It’s a tricky time to be a business leader in South Africa and no more so than in the building trade.

We’re faced with the daily uncertainties of a precarious economy, and a government that is not doing enough to help stabilise it and stimulate growth. This is further compounded by the prioritisation of durable goods demand and the high interest rates, coupled with low consumer and business confidence. Of late we also have to consider the exchange rate and the direct and indirect impact that that has on sourcing and manufacturing. On top of this dynamic, you add nationwide unpredictable and escalating loadshedding and you have a dramatic impact on an already fragile industry.

Being adaptable as South Africans are, the building and construction industry has factored many of these variables into their business models and despite relatively flat construction activity, the retail element continues.

However, this being said I do believe the true impact of loadshedding is only now starting to be felt and the consequence of this could create a compounding effect that will take us years to recover. It is a true game-changer in that it impacts every aspect of the value chain with knock-on effects that are impossible to ignore.

With regards to our suppliers and manufacturers. Under normal circumstances with the slowdown in consumer demand, you would expect downward pressure on the price of goods purely to balance the supply and demand equation. This pressure would continue until a new natural equilibrium point is reached. Under the current loadshedding phenomena, manufacturers are battling to produce product and are having to absorb consequential costs resulting in them needing higher than PPI price adjustments for their sustainable business needs. One only has to contemplate a continuous manufacturing process to understand the disruptive impact of loadshedding.

With regards to building material retailers one step down the value chain, we are obviously subject to all the factors above whether it be the exchange rate on direct imports or the loadshedding et al impact on local manufacturing and suppliers, this all filters through to our input costs.

Besides the input cost factor, the everyday cost of doing business is also impacted by the exorbitant cost of running generators and/or the capital cost of alternative energy solutions. For the generator option, it is the ongoing excessive costs of fuel consumption and maintenance and with the alternative energy options, the depreciation associated with the grudge investment. Either way the cost model of the business is impacted negatively to simply operate as per normal. The joke of the situation is that your Eskom energy bill does not decrease!

Further to this, any disruption to any system causes friction in the form of unnecessary expenditure, including overtime payments and travel costs for employees, creating a domino effect throughout the organisation.

The third element is our customers. In many aspects building materials are sold to be consumed by the purchaser. Stated differently, there is a whole industry reliant on the retail supply of building materials which they use in the pursuit of their business objectives. Loadshedding has a dramatic impact on their ability to work onsite and to that end their need to purchase product which filters it’s way right back through the value chain to the manufacturers and the consequential impact referred to above. There are countless examples of small businesses in distress as a result of this phenomena and only those with sufficient reserves have the ability to sustain themselves until the situation improves. Either way, the impact on the business ultimately results in an impact on its employees, their families and eventually the economy.

Besides the factors mentioned above, there is an over-arching reprioritisation of durable goods expenditure, as money is reallocated to energy efficient solutions, away from the traditional construction product type materials and projects.

Considering these challenges, it is evident that loadshedding in its broad context has disrupted the entire value chain of our industry. The implications extend beyond conventional economic models, requiring us to adopt a new mindset and embrace agility to navigate this uncharted territory.

In such extraordinary circumstances being agile is essential. Having the ability to flex your business model, conserving reserves and exerting effort for the greatest opportunity of benefit. It kind of reminds me of a story about two men on foot encountering a lion in the Kruger National Park. Faced with imminent danger one person quickly puts on his running shoes not because he expects to outrun the lion but because he believes he can outrun his companion.

Similarly, South African businesses are faced with the immense task of getting ahead of their competitors under increasingly difficult circumstances and their collective agility is the key to overcoming these challenges. We may not have control over external factors like the economy or loadshedding itself, but we can control how we respond. It is crucial to optimise our operations and seize the opportunities that arise amidst the turmoil. We must adapt our strategies, explore alternative solutions, and invest in technologies that mitigate the impact of loadshedding on our business and capitalise on the opportunities to grow.