effects of the corona virus on the steel industry » Musara And Company
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effects of the corona virus on the steel industry

steel manufacturing warehouse

effects of the corona virus on the steel industry

The corona virus (covid-19) took the world by storm and sent the whole world into panic with the effects of the corona virus on the steel industry in Zimbabwe heavily feeling the pinch. Prophets of doom had started to promulgate that it signifies the end of the world. Being a contagious disease and spreading at very alarming rate taking precious lives along the way, it became reasonable to believe that truly the world was ending. Nevertheless, we never lose hope of the future and either way life has to continue as the world strives to pick up the broken pieces and move on.

The impact of the corona virus cannot be undermined in every sector of life. Given that in the past few months everything we consider life came to a halt, lockdowns, curfews and restrictions have become the order of the day. As a result, just like any other sector of life, businesses, economies and industries will find it difficult to navigate through these timid times. This piece centers mainly on the effects of the virus on steel industry by focusing on African industries and Zimbabwe in general.

Commenting on the same topic earlier in March 2020, Nicole Kareta emphasized that the consequences of the corona virus on the light metal industry are not yet fully foreseeable. The assertion holds value in that most economies both developed and developing are yet to assess the degree of damage the virus had on economies in general. The focus as it stands is on how to eradicate the virus and somehow learn to live with it. In the view of Andrii Tarasenko, steelmakers are actually expecting a drop in demand by over 50%. Given that there is virtually low investment culture in mostly in Africa, food to mouth characterizes the whole investment quandary priority has been shifted to survival, that is seek food and health at all costs. As such, developmental projects on construction will be put to a hold. This has also been exacerbated by the uncertainty over the period of government imposed lockdowns. Simply put, both buyers and suppliers are uncertain.

Projections are that the industry is not returning to normalcy as people are hoping for. The Indian Minister, Pradhan argues, “the impact of the corona virus will be felt on a global steel industry for at least two to three years as China is the largest producer of the alloy”. Three years is a death sentence to Small to Medium Enterprises in Africa. The same view was expressed by Ellen Zentner, chief US Economist who lamented that the small companies will be hit harder than large ones because of their limited credit and less cash in the bank. SMEs in Zimbabwe even before the pandemic were always highlighting how their relationship with banking institutions wasn’t that rosy.

The Ministry of Youth, Sport, Arts and Recreation in conjunction with the Ministry of Finance and Economic Development announced a relief fund of ZWL 17 million for entrepreneurs and social enterprises who have been affected by the corona virus. Noble as the gesture is, the impact of the relief fund will be minimal especially considering the vastness of businesses in question. There is no universal degree of impact on the SMES. In fact, the fund does not address the need to improve credit worthiness of small enterprises. If one attempts to assess the level of impact the virus has had on the steel industry alone, the fund would fail the litmus test in no minutes.

The steel industry in Zimbabwe is highly characterized by imports. China, India and South Africa are the mainly suppliers and exporters of raw materials that are used in the steel industry, henceforth. the whole of Africa steel industry eagerly awaits the recovery of China basically. As China continues to limp back to normalcy, SMEs in Africa will be dripping blood continuously. Cancellation of shipments coupled with closure of all trading facilities means that the supply routes have been cut. 60% of the SMEs will not survive beyond one year. This is a synapses of the the effects of the corona virus on the Steel industry in Zimbabwe also.

WHAT DOES IT MEAN FOR THE STILL INDUSTRY IN AFRICA?

  1. Adapt or perish

Businesses that trade in steel should acknowledge the new normal, “social distancing”. Companies and individuals will be very sensitive to social distancing for the next 6 months to one year! What it means is that the usual channels of marketing will not be opened anytime soon. SMEs in Zimbabwe had gotten accustomed to marketing platforms like trade fairs, Agricultural shows and Expos. The most traditional ones were still mapping their marketing campaigns to direct marketing approaches like roadshows and roadside marketing. These strategies are now defunct for the time being and that’s a fact every organization has to accept! But either way every business has to sell. Believe you me, customer is king but cash is king Kong!

As such, the best possible route open to SMEs is digital marketing. What the lockdown has shown us is that nearly 90% of the working population is online, either on WhatsApp, twitter, Facebook and LinkedIn. The sad reality is that not that much can be said about the majority of the companies in the steel industry. The majority have websites just for the sake of it! Covid-19 has come with an opportunity for disruptive innovations and new way of doing things. Don’t just focus on social media marketing (Facebook and WhatsApp). Extend to general internet marketing like interactive websites, online shops and online marketing on Business to Business perspective (B2B). Invest seriously in digital marketing campaigns because both the businesses and clients are now online. This is the 21st century for God’s sake!  

  • Revisit your systems

Revisiting systems applies to both operational and strategic systems within and outside the organization. Do away with inefficient systems that encourage pilferage. It is a fact that once lockdown is over, most companies in the steel industry will look for ways to retain stocks (as they wait for the suppliers in Asia and South Africa to reopen), cut costs and sadly to retrench staff that may be considered redundant. These measures are part and parcel of systems revision. However, this juncture represents a break or make for many SMEs. The process has to be done objectively using the relevant tools that ensures the foregoing concern of the business

In these wearisome times, only a good name will make you money. It’s very risky to largely depend on walk-ins” customers as is the case with the majority of SMEs in Home Industries like Siyaso, Gazaland and Area 8 in Zimbabwe. As such, SMEs should be able to come up with customer attraction and retention strategies that can sail them through to normalcy.   Invest in imaging or branding of your company through establishing networks wherever necessary.

CLOSING REMARKS

Survive! Learn to win in every environment. The future of the steel industry is still bright. When normalcy returns, it will find the industry on top of the game. Hope is what differentiate us from animals! Yes, the effects of the corona virus on the Steel industry in Zimbabwe is yet to be measured but futuristic planning can help averse some of these effects.

Musara and Company

IT’S STILL STEEL

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