The Federation of Metal, Mechanical, and Electromechanical Industry blames trade protection measures in favor of Maghreb steel for the drop in industry investment.
Rabat – The Moroccan Metal, Mechanical, and Electromechanical Industry has suffered a 57% drop in industry investment since 2010. According to the Federation of Metal, Mechanical, and Electromechanical Industry, trade protection measures in favor of Maghreb Steel are the issue.
Investment in the metal sector has dropped 57% since 2010, from MAD 3.5 billion to MAD 1.5 billion in 2016, reported the Moroccan Federation of Metal, Mechanical and Electromechanical Industry (FIMME) at a conference in Casablanca last week.
According to Chafiq Essakalli, the director of Moroccan metal company Chantiers & Ateliers du Maroc, the problem comes from the trade protection measures in favor of Maghreb Steel, Morocco’s only flat steel supplier, which negatively impact local industry competitiveness. His views echo a previous FIMME statement.
Maghreb Steel produces sheet metal in Tit Mellil east of Casablanca and has benefited from trade protection measures for five years.
For Essakali, the state protection measures in favor of Maghreb Steel increase raw material costs. Faced with more expensive local products, public infrastructure project developers like the Moroccan Agency for Sustainable Energy (MASEN), the national electricity body ONEE, and the National Port Agence (ANP) prefer to turn to cheaper overseas suppliers.
“Preference towards national industry presupposes competitiveness. It makes no sense to ask someone to buy something at a more expensive price, when they can buy it elsewhere for cheaper,” Essakalli notes.
“Our product needs to be competitive before we can require public infrastructure developers to choose local industry. But we can’t be competitive if, because of the Maghreb Steel trade protection measures, we are required to buy raw materials at a higher price than the international market price,” he explained at the conference, reports Moroccan news source Media24.
On 24 May, the Ministry of Industry launched an inquiry into a request by Maghreb Steel for further trade protection measures. On July 4, the FIMME officially opposed the decision. In a letter to the Minister, the FIMME reminded that the measures impact the competitiveness of the industry, risking “serious consequences.”
At the conference last week, a Moroccan tube producer explained the impacts of the measures: “I buy steel for MAD 15 from Maghreb Steel, but the tube that is my finished product comes from Turkey for MAD 9. If it goes on like this I will have to close down.”
For Hatim Senhaji, the director of Maghreb Steel, removing trade protection would kill Maghreb Steel. The solution is to impose trade protection measures on finished products, as well as the sheet steel.
A move which FIMME sees as unrealistic. “It is impossible to protect the finished product market, for the simple reason that the range of products is infinite. […] The only solution is to be competitive,” explains Tarik Aitri, the president of FIMME.
“We have to try before we say it is impossible,” says Senhaji.