SHEPCO Group, which operates Shepco Industrial Supplies and Shepco BMA Fasteners, is facing unfair competition from imported sub-standard imports many of which are smuggled into the local market, the group’s chief executive officer, Shepherd Chawira says.
DUMISANI NYONI
Shepco Industrial Supplies manufactures mining equipment such as locomotives and underground loaders while Shepco BMA Fasteners makes bolts, nails among other products.
Chawira told The NewsHawks that cheap imports coming into the country were posing a serious challenge for them in terms of the local demand and export.
“We have various challenges there (Shepco BMA), initially it was forex for the raw materials which is now available. We can now go to the auction market and buy. The biggest challenge that we are currently facing is that our products are expensive compared to the region,” Chawira said.
“We are operating at 20% capacity utilisation whereas a company in South Africa, China or India, for instance, is operating at 100%. The other biggest challenge is that we have cheap imports coming into the country and some of them are actually smuggled into the country.”
“So, these are really posing quite a big challenge for us in terms of the local demand and export. We haven’t even restarted the export because we are not competitive. When we get to around 50% capacity utilisation, I am sure then we can start talking about exports,” he said.
Goods entering into Zimbabwe from other countries must be declared at ports of entry but this is not happening due to leakages.
Chawira, who is also Confederation of Zimbabwe Industries Matabeleland chapter president, said during the first quarter of this year Shepco Industrial fared well, operating at over 80% capacity utilisation.
“But for Shepco BMA, although our capacity utilisation increased, we are still at below 30%. It increased in the last quarter going into the first quarter. People are very positive at the moment, I think for most of our industries, this stability that has been brought about by the foreign auction and also the enablers like fuel are now available,” he said.
“We all agree that most of last year going into early this the first quarter, power supply has been fairly stable. These have really strengthened the position from where companies have been operating from. Stability can be sustained and definitely, we are geared towards growth.”
Chawira said BMA has a plant with installed capacity of 500 tonnes conversion a month but, due to imports, it operates at 20% capacity.
“So capacity is there, but we need to retool to increase capacity utilisation. So definitely, we are on course. We did commission another manufacturing line at the end of last year and we are on course as well to commission another production line this quarter,” he said.
“Definitely, that’s the direction that we are taking to increase our production by retooling and resuscitating some of the lines.”
For retooling, Chawira said BMA needs about US$2 million.
“That’s what we need for retooling and unfortunately, currently as the financial models are available in the economy we will not be (borrowing). The interest rates are a bit high at the moment. Besides that, the short-term finance is not good for retooling,” he said.
The Shepco boss said they were hoping that the government would work with banks to come up with a stimulus package for long-term retooling. He said in retooling, companies would need about 5 to 15 years of finance because it is quite a huge outlay.
Chawira said at Shepco Industrial they have expansion projects and have started manufacturing conveyor rollers.
“That one was completed in the last quarter of 2020. Then we have the second phase which is now almost complete and we are hoping that we will commission that one at the end of second or third quarter this year,” he said.
“If you go there, there are quite huge expansion projects going on at the moment. Shepco Industrial is really trying, but it’s all due to the stability which has prevailed in the last few months or so, which we are hoping will continue,” he said.
