SurvivingTOUGHTimes

The report adds that despite this, South Africa still ranks as the sixth most optimistic country out of the 36 surveyed in accounting and, up from ninth last year. Says Leonard Brehm, national chairman, Grant Thornton: "Despite the slump in optimism, there are still pockets of hope in the South African marketplace and it is no coincidence that privatelyheld businesses are some of the first to realise this. Their macro view of the global economic situation explains the overall slump in optimism - while privately held businesses worldwide are preparing for a prolonged and painful downturn, real opportunities exist, especially in South Africa." 

As explained on the website SAinfo.com: “The IBR investigates key business indicators to better understand optimism and pessimism levels. All indicators showed a decrease from 2008, with employment expectations decreasing by 32 percent, profitability expectations by 32 percent and turnover expectations by 18 percent.” 

For Dennis Dykes, chief economist at Nedbank, “South Africa has been relatively shielded by a healthy banking system as well as the fixed investment boom ahead of the 2010 Fifa World Cup. The tournament will help soften the effects of the global crisis locally, while lower interest rates and oil prices should also help a modest recovery in the second half of the year.” 

Auto industry view 
“Currently, the business environment is characterised by extreme volatility, and the situation worldwide is very unpredictable,” says Brand Pretorius, executive chairman, McCarthy Motor Holdings, in an interview with Engineering News. “The only thing we know for certain is that the market will go up and down, but not necessarily in that order.” 

The dramatic decrease in car, light commercial and medium commercial vehicle sales during 2008 has left auto dealers with “greatly reduced volumes and an unfavourable model mix as people are buying down. This has left us with excess capacity as, until 18 months ago, we were creating capacity for growth,” says Pretorius. 

The only glimmer of success in the local auto industry during 2008 came from the heavy commercial vehicle sector, where sales were at 22 521 units, up 2.9 percent from 21 895 units, says Nico Vermeulen, Director of NAAMSA. 

“While we are all aware of the fall off in global economic strength, it is imperative that we do not fall into the trap of adopting the problems of other countries as our own. We are not facing the same problems and there is a lot of good news coming our way in 2009. 

“We are now seeing inflationary pressures abating as food and energy prices come down - and are set to come down even further. The largest ever cut in the price of fuel in early December, according to Econometrix, acted to free up R2.5- billion per month. That’s R27-billion per annum which is sure to provide some relief to the hard-pressed. In addition, the combined effect of the November and December fuel price decreases will reduce inflation by 1.5 percent.” 

Apart from keeping a positive attitude about our economic advancement in South Africa, Pretorius has some sound advice for business managers: “Businesses should strive to cut costs, eliminate waste, improve productivity, maintain strict discipline and watch cash flow closely. Businesses should invest in talent retention and put a special emphasis on all key relationships. 

“We must remain focused and invest our energy in key priorities. While we are unable to change the macro environment, we are able to make our businesses better. It's time for all of us to accept co-responsibility for creating a better future for South Africa.” 

For the world’s top CEO, new US president, Barack Obama, the road out of financial crisis is posted thus: “There are some who question the scale of our ambitions - who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage.” 

Trucking’s view
The sustainability of the South African road freight industry depends on a host of factors associated with macro-economic drivers. With consumer demand at a low currently, transporters servicing the retail sector are feeling the pinch. Fleets servicing the construction industry, on the other hand, are continuing to experience high demand on the back of government’s investment in infrastructural development. While the USA and the UK officially declare their economies ‘in recession’, South Africa’s trucking industry looks set to weather the storm. 

“We predict a truck market of around 30 000 units during 2009, which is still substantial. Whilst negative factors still exist, there are enough positive factors for us to be cautiously optimistic. The quicker business confidence is instilled the faster we can see a recovery,” says Johan Richards, chief operating officer of Nissan Diesel South Africa. “This should, furthermore, serve to ensure the continuing viability of established manufacturers, dealers and suppliers and allow them to maintain acceptable levels of sales, service and parts support to their customers,” he adds.

Johan Richards, Nissan Diesel’s Chief Operating Officer explains the concept of ‘lowest possible lifecycle cost’ achieved through solid service support from the dealer network.

With an extensive client-base of truck fleet operators both locally and abroad, fleet management system provider, MiX Telematics, is well positioned to comment on the current financial status quo and how it impacts on our road freight industry. 

“The reality is that truck transport will always be a necessity for many companies (to get goods to the endconsumer), notwithstanding the shortcomings of our rail network. The expected slower economic growth will probably be most notable in this area (distribution) of the industry. Consumer demand for certain goods (especially luxury items) will decrease. This will bring production down resulting in fewer goods needing to be delivered,” says Hernus Vermeulen, senior marketing manager, MiX Telematics. 

“Platinum, steel and oil production has been particularly hard hit by reduced demand, which has led to companies rationalising their operations and as reduced demand means less production, vehicle fleet numbers in these industries will be affected accordingly. However, South Africa has largely weathered the global credit crisis and the financing of new vehicles in the medium to heavy commercial vehicle category remains pretty much intact as these vehicles typically retain their value.” 

Insurance companies are also ‘at the coal face’ of the truck transport industry, witnessing first-hand the effects of the global financial slump as it ripples through the local trucking industry. 

“There are certainly some sectors in our economy suffering from the global financial meltdown, but in the local trucking industry, construction and tourism activities promise to keep certain applications afloat,” says Chris Barry, managing director, Heavy Commercial Vehicles Underwriters. “I believe the so-called ‘unbanked’ economy north of our borders holds much potential for growth in the local trucking industry. The need for food aid alone suggests a massive demand for long-haul trucks in months to come.” 

South Africans are no strangers to adversity - financial or otherwise - and truckers are a tougher breed than most. While the proverbial wolf may not be gnashing and slobbering right outside our door today, every effort to streamline business processes should be made to not only help us survive these tough times but to help build a solid enterprise, equipped to navigate all manner of obstacles in the prevailing economic environment.