Only 4% of industry viable Print

HARARE – Only four percent of Zimbabwe's manufacturing companies are
operating at full capacity while the majority are struggling to ramp up
operations to match at least half of their potential, according to an
industrial survey published last week.
The 2010 CZI Manufacturing Survey, conducted by the Confederation of
Zimbabwe Industries showed that policy pronouncements such as the
Indigenisation and Empowerment Act impacted on the performance of the sector
with some companies adopting a wait-and-see attitude. The CZI noted that
capacity utilization remained a key challenge in the manufacturing sector.
"Although a few firms are producing to their full capacity or close to 100%,
the majority claim under utilization," the survey said. At least 55 percent
of manufacturing concerns are yet to reach 50 percent of their capacity
largely due to lack of working capital, low demand and antiquated equipment
which often results in high plant downtime.
Average capacity utilization at the end of the first half of 2010 stood at
43.7 percent compared to 32.3 percent at the end of the first half of 2009.
This has been largely due to the stable environment which has allowed
companies to plan and budget.The manufacturing sector is yet to experience
the big leap to high sustainable growth that had been projected by
Government. On interrogation, it was observed that the major constraints to
capacity remain largely unchanged with government having failed to address
the fundamentals required to attract the much needed investment.
The three major capacity constraints have been attributed to lack of working
capital; antiquated plant machinery which has resulted in loss of time due
to machinery breakdowns or plant and machinery refurbishment; and low
demand. Exports also remained depressed, with Zambia being the top export
destination. The survey also cited high wage bills as one of the constraints
affecting operations of most companies in the sector.
Workers continue to demand wage increments that are neither productivity
based or in line with inflation developments.
Average wage bills rose by 12% from the second half of 2009 to the first
half of this year. "As the confederation we believe that any wage
adjustments should be productive based, we need to realize the need to
contain unnecessary
inflationary pressures in the economy," CZI said.
The majority of the manufacturers believe there are "minimal" chances of
positive growth for the sector until the right fundamentals are put in
place. They said the government has to seriously address the issue of
capital availability as well as power shortages which are hurting the
industry.