub sector is estimated to be between R6 and R8 billion and it provides employment to more than 10 000 workers. Employment levels declined in recent years and this trend is expected to continue in the future. The sub-sector's products are used in production processes and the main intermediate users are found in the chemical industries sector itself. Base chemicals are exported to the USA, the Netherlands, the UK, Japan and India.
What factors influence the Petroleum and Base Chemicals Chamber?
- Falling trade barriers represent a serious threat to the local petroleum and base chemical industries sector. The cost of transporting base chemicals (relatively low value, bulk chemicals) provides some protection to the domestic industry against imports.
- The petroleum industry represents about 50% of this sub-sector. With the exception of Sasol, all manufacturers in this industry are directly dependent on crude oil as a feedstock, which means that their production is strongly influenced by the price of crude oil and exchange rate fluctuations.
- The performance of the steel and mining industries impact directly on the petroleum and base chemicals sub-sector.
- The envisaged opening up of southern African natural gas wells may give rise to new opportunities, but the domination of modem technology may hamper employment potential.
- The petroleum and base chemical sub-sectors are generally uncompetitive in the international market because they depend on relatively small, ageing plants. However there is opportunity for growth in certain areas.
- The petroleum and base chemical industries sector is very capital intensive resulting in relatively low labour absorption rates.
- The decline in employment is skewed towards lower occupational categories, resulting in a rising average skills level within the sub-sectors. Outsourcing often affects higher skill levels as well, for example, the outsourcing of engineering services in some parts of the sub-sectors.
- One exception to the employment decline is the liquid petroleum industry, which is experiencing a growth in employment on its distribution side.
The Skills Needs of the Petroleum and Base Chemicals Chamber
- The major skills need for the sector is for multi-skilled employees with 'portable' skills, as well as a need for employees at all levels to have a good contextual understanding of the industry and of the issues affecting the industry such as:
- basic chemistry principles, business principles, high-level technical skills, particularly in all occupational categories above operator level.
- A major problem in the industry is the lack of incentives to keep technically skilled people in their fields. The fact that the progression of technically skilled employees into managerial positions is viewed as a problem exposes the extent of the skills shortage in this area and a definite need for higher level skills, particularly from the designated groups.
- Portable skills operator with engineering skills based on trading.
PHARMACEUTICAL AND FAST MOVING CONSUMER GOODS CHAMBER
What is the Pharmaceutical sub-sector?
The pharmaceutical industry is involved in the manufacture, fabricating processing and distribution (excluding wholesale) of drugs, medicines and health-monitoring preparations, including biological products such as bacterial and virus vaccines, serums and plasmas; medicinal chemicals and botanical products such as antibiotics, quinine, strychnine, sulpha drugs, opium and derivatives, adrenal, caffeine, codeine derivatives, vitamins; and pharmaceutical preparations for human or veterinary use; and antiseptics for medical but not for household use, and all operations incidental to these activities.
- The size of the South African pharmaceutical industry was estimated by IMS at R7 billion in 1998, growing to R7.6 billion in 1999. This excludes 'over-the-counter' sales in non-pharmacy outlets such as supermarkets.
- Generic products account for an estimated 20% of market value. Import penetration of the market was 34% in 1996 and is increasing due to the closure of domestic plants by major international companies. Therefore local production of pharmaceutical products is under threat from both multinationals downsizing or closing locally licensed operations.
- It is estimated that the sub sector employed 17,772 people in 1998. Employment on average has been stable in the industry over the past 5 years
- Trend is towards (packaging ) and distribution of imported products..
Factors influencing the Pharmaceutical sub-sector
- The pharmaceutical sub-sector is a highly regulated industry requiring technology beyond what local plants are equipped to supply. Low domestic production volumes resulting in uncompetitive unit costs have forced a shift to a global manufacturing approach. Import prices are very competitive, resulting in the downsizing and closure of South African manufacturing facilities and a reduction in staff.
- There is an increasing trend to outsource distribution operations to centralised distribution networks
- The cost associated with legislative compliance in alignment with global standards in areas of internal quality control, safety and environmental protection also place increased pressure on the local pharmaceutical manufacturing industry Deregulation of the distribution chain, e.g. the opening up of pharmacy ownership to non-pharmacistsl is likely to result in increased demand for Over the Counter (OTC) medication at the expense of prescription drugs. The rate of generic consumption in the public sector is expected to increase due to the implementation of the Essential Drugs List (EDL).
Skills Needs of the Pharmaceutical sub-sector
- As the local industry moves away from manufacturing towards warehousing, distribution, sales and marketing, there will be a lower demand for plant operator skills and increased demand for sales, marketing and distribution skills.
- Specific skills shortages include:
- Insufficient candidates from designated groups with relevant qualifications and experience
- Marketing or sales personnel with pharmacology backgrounds.
- Supervisory and management skills
- Product management with experience in category management for penetration into retail chains
- Pharmacists with production, Quality assurance and regulatory experience
- Experienced clinical research specialists
- Experienced and qualified chemical laboratory analysts
- Artisans, particularly with electronics responsibility for maintenance of machinery and site.
Chemically related consumer goods
- The manufacture of soap in any form, synthetic detergents, shampoos and shaving products; cleansers, washing and scouring powders and similar cleaning preparations: cosmetics, lotions, hair dressings, toothpaste and other toiletry preparations.
- The performance of this sector is heavily dependent on the state of domestic demand and fluctuates with the economic cycle.
- The depreciation of the exchange rate has increased the price of imported raw materials.
- Major costs impacting on the industry are raw materials and labour. If either of these costs increases substantially, domestic competitiveness may decline and multinational operations may look for cheaper production destinations. Local demand will then have to be satisfied through imports.
- The smaller companies operate in niche markets and do not compete with the multinationals. Manufacturers that sell directly to the public via agents (direct marketing) also fall into this sector.
- The annual turnover of this sub- sector is estimated at about R5 billion but this figure could be higher since there is little information on SMMEs in this sub-sector. It is estimated that employment in the sub-sector is over 20,000.
- The bulk of the industry's output is sold on the domestic market, with household demand accounting for 80% to 90% of total sales. Exports represent only about 8% to 10% of total sales with. soap and cosmetic preparations comprising the main export categories. The southern African region, particularly Mozambique, is the principal export destination. Beauty preparations and hair-care products are imported mainly from Germany, France, the UK and the USA, with steady increases over the past 4 years.
Globally the trend is to find economies of scale through the establishment of centralised manufacturing sites in countries with profitable production conditions. This trend impacts negatively on operations in developing countries.
Multinationals have central - often global - buying arrangements and access to sophisticated technology. Currently, bigger companies concentrate on the richer segment of the market, while smaller operations survive by concentrating on the poorer end of the scale If multinationals succeeds in lowering their unit costs they will start moving into some of the niche segments currently served by smaller operations.
What are the Skills Needs of the chemically related consumer goods Sub Sector
Skills needs differ between the larger and smaller manufacturers. Multinationals have a need for technically skilled employees with emphasis on mechanical and electrical skills.
Employers require generic skills or abilities from their employees, such as problem solving and multi-skilling capabilities; and a generic skills focus.
Shortages are experienced in non-technical areas, such as business skills, people management skills, particularly at supervisory level. This sub-sector needs process operators who are multi skilled including engineering and quality/product enhancement.
Explosives and Fertilisers Chamber
The fertiliser and explosives industries share many characteristics, such as common feedstocks (mainly ammonium nitrate and similar basic chemical technologies).
The Explosives sub-sector covers all commercial enterprises whose primary activities are governed by the Explosives Act, and includes the manufacturing and marketing of explosive accessories and related activities.
Characteristics of the explosives industry
- The turnover of the explosive industry is estimated to be about R2 to R2.5 billion per annum.
- Total employment in the industry is estimated at approximately 5,000 to 6,000 people.
- Approximately 80% of all explosives are used by the mining industry, while the quarrying and construction industry use the remaining 20%. The performance of the mining and construction industries has direct impact on the explosives industry.
- The Fertilisers sub-sector conducts business in the supply, manufacture, formulation and distribution of the following products:
- Fertiliser and related products, including straight, mixed, compound and complex nitrogenous,, phosphatic and potassic fertilisers, ammonium nitrate, organic fertiliser, agricultural lime, and the operation of sulphuric, phosphoric and nitric acid plants in conjunction with fertiliser plants.
- Ready-to-use pesticides, insecticides, fungicides and herbicides and the operation of chemical plants for the manufacture of these products.
- Other raw materials, and chemical compounds primarily used in agriculture.
- The annual turnover of the fertiliser industry is estimated to be approximately R5 billion with the estimated employment in the region of 3,500 to 4,000 people.
- The bulk of the fertiliser industry's output is sold to the agricultural sector. On average, domestic consumption has remained stable during the past decade.
- About 30% of total sales are exported, with neighbouring countries accounting for 50% of all exports. Other prominent export market destinations are Australia, the United Arab Emirates, South East Asia and the USA.
The demand for fertilisers for household gardening purposes is estimated to be between 3% and 5% of total sales.
The Skills Needs of the Explosives and Fertilisers Chamber
- The sub-sector is experiencing shortages of 'traditional' artisans in areas such as fitting and turning and mechanical engineers.
- The sub-sector needs a more multi-skilled workforce. There is no real incentive within the industries for employees in technical occupations to remain in their fields of expertise, as noted in the absence of a clearly defined technical skills career path.
- There is a shortage of the skills and knowledge necessary to apply the technology. Thus, 'applications technologists', with a contextual understanding of the industry in which they work, are required. business skills.
- Technical sales and entrepreneur marketing
SPECIALITY CHEMICALS AND SURFACE COATINGS CHAMBER
What makes up the Speciality Chemicals sub-sector
The manufacture, sale and/or distribution of diversified speciality chemicals for mainly industrial use; including but not limited to: furniture, metal and other polishes; waxes and dressings; disinfectants, insecticides, fungicides, herbicides and pesticides for industrial / agricultural use, dry and wet cell batteries; sterilants and deodorisers: metallurgical powders: additives for plastics; candles: food additives; fine chemicals and enzymes.
The speciality chemical industries sub-sector is a diverse sub-sector, producing a wide range of products. It is estimated that as many as 200 companies comprise this sector. The sector is dominated by small and medium enterprises operating in niche markets.
- Specific data on the annual turnover of the speciality chemicals sub-sector is unavailable, but is estimated to be between R5 and R7 billion. Employment is estimated at approximately 8,500 employees, but it could be much higher if the SMME sector is taken into account. A large percentage of the sub-sectors' output is used as inputs in other sectors of the economy, such as mining and construction. Because the sector is closely linked to a variety of domestic industries, it is susceptible to fluctuations in the general level of economic activity in the country, and dependent on other sub-sectors.
- The sub-sector is currently not export driven but opportunities exist for exporting to SADC countries. It is also relatively labour-intensive.
What is the Surface Coatings sub-sector
- The surface coatings sector refers to the following activities:
- The preparation, manufacture, bottling, wrapping or packing of: paints, pigments, distemper, lacquers, varnishes, enamels, finishes, powder coatings fillers, putties thinners, printing inks, printing rollers and printing industry sundries, including: the delivery and distribution of these products to a depot of the manufacturer, or to the premises of a wholesaler or retailer, if such delivery or distribution is carried out by the same employer who prepared, manufactured, bottled, wrapped or packed the products.
Characteristics of the Surface Coatings Industry
The annual turnover for the paint and coating industry is estimated to be between R3 and R5 billion, with current employment levels of about 7,000 workers. The sub-sector caters almost entirely for the domestic market, as only speciality and novel products not available locally, are imported.
- The past few years have witnessed a steady decline in employment within this industry. Factors that have contributed to this include a shrinking industry: automation and mechanisation: and the tendency to move towards a more multi-skilled workforce.
- Technologies used within this sub sector are relatively basic and often based more on the formulation or mixing of raw materials, rather than on actual manufacturing of raw materials. The most important factor affecting this industry is the domestic economic cycle. Demand for products is derived from the demand for a wide range of consumer product based industries, general industrial and mining applications, as well as construction and automotive activities.
- These industries are not very capital intensive, and economies of scale are not very important, compared to many of the other sub-sectors within the sector. Barriers to entering the sector are consequently relatively low.
- Growth opportunities are linked to foreign investment in industrial development within South Africa, e.g. focused on the automotive sector and involving large construction projects.
- External market opportunities depend on growth and stability in the economies within Sub- Saharan Africa.
- Falling trade barriers and pressure on customers who struggle to compete with international rivals have negatively affected demand for speciality chemical products eg. increased imports of finished goods (shoes or car batteries), have detrimentally affected sales.
The Skills Needs of the Speciality Chemicals & Surface Coatings Chamber
- There is no absolute shortage of managers in these sub-sectors, but a shortage of skilled people from designated groups for middle and senior management positions.
- Generally, there is no shortage of technical skills in the sub-sectors, but a need for retraining of current employees in recognised and portable qualifications within a variety of technical fields.
- There are shortages of people with the skills and knowledge required to apply technology in diverse sales and service situations, such as 'applications technologists', with contextual understanding of the industry in which they work, who can sell speciality products, and with assessment and problem-solving capabilities.
- there is a need to develop world-class standards in terms of quality
- Occupational health and safety and environmental issues
- Multi skilled operators with attributes of production and quality enhancement.
- Technical sales and marketing
What is the Glass sub sector?
The manufacturing, smelting, decorating, distribution and storage processes of glass products in the following markets:
Packaging and container ware, Blown glass, whether this is performed mechanically or manually, including glass bending, building glass for building, architectural, toughening and silvering use, including applications, Automotive glass for original equipment and replacement, Fibreglass, mineral wools, slagwool and rockwool,
The extraction, processing and distribution of industrial minerals and other non-metallic mineral products which are specifically employed in the manufacture of glass and/or glass products, or are by-products from the extraction and processing of silicate, glass sand or any other non-metallic mineral product primarily for use in the manufacture of glass.
- The annual turnover of the glass industry is estimated to be between R2.5 and R3 billion with the estimated total employment for the industry approximately 8,000 employees.
- Currently the market for glass products is perceived to be stagnant with a growth rate of only 1 % envisaged for the coming year.
- As with many other sectors, the glass sector has experienced a decline in employment over the past few years, which can be ascribed to the implementation of labour-saving technologies, the poor performance of the economy over the past few years and multi- skilling of employees. The decline in employment is expected to continue in the future.
What are the factors influencing the Glass Chamber?
- The flat and curved glass industry is highly dependent on the level of activity in the construction and automotive industries. Poor conditions in the construction industry in recent years have had a negative effect on glass production.
- Consumer patterns in the beverage and food industries also influence the demand for glass bottles.
- There is a small domestic demand for imported European and Eastern glassware, mainly for laboratory and kitchenware uses.
- Generally, the glass industry has high entry barriers due to the high capital investments involved.
- One possible key to the survival of the package glass industry will be its ability to customise products on short notice to customer requirements, as currently occurs in Japan. This requires a technological transformation of the industry to a modular set-up as opposed to its current fixed equipment. More flexible production processes are needed.
What Skills are needed in the Glass Chamber?
- Skills needs are mainly of an operational and technical nature.
- One specific skill that is needed is a glass industry millwright (a millwright with additional specialised training focused on the glass industry).
- Supervisory and people management skills.
- There is a need to equip employees throughout the industry with a good contextual understanding of entire glass manufacturing process and the nature of the industry, and the particular business within which they are working.