The economic impact of the Saldanha Steel Project on firms in the Saldanha

Master Thesis


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University of Cape Town

This paper examines whether the Saldanha Steel Project has made a significant impact on firms in the Saldanha/Vredenburg/Langebaan area. The building of the steel plant is the anchor project of a government regional policy initiative called the West Coast Investment initiative. The paper's examination begins with a theoretical overview of regional industrial policy in general and Spatial Development Initiatives (SDI) in particular. It then contextualises the West Coast as a region earmarked as a SDI and describes the Iscor and Industrial Development Corporation's joint venture -- Saldanha Steel Project (SSP). A questionnaire survey sought to establish the impact that the Saldanha Steel Project was having on firm's activity and economic prospects in the West Coast Area. International experience as well as South Africa's previous experience points to key aspects of successful interventions in the space economy. Firstly, governments have to select areas and projects carefully. Projects chosen should reflect the market demand. Secondly, long term success will require that key or anchor projects not only succeed themselves, but that side-effects from anchor projects help promote the region's economic capacity, co-operation between economic players and the ability of the region to attract further investment. With this in mind, the process of constructing the steel plant and the SSP's procurement policy should seek to maximize the benefits to local firms. A questionnaire survey of local firms involved with the Saldanha Steel Project was the means by which information was collected. The responses of local firms dealt with business prospects in the area, experiences with the Saldanha Steel Project in the construction phase and the impact the project had on firms. The paper concludes that the Saldanha Steel Project did have some positive side effects for the local business community. Firms have adapted to become more competitive, learned how to deal with large industrial projects and the region has expanded the range of goods and services it is capable of delivering. The SSP's procurement policy supporting local firms had gone some way to improving local business' capacity. The paper identifies certain characteristics which make certain firms successful under the given circumstances, addresses problems local firms faced dealing with a large scale capital project and suggests measures to best help promote the prospects of local firms in future.

Bibliography: leaves 50-52.