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Articles: Alarm over foreign construction tenders

Posted by admin on Thursday, March 30, 2006 - 08:04 AM

ONE of SA’s largest construction bodies has called for government intervention to protect the local industry against rising competition from China.
Carli Lourens

While the industry has recorded an increase of 49% in confidence levels in the civil engineering fraternity, the South African Federation of Civil Engineering Contractors’ first quarterly report for the year warned that bullish conditions may not translate into increased profitability for several reasons, including increased international competition. The report also observed a turnaround in the industry’s fortunes, with revenue climbing 22% to R21bn last year, compared with a 5% contraction the year before. Meanwhile, several construction industry players have already raised alarm over foreign competition, especially from Chinese companies. The report said that Chinese companies were “focused on establishing a local presence and willing to tender as low as it takes”. Two recent contracts awarded to Chinese companies — one by a government agency, the Trans Caledon Tunnel Authority — sent shock waves through the industry. Economist Pierre Blaauw of the civil engineering body wrote in the report that the industry should engage government on a policy towards foreign participation, to ensure that the construction sector was preserved. Among other things, there should be a means to ensure that foreign companies complied with SA’s laws and that domestic labour was used, the report said. The report also warned that “Chinese infiltration” would escalate. “From now on, there will be no sacred cows — all large projects will be tendered for within the context of this global dynamic.” The report also provided figures supporting the bullish sentiment in the construction sector, which has seen two new listings on the JSE’s AltX bourse this year. It said average annual employment in the construction sector increased 11% last year, compared with 2004 figures. The value of contract awards rose 16% last year, compared with the prior year, the report said. The number of tenders increased by 5% over the period up to the fourth quarter of last year, compared with the previous year.

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