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Turning: The Completion Of The CLX Range – Now Also With Fanuc

The CLX 550 universal turning centre from DMG MORI impresses with its high level of stability, sturdy construction, a powerful 630-Nm spindle and a multitude of customer-orientated hardware and software options.

In addition to Siemens the FANUC I series is now also available as a new and additional 3D control alternative. The CLX series represents the segment of high-performance universal machines with a diverse choice of options within the product range of universal turning centres from DMG MORI. The CLX series is a modular solution offer for many different branches – including the automotive industry or general machinery and plant engineering. The new CLX 550 now joins the CLX 350 and CLX 450 to expand the spectrum of successful universal turning centres. With a 480mm turning diameter and 1,225mm turning length it offers users a larger work area on a compact footprint (7.4 m²). The sturdy cast-iron bed with its innovate design ensures the necessary rigidity, optimum vibration behaviour and improved chip fall. Powerful DMG MORI spindles and a VDI40 turret with twelve stations guarantee a high level of productivity. An extensive portfolio of technology solutions, DMG MORI software solutions and applications round off the offer of the high-performance CLX 550.

Its sturdy machine bed, large ball screws and the equally sturdy spindle bearing make the CLX 550 a flexible all-rounder through to heavy-duty machining with a torque of up to 630 Nm in the DMG MORI portfolio of universal turning centres. There is also a 280 Nm counter-spindle available that enables the 6-sided complete machining of complex workpieces. This new and now largest model in the CLX series enables bar machining with diameters of up to 80 mm (ø 102mm as an option) with a high degree of accuracy (circular precision: < 3 μm). In its standard version the CLX 550 comes equipped with a VDI40 turret with twelve tool stations and six block tool holders.

Diverse options enable application-oriented equipping and upgrading of the CLX 550. In addition to the larger bar capacity and lower spindle there are also VDI30 or VDI50 turrets available as well as a tailstock and a steady rest. Both can be ordered alternatively as CNC controlled units. This means the manufacture of crankshafts is also possible on the CLX 550. DMG MORI underscores the high demand on machining quality with versatile equipment options such as direct path measuring systems and integrated workpiece measurement. Altogether the customer has a choice of over 100 hardware and software options which enable individual CLX machine configurations.

Completely new is the 3D control strategy for the CLX: In its standard version the 19″ DMG MORI SLIMline multi-touch control panel with SIEMENS 840D solutionline and Operate 4.7 ensures a high level of user comfort and reliable machining processes. In addition to this the FANUC I-series CNC is now also available as an option for all CLX machines. All machines with FANUC are built in the traditional plant GRAZIANO in Tortona, Italy.

Dr. Michael Budt, CSO for the DMG MORI plants in Poland and Russia, explains, “the decision to produce the CLX machines in Italy as well as in our plant in Poland means we can meet the enormous demand and also come a step closer to achieving our goal of selling up to 3,000 CLX / CMX machines worldwide in future.”

DMG MORI Technology Cycles, such as Easy Tool Monitoring, are also available in addition to the diversity of 3D control. These cycles boost machining efficiency and so of course customer benefit as well. Easy Tool Monitoring, for example, prevents damage by controlled stopping of spindles and axes in the case of broken or overloaded tools.

For more information contact Retecon – Tel: (011) 976 8600

 

Turning: Universal Turning In The High-Performance Class

With its robust and rigid construction, the CTX 2500|700 offers the perfect basis for powerful heavy-duty machining combined with high surface qualities.

The machine design was developed using FEM analysis. Robust guides in all axes ensure dynamic rigidity – the rapid traverses achieve up to 30 m/min – as well high vibration damping. Large-scale ball screw spindles as well as 4-fold bearing of the spindle motors result in up to 50 percent higher overall rigidity compared with its predecessor.

DMG MORI combines the rigidity of the CTX 2500|700 with high thermostability. A spiralshaped oil jacket fitted around the spindle unit controls the temperature increase. Also in the circulating coolant of the cast components, which minimizes displacements and is just 2.0 μm. The incremental length measuring system from MAGNESCALE, with a standard resolution of 0.01 μm, underscores this mark of quality.

When it comes to performance, the CTX 2500|700 excels with its turnMASTER main spindles. A 10″ model with 4,000 rpm, 26 kW and 525 Nm and optionally a 12″ model with 3,500 rpm, 30 kW and 1194 Nm are available. The counter spindle is 6″ as the standard model and achieves 7,000 rpm, up to 11 kW as well as 70 Nm. An 8″ spindle with 5,000 rpm, 32 kW and 360 Nm is offered as an option here.

The precision disk turret with active disk cooling and VDI-40 interface is the standard of the MC models and Y models with an additional Y-axis. The rotational speed is 6,000 rpm. The torque achieves a maximum of 32 Nm. The SY expansion stage with counter spindle is equipped with the 6,000 rpm star turret torqueDRIVE with up to 85 Nm torque as standard. The BTM interface is available as an option. The speedDRIVE turret with 12,000 rpm and 56 Nm is also available. All turrets offer space for either 12 or 16 tools in the optional VDI 30 design (not for torqueDRIVE).

With ø 366mm turning diameter and 705mm turning length in the case of the CTX 2500|700k, the new turning centre offers enough space for a broad range of tools. The chuck size for the standard model is 250mm with a bar capacity of 76mm. The travel paths in the X-, Y- and Z-axis are 260 x 100 x 795mm.

The ergonomic design of the CTX 2500|700 makes the work area easily accessible, which also enables crane loading of heavy components from the top. A pocket for long tools is built into the wall of the spindle gear box to prevent collisions. The oil cooler and hydraulic unit are mounted at the rear and easily accessible.

The user friendliness of the operating system offered by the turning centre is continued in the control system. A ERGOline Control with 21.5″ multi-touch screen and CELOS with SIEMENS inclusive ShopTurn 3G are put to work here. CELOS enables integral administration, documentation and job planning in work preparation and workshop on the one hand and on the other, CELOS APPs, such as the condition analyzer or performance monitor, offer our customers a detailed insight into the machining processes and the status of the machines as the basis of a continuous improvement process. Moreover, CELOS functions to an ever-greater extent as an IoT interface and creates the basis for cross-company interaction in the production networks of the future.

A topic for the future is automation. DMG MORI offers a flexible connection to various automation solutions for the CTX 2500. In addition to integrated tool unloading, a bar loader connection and the option of using the Robo2Go, DMG MORI has now taken over the GC gantry loaders from the NLX series.

 

For more information contact Retecon – Tel: (011) 976 8600

 

Turning: FS And MK RhinoRush Chip Breakers

The RhinoRush MK chip breaker is ideal for medium applications while machining stainless steel and heat resistant materials.

The MK chip breaker is a more stable insert that offers long tool life because of its sharp edge design that minimizes built-up-edges during machining operations.

Case studies prove the effectiveness of the MK chip breaker with tool life being increased by over 300 percent.

For example, during the product testing phase of a workpiece made from SUS 304, the MK chip breaker coated with TaeguTec’s TT9080 grade witnessed an increase of tool life by 343 percent during continuous cutting conditions with speeds of 160 meters per minute and same cutting conditions.

During another continuous cutting test, on difficult-to-cut Inconel 718, tool life was increased by 159 percent with all cutting parameters the same.

The RhinoRush FS chip breaker is specifically designed for excellent chip control on steel finish turning with superior evacuation under low feed and low depth of cut applications, while the insert’s sharp cutting edge drastically reduces machining load resulting in minimal vibration during operations.

For more information contact TaeguTec – Tel: (011) 362 1500

 

Turning: New Tool Holders Offer Firm Grip On Progress

PrimeTurning™ now accessible on multi-task machines and VTLs

Cutting tool and tooling system specialist Sandvik Coromant has unveiled a new range of CoroTurn® rime multi-task and axial type tool holders to help machine shops implement the new PrimeTurning™ methodology, which enables turning in all directions. The introductions allow users to maximize the benefits of PrimeTurning on multi-task turn-mill centres and vertical turning lathes (VTLs). Complementing the company’s existing radial tool holders, Sandvik Coromant now has a complete offer for PrimeTurning operations.

One of the highlights of the range is the CoroTurn Prime Twin tool holder for multitask machines. Both CoroTurn Prime A- and B-type inserts can be mounted together on Twin tool holders, allowing manufacturers to undertake roughing with a B-type insert before switching to finishing with an A-type insert, for example.

“Modern multi-task machines are intended for the complete machining of components but typically have a slow tool changing time, often around 15-20 seconds,” says Håkan Ericksson, Product Manager General Turning at Sandvik Coromant. ”As a result, the new Twin holder will save customers a considerable amount of time when changing tools.”

As a further advantage, B-axis machining on multi-task machines permits the operator to program the angle of the tool in precise increments. When the machine cuts using its B-axis, a lot of accessibility is created using neutral holders. In combination with streamlined operations, this delivers the potential for huge time saving and productivity increases to help manufacturers reduce tooling inventories and achieve competitive gains.

Six new multi-task tool holders are being introduced, which are mounted at a 45° angle for B-axis machining and can be used with either CoroTurn Prime A-type or B-type inserts. Options for multi-task machines include four tool holders (one-insert only) and two Twin tool holders (two inserts). The CoroTurn Prime Twin tool holder is available for use with Coromant Capto® C5 – C8 size.

A range of axial tool holders for vertical turning lathes is also part of the range, which means that Sandvik Coromant now has a complete offer for PrimeTurning: axial, radial and multi-task tool holders. In total, eight dedicated tool holders for axial mounting are being launched. This type of tool holder is compatible with most types of vertical lathes, and is available in Coromant Capto for use with either CoroTurn Prime A-type or B-type inserts.

Although PrimeTurning is applicable to the entire general turning area, machine shops with large batch sizes (automotive) are set to benefit most, as will those machining large components (aerospace), where there is a need to reduce tool changes, set-up time and production stops.

Ultimately, the all-directional PrimeTurning method and CoroTurn Prime tools will ensure that manufacturers can complete their turning operations in a much more efficient way. Compared with conventional turning, a 50-80% increase in productivity, along with 1.5–2 times more tool life, can be achieved.

For more information contact Sandvik Coromant – Tel: (011) 570 9615

 

Turning: Iscar Whisper

Throughout the world, machinists have to deal with the presence of problematic vibrations on a daily basis.

To help solve these difficulties, ISCAR’s Research and Development department has developed a wide range of anti-vibration tools that are able to reduce or even eliminate this challenging phenomenon, across a wide range of machining disciplines. Today, ISCAR’s acknowledged expertise in the design and development of anti-vibration tools has been applied to the boring bar.

One of the most common turning applications is the boring of components, a function also known as internal turning. The most widespread tools used for this type of machining operation are boring bars. Boring bars’ shapes enable them to operate through previously drilled holes and to efficiently enlarge and accurately profile holes according to their specific requirements. The correct application of a boring bar enables a bore’s internal profile to be machined according to specification, an accurate hole diameter to be achieved and the required surface finish quality to be realized.

In order to cover the complete range of applications for internal turning, ISCAR has developed a comprehensive series of high-quality internal boring bars for different insert geometries, covering all machining applications from 4xBD to 10xBD.

ISCAR offers three types of boring bars: solid steel, solid carbide and anti-vibration.

The maximum overhang for solid steel boring bars is up to 4xBD. This limitation is due to the fact that machining with a longer length of steel shank (more than 4xBD) can induce unwelcome vibrations due to the elasticity and characteristics of the steel.

In order to limit the vibration on a higher overhang of more than 4xBD and up to 6xBD, the use of solid carbide boring bars is recommended. Solid carbide boring bars represent an excellent, highly efficient option for boring applications of up to six times the tool’s machining depth. This capability is attributable to solid carbide possessing a coefficient of elasticity that is three times higher than that of steel.

However, when the machining of high overhangs of more than 6xBD is required, even the use of a solid carbide shank can cause vibrations. Therefore, in these cases the use of solid carbide can be somewhat limited.

Deep Turning

Deep turning solutions for machining high depth to diameter internal applications include special anti-vibration boring bar systems with a live vibration dampening system located inside the tool body.

A product of ISCAR’s prolific R&D department, innovative WHISPERLINE anti-vibration boring bars have been designed to significantly reduce and even totally eliminate vibrations when working with a high overhang from 7xBD to 10xBD.

Situated inside these ingenious tools is a unique damping mechanism that consists of a heavy mass that is supported by a rubber spring element containing oil to increase the required dampening effect.

In addition, the system contains other elements which help to further reduce vibrations. The reactive damping mechanism comes into action during machining with high overhang work depths and acts as an effective counter to vibrations.

The highly effective, anti-vibration damper effect is applicable for large D.O.C and high feed rates, and ensures continuous, efficient machining. ISCAR’s inspired WHISPERLINE anti-vibration tools considerably improve machining stability and enhance insert life. These factors enable meaningful increases in productivity to be achieved, improvements in surface quality on high overhangs to be attained, scrap levels to be reduced and users’ profitability to be enhanced.

WHISPERLINE anti-vibration tools enable the delivery of internal coolant to be supplied directly to where it is required – the insert’s cutting edge. The efficient distribution of coolant increases the insert’s tool life by reducing temperature and also improves chip control and chip evacuation.

The WHISPERLINE anti-vibration turning tool line enables the fitting of a wide range of cutting heads with a range of different insert geometries, including all ISCAR standard ISO turning inserts for different applications; thus offering great flexibility.

The WHISPERLINE boring bars represent a cost-effective, modular system with a wide range of standard shanks with diameters of 16, 20, 25, 32, 40, 50 and 60mm. The flexible boring bars are able to carry eight different interchangeable boring heads: CCMT, VCMT, TCMT, DCMT, TNMG, CNMG, WNMG, TNMG, DNMG, SNMG and VNMG.

Insert Geometry

Correct insert geometry is a very important factor when using anti-vibration boring bars. The most recommended insert geometry for successful anti-vibration use, is a positive geometry insert with a positive rake angle, as this shape exerts a lower tangential cutting force when machining.

Choosing the appropriate nose radius of the insert is also a vitally important consideration. A lower nose radius is recommended as this configuration significantly reduces the cutting forces, due to the lower contact between the insert and workpiece, which helps to limit and reduce vibration. A greater nose radius creates much larger radial and tangential cutting forces that can produce unwelcome vibrations.

Inserts with the benefit of appropriate chip breakers are recommended for improved chip evacuation, as the production of long and curled chips can cause a range of problems when working with long overhang tools. In addition to increasing vibration during machining, long and curled chips are liable to spoil or damage the surface quality of the workpiece. Highly recommended ISCAR chip breakers for anti-vibration tools are the F3P/F3M for finish machining applications using a small D.O.C.; and the M3P/M3M, for medium applications. These highly-efficient chip breakers ensure excellent chip control and the creation of small chips which can be evacuated more easily with the help of the coolant supply.

An additional, very important factor in reducing vibrations is ensuring the clamping stability of the anti-vibration boring bar. Secure clamping helps users to achieve the correct workpiece dimension, which results in excellent workpiece surface quantity and assists in avoiding vibrations; clamping length should be 4XBD.

ISCAR’s new, anti-vibration boring bars join the ever-growing ISCAR WHISPERLINE family of ingenious tools that are designed for antivibration turning and grooving applications. The all-embracing anti-vibration turning tools can be referred to as tuned or damped tools, which provide effective solutions for the reduction and elimination of vibrations.

For more information contact Iscar South Africa – Tel: (011) 997 2700

 

Tracking Debris In The Earth’s Orbit With Centimeter Precision Using Efficient Laser Technology

Space debris is a massive problem in low Earth orbit space flight.

Decommissioned or damaged satellites, fragments of space stations and other remnants of space missions pose a potential threat of collisions with active satellites and spacecraft every day. In addition to their destructive force, collisions also create additional risk creating thousands of new pieces of debris, which in turn could collide with other objects – a dangerous snowball effect.

Today, the global economy depends to a substantial degree on satellites and their functions – these applications are, for example, used in telecommunications, the transmission of TV signals, navigation, weather forecasting and climate research. The damage or destruction of such satellites through a collision with orbiting satellites or remains of rockets can cause immense and lasting damage. Therefore, the hazardous space debris needs to be reliably tracked and recorded before any salvaging or other counter-measures can be considered. Experts from Fraunhofer IOF in Jena have developed a laser system that is perfectly suited for this task.

Reliable recording of the position and movement of objects in the Earth’s orbit

“With our robust and efficient system we can reliably and accurately determine the objects’ exact position and direction of movement in orbit,” explains Dr. Thomas Schreiber from the fiber lasers group at Fraunhofer IOF. “Laser systems like ours must be exceptionally powerful in order to withstand the extreme conditions in space. In particular, the high physical strain on the carrier rocket during the launch, where the technology is subjected to very strong vibrations. “In the low earth orbit, the high level of exposure to radiation, the extreme temperature fluctuations and the low energy supply are just as great obstacles to overcome. This necessitated the new development by the Jena research team since common laser technologies are not able to cope with these challenges.

Moreover, it is also necessary to analyze space debris over comparatively long distances. For this purpose, the laser pulse is propagating through a glass fiber-based amplifier and sent on its kilometers long journey.

Measurements with ten thousands laser pulses per second

“Very short laser pulses, which last only a few billionths of a second, are shot at different positions in space to determine the speed, direction of motion and the rotational motion of the objects,” explains Dr. Oliver de Vries. “With our laser system it is possible to shoot up thousands of pulses per second. If an object is actually at one of the positions examined, part of the radiation is reflected back to a special scanner, which is directly integrated into the system. Even though the laser beam is very fast, it takes some time for the emitted light to get to the object and back again. This so-called time of flight can then be converted into a distance and a real 3D coordinate accordingly.” The system’s sophisticated sensors, which collect the reflected light reflexes, can detect even billionths of the reflected light.

The principle – originally developed by the two researchers of Fraunhofer IOF for Jena- Optronik and the German Aerospace Centre (Deutsches Zentrum für Luft- und Raumfahrt, DLR) – has already been successfully tested during a space transporter’s docking maneuver at the International Space Station ISS. Previously, the laser system had been installed in a sensor of the Thuringian aerospace company Jena-Optronik and was launched in 2016 with the autonomous supply transporter ATV-5. Jena Optronik’s system also excels in energy efficiency: the fiber laser operates at a total power of less than 10 watts – that is significantly less than a commercial laptop, for instance.

Beyond 5G – After The Next Generation

Rx/Tx Modul, 4-Kanal, Terapan, THz-Kommunikation, 300 GHz

Today it is already becoming apparent that the data rates offered by the coming 5G mobile communications standard will not sate private users’ and industry’s hunger for data for very long.

That is why Fraunhofer experts are already working on 6G together with partners from industry and research as part of the EU-sponsored TERRANOVA project. Up to the end of 2019, the TERRANOVA team will be working on embedding terahertz wireless solutions into fast fiber optic networks, developing new frequency bands and thereby laying the foundation for a resilient communications infrastructure that is equipped to cope with the demands of the future.

When today’s leading 4G standard was introduced back in 2010, it was the first time that you could achieve the sort of data transfer rates on a mobile device that you could on a home network. This is what facilitated many of the applications that mobile users today take for granted, including video calling, on-demand video streaming and connected machines and vehicles. Even so, the hunger for data just keeps on growing, with the result that even the comparatively fast LTE data rates of up to a gigabit a second are increasingly proving the limiting factor in new applications. There is a clamor for faster connections, not just from mobile users but also from industry, where the growing number of connected devices and machines generate ever larger streams of data, which must be relayed as fast and smoothly as possible. The next telecommunications standard, 5G, is already on its way; this new mobile communications standard promises to deliver a huge boost in performance for wireless communications – up to ten gigabits a second. Already, however, developers are realizing that the current frequency bands will not be enough to serve the growing demand for stable wireless communication. For this reason, researchers from the Fraunhofer Institute for Applied Solid State Physics IAF have teamed up with researchers from the Fraunhofer Institute for Telecommunications, Heinrich Hertz Institute, HHI and further partners from industry and research to start work on the communications standard that is set to follow in the EU-sponsored TERRANOVA project. The goal is to create a network connection in the terahertz frequency range that is sufficiently stable to allow for wireless data transmission at speeds of up to 400 gigabits a second.

From fiber optics to wireless

One way of providing such fast data rates is to expand the fiber optic network. However, not only is this expensive, it also fails to address the challenge of how to achieve such high data rates on mobile devices. The researchers’ solution is to combine fiber optic technology with wireless transmission. Admittedly, the frequencies currently employed by wireless technology are too low to achieve the kind of bandwidth necessary to relay data at fiber optic speed. “As a rule of thumb, the lower the frequency, the less the available bandwidth. To achieve the same data rates provided by fiber optics wirelessly, we need to be transmitting on frequencies in the terahertz range. While these have a more restricted range than megahertz frequencies, they have a significantly greater bandwidth. 4G operates on frequencies of between 800 and 2600 megahertz, which give a bandwidth of up to a gigabit a second. With terahertz frequencies, on the other hand, there is enough bandwidth to achieve data rates of up to 400 gigabits a second,” explains project lead Dr. Thomas Merkle of Fraunhofer IAF. “As a result, we are working on a transfer from optic to wireless data transmission. In other words, we want to fully exploit the potential of fiber optics without restricting it to cable connections, but rather transferring it to wireless transmissions.”

From Wi-Fi to mobile

Bandwidth is one of the central challenges. This is primarily because there are more and more devices and users making use of communications technology – from the mobile phone to the car, the smart home to Industrie 4.0. “It’s not just about the speed of the data connection though. Another challenge we are addressing in this project is seamless transition between different access technologies. Today, mobile users switch back and forth between Wi-Fi and a mobile connection depending on the network coverage, and with laptops you also have the option to connect to the internet via a wired connection. What we don’t have at the moment is a seamless transition between the various connection types so that you can switch modes without any disruption,” says Dr. Colja Schubert, Head of Submarine and Core Systems Group at Fraunhofer HHI. “In the TERRANOVA project we want to give users an experience where they don’t even notice they are switching between access technologies.”

Alternatives to conventional fiber optic networks

There are many challenges to overcome on the way to the 6G standard, both in terms of the individual components and the way in which all the network components interact. To address these challenges, the two Fraunhofer Institutes are working on core tasks. Fraunhofer IAF is focusing primarily on the wireless transmission and the integration of wireless modules at chip level. One of the challenges is how to integrate a baseband interface with the fiber optic network and transmit the signals to the chip. Fraunhofer HHI, meanwhile, is working on signal processing so that signals can be transmitted from the antenna with as little disruption as possible.

This signal processing must take place extremely rapidly, calling for the development of special algorithms that can make signal processing as efficient and energy saving as possible. Researchers at Fraunhofer IAF and Fraunhofer HHI are working in close collaboration to develop and test the hardware elements of the pioneering network structure. Here, the strengths of the two institutes come together and complement each other. Fraunhofer HHI contributes its expertise in network concepts and its extensive experience from numerous 5G projects and fiber optics, while Fraunhofer IAF brings its experience in high-frequency wireless technology and millimeter wave technology in the analog realm. Since these areas often work in isolation of one another, the collaboration of the two institutes harbors a great deal of potential for the development of high-speed internet in the long term.

SEIFSA Welcomes PPI Improvement

The increase in producer prices in September 2017 provides some muchneeded comfort for producers, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said recently.

Commenting on the latest data on Producer Price Index (PPI) for intermediate manufactured goods released by Statistics South Africa, SEIFSA Economist Marique Kruger said the industry can be encouraged by the latest data, which show the PPI for intermediate goods remaining in an expansionary terrain for three consecutive months.

“This indicates a continued improvement in factory gate prices and operating business conditions in the metals and engineering (M&E) sector. The data provide some relief for producers in the sector, who are beginning to derive the benefit of a modest recovery in domestic demand and declining costs,” Kruger said.

This was consistent with SEIFSA’s input cost index which decreased to 0.9 percent in September 2017 said Kruger, when compared to 1.7 percent recorded in August. She said the improvement in the latest PPI data was generally in line with an increase in the broader PPI for final manufactured goods, which recorded an annual change of 5.2% in September 2017, compared with 4.2% in August 2017.

The Statistics South Africa data showed that the PPI for intermediate manufactured goods rose to 2.1 percent in September 2017, up from 2 percent in August.

Kruger said that this was encouraging when viewed “against the backdrop of Finance Minister Malusi Gigaba’s bleak news in his Medium-Term Budget Policy Statement (MTBPS), which highlighted a tight economic environment characterized by poor tax efforts and tax morale, expanding government expenditure, ballooning deficits and high debt levels”.

However, Kruger cautioned that although the PPI for intermediate goods in the M&E sector provides a glimmer of hope, economic activity within the sector and broader manufacturing will remain constrained by depressed business and consumer confidence levels that have been linked to perceived policy, uncertainty and political turmoil. She said these will definitely keep producer prices volatile in the near term, thus making it very difficult for businesses to plan in advance and contain costs.

Kruger expressed grave concern about the latest economic and political developments, which have the potential to quickly reverse the positive growth trajectory recorded in the second quarter of 2017.

“In an atmosphere of generally low business and consumer confidence, low domestic demand, structural challenges and political uncertainty, the Finance Minister’s bleak news raised more questions than providing answers,” she said.

Kruger also raised disquiet about the oscillating rand’s effect on the economy, saying that a depreciating rand would be less beneficial for inflation, imported input costs and margins of companies in the M&E sector.

“The M&E sector is relatively small and open, hence volatility in price trends and the variables that impact the price trends does not augur well for it. A positive differential in the selling price inflation and input cost inflation needs to be maintained in order for the sector to stay attractive for existing and new investments,” Kruger argued.

IMF Mission Concludes Visit To South Africa

Coronel pointed out that despite South Africa’s institutional strength and favourable global conditions, increasing domestic political uncertainty and stalled reforms point to a challenging economic outlook.

Some sectors, including agriculture and mining, are certainly generating growth, but other key activities have stagnated or declined, as investment decisions are being postponed or abandoned.

Coronel stated “IMF staff anticipates that the subdued economic growth of 0.7 percent, projected by the authorities for 2017, is not likely to improve much in 2018. Growth would recover only gradually in the medium term, unless the pace of implementation of structural reforms accelerates quickly enough to prompt a clear recovery in business and consumer confidence. Against current structural constraints, the envisaged growth upturn would be insufficient to reverse the on-going decline in per-capita income and generate enough jobs to absorb the growing labour force. Downside risks to the outlook relate to worsening perceptions of weak governance, tightening global financial conditions and slowing trading partner growth.

“South Africa’s slow growth and inefficiencies in public enterprises have taken a toll on public finances by generating a substantial revenue shortfall and prompting unplanned expenditure, as described in the 2017 Medium Term Budget Policy Statement. Against this background, IMF staff welcomes the National Treasury’s candid acknowledgement of the challenges and its call to the Presidential Fiscal Committee to implement reforms to unlock the economy’s potential.

“Specifically, IMF staff urges the Presidential Fiscal Committee to approve, in a timely fashion, fiscal measures to avoid undue increases in the debt-to-GDP ratio, including by strengthening tax revenue compliance and cutting unproductive outlays. The economy will also benefit from expeditious action from the Presidential Fiscal Committee to signal the political will to tackle longstanding issues that have led to deteriorating market sentiment. Reforms to improve governance and procurement practices and remove any obstacles to investment are essential. Special emphasis should be placed on prompt implementation of sanctions against deviations from the Public Financial Management Act to increase deterrence. Early announcement and timely implementation of a strong adjustment and reform plan is now a priority to restore investor and consumer confidence. This would increase competition in key markets, reduce input costs for households and businesses, and in turn, lead to a virtuous cycle between economic growth, job creation, and inequality reduction,” concluded Coronel.

IBR Q3 2017 – Grant Thornton

Economic instability seems to be the new normal in South Africa as 72% of business executives confirm that turbulence in the SA economy over the past six months has affected business operations and decisions.

When asked in Grant Thornton’s International Business Report (IBR) for the third quarter of 2017 to explain how this turbulence had affected privately held businesses and listed companies, 68% of the SA business executives stated that they were delaying business expansion plans, 61% were putting off investment decisions, 38% were considering investing offshore and 28% were contemplating selling their businesses.

“Our IBR data for Q3 to the end of September 2017 shows a nation that is experiencing total uncertainty with no sign of any stability on the horizon,” says Gillian Saunders, Head: Advisory Services at Grant Thornton South Africa. “The fact that businesses are delaying important investment decisions or expansion plans, coupled with a challenging economic environment, indicates they are just managing to keep their heads above water, with operations stagnant in a holding pattern of sorts. It’s very concerning.”

The International Business Report (IBR) from Grant Thornton provides tracker insights from around the world on a quarterly basis. These findings are from the IBR’s third quarter tracker data for 2017, revealing views from business executive interviews held between August and September 2017. The survey presents perceptions into the views and expectations of over 9600 C-Suite executives in privately-held and listed businesses, across more than 36 economies (more than 2400 interviews per quarter). Regional and national perceptions are also researched every quarter for South Africa, from 400 SA privately held business executives annually (100 executive interviews per quarter) regarding the business environment, and other issues such as crime, service delivery and the political climate.

SA execs are the second most pessimistic nation worldwide

Coupled with uncertainty affecting investment decisions and expansion plans, when asked how optimistic SA business executives are regarding the outlook for the country’s economy over the next 12 months, businesses confirmed a negative outlook for the second consecutive quarter – at on balance -6% (6% pessimistic). This balance statistic is determined by calculating the percentage of respondents who report a positive outlook, less the percentage who report a negative outlook for the year ahead. In the case of Q3 2017 the outlook is negative with net 6% more negative responses expressed than positive.

There is some improvement, though, compared to the previous quarter (Q2) when the figure was -28% pessimistic and we were the most pessimistic of the surveyed 36 countries. South Africa this quarter recorded the second lowest figure, with Japan at the lowest with a negative 14% (-14%) pessimistic outlook.

“For South Africa, most of 2017 has been marred by political upsets and these were followed by subsequent downgrades of the nation’s sovereign credit rating by key ratings agencies,” says Saunders. “Then, towards the end of the third quarter massive ructions occurred with further developments which drew the nation deeper into the state capture debacle, and more concerning revelations were uncovered regarding high profile private companies with suspicious Gupta ties. The year is going from bad to worse.”

Conversely global business optimism was fairly stable at +49% optimistic for Q3, just two percentage points below the +51% recorded during the second quarter of this year. Optimism among firms in the US is well above the global average at 70% in Q3, while Chinese business optimism has hit a three-year high of 52%.

“South Africa’s instability, uncertainty and pessimistic outlook has no doubt influenced the World Economic Forum’s Global Competitiveness Report for 2017-2018 in which South Africa’s overall ranking declined 14 places to 61st position from 47th. The survey cited political instability, poor work ethic, restrictive labour regulations and an inadequately educated workforce as some of the key reasons for the decline. All signs are pointing to a disturbingly rocky situation – it is crucial for everyone in every corner of the country and across private business, government and public sector, to start working collaboratively to try and re-establish some stability for our nation,” said Saunders.

Business expansion constrained by economic uncertainty, exchange rate volatility and over-regulation

According to Grant Thornton’s IBR data for Q3 2017, the top four constraints to business growth for South African executives are: economic uncertainty (59%); exchange rate fluctuation (48%); rising energy costs (34%); and over-regulation / red tape (33%).

“These four constraints just keep reaffirming the same concerns,” says Saunders. “Naturally a nation will struggle with exchange rate volatility when economic uncertainty is rife. Regulation and red tape is also weighing down on South African businesses’ ability to function effectively as a result of excessive administrative and legal requirements which need constant attention.”

The greatest constraint to growth globally recorded for the third quarter of this year is the lack of availability of a skilled workforce, with 38% of the executives surveyed worldwide lamenting this issue, while economic uncertainty is recorded as the second biggest constraint to expansion by 32% of executives. Over regulation is the world’s third greatest restraint to business growth (IBR Q3 2017 Global: 27%) and this is tied with the issue of a lack of orders (low demand for goods) also at 27%. South Africa therefore shares two of the top four constraints with the general global environment, but experiences them far more acutely.

The South African businessman remains an eternal optimist

Every quarter, Grant Thornton’s IBR asks respondents if they believe that South Africa still presents good business opportunities and every quarter, the responses are surprisingly positive. For the third quarter of 2017, 89% of SA business executives confirmed that they believe the opportunities in SA are good.

“South Africa has always been a country of opportunity. We’re a resourceful, entrepreneurial and resilient group of people who work smart to ensure that business operations continue as best as they can, and can see beyond the current turmoil to a country that does present great opportunity if the political and economic environment were stable and stimulatory.” says Saunders. “After all, if we didn’t have our positive attitudes, what would we have left?”

Burden of crime on business worsens by 20% since Q3 2016

Saunders laments the desperate crime situation in South Africa which continues to impact on business. When executives were asked if they had been affected by the threat to personal security as a result of contact crime events, 64% said yes. Contact crime is defined in the IBR research as housebreaking, violent crime, road rage or hijacking.

“When analyzing our crime data for the past few quarters, it is even more concerning to note that this figure is 44% higher than what was recorded during the third quarter of 2016,” she says (Q3:16 = 45%). “It is truly alarming to see that the impact of crime is increasing once more.”

South Africa’s national crime stats which were released last month, corroborate this increased impact, when for the period of 1 April 2016 to 31 March 2017, they show that hijacking, aggravated robbery and house robberies have increased by 7% to nearly 180 000 incidents reported, compared to the previous year.

“The figure reported is completely unacceptable though. One hundred and eighty thousand such crime incidents in a year is a shocking figure,” says Saunders. “That equates to nearly 500 of these events every single day of the year. As a nation, our crime situation is abominable, and it directly affects business operations, foreign direct investment and tourism. We have to get a handle on this situation – it’s a matter of national emergency.

Conclusion

Saunders concludes, “despite South Africa being caught in a vortex of despair, we urgently need to re-direct our focus and concentrate on stability. We can only hope that some of the political developments, such as the ANC’s elections, which are taking place in December this year, will work towards stabilizing our nation, following which the rebuilding can hopefully begin in earnest.”

Additional notes of interest:

 

  • While South Africa has a positive outlook in terms of expectations to employ people in the coming 12 months, the nation is placed in the bottom five countries for this metric (net 20% of executives expect to employ more people in the year ahead – Global: 35%)
  • South Africa ranked in the bottom 10 countries in terms of how the lack of a skilled workforce constrains business expansion (SA: 27%; Global: 38%)
  • South Africa ranked in the top 10 countries worldwide and above the global average in terms of expectations for investment in technology (SA: 54%; Global: 47%)
  • South Africa ranked in the top 10 countries worldwide and above the global average in terms of expectations to increase selling prices in the year ahead. This is most likely as a result of the countries high inflation compared to other countries (SA: 41%; Global: 29%)
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