Business News of 2014-07-13

Steel companies threaten shut-down action

Major steel producing companies in Tema will soon hit the streets with a possible shut-down of their factories to protest against what they term as the “harsh and unfavorable economic environment” in the country.

Directors and managers of major steel companies like Sethi Brothers Ghana Ltd, Special Steel Limited, Ferro Fabric Limited, Steel and forging Limited and Wahome Steel Company Limited last Friday held a meeting to plan for the protest-march schedule -- which will possibly take place by close of the month.

A close source told the B&FT that the present economic situation is not helping their businesses to thrive, and it is better to shut down their factories for the meantime until things improve rather than continually operate at a huge loss; saying “we want government to address the situation as early as possible”.

According to the source, they operate at a huge loss under the present economic situation of the country -- citing high interest rates of the banks, the continuous fall of the cedi against major currencies, deplorable road networks leading to their factories, persistent power-cuts and frustrations at the harbor when clearing raw materials for their production.

“We are tired of having series of meetings day-in and day-out on these issues with the big men handling our industry without any positive signs of solving these problems for us. And our companies are collapsing because we keep on paying huge taxes, utility bills, chunks of workers’ salaries among others; and we are not getting our investments back, because we produce below production capacity and people just can’t buy due to the high cost of the commodity.

“So we are seriously planning to hit the streets and subsequently shut down our facilities until the situation becomes stabilised,” one of the directors who pleaded anonymity told B&FT at the premises of Sethi Brothers Ghana Ltd. on Friday.

One of their major worries, the source said, is the recent increment in utility prices which they said has seriously affected cost of production and hence compelled them to increase prices of the commodity, which is not the best

B&FT can confidently confirm that when it visited the factories on Friday the situation at the Steel Melting industries was not encouraging, and they mean to keep their word and strike very soon. For the first time in about 15years ,the steel companies are producing less than 30 percent of their production capacity due to the current economic problems.

About 3 months ago, a tonne of imported iron rod (16mm and 12mm) for instance, which was sold at GH¢2,500 now sells at GH¢3,500 and above, whiles the local one which was sold at GH¢1,400.00 per tonne is sold at GH¢2,400, about a 70 percent increase.

“My brother, where will Real Estate developers, construction firms and landowners get the money to come and buy our products looking at the high cost of the commodity?” he asked, adding that there is very little they can do about the price hikes due to cost of production.

They are calling on government to slash taxes, utility bills, rates on borrowing and solve the energy crisis to give them uninterrupted power supply. If government does this then we will rescind our decision,” he said.