With local tyre producers continuing to strive for sustainability, their production runs are being streamlined, thereby increasing the country’s dependence on imported tyres to meet market demand. The local four manufacturers alone import a fair amount of product to supplement their local production, especially for the truck tyre segment, but the last decade has also seen a rise in the number of independent companies importing and distributing foreign makes into the market. So much so, that the ratio of imported to locally-produced tyres in South Africa stands at around 53 percent for passenger tyres and 72 percent for truck tyres.
The exact number of tyre importers operating in the country is difficult to arrive at. Alongside the legitimate operators, are a growing number of fly-by-night entities, many of which do not abide to ethical trading practices, thereby posing a worrying threat to industry and the consumer.
This was one of the reasons that led to the establishment of the Tyre Importers Association of South Africa (TIASA), in 2012. 11 years on, TIASA members – comprising recognised international brands as well as other, lesser-known makes – number 17. We caught up with TIASA chairman, Charl de Villiers, to highlight some of the issues the Association is currently lobbying for behalf of its members, and what TIASA members can hope to gain by lending their support to the Association.
Charl, tell us more about the importance of an Association such as TIASA.
TIASA is the official representative body for legitimate importers of tyres in South Africa. Currently, we are engaging with the relevant government authorities on a number of pressing issues affecting the trading landscape, among them, the collection and disposal of waste tyres, illicit trade, tyre homologation, Customs and import duties.
This is the only way to ‘get heard’ as government will not entertain queries or concerns from individual businesses. Much of the work we do, is done in collaboration with organisations such as the SATMC, TEPA, thereby growing the power of the ‘collective voice’, to ensure that issues affecting our businesses and the industry as a whole, are taken seriously and are being addressed at government level. TIASA members represent a large chunk of the South African industry, particularly with the majority of truck tyres being imported, so government are showing support of our initiatives and our desire to ‘clean up’ the industry.
Are you on a drive to recruit more members?
On the contrary. We are very selective in our approach towards prospective new members. Our vision is to work alongside like-minded legitimate operators who run their businesses legally and professionally. Unscrupulous operators and those who wish to take short-cuts cannot hide under our umbrella.
What does it cost to become a member of TIASA?
Our annual membership fee is R18 000.00, however, we also raise a special levy for specific projects as and when required.
What are some of the issues you are lobbying for?
Waste tyre collection and disposal and the impact this is having on illicit trade remains top of the agenda.
The dealers are forking out for an expensive retail space and do not have massive warehousing facilities to house their scrap tyres. This is placing them under pressure from their landlords who are clamping down on them to dispose of their waste tyres as they pose a health and fire hazard to the premises.
The Waste Bureau is unable to provide a timeous collection, (currently, collection rates nationally stand at around 20%), and even if collections were to improve, landfill sites around the country are almost to full capacity.
Are dealers conforming to the requirement to cut their scraps, thereby rendering them unusable?
Unfortunately, very few are, although we continue to drive home the importance of doing this. Many of these unwanted scrap tyres are filtering into the secondhand market and are finding their way back on our roads at the hands of cash-strapped consumers who are possibly unaware of the danger they pose to safety.
Is government aware of the magnitude of the problem?
The Interim Advisory Committee of which we are a part, continues to voice its concerns to the relevant government authorities, but sadly, the waste tyre problem appears to be getting worse. Some scraps could potentially be exported to recycling operators overseas but they are not being granted the necessary permits. Similarly, there are recycling companies that are willing to invest in the domestic market, but recycling plants cost millions of dollars. At this time, the government cannot guarantee surety of supply, which prohibits us from creating the circular economy that is required. More worrying still, industry has raised its concerns regarding the possible re-involvement of Redisa, behind the scenes, in a legal letter sent to the Minister. We have also raised our concerns, in a joint meeting with NRCS, about the instruction that we use the government-endorsed tyre testing facility, built by Redisa, with what we believe were misappropriated funds. We continue to forge the way, as best we can, in the hopes that we will eventually arrive at a sustainable solution. This is imperative, not only for industry, but for the Waste Bureau, which claims that waste tyre collection has now become a five-year project that they do not have the skills to manage. Clearly, it is in everyone’s interests that we reach a viable solution.
How are you hoping to tackle the rise in illicit trade?
Although we will not be able to eradicate illicit trade completely, we are serious about reducing it. We are asking our members should they come across suspicious deals, to please give us the intel, which we will then pass on to SARS for further investigation.
Our view is that as businesses, you want to get to the point where you are unashamedly ethical in the way you trade, starting with factories and clearing agents. It stands to reason that freight forwarders must be privy to the misdeclarations that are taking place.
What’s more, if a dealer is buying product at 25% below the market price, he needs to ask himself whether he may be part of the problem. Don’t ignore the red flags. If a deal seems too good to be true, it usually is!
In contrast, we are hoping to encourage legitimate importers to become Authorised Economic Operators with SARS, which via a stringent auditing process, qualifies them for preferential treatment, discounts on guarantees and delays associated with red tape.
Illicit trade is on the rise, as we suspected it would be, following the imposition of the Provisional Import Duty. This needs to be addressed with a sense of urgency, or it will impact negatively on all our businesses, right across the chain.
We are awaiting ITACs final decision on the SAMTCs application to impose an anti-dumping duty on products coming in from China, on 31 July.
Up until 9 March, while the provisional anti-dumping duty of 38.33% was in effect, the consumer was the hardest-hit as importers were unable to absorb these additional costs, and were therefore compelled to pass them on to the end user
Why is the final decision on this taking so long?
This investigation ranks as the biggest investigation in ITACs 19-year history. ITAC has selected a random sample of Chinese tyre producers for investigation. As you can well imagine, this is a time-consuming task. This has been done and they have issued an Essential Facts letter to industry to which we had fourteen days to respond.
This Essential Facts letter was received on April 12. Due to the large number of responses, ITAC decided to sample only nine Chinese producers, with the investigation yielding a dumping margin ranging from 8.96 percent to as high as 57.93 percent.
Ten producers requested individual dumping margins, however, ITAC is considering making a final determination to NOT determine an individual dumping margin, meaning that these producers will likely receive the weighted average.
Noteworthy, a total of 28 producers were not selected for sampling and ITAC is considering making a final determination that these producers will receive a weighted average dumping margin which they calculated at 15.14 percent.
In addition, the residual margin of 57.93 percent has been calculated and will be awarded to all new producers and those that have not participated in the investigation. Sailun has been hit the hardest, with a weighted average margin of 52.69 percent for three of their facilities.
What are TIASAs thoughts on ITACs determination?
ITAC has not made their calculations available to the nine producers sampled which is a major concern for TIASA and the producers. Without the possibility to audit ITAC calculations, we have no way to confirm whether their calculations are, in fact, correct. ITAC has been known to make mistakes when it comes to determining dumping margins. All we can do is ask that ITAC provide the necessary calculations, to give industry peace of mind that all is above board.
Moreover, out of the 18 importers that participated in the process, only six were found to have addressed the deficiencies raised by ITAC, and yet ITAC is now considering to not apply the lesser duty rule for those importers that have addressed all the deficiencies raised by ITAC. Unfortunately, this proves that ITAC simply does as it likes, making it difficult to make any sense of the investigation, or find any comfort that ITAC is acting in the best interests of all parties concerned.
Will TIASA continue to fight this?
Only time will tell, it would be premature to make any prediction until we know the final outcome of the investigation.