HomeBusiness DigestCandid Comment: 60% capacity utilisation? My foot!

Budget Outlook: Intent and Performance in 2010

One couldn’t help wondering whether there were no later technologies. It turned out there was and this was the MRI scan. The author had to be sent for MRIs instead as the CT wasn’t going to be effective on him for certain reasons (a polite way of saying “sorry we don’t see anything in there”).

One can draw parallels from this and apply that to the local manufacturing sector. It is pleasing to note that companies are reporting getting back into the black in the current earnings season. However, which report have you read where there has been investment in new technology? Most of the recapitalisation exercises appear to have been on just clearing debt and securing working capital, with little or no effort towards retooling.

Isn’t it that they are using the same old equipment that dates back to the 90s, 80s, 70s or even 60s and beyond? The author once worked for a newspaper that similarly had antiquated equipment in the form of an old Heidelberg printing press. When a major breakdown occurred and replacement parts had to be obtained, the company faxed Germany, where the machine had been made decades earlier. 

The quick response was: “You mean such a machine still exists?” It appears that this is still the same case with most of our manufacturing companies. In the case of mining, we only see new equipment crossing our borders to Zambia. Yet, with that kind of situation, we continue to hear fantastic figures of the manufacturing reaching 60% and above capacity utilisation.

 

Really? With obsolete machinery?  Even if the machinery was still working beyond its economic life, surely it can’t be as efficient as more modern offerings? And isn’t it the main reason why our manufacturers are losing out on competitiveness and market share to foreign products?

Efficiency by nature should result in better quality products produced at a lower price. Take Cairns for example, one analyst correctly pointed out that it was cheaper for the company to get rid of its old assets and invest in newer technology at a much cheaper price. Mutare Board and Paper Mills came to terms with such reality and disposed off units that were dragging it behind. The list goes on.

One of our readers, Chris Veremu, describes the 57% capacity utilisation figure as nonsensical. “If this were not a serious issue it would be the stuff that made (ZTV comic character) Gringo famous!,” he says. “Our politicians on both sides of the political divide know that this is nonsense but they are happy to run with it as it helps them look at themselves in the mirror without blushing…How do you achieve this growth when the same industry is closing left right and centre? Liquidity is almost nil…one could go on.”

We rest our case, but not before underlining Zimbabwean companies need new technologies and methods of production to be competitive and viable. Using archaic machinery and technology will undercut delay, or hold back economic recovery.

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