Tag: Covid

Despite the struggling global supply chain, labour shortages and economic difficulties as the world tries to bounce back from COVID, global demand for uncoated freesheet (UFS) grew last year. This is according to a recent report by OPI.

Highlights of the report include:

  • Cutsize paper demand across Europe in 2021 rose by just over 2%
  • Shipments increased about 8%
  • Capacity dropped 7%
  • Buyer inventory levels dropped to their lowest in more than a decade
  • The US market for office paper had a slight recovery versus 2020
  • For the full year of 2021, Mondi reported year-on-year revenue growth of 11% for its Uncoated Fine Paper segment
  • Sylvamo – formerly International Paper’s Printing Papers division – reported sales that were almost 17% higher
  • Portugal-based Navigator benefitted from a surge in demand for its uncoated woodfree (UWF) paper, with sales increasing 23%, while those for the Communications Paper division at Finnish manufacturer UPM grew by 8%
  • Sales at Packaging Corporation of America’s Boise division fell as it was unable to offset rising energy costs.
  • Finland-based Stora Enso reported a decline in revenues for 2021

Continuing pressure due to sustained gas and electricity price rises, supply chain issues and the war in the Ukraine has not helped matters. It appears that the paper industry in one in crisis.

Deon Joubert of Merpak commented as follows:

Our South African paper converting and printing businesses, like so many around the world, are under significant pressure to source supply.

Covid and the resultant drop in demand for, especially uncoated wood-free paper and newsprint, around the world has seen traditional manufacturers of this grade taking commercial downtime, converting paper machines to packaging grades or, in some cases even shutting down permanently.

The post Covid recovery and the return to office has seen demand for these grades grow to the point where it may be that demand now exceeds supply. Combined with the shipping crisis, the resultant explosion in shipping costs, lengthening of shipping lead times and port congestion has battered paper supply chains.

The war in Ukraine has affected energy costs in Western Europe where many of these mills are to be found.

At home, local mills have also suffered from rapidly rising input costs in pulp and chemicals. Demand has been strong and for the past few months some customers have been put on allocation by local mills.

Then the devastating KZN floods have tipped our local supply upside down with all Sappi and Mondi mills in the region suffering flood damage. Mondi has needed to declare force majeure as the Merebank mill was severely damaged and with the lack of municipal power in the Merebank area are yet to completely understand when we may see the start of paper production again.

The effect on printers and paper convertors could be devastating. Just as the world of work and traditional paper communication media was showing some recovery, the price and shortages of paper may well see an accelerated move to digital platforms. Once lost to electronic communication, it is very hard for our industry to return to print.

We are most concerned.

By Robert Brand for News24

The rand weakened the most in five months and benchmark bonds sold off as rolling power cuts, flood damage and signs of a Covid-19 comeback added to worries about the country’s economic outlook.

As global concern over rising US interest rates sent emerging-market currencies into reverse, the rand weakened more than 2% against the dollar on Tuesday, the biggest daily decline among the asset class.

Eskom warned the country may have more than 100 days of electricity blackouts this year because of outages. The government will ask parliament for additional funding of R1 billion rand to repair infrastructure damaged by deadly floods in KwaZulu Natal.

This hampers plans to reduce the budget deficit and curb government debt, a key factor preventing credit-rating upgrades. In addition, growing evidence of a resurgence of Covid “could complicate” South Africa’s economic recovery, said Brendan McKenna, an currency strategist at Wells Fargo Securities in New York.

The rand slumped 2.2% to R14.9717/$ late on Tuesday, the most since November 2021. The yields on 2032 government bonds climbed 18 basis points to 10.31%.

“There were some pretty severe floods in South Africa recently that caused a fair amount of damage,” McKenna said. “Looks like the government is asking for funds to start rebuilding, which could add to the debt burden and fiscal deficit.”

He said that public finances in the country were “already in bad shape, so that could be weighing on the currency too.”

Treasury yields surged Tuesday as inflation fueled by the war in Ukraine and supply-chain chaos bolstered expectations for tightening by the Federal Reserve, strengthening the dollar.

 

Source: Bloomberg

More than 30 Taiwanese companies including Pegatron Corp and Macbook maker Quanta Computer Inc. have now halted production in the electronics hubs of eastern China to comply with local Covid-related restrictions, spelling more trouble for an already fragile global tech supply chain.

On Wednesday, Quanta said it was suspending a Shanghai plant to comply with government restrictions. At least 30 other companies are suspending output in nearby Kunshan until April 19, they said in filings to Taiwan’s stock exchange. Some said the effect on their finances is still unknown, while others expect no major impact. Kunshan, a bustling city that hosts Apple Inc. suppliers including Pegatron and Luxshare Precision Industry Co., began a city-wide lockdown in early April.

The companies make parts for consumer electronics products ranging from PCs and smartphones, with many of the components critical for their global customers. The global supply of key tech has already been hobbled by China’s zero tolerance toward the virus and its measures to stamp it out in cities such as Shanghai and Kunshan.

On Tuesday, Pegatron suspended its iPhone assembly campuses in those two cities as China struggles to control the worst virus outbreak in two years. Other key Apple Inc. manufacturing partners including Luxshare and Compal Electronics Inc. also have major operations in Kunshan.

Widespread Chinese lockdowns have begun to exact an unquantifiable toll on the world’s No. 2 economy, the biggest buyer of semiconductors and the largest producer of electronics from iPhones to PCs.

Disruptions to local manufacturing are set to worsen the logistics hurdles of global companies already grappling with a shortage of cargo capacity that’s pushed shipping costs to record highs and a prolonged chip crunch. Gaming consoles, server computers and electric vehicles are among products facing further supply challenges.

Many of the most critical factories in Kunshan and Shanghai have managed to keep humming by operating so-called closed-loop systems that are quarantined from much of the outside world. But worsening logistics jams are constricting shipments of components, draining inventories to the point where some manufacturers including Pegatron and Quanta are down to just a few weeks’ stocks, Taipei-based consultancy TrendForce estimated.

Local officials on Wednesday placed two Kunshan districts with significant electronics manufacturing into lockdown for an indefinite period, while for certain other districts the lockdown was extended by seven days.

Some contract electronics makers have been unable to secure CPUs, battery modules and panels amid prolonged lockdowns, and certain manufacturers are facing a shortage of multilayer ceramic capacitors for servers and automotive products.

“The biggest problem for MLCC suppliers at this stage is they cannot deliver materials to Shanghai and Kunshan,” TrendForce said in a note on Tuesday. “Limited manpower and logistics and suspended transportation options mean [contract electronics makers] can only rely on onsite inventory to barely meet the needs of production lines, further exacerbating component mismatches.”

700 000 social relief grants uncollected

By Mayibongwe Maqhina for IOL

Social Development Minister Lindiwe Zulu has revealed that more than 700 000 beneficiaries have not collected their R350 social relief of distress grants from the South African Post Office (SAPO).

EFF MP Rosina Ntshetsana Komane wrote to Zulu asking about the number of beneficiaries who were approved to receive the grant and were yet to claim their money.

Komane also asked about the measures her department has put in place to ensure that all those entitled to the grant accessed it.

The grant was introduced as a temporary relief measure for those who lost economic opportunities and were adversely affected after the outbreak of Covid-19 in 2020.

In February, President Cyril Ramaphosa extended the grant until March 2023 and Finance Minister Enoch Godongwana allocated R44 billion for the 12-month extension while a long-term social assistance approach was considered.

In her written reply, Zulu said a total of 771 089 had not collected their R350 grant since it was first introduced.

“According to the reconciliation received from the SA Post Office (SAPO), a total of 328 477 beneficiaries have yet to collect their grant from the first cycle which ended 30 April 30 2021 and 442 602 from the second cycle which covers the period from August 2021 to March 2022,” she said.

Zulu also said approval was recently provided to SAPO, in line with the directions published on February 10, for beneficiaries from the first cycle to be paid their funds should they report to the Post Office.

The minister said beneficiaries could have the grants paid directly into their personal bank accounts and through the Post Office.

“Currently, of the 10 563 123 approved beneficiaries, 42% collect their grants through the post office while 58% receive the grant in their own personal bank accounts,” she said in reference to the 4.4 million beneficiaries paid via the Post Office.

Zulu also said beneficiaries could access their grants through the retailers such as Pick n Pay, Boxer, Checkers, Shoprite and Usave.

“Negotiations with the Spar group to also allow access to the relief grant are at an advanced stage and further announcements will be made shortly.”

Zulu said the South African Social Security Agency was also finalising the contracting with banks to allow for the payment to be made to mobile phones.

“This channel will be available for the extension of the grant from April 2022 to March 2023.”

Zulu said: “These channels have all contributed to the significant improvement in reducing the queues at Post Offices, and provide a range of options for approved beneficiaries to be able to access their grants conveniently.”

Meanwhile, a total of 51 Post Office branches were closed between 2020 and 2021 with Gauteng and KwaZulu-Natal leading the pack with 21 and 16 respectively.

Responding to parliamentary questions from DA MP Bridget Masango, Zulu said Sassa was no longer growing the customer base for the Post Office with new social grant beneficiaries in light of current challenges experienced by the entity.

“This decision was taken by Sassa in 2020 to afford the Post Office an opportunity to review their systems and strategies going forward,” she said.

Zulu also said since the contract with Cash Paymaster Services was terminated, Sassa ensured that the social grants were paid into the beneficiaries’ special disbursement accounts handled by SAPO and into beneficiaries’ private bank accounts on a monthly basis.

“Of the approximately 7 million accounts opened within the SAPO environment for social grant beneficiaries, only 10% actually utilise the post office branches or cash pay points to access their funds.

“The remaining beneficiaries already access their grants through the National Payment System at bank ATMs and merchant point of sale devices,” she said.

 

Source: East Coast Radio

Recently, Employment and Labour minister Thulas Nxesi published new labour laws for the South African employers and employees.

They have to do with appropriate and acceptable rapport in the workplace, vaccination status, COVID-19-related laws in the workplace, and the procedures and laws for the employment of foreign nationals.

The Draft National Labour Migration Policy and Employment Services Amendment Bill gives Nxesi the right to make regulations regarding the employment of foreign nationals.

These will include the appropriate measures employers should take confirming there was no suitable candidate in the country, the necessary documentation and records employers should keep regarding foreign national employees, and the criteria and procedure to apply for an exemption from the minister.

In this Bill, it also states that a private employment agency providing employment services simply “for gain” has been removed. So if you’re a business or group that offers vast employment services to other business, it is required that you also register your business as a private employment agency.

The above is absolutely important; go register your business.

The Code of Practice for Managing Exposure to Sars-CoV-2 in the Workplace 2022 states that employers will no longer be required to screen employees daily for COVID-19 symptoms.

As an employee, it is necessary that you to share with your employer that you have COVID-19 symptoms.

The code also includes that employers accept when some employees refuse to get vaccinated.

It is not required that you share your vaccination status.

Workplace bullying falls under The Code of Good Practice on the Prevention and Elimination of Violence and Harassment in the World of Work, therefore making it an issue big enough to report to HR.

BusinessTech describes this as unwanted persistent conduct (or a single incident), which is serious and demeans, humiliates, or creates a hostile or intimidating work environment.

Some examples of workplace bullying include harassing; offending, professionally or socially excluding someone, or negatively affecting their work tasks. (BusinessTech)

Digital innovation is faster than ever

By Given Majola for IOL

In an ongoing effort to encourage digital innovation by large enterprises, small and medium enterprises (SME’s), as well as to encourage innovation on a broader scale within South Africa, BCX has announced the launch of its first Digital Innovation Report 2022.

BCX chief executive Jonas Bogoshi said the reality of the Covid-19 pandemic was that everyone was trying to solve problems never experienced before.

“At first it was for survival and business continuity, and later for some, it led to considerations for the future. It is without a doubt that digital technologies and digital innovation will play a big part of that future,” Bogoshi said.

World markets have experienced rapid technological changes as a result of the Covid-19 pandemic in pursuit of economic revival. He said the pandemic presented South Africa and much of the developing world with increased challenges, which seemed insurmountable. It had, however, also provided opportunities that must be seized if people were to rebuild the economy and remain competitive within a technologically driven global market.

The recently launched report includes a body of knowledge that outlines current trends and the status of digital innovation in South Africa, at both a micro and macro level. It provides an in depth look at subjects such as global and local trends in innovation, technologies that are fuelling digital innovation, especially in retail.

Regarding the retail sector, the report suggested that digital innovation has had a massive impact on this sector. In 2019, South Africa’s online retail space (or e-commerce industry) was still in its infancy, accounting for only 1.4 percent of total retail spend. However, the onset of the Covid–19 pandemic brought about nationwide lockdowns and restrictions to the movement of consumers.

Retailers needed to reform their business models to attract customers without the enticements of shopping malls. It pushed the pace of change into hyperdrive. The pandemic served as a launchpad for digital innovation, with an increased uptake in e-commerce from online retail and click-and-collect to video streaming. South Africa saw a 50 to 70 percent growth in e-commerce last year.

Similar insights were presented on critical sectors of the economy, such as Banking, Healthcare, and Insurance, amongst others. There were ten case studies included in the report of local companies depicting their journey to success with digital innovation.

“We are at a critical period of our economy – most countries are still reeling from the fourth wave of Covid-19 and are focused on their future sustainability. The world’s larger economies are picking up speed based on substantial stimulus packages and an incredible pace of digital innovation. We are playing catch-up and must act if we are to compete, ” Bogoshi said.

According to the report, South Africa has, however, greatly increased its adoption of digital technologies over the past 18 months. Although digital innovation and transformation have been priorities for South African organisations for a number of years, the Covid-19 pandemic has escalated the importance of digital innovation to ‘survival level’. The report cites a study indicating 79 percent of organisations in South Africa had fast-tracked digital transformation programmes by the end of 2020.

The BCX report said a positive aspect of Covid-19 had been the impetus it created for digital innovation, which was never experienced before in modern history. From the way people worked and the way bought groceries, to the way they received healthcare and carried out their jobs, the necessity for less physical contact had opened a gateway for digital innovation from which they stood to benefit for decades to come.

Bogoshi said: “The BCX Digital Innovation report 2022 highlights the opportunities that our current circumstances present for large-scale transformation of South Africa through digital innovation. It should be an inclusive journey, ultimately leading to benefits for all, whilst limiting the negative impacts of rapid changes we will most likely continue to experience for years to come.”

South Africa’s consumer, industrial and export-led sectors are expected to recover as global and local demand returns, says Henkel South Africa, who recently celebrating 70 years in the country.

Henkel South Africa is a subsidiary of Henkel AG & Co. KGaA. The company is a century old German company that became a successful multinational present in more than 100 markets. From a family business founded in 1876 to 145 years of success, Henkel operates globally with a well-balanced and diversified portfolio. The company holds leading positions with its three business units Adhesive Technologies, Laundry & Home Care and Beauty Care. As a recognised leader in sustainability, Henkel holds top positions in many international indices and rankings. Henkel employs more than 53,000 people globally – a highly diverse team, united by a strong company culture, a common purpose, and shared values.

We are extremely proud of our long, rich heritage in SA, supporting growth, economic development and opportunity across the communities we serve. Based on our history of success, we are now witnessing signs of recovery and future growth, following a difficult year for economies around the world.

Locally, I believe that there is a great deal of potential for the South African economy as the country has a lot of sectors with growth potential, but those that stand out are the consumer and industrial sectors, technology and innovation, and export-oriented areas like automotive.

Popular brands like Pritt, Pattex, Loctite and Schwarzkopf are now part of everyday life for millions of people in SA, and what we have noticed is that demand for essential products has proven resilient during the COVID-19 pandemic. However, to embrace a future that will no doubt be full of possibility and risk, we need to ensure we continue to innovate to stay a step ahead.

In its 13th South Africa Economic Update, the World Bank says the current global outlook is looking better after the 2020 collapse and South Africa is positioned to grow at the fastest pace in over a decade, bouncing back from 2020’s 7% growth contraction. While there is still “considerable uncertainty,” economic growth could rebound to 4.0% in 2021. More recently, other sources such as the South African Reserve Bank have even increased their GDP growth projections to above 5% for last year (2021).

Although South Africa has battled a third and fourth wave of COVID-19 infections, and a close watch is needed moving into the New Year, talk of a recovery is extremely positive. Henkel is also noticing signs of stronger demand returning, as it trends ahead of the recovery in other regions.

The automotive sector, in particular, was driving growth for most part of last year as new locally-produced models came on stream, together with general manufacturing on the back of infrastructure demand. Other industries doing well include beverages and packaging.

As a result, our commitment in South Africa remains strong and we are constantly seeking ways in which to invest further in the country, albeit through innovation, technology, skills development, or corporate social investment – our commitment is to keep growing.

Business risks include rising costs, driven primarily by raw materials, electricity and logistics, but also global supply chain shortages. To achieve purposeful growth we therefore need to intensify our efforts to step up customer and consumer proximity with faster decision-making mechanisms and to increase efficiency by constantly reshaping our operating models to be lean, fast and simple.

Furthermore, Henkel worldwide aims to strengthen sustainability as a competitive differentiator. Our aim is to reduce the carbon footprint of our production by 65 percent by continuously improving energy efficiency and by using electricity from renewable sources. In addition, we want to leverage our brands and technologies to save 100 million tons CO2 together with our consumers, customers and suppliers by 2025. We are working towards a circular economy and zero plastic waste in the environment.

We also realise the critical role we must play in our communities and we want to enhance our positive social impact on communities through responsible sourcing. We continue to maintain an intense dialog with our suppliers to promote sustainable practices and the respect for human rights along our value chain.

We supply a very wide array of consumer and industrial needs, and while we often fly below the radar from a marketing perspective, our technology solutions are holding many products together.

A key focus for the future will be on introducing sustainable solutions, both in our products and also towards socially driven initiatives. We will continue to contribute towards building a better world and society.

With both business and consumer confidence returning, Henkel’s diverse array of products – from household and industrial-grade adhesives to hair care – ensures we are well positioned for the next 70 years in SA.

 

Covid-19, riots hurt Massmart

Source: Supermarket & Retailer

In a trading update on Friday, Massmart said its group sales for the 52-week period amounted to R84.9 billion, which is 1.9% lower than the same period in 2020.

The group, which also owns the Builders and Game brands, said its total comparable stores sales were 1.7% higher, however.

It said 43 of its stores were damaged in the July unrest that took place in KwaZulu-Natal in 2021. However the impact on two Makro stores hit the group’s second-largest sales category hard, resulting in sales declining by 9.7% in the fourth quarter of 2021 compared to the same period in 2020.

That said, Makro’s total sales for the 52 weeks rose by 6.6% to R29 billion and comparable sales increased by 10.6%. Despite the government imposed Covid-19 sales bans, liquor had a comparable sales growth of 39.8%, while comparable general merchandise sales grew by 7.2%.

With regards to food, Makro saw a slight increase in comparable sales of 1.5%.

“Business activity, specifically in the hospitality and catering sector remains at lower-than-normal levels, as this industry was impacted by various levels of trading restrictions as well as international travel restrictions during the year,” said Massmart.

The group’s wholesale and cash-and-carry division, made up of the Jumbo Cash & Carry and Shield brands, had a 6.3% decline, which Massmart attributed to lower sales in the hospitality, restaurant and catering sector due to Covid-19.

Builders, on the other hand, saw a 7.1% increase in total sales.

Game suffered a total sales decline of 8.1% at R15.3 billion, as mall-based foot traffic slowed down as consumers came under financial pressure.

“The Game supply chain was particularly susceptible to unrest related supply chain disruption that resulted in insufficient in-stocks of some core appliances and home electronics in the period following the unrest, exacerbated by lower in-stock levels on key lines of certain electronics and appliance products as a result of global supply shortages,” Massmart said.

 

By Paul Vecchiatto for Bloomberg

A South African law-enforcement agency said its investigation into some of the health-equipment contracts awarded by the government during the Covid-19 pandemic found almost two-thirds of them were irregular.

The Special Investigation Unit probe found that 2,803 of 5,467 deals worth 14.3 billion rand ($935 million) were improper, according to a statement emailed by the presidency on Tuesday. President Cyril Ramaphosa authorized the investigation into the contracts in mid-2020.

“It is unacceptable that so many contracts associated with saving lives and protecting livelihoods were irregular, unlawful or fraudulent,” Ramaphosa said in the statement. “This investigation demonstrates our determination to root out corruption and to deal with perpetrators.”

The National Prosecuting Authority and other law-enforcement agencies may use the SIU’s investigations to file criminal charges against people in the public and private sectors, the presidency said.

 

Why the supply chain is in crisis

By Grace Kay for Business Insider US

America seems to be running out of everything.

Supply-chain bottlenecks caused record shortages of everyday products from household goods and electronics to cars, food, and raw materials.

For shoppers, empty shelves can be jarring, spurring panic-buying sprees. It’s often the first sign people see that something may be wrong with the global supply chain. But, shortages are typically indicators of issues that have plagued the industry for months.

“At this point, shortages are guaranteed,” Jonathan Gold, vice president of supply chain policy at the National Retail Federation, told Insider. “… We’ve been warning consumers to manage their expectations for the holiday shopping season for months now. The fact of the matter is the supply chain is stretched to its limit from end-to-end.”

The supply chain didn’t recover from Covid-19
In 2020, coronavirus shutdowns wreaked havoc on the global supply chain. Since, lingering virus-mitigation measures continue to limit efforts to return the supply chain to pre-pandemic levels.

Several industry players limited worker levels due to fears of the further spread of Covid-19 within the workplaces. In China, port terminals temporarily shuttered as a result of the country’s Covid-19 zero-tolerance policy, spawning backlogs at some of the world’s largest ports.

“From an economic perspective, it’s sort of like a game of musical chairs,” former US trade negotiator Harry Broadman told Insider, pointing to efforts in the US to compete with 24/7 operations at Asian ports. “The world economy is out of sync because parts of it were forced to go offline when the pandemic started and getting all the industry players back in line at the same time is near impossible.”

Demand is soaring
Demand grew so rapidly in the past two years that it’s equivalent to about 50 million new Americans joining the economy, Gold told Insider.

“All parts of the supply chain, most of which are built on ‘lean’ principles (no slack, little redundancy, from truck drivers to inventory in warehouses), were not prepared for this increase,” Pelli told Insider. “While consumer demand can increase in a matter of months, it takes more time to increase port capacity, build warehouses, hire employees, etc., to meet that demand.”

Shortages make it difficult to keep up
Ports, warehouses, and trucking companies are processing more goods than ever while combatting a series of crushing shortages, including workers, equipment, and space.

A lack of chassis and shipping containers has made it even more difficult to transport goods.

Most notably, the national labor shortage has left warehouse companies scrambling for employees and key US ports working with limited manpower.

Two of the largest US ports saw a 30% increase in the amount of goods going through them while processing the cargo with 28% fewer workers. In July, the US Labor Department reported that the warehouse industry had a record 490,000 job openings. Meanwhile, the trucking industry has a shortage of over 80,000 drivers.

With fewer workers to process the goods, shipping yards and warehouses are running out of space, making it increasingly difficult to organize the output of goods to their final destinations.

No end in sight
While the record backlog at Southern California ports represents the most eye-grabbing aspect of the supply-chain crisis, every leg of the industry is in chaos, RBC analyst Mike Tran told Insider. Last week, Moody Analytics warned there will be “dark clouds ahead” for the supply chain.

The only realistic near-term solution would be a cut back on consumer spending, though the prospect seems unlikely.

Experts predict the disruptions will continue well into 2023, despite efforts from the government to mitigate the issue.

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