Housing in Southern Africa October 2015

Cement & Concrete

Readymix vs Bagged for housing boom

W hile this is analarming statis- tic according to construction specialist Don Schoeman of Crowbar Solutions, it represents an opportunity for the industry to win market share from competing segments and should form the basis of a new strategy for the readymix industry to pursue. Addressing delegates at the South African Readymix Association confer- ence, Schoeman says that themajor- ity of cement supplied in South Africa is bagged cement sold through retails outlets. Of all bags sold, the vast majority is sold through a handful of retailers who employ slick marketing techniques tokeepcustomers coming back for more. In addition, the enormous buying power of these retailers continues to force cement producers to slash prices of bagged cement which en- ables them to maintain low prices compared with smaller users (such as the readymix industry). He suggests SARMA should rep- resent the industry to establish a united buying group and negotiate better pricing for its members. With competitive pricing, he suspects that the market share of readymix will increase exponentially in time. Some of the standards governing the use of concrete are outdated and need to be changed. This is ac- cording to concrete expert George Evans of PPC, who is actively working with standards authorities and the

The readymix concrete industry supplies 15%of concrete used in South Africa as opposed to similar-sizedmarkets around the world - where readymix comprises up to 75% of the concrete used in these countries.

industry to modernise the country’s concrete standards. Many of the stan- dards are currently being revised to meet the needs of the end users and ensure quality, price and longevity of structures. The standards currently being improved apply to the entire cycle from manufacturing, testing and placing concrete. Furthermore, the country has ad- opted European standard EN1992 as the basis for our new standards and the team is currentlymodifying exist- ing standards accordingly. Highly acclaimed and well re- spected economist, Dr Roelof Botha, predicted a number of ups anddowns in the market last year, of these 90% were realised. According to Botha South Africa’s mortgages are still low and the econ- omy in general is under performing. He says that low commodity prices are due to swing as they follow cycli- cal movements and have done so throughout history. Despite chal- lenges, the South African economy still continues to grow modestly and when commodity prices do improve he predicts that our economy is going to flourish. Added to that, he says that indicators are pointing that the

country’s property market is on-the- brink of the next property boom and that signs are already showing that the boom has started. Those able to invest in property or improvements may consider his 90% track record when contemplating their next in- vestment. Andre de Klerk of Eskom told del- egates at the SARMA conference that load shedding will remain a reality for the next two and a half years. He said that the country has the ability to generate approximately 40 Gigawatts (GW) of electricity but loses 4GW for planned maintenance and a further 4GW for unplanned maintenance, which means that the nett output is 32GW of useable power. “Best practice dictates that a fur- ther 15%be held available in reserve. Unfortunately for us the peak in sum- mer is 33GWand 35GW inwinter. This has resulted in our systems becoming overloaded and as a result, load shed- ding is being implemented in order to alleviate pressure off the grid. With no new projects able to generate electricity in the short term, Eskom needs to wait for Medupi and Khusile to come on line before there is a shift away from load shedding.” ■

October 2015