Manufacturing Circle releases first investment tracker survey results

The Manufacturing Circle’s newly launched Manufacturing Circle Investment Tracker (MCIT), released on Friday, stood at 70.3 points in the third quarter, well above the neutral 50-point level.


The MCIT, which surveys local manufacturing enterprises, is aimed at assessing sentiment in this vital sector of the economy, in both the index period, and projecting forward into the following quarter.

Plant and equipment as a component was the largest contributor to the expansion of the index in the third quarter. This was followed by inventory levels, which is an important contributor to the index and highlights demand conditions and expectations.

Surveyed manufacturers indicated that their spending on investment was within planned budgets, suggesting that actual operating conditions in the sector were conducive to the implementation of plans.

These positive results were in response to the weaker exchange rate, encouraging an increase in exports, and increased localisation facilitated bygovernment and quasi-government customers.

Further, Manufacturing Circle executive director Philippa Rodseth said that while the Department of Trade and Industry’s (DTI’s) Manufacturing Competitiveness Enhancement Programme, which offered manufacturing incentives, had been encouraging investment and showed clear benefits, it had been suspended in October 2015 owing to insufficient funds.

Trade and Industry Minister Dr Rob Davies in September announced that the R1-billion loan component of the MCEP would be reopened.

“This needs to be fully restored, and we are hopeful that the DTI will be able to make a positive announcement soon,” she noted.

While the first MCIT data was encouraging, the Manufacturing Circle noted that the industry remained fragile. Looking ahead to the fourth quarter, the MCIT reveals that manufacturers foresee an increase in investment spending, but at a lower level. The lower projected index number is 58.7, and the likely fall is the result of an expected contraction in inventories. This reflects destocking by manufacturers as they move into the final quarter of the year.

In addition, “there is clearly some nervousness [about] the political climate in South Africa, and concern over the decisions we will soon see from the ratings agencies, which could impact long-term investment decisions in the manufacturing sector,” said Rodseth.

“What we aim [to do] through this new research is to achieve a continuing insight into the thinking of manufacturers and today’s launch will give an extra set of data for government, economists, businesses and all who are trying to understand the dynamics in the local economy.”

The property (building) subcomponent showed a strong positive reading in the third quarter, recording 68.2 points for spending on expansions, while spending on maintenance was recorded at 66.7 points.

This can be attributed to the need to expand capacity to meet growing demand. However, looking into the fourth quarter, spending on expansions falls by 8.7 points, while spending on maintenance and replacement falls by 4.8 points to 61.9.

Spending on plant and equipment expansion recorded a strong 68.2 points in the third quarter, above maintenance and replacement, suggesting a need for increased manufacturing capacity.

However, expectations showed a strong downward trend. In the fourth quarter, spending on plant and equipment expansion is expected to fall by 15.9 points – the highest decline within the MCIT subcomponents.

Spending on research and development recorded a strong 64.3 points over the third quarter as manufacturers focused on looking for ways to improve process and productivity. More than any of the other segments, this indicates plans for manufacturers to modernise and stay competitive.

However, moving into the fourth quarter, manufacturers expect investment in research and development to stay unchanged, recording a neutral 50 points.

The human capital subindex, reflecting spending on people (wages and training) recorded a strong expansion, with the level at a high 69.1 points. This suggests rising levels of employment in the manufacturing sector, consistent with the drive to expand capacity.

However, this was in direct contradiction with Statistics South Africa’s recent figures on unemployment.

The human capital subindex is expected to decline by 12 points in terms of wages and 7.1 points in terms of training and development in the fourth quarter. While expansion in employment is still expected, it will be at a much slower pace in the final quarter.

Inventory levels recorded marked expansion, recording 61.4 points in the third quarter. However, the fourth quarter is expected to show a strong decline of 13.7 to 47.4 index points. The inventory index falls below the neutral 50-point mark suggesting a contraction.

Oil prices soar on global producer deal to cut crude output

Oil prices shot to their highest levels since mid-2015 on Monday after Opec and other producers reached their first deal since 2001 to jointly reduce output in order to rein in oversupply and prop up markets.

Brent crude, the international benchmark for oil prices, soared to $57.89 per barrel in overnight trading between Sunday and Monday, the highest level since July 2015.


US West Texas Intermediate (WTI) crude also hit a July 2015 high of $54.51 a barrel.

Brent and WTI eased to $56.83 and $54.07 respectively by 0629 GMT, but were both still up over 4% from their last settlements.

With the deal signed after almost a year of arguing within the Organization of the Petroleum Exporting Countries and mistrust in the willingness of non-Opec Russia to participate, focus is switching to compliance of the agreement.

“We believe that the obser vation of the Opec-11 and non-Opec 11 production cuts is required to sustainably support… oil prices to our 1H17 WTI price forecast of $55 a barrel,” Goldman Sachs said.

“This forecast reflects an effective one-million barrels per day cut vs. the 1.6-million barrels a day announced cut and greater compliance to the announced cuts is therefore an upside risk to our forecasts.”

AB Bernstein said the agreed deal “amounts to an aggregate supply cut of 1.76-million barrels per day from 24 countries which currently produce 52.6-million barrels a day, or 54% of world oil supply.”

Bernstein said that “some of the non-Opec supply cuts will come from natural decline, but most will come from self-imposed cuts.”

Saudi Aramco has told US and European customers it will reduce oil deliveries from January.

“The kingdom is targeting excess inventories, the lion’s share of which sit in the United States,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore. “Lower Saudi exports to the US could also make the export arbitrage uneconomic.”

Opec plans to slash output by 1.2-million barrels a day from Jan. 1, with top exporter Saudi Arabia cutting around 486 000 bbl/d in a bid to end overproduction that has dogged markets for two years.

On Saturday, producers from outside Opec agreed to reduce output by 558 000 bpd, short of the target of 600 000 bbl/d but still the largest contribution by non-Opec ever.

“Non-Opec participation should add to bullish sentiment,” Morgan Stanley said.

From outside Opec, Russia said it would gradually cut 300 000 bbl/d.

“Once cuts are implemented at the start of 2017, oil markets will shift from surplus into deficit. Given the cuts in production announced by Opec, we expect that markets will move into a 800 000 bbl/d deficit in the first half of 2017,” AB Bernstein said.

Still, some analysts expect producers, drawn by higher oil prices, to increase output again.

“While better compliance than we expect would initially lead to higher prices – with full compliance worth an additional $6 per barrel to our price forecast – we expect that a greater producer response, especially in the US, would eventually bring prices back to $55,” Goldman Sachs said.

World’s first eHighway opens in Sweden

The first eHighway system on a public road opened in June 2016. For the coming two years, a Siemens catenary system for trucks will be tested on a two-kilometer stretch of the E16 highway north of Stockholm. The trial will use two diesel hybrid vehicles manufactured by Scania and adapted, in collaboration with Siemens, to operate under the catenary system. During the two-year trial, Sweden’s Transport Administration Trafikverket and Gävleborg County want to create a knowledge base on whether the Siemens eHighway system is suitable for future commercial use and further deployment. As part of its climate protection strategy, Sweden has committed to having a fossil fuel independent transport sector by 2030.

eHighway: Lösung für den elektrifizierten Straßengüterverkehr / eHighway: solution for electrified road freight transport

Govt, AMSA reach accord on steel price basket

Steel producer, ArcelorMittal South Africa (AMSA) and government have agreed to remove import parity pricing with immediate affect in a bid to boost South Africa’s steel industry.

The local price for flat steel products will be based on an import-weighted basket.


“It will be determined by the weighted average of countries we compete with and will exclude China and Russia,” Trade and Industry Minister Dr Rob Davies, told Parliament’s Trade and Industry Portfolio Committee on Tuesday.

The decision follows mounting concern about the global steel glut. The new agreement will make sure that domestic prices do not increase on an import parity basis when the international steel price increases in future.

“We have tried to develop a solution that will ensure the continued production of primary steel in South Africa, and at the same time address some of the structural challenges around pricing policy,” Davies said.

He said the basket aimed to provide a fair price during boom and bust periods.

The pricing principles would apply to flat steel products, which have more value-add.

The weighted average will be based on the domestic steel price in countries South Africa competes with in steel-intensive downstream sectors and subsectors. These are fabricated metal products, machinery and equipment and vehicles and other transport equipment.

The basket of countries come from the European Union, which makes up 50% between France, the UK, Italy and Spain; Asia – making up 30%, and the US, Canada and Brazil completing the basket.

“When ArcelorMittal reviews its flat steel pricing, it will be done using a transparent mechanism based on forecast basket prices using the latest CRU published prices, where available, and the rand:dollar exchange rate, assuming one month forward. The announced and published price will include the settlement discount, currently at 2.5%,” said Davies.

He said the agreement on a set of principles for flat steel pricing in South Africa would ensure that steel-dependent industries were competitive while at the same time ensuring that the upstream steel mills remained sustainable.

The announcement follows the Competition Commission’s settlement with AMSA. The company admitted to being involved in the long steel and scrap metal cartels, and agreed to pay an administrative penalty of R1.5-billion in five annual installments of no less than R300-million.

AMSA has also committed to R4.6-billion capital expenditure over the next five years. Davies said he hoped this would help to make the steel industry far more competitive than it is.

“The obligations we have extracted from ArcelorMittal are significant as we move ahead in order to find the balance, save primary steel manufacturing in this country, and ensure some steps towards the change of behaviour by primary steel manufacturers,” said Davies.

He disputed criticism by Democratic Alliance MP Dean Macpherson, that the government had been “shielding” AMSA, which it accused of “ripping the ring out of the downstream market for too long and without any consequences.”

“We share the view that ArcelorMittal’s pricing has been damaging to downstream industries. But we are not dealing with angels and devils here. It is a much more mixed picture. We have had to act to make concessions, otherwise we risk losing primary steel manufacturing in South Africa,” said Davies.

New unit to be set up to oversee rail local-content push

The Department of Public Enterprises and National Treasury will consolidate procurement for locomotives into a single institution, under Transnet, to ensure “efficiency and compliance with the localisation requirements”. The decision to set up the unit was made at the recent Cabinet lekgotla, which took place in Pretoria from August 16 to 19.


Minister in The Presidency for Performance Monitoring and Evaluation Jeff Radebe indicated that it would have oversight over the localisaiton programmes at both Transnet Freight Rail and the Passenger Rail Agency of South Africa (PRASA).

Details remain sketchy, but Radebe indicated that the aim was to “utilise economies of scale of all entities that belong to the State” to support higher levels of local content in rail rolling stock.

“You will recall that 18 months ago the African Union designated South Africa to be the manufacturing hub of locomotives [on the continent], so we need to ensure that South Africa is properly positioned to play that central role,” he said.

The stipulated thresholds for local production and content are 60% for electric locomotives and 55% for diesel locomotives, with various components, such as car body shells and bogie frames, to be fully localised from the start of the programme. Other components, such as traction motors and braking systems, are expected to be localised progressively over a six-year period.

The Department of Trade and Industry (DTI) has indicated previously that it is “concerned” about whether all four of the original-equipment manufacturers (OEMs) that have been awarded parts of a R50-billion contract to supply 1 064 electric and diesel locomotives to Transnet are in a position to meet the minimum thresholds set out in local-content designations for the rail rolling stock sector.

The suppliers include General Electric South Africa Technologies, China South Rail Zhuzhou Electric Locomotive, Bombardier Transportation South Africa and China North Rail Rolling Stock South Africa. The two Chinese companies have since merged.

PRASA, meanwhile, has awarded a R51-billion contract to the Gibela consortium to supply 600 X’Trapolis Mega commuter trains over ten years. The first 20 commuter trains are being built at an Alstom facility in Lapa, Brazil, with the balance to be assembled at a R1-billion new facility, which is being developed at a site in Dunnottar, near Nigel in Gauteng.

Deputy director-general for industrial policy Garth Strachan tells Engineering News Online that greater coordination around the programmes could improve local-content outcomes and ensure resources are pooled across OEMs and Transnet Engineering.

He says that, while progress is being made in rebuilding South Africa’s rail-linked industrial capabilities, several problems persist, one being a lack of alignment between the country’s black economic empowerment programme and initiatives to bolster local content and small business.

There is also an ongoing dispute over who should bear the financial burden associated with the verification of local content, with the South African Bureau of Standards having established to SATS 1286:2011 technical specification for that purpose.

The slowdown in the domestic and African economies is also affecting both local and export demand, as well as the profile of demand, which is now likely to be far less smooth than initially expected.

Transnet has reported that its multibillion-rand capital expenditure (capex) plan, which has already been rephased in response to weaker-than-expected market demand, could be further moderated under what it terms a ‘low-road scenario’.

Outlining its revised capital plan in its recently released 2016 integrated report, the group shows that, under its official 2017 plan, it will invest R277.8-billion over the seven-year period to 2023 and between R340-billion to R380-billion over the next ten years.

Capex of R22.8-billion is planned for the current financial year, which is lower than the nearly R30-billion invested last year and well below the peak of R33.6-billion recorded in the 2015 financial year. Capex then rises steadily from R36.2-billion in the 2018 financial year to a peak of nearly R50-billion in 2022.

However, the report also provides insight into a ‘low-road scenario’, which shaves R22.9-billion from the seven-year investment plan and lowers the overall budget for the period to R254.9-billion. Under the scenario, spending is moderated materially in 2017 to 2021, whereafter its rises steeply to peak at R54.3-billion in 2023.

Hybrid power generation system wins energy award

The Hybrid Power Generation System (HPGS) of national security alliance the North Atlantic Treaty Organisation’s (Nato’s) Energy Security Centre of Excellence has won one of the Energy Transition Trophies 2016.


The awards, held in Paris, France, in June, covered such themes as factories, energy, renewable energy, energy transition and mobility, and were organised by leading professional press group in France, Usine Nouvelle.

The HPGS smart energy system beat more than 130 rival projects in the renewable- energy category. The system is based on Germany-based cable and overhead line accessory manufacturer Pfisterer’s CrossPower technology, which combines conventional and renewable-energy sources in one system.

Pfisterer’s CrossPower system creates isolated power grids, or microgrids, in which wind turbine and photovoltaic (PV) systems are combined with conventional diesel generators.

“This alliance of hybrid power generation and intelligent management ensures a highly secure power supply,” according to Pfisterer.

Further, the system allows for a stable, mobile power supply in various areas.

In emergency scenarios, the ability to rapidly establish a reliable power supply is crucial, the company noted in a press statement last month, adding that, with the HPGS, stable power grids could now be set up rapidly in locations such as remote areas, earthquake zones or refugee camps, or areas of conflict.

While the Lithuanian Armed Forces have been testing the system in field conditions since the beginning of the year, Nato will soon deploy the system in planned military exercises, the Nato Energy Security Centre of Excellence says.

Pfisterer and the centre gave a demonstration of the technology at Eurosatory, the world’s largest international land, air defence and security exhibition, in Paris, in June. This was Pfisterer’s first joint trade fair appearance with the Nato energy organisation. The hybrid power concept attracted military and civilian interest.

Modern lithium-ion batteries store solar or wind power in the system. The control system automatically prioritises renewable-energy sources according to their availability, whereas the diesel generators function only as required to recharge the batteries and always operate at their optimum output range.

This reduces fuel consumption by up to 50% and makes the system remarkably efficient, the company noted.

A single 150 kW plant can provide a reliable supply for a hospital with 100 people or to a military base with up to 150 soldiers, while the entire system is based on touch-safe design and can be operated in the close vicinity of tents and equipment.

The CrossPower system also reduces logistics expenses. Since diesel consumption is significantly lower, fewer costly fuel transports – inevitably entailing security risks – are necessary to conflict areas.

Additionally, the system can be housed in two International Organisation for Standardisation-certified 20-ft containers for transport, taking up very little space.

One container accommodates the PV system and the wind turbine mast, while the second accommodates the management system, switchgear, batteries and diesel generators.

The CrossPower system is scaled by design and is available with rated power outputs from 25 kW up to 1 000 kW/1 MW as a stationary unit. Additional modules can be integrated, for instance, into a hydroelectric power station, a permanent power grid or a Smartflower solar system.

Manufacturing equipment locally proves to be beneficial

Following two years of research and preparing for the local manufacturing of new innovative materials handling equipment, Pretoria-based materials handling company Wuhlf started manufacturing last month and has reached full production.


Engineering News reported in January that the company would manufacture materials handling equipment – including wheel loaders, forklifts and numerous attachments – designed specifically for the South African market.

Manufacturing Wuhlf products enables the company to predict its quality and outcome as the inputs and outputs of the expected end product can be controlled.

“There is a need for materials handling equipment in the engineering industry, owing to the size of projects and the moving of loads. Being able to manufacture the equipment in South Africa gives the company the upper hand in producing high-quality, low-technology products relevant for the local market,” says Wuhlf director Johan Grobler.

Another advantage is the number of jobs created by manufacturing locally, as this increases Wuhlf’s contribution towards social responsibility.

Moreover, Grobler notes that the maintenance requirements of the locally manufactured equipment are relatively low and require no electronics.

He explains that the nonelectronic tools for maintenance allow for end-users to repair and maintain the equipment themselves, with parts being locally available and easy to use.

“A few companies in the engineering industry still think that high-technology equipment is a better option; however, locally manufactured low-technology front-end loaders and terrain forklifts are more reliable in terms of maintenance and availability,” he asserts.

Design Specifications

Grobler says Wuhlf is manufacturing front-end loaders and terrain forklifts. Front-end loaders are used on farms, construction sites and where supplies need to be picked up and transported from one location to another, he notes, adding that the terrain forklift is equipment used to lift and move materials short distances.

Grobler notes that the Wuhlf ML 18 front-end loader has a full hydraulic articulated frame steering, with a 35° angle, and a width of 1 900 mm. He adds that the machine’s overall operating weight is 4 370 kg, with a bucket capacity of 0.9 m.

He points out that the machine uses an open-mode controlling system, with an 85 ∙ fuel tank capacity, a 15 ∙ oil tank capacity and a 4 ∙ break system, as well as a four-cylinder diesel engine of 47 kW and 2 400 rpm.

Grobler asserts that the all-terrain off-road 4  4 forklift is 5 100 mm long, 1 720 mm wide and 2 430 mm high.
He points out that the forklift’s rated load capacity is 2 000 kg, with an 18 kN max traction force, a fork size of 1 070 mm and total weight of 3 200 kg.

Grobler concludes that the company will continue to develop and research ways to manufacture different equipment while building the company profile as local manufacturers.

ABB new robot offers bigger payload handling, compact footprint

ABB Robotics has launched its latest robot – the IRB 1660ID – for applications such as arc welding, machine tending and materials handling, which require work in tight spaces.


The new robot’s Integrated DressPack solution makes it easier to programme and simulate predictable cable movements, creates a more compact footprint and reduces maintenance costs by 50%, owing to reduced wear and tear on cables.
“Our aim . . . was to deliver a robot that offers superior and consistent quality in arc welding, as well as a fast, agile and reliable machine-tending solution,” ABB Robotics global product management head Dr Hui Zhang explained in a press statement last month.

The robot will also enable customers to increase productivity, deliver better workpiece quality and reduce cycle times, he noted.

The IRB 1660ID, with the aid of RobotStudio, ABB’s offline robot software programming tool, enables programmers to envision high-density cells, with several robots welding close to one another.

Additionally, the compact and hollow IP67 wrist enables fast and reliable movements, while the risk of collision in confined spaces is also eliminated. The combined working range of 1 390° for axes 4, 5 and 6 ensures agility inside computer numerically controlled machines.

“As a direct result of close collaboration with our customers, the IRB 1660ID also includes a new generation of accurate, efficient and reliable motors,” said Zhang.

The IRB 1660ID has a reach of 1.55 m and can handle payloads of up to 6 kg.

While the robot’s predecessor, the IRB 1600ID is installed at several sites across South Africa, ABB South Africa expects to service the first orders for the new robot in the near future.

ABB South Africa service manager Alok Maharaj told Engineering News that there was significant demand for welding, assembly, painting and finishing in the automotive and metal fabrication industries, as well as picking, packing and palletising in the pharmaceuticals and food and beverage industries.

“Traditionally, the automotive sector has driven the technology and adoption of robotics in industry. However, small to medium-sized enterprises are also starting to invest as decreasing prices and increased labour issues become a reality,” Maharaj said.

GE Capital Aviation Services Signs Purchase-and-Leaseback Transaction with Qatar Airways for Five Airbus A350-900s

SHANNON, Ireland – August 16, 2016 – GE Capital Aviation Services (GECAS), the commercial aircraft leasing and financing arm of GE, today announced it signed a purchase-and-leaseback transaction with Qatar Airways for five new Airbus A350-900 aircraft to help expand the carrier’s fleet.


About Qatar Airways

Qatar Airways, the national carrier of the State of Qatar, is one of the fastest growing airlines operating one of the youngest fleets in the world. Now in its 19th year of operations, Qatar Airways has a modern fleet of 190 aircraft flying to more than 150 key business and leisure destinations across six continents.

A multiple award-winning airline, Qatar Airways was awarded World’s Best Business Class; Best Business Class Airline Lounge and Best Airline Staff Service in the Middle East at the prestigious 2016 World Airline Awards managed by international air transport rating organisation Skytrax.

Qatar Airways is a member of the oneworld global alliance. The award-winning alliance was named the World’s Best Airline Alliance 2015 by Skytrax for the third year running. Qatar Airways was the first Gulf carrier to join global airline alliance, Oneworld, enabling its passengers to benefit from more than 1,000 airports in more than 150 countries, with 14,250 daily departures.

About GE Capital Aviation Services (GECAS)

GE Capital Aviation Services (GECAS) is a world leader in aviation leasing and financing. With over 45 years of experience, GECAS offers a wide range of aircraft types including narrowbodies, widebodies, regional jets, turboprops, freighters and helicopters, plus multiple financing products and services including operating leases, purchase/leasebacks, secured debt financing, capital markets, engine leasing, airframe parts management and airport/airline consulting. GECAS owns or services a fleet of over 1,950 aircraft (~1,700 fixedwing/ ~250 rotary wing) in operation or on order, plus provides loans collateralized on an additional ~400 aircraft. GECAS serves ~ 270 customers in over 75 countries from a network of 25 offices.

Siemens proves pioneer position delivering green solutions in the shipbuilding industry

Scandinavia is the first region in the world to rely increasingly on battery-powered and thus environmentally-friendly technologies in the shipbuilding industry. After “Ampere”, the world’s first electrical ferry in Norway, Siemens has received a follow-up order of the Finnish shipping company FinFerries. Ampere was put into operation in Norway in May 2015, and has traveled a distance equivalent to more than 1.5 times around the equator. With the change from diesel propulsion to battery, Norwegian ship owner Norled has reduced the cost of fuel by 60 percent. For FinFerries, Siemens has now tailor-made a suitable technical solution for Finland’s first emission-free ferry. This follow-up order confirms Siemens’ pioneer position delivering green solutions in the shipbuilding industry.

Finnlands erste Elektrofähre wird neuer Meilenstein in ökologischer Schifffahrt / Finland's first battery-powered ferry represents milestone towards clean shipping