On the rebound

Is the industrial sector managing to regain its balance after weeks of disruption, asks Mona El-Fiqi

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Most industrial firms, regardless of the sector, were negatively affected during the past few weeks during and after the events of the 25 January Revolution, yet a spirit of optimism has spread among industrialists who asserted that Egypt's industry can soon return to its full capacity.

Difficulties in transporting raw materials from ports or manufactured products to distribution centres, movement of workers to and from factories, lower market demand for non-food products, funding problems, lack of security measures in industrial firms, and workers' strikes are the main problems facing the local industry sector, especially those based in Greater Cairo, Alexandria, the Suez Canal cities and 10 Ramadan city and 6 October governorate.

Mohamed Qassem, chairman of World Trading Company, which manufactures and exports ready-made garments, said the main problem is that due to the events, many factories were obliged to stop operating for more than a week, which led to a loss of the production during this period.

Moreover, Qassem said that closure of banks during and after the events caused problems for those who import raw materials needed for industry. According to Qassem, one more negative impact was that following the unrest, Egypt's rating for banking credit was reduced worldwide. However, he believes that the local industry will be able to overcome the situation, adding that he was happy to find out that Egypt's foreign partners who import from or export to the country expressed their support for their Egyptian counterparts.

Safwan Thabet, chairman of Al-Masreya Dairy and Juice Company (Juhayna), is also optimistic and agreed with Qassem that the Egyptian industry will soon be able to return to its normal capacity. The food industry sector is now working at 70 to 80 per cent of its total capacity, according to Thabet. It would be easy to overcome these problems particularly since the food industry sector continued operating even during the crisis, and succeeded to provide local market needs during difficult times.

"It is a real achievement that consumers did not complain of any shortages of food products in such circumstances, in addition to the fact that prices remain at their average level," Thabet said.

However, Thabet admitted that the local industry is still facing some challenges, chief among which are the workers' strikes which are adversely affecting the manufacturing process. According to Safwan, some of workers' demands are valid and need to be considered.

The situation is different according to the nature of each industry. Mohamed Hanafi, general manager of the Metallurgical Industries Chamber at the Federation of Egyptian Industries, said the problems facing his sector are more complicated since 80 per cent of heavy metals are mainly produced for the government's infrastructure projects, which are currently at a standstill.

The second problem is that factory owners are committed to pay workers their salaries although factories are closed for three weeks, "but if the market remains in recession, factory owners would not be able to pay workers," Hanafi added.

One more problem mentioned by Hanafi is that due to the recent disruption, banks started to apply strict measures when issuing letters of credit, which represent a real obstacle in for them. The result, according to Hanafi, is that metallurgical industries are currently operating at 50 per cent of their total capacity.

Hanafi suggested that the government needs to accelerate the launching of its infrastructure projects to revive the local market. Hanafi added that the government has the right to apply measures to ban import of goods which have local equivalents as a temporary procedure to help local industries overcome the crisis, while factories should be committed to keeping the prices of local products down.

An important issue facing local industries in almost every sector such as banks, factories, mines and government offices, is workers' strikes. These strikes are drawing to an end following the Armed Forces' announcement that strikes threatened national security and that it "would not allow them to continue".

The announcement seemed to be taking effect as the working week which started Sunday saw banks back in business and life seemed to be returning to normal.

To discuss the situation of Egypt's industry during the crisis and the measures needed to ensure that the industrial sector will continue to operate at the highest possible capacity, the Federation of Egyptian Industries (FEI) representing 70,000 industrial facilities held a meeting recently. FEI chairman Galal El-Zorba announced that industrialists are committed to all their local and foreign contracts and pledged that Egyptian factories will return to full production capacity as soon as possible.

El-Zorba submitted a number of proposals to the current government to help the industry regain its normal production rates. The proposals include speeding up government payment of factory dues and postponing the collection of government dues for the industrial sector, to continue operating during the crisis.

The recommendations also included tightening controls on customs outlets to prevent the entry of any smuggled products, or imported products which are not in accordance with the set specifications which would unfairly compete with local production.

The report called upon the government to give preferential treatment to local industries at this critical stage. It called upon the Customs Authority and the banks to work at full capacity to facilitate the flow and funding of goods and raw materials for the industrial sector.

Egyptian industrialists also appealed to the government and the media to maintain confidence in their industries and to send strong messages to the society explaining that the industrial sector is one of the largest job creating sectors.

The FEI report called on "everyone not to tarnish the reputation of the honourable industries of Egypt so that the local and foreign confidence in this sector may not be shaken."

Moreover, FEI announced it had established a call centre to receive any industry complaints.