Budget Constraints – when Local is Lekker
There’s never been a better time to Buy Local and #Specify South Africa than when budgets are being cut and everyone is tightening their belt.
Whilst project initiation and procurement may seem counterintuitive to fiscal prudence, increased expenditure is exactly what the doctor ordered to remedy our ailing economy. And while we may have seen signs of economic recovery through the 1,4% growth in Q2 to June 2021, the impact of the July unrest in Kwa-Zulu Natal & Gauteng is yet to be quantified and we are still 1,4% down on pre-Covid levels. In addition, further delays in capital projects can prove more costly.
¹The latest Producer Price Index (PPI) – the average change in price of final manufactured goods & services received by producers – saw an increase of 0,8% from July, and 7,2% increase annually to August 2021. Also considered an important measure of inflation, a higher PPI generally precipitates an increase in the Consumer Price Index (CPI) which translates into higher prices to the consumer.
That one-year delay will now cost you almost 10% more!
Keeping costs in check – and stimulating our economy – makes a strong argument for specifying local. Reduced supply chain capacity and production delays due to Covid, particularly on imports, exorbitant transport costs and delays at ports, as well as a volatile exchange rate make local alternatives the cost-effective, sensible choice.
In 2019/2020, the government spent R628,8 billion in total on healthcare and education – R260,7 billion or 41% on education and R206,6 billion or 33% on healthcare. By specifying a local flooring manufacturer such as Floorworx, which manufactures homogenous vinyl such as SuperFlex from its factory in East London, these projects could have enjoyed the following cost-saving benefits:
1. Superior supply chain management – guaranteed product availability manufactured to specification.
2. Minimised lead times – 24-hour delivery on stocked items and 2 weeks on custom orders vs the current 8 – 12 weeks on imports.
3. No port delays = improved project management and construction timelines.
4. Lower transport costs vs high freight charges – significantly lower charges as opposed to container prices which are currently being auctioned off to the highest bidder and are almost 900% more expensive.
5. Improved cash-flow – Just-in-Time delivery and flexible payment terms.
6. NO storage costs – material can be ordered and delivered on-demand to site.
7. No exchange rate volatility.
8. Reduced financial risk due to material damage or theft/loss.
9. On-site technical support.
10. Reduced carbon footprint and recyclable content for better environmental outcomes.
The benefits of buying local are obvious: Product availability, shorter lead times, quality improvements, lower transport costs and reduced carbon miles, on-time delivery and improved cashflows, skills transfer and training, faster national development. Who wouldn’t want to do that? Specify SA. Everyone wins!
For more information, contact FloorworX:
Tel: 0861 833 338
¹Source: (STATSA, 2021, “Key findings: P0142.1 – Producer Price Index (PPI),” August 2021, http://www.statssa.gov.za/?page_id=1856&PPN=P0142.1&SCH=72741)