Gloom over water and electricity

THE deficiency in water and electricity supply pose a risk to the country's manufacturing sector's growth.

This is according to the Manufacturing Circle, which recently released its 2012 first quarter Manufacturing Survey results. The survey featured 50 chief executive officers from a variety of manufacturing companies.

The survey results showed that business confidence remained stable during the first quarter of 2012.

Companies said there was optimism in the future on the back of the government's infrastructure investment drive, but noted eight factors presenting risks to their outlook on business confidence. Topping the list was deficiency in water and electricity supply.

Manufacturing Circle executive director Coenraad Bezuidenhout said recent data from Statistics SA and the Purchaser Managers Index painted a gloomy picture.

"Everybody knows about the electricity supply problems. As far as water is concerned, there is a problem in the issuing of licences, getting access to the source and the price thereof. Every municipality is able to put its own price tag on water. The same goes for electricity.

He said municipalities still put their own increases on top of Eskom's increase in the price of electricity.

"Petrol prices have gone up. People are still worried about e-tolling. These things are among the factors that could push the cost pressure up on manufacturing," Bezuidenhout said

Other risks included a scarcity of raw materials, an appreciating rand and mediocre service delivery by most municipalities.

Last week Statistics SA reported that the manufacturing sector lost 67 000 jobs in the first quarter of 2012.

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