Lucio Trentini

Thought Leadership

Thought Leadership piece by Lucio Trentini, the CEO of the Steel and Engineering Industries Federation of Southern Africa (SEIFSA)

South African businesses in the metals and engineering (M&E) sector have faced enormous challenges over the past few years, with the Covid-19 pandemic compounding an already difficult situation.

A shrinking domestic market, declining production, weak production sales, a smaller contribution to the economy, increasing joblessness, cheap imports and low investment levels are just some of the issues they face.

These challenges do not plague the M&E sector only and their knock-on effects are felt throughout the economy due to its role as supplier and customer into the auto, motor, mining, construction and other manufacturing sub-industries.

Manufacturing companies play an integral part in the supply chain of the South African economy and the sector will struggle to recover without support. The sector already relies heavily on demand from Government projects to boost its production and sales, especially for products such as steel and other downstream products. This is why the Government must speed up the implementation of its infrastructure investment plan and reforms across state-owned enterprises (SOEs) as the lack of progress on these and other projects is delaying the revival of our economy.

Some form of protection against the dominance of imports while promoting domestic manufacturing and suppliers can also make a difference, though in the longer term the international competitiveness of the sector will need to improve before local producers can assume the role of preferred supplier to both domestic and international markets.

There is also help at hand in the form of the African Continental Free Trade Area (AfCFTA) agreement, which offers new opportunities for trade on the continent in the M&E sector.

Costs remain an issue for manufacturers. The unexpected acceleration in producer inflation in December highlighted the effect of higher energy prices globally and global supply chain problems. According to the latest data released by Statistics SA, the producer price index (PPI) for final manufactured goods rose 10.8% year on year in December, up from 9.6% in November. Stats SA said coke, petroleum, chemicals, rubber and plastic products were the main contributors to the higher number; these product categories incorporate petrol and diesel prices, which are close to record highs.

Manufacturers also have to contend with falling prices, which benefit buyers of the M&E sector’s products, but put enormous pressure on manufacturers' profit margins, which in turn leads to job losses as companies look for ways to cut costs.

SA’s official unemployment rate was recorded at 34.9% in the third quarter of 2021 — the highest jobless rate since comparable data began in 2008 — due to, amongst other things, the deplorable looting that took place in July compounded by the stringent lockdown measures.

The jobless data showed that 660,000 jobs were lost between the third and second quarters of 2021. The broader manufacturing sector lost 13,000 jobs. The disheartening lack of employment opportunities affects the economic status of the country and, more importantly, the livelihoods of all its people.

Industry has expressed its concern about the stubbornly high unemployment rate. The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) has called on the Government to address the issue, while finding ways to reduce the cost of electricity, diesel and petrol to help put the economy back on track.

The M&E sector is a strategic industry for South Africa, so plans to reindustrialise the sector, including the primary steel and downstream industries that employ more than 200,000 workers must not be allowed to fail.

SEIFSA has advocated for infrastructure development as a means to promote industrialisation in South Africa, especially in the M&E sector as it feeds into infrastructure projects from an input supplier perspective, but for recovery to take place there is a need for clear purpose and strong support for Government projects.

While it is not possible to state, with a degree of certainty, how the year ahead is likely to pan out, it is probably safe to say that 2022 will be marginally better than 2021. However, a lot hinges on the Government’s planned infrastructure rollout and the trajectory the COVID-19 pandemic takes in the country in the months to come.

We hope that the Government will finally deliver on both the Steel Master Plan and the promised and long-awaited infrastructure plan, which is intended to stimulate the economy, and not be distracted by the political agenda when all focus and energy should be firmly directed at economic growth and recovery.

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by Lucio Trentini

Eskom Group Chief Executive, André de Ruyter responds in an open letter to SEIFSA CEO

Load shedding and its impact of the metals and engineering sector

Eskom acknowledges your letter dated 23 November 2021.

The contribution of the Steel and Engineering Industries Federation of South Africa (SEIFSA) to the
employment and economy of the country is acknowledged. Eskom has had a good relationship
spanning over many years with the key industrial customers represented by your federation, and
such industries have always complied with the NRS 048-9 agreement to curtail load whenever
Eskom declared a power system emergency.

While Eskom regrets the electricity supply interruptions in the past weeks, it is important for SEIFSA
to understand that load shedding is the last resort in the management of the power system. This is
to protect and prevent the power system from collapsing or even having a black-out.
Eskom forecasts potential load shedding based on the maintenance plan and an assumed amount
of unplanned unavailable generation capacity; 11 000 MW in the winter and 12 000 MW in the
summer months (the base case). Eskom then adds two risk scenarios by adding an additional
1 000 MW and 2 000 MW to this assumption.

For the base case, the current forecast is two days of Stage 2 load shedding for the next year. For
the + 1 000 MW risk case, this rises to 104 days of up to Stage 2 load shedding and for the + 2 000
MW risk case; 252 days of up to Stage 3 load shedding. Eskom, however, endeavours to keep the
unplanned losses to below even the base case. It is essential that, for sustainable performance
improvement, Eskom continues to implement its reliability maintenance programme and to keep in
mind that 4 000 MW to 6 000 MW additional national capacity is required to significantly reduce the
risk of load shedding.

I welcome SEIFSA’s availability to assist Eskom in any way possible, and would therefore like to
propose that together with some of my executive team, we have a meeting with you and your team
to discuss ways to reduce the impact of load shedding on your federation member companies.

My office will be in contact with yours to make this arrangement.

Yours sincerely

André de Ruyter
GROUP CHIEF EXECUTIVE

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by Lucio Trentini

SEIFSA open letter to Eskom CEO

Load shedding and its impact of the metals and engineering sector

I write to you on behalf of eighteen employer associations, who are federated to SEIFSA, who collectively represent in excess of a thousand employers and who employ close to 170 000 employees, which accounts forty-percent of all employees in the metals and engineering (M&E) sector.

The metals and engineering sector is a key and integral part of the economy. Any disruptions in the sector’s industrial activity feeds through into the rest of the economy. From the end user’s perspective, the M&E sector, made up of 13 sub-sectors, is a crucial supplier of inputs into major sectors such as construction, mining, motor, automotive and other manufacturing sub-industries.

Notwithstanding the COVID-19 pandemic, the economy was already suffering from a shrinking domestic market, declining production, low capacity utilization, weak production sales, declining employment numbers, increasing levels of imports, a weak global trade balance and low investment levels.

In the first six months of 2021, green-shoots began emerging in the sector. Key positives during this period were improvements in production volumes and production sales, capacity utilization, exports improving in value terms, narrowing of the M&E trade deficit and growing exports into the African continent.

The M&E sector, already buckling under the strain of difficult market conditions, state capture, low economic growth, disinvestment and collapsing infrastructure, misguided objectives and parochial interests, is now having to contend with seemingly never-ending load shedding.

Whilst we accept that structural changes, significant investment and a culture or paradigm shift is urgently needed to secure the long-term sustainability of Eskom, in the immediate to medium term, on-going and intermitted load shedding is taking a heavy toll on our membership, the sectors contribution to the fiscus and the M&E sector’s ability to hold onto jobs and more importantly, create additional and much needed employment opportunities.

I have no doubt that you have heard more than your fair share of horror stories about the effect of load shedding on businesses. The sad and tragic reality is that it has gone on for so long that we have become accustomed to wringing our hands in despair and hoping for the best. It is also true that much has been written regarding the negative effect of load shedding on industry, sadly with little effect. Repeated assurances that everything possible is being done is also wearing thin on business.

We continue to hear and read about Eskom blaming its aging fleet on its poor performance. Whilst we may, readily accept this, we are also of the view that this, may, with respect, be an oversimplification of the problem. Moreover, much has been written about the lingering and worrying effects of the deep-rooted networks of corruption within Eskom and your commitment to eradicating this and returning this once great institution to good governance, which endeavours we support. We also support the Presidents call and your commitment to Eskom’s division into three constituent parts (generation, transmission and distribution) each run on sound businesses practices.

In closing, as we continue to struggle with the reality of load shedding, which we reluctantly have no choice but to accept for the foreseeable future, can you provide business with assurances that firstly, the scourge of corruption is being tackled and criminal and/or civil charges against current and past employees have been opened with the South African Police Services and how many of these cases have resulted in convictions; secondly, do you have the political leeway to make the cultural and headcount changes necessary to make Eskom a viable commercial enterprise and finally, are you able to provide businesses with assurances on predictability going forward? It is incredibly difficult for businesses to plan production and/ or give assurances to customers and clients when load shedding schedules themselves are not predictable.

South Africa and for that matter SA Inc., cannot afford for Eskom to fail. All we ask is that, as business continues to grapple with the present-day reality, you and your team are doing everything reasonably possible to address this crisis.

Business needs to know that the sacrifices we make today, will yield the returns that will contribute to putting SA Inc. back on a positive growth trajectory fuelled by a stable and predictable energy supply.

SEIFSA and its constituent membership remain available to assist you in your endeavours in whatever way we can, as you and your team steer Eskom, and for that matter SA Inc., through this crisis.

I look forward to receiving your views herein.

Yours Faithfully

Lucio Trentini
Chief Executive Officer

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by Lucio Trentini

Industry wage and employment negotiations successfully concluded.

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by Lucio Trentini

SEIFSA final offer.

The SEIFSA final offer in this year’s Main Agreement Negotiations amounts to the following:

1. Duration

A three year deal

2.Wage Increases

A guaranteed personal rands and cents increase for all workers this year; and
Guaranteed rands/ cent increase in 2022 and 2023.

Wage Increases 1 July 2021 to 30 June 2024

The rate for new workers set out above is the minimum entry level wage rates for new entrants into a company,

Existing workers will receive the guaranteed personal rands/ cents increase to their hourly rate of pay per hour.

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by Lucio Trentini

SEIFSA recommends implementation of final offer.

With the strike in its tenth day and given that Solidarity and UASA have accepted the final offer, the SEIFSA Council has unanimously endorsed a recommendation that affiliated member companies begin implementing the final offer as from tomorrow.

Whilst we request individual member companies to be guided by this recommendation, we nevertheless implore member companies to be guided by circumstances and the prevailing industrial relations climate on each and every shop floor.

Of the five trade unions that have bargained with SEIFSA, Solidarity and UASA have indicated their acceptance of the offer. SAEWA have confirmed their rejection of the final offer but are not out on strike. NUMSA and MEWUSA remain on strike. Accordingly, a company may be faced with one, some or all of the following scenarios:

• None of your employees are members of any trade union; 

• Some of your employees are unionised;

• If unionised, and your employees belong to NUMSA or MEWUSA, all of your NUMSA and MEWUSA employees are out on strike;

• Most or some of your employees have continued to work during the strike;

• Most of your employees, barring NUMSA and MEWUSA members, have wanted to work but were prevented from doing so and/or where unable to report for duty and/or management took a decision, for reasons related to their personal safety and protection and sent employees home.

Should you elect to implement the final offer, the implications of this will be as follows:

• All scheduled employees, except for NUMSA and MEWUSA members, must receive the increase, as set out in the attached wage schedule, effective from date of implementation;

• Implementation of the final offer must not be extended to NUMSA and MEWUSA members, as NUMSA and MEWUSA is still on a protected strike and they have not signed the agreement. Therefore employees who are members of NUMSA and MEWUSA whether they are on strike or not, must not receive the final wage increase, unless;

• An individual NUMSA or MEWUSA member elects to abandon his/her participation in the strike and before being allowed back into the factory, he/she signs the attached undertaking - no other demand/s must be made on the employee.

Implementation of the final offer for all of the above employees implies that they are entitled to back-pay from 1 July 2021. As backpay is a matter for discussion and agreement between management and employees at individual company level, it is recommended that backpay remain a matter for discussion until after the strike has ended.

With regards to implementation, we ask all member companies to please implement the final offer as a guaranteed Rands/ cents amount.

SEIFSA has shared the details around the plan of action emanating from urgent discussions with the National Joint Operational and Intelligence Structure (NATJOINTS), which is the coordinating body of all security and law enforcement agencies throughout the country, including the SA Police Force, SANDF and Metro Police, that took place over the weekend.

Our aim is to see more feet on the ground, visible, active, properly resourced and coordinated resources targeted at acts of violence, intimidation, destruction to plant, equipment and valuable infrastructure and indiscriminate attacks on fellow workers exercising their constitutional right to work. 

As the strike and lock out continues into another week, we have consistently communicated that the longer the posturing and refusal to settle on the part of NUMSA continues, the more jobs will eventually be lost in an industry that should instead be doing everything possible to protect each and every valuable job in the sector.

Again, we kindly remind the membership to ensure that all necessary precautions and contingency plans are in place, reviewed and where necessary revised. Unfortunately, it does look like another week will be lost.

Should you have any queries, questions and/or concerns during this difficult period please contact the Staff of the Industrial Relations Division on (011) 298-9400 who will assist.

As this saga plays out, we are acutely aware of what is at stake. Not just for our members but for the entire industry. We are at a cross roads and the lines in the sand have been drawn. It is regrettable and unfortunate but we have a duty to protect our industry from ever increasing costs of doing business, which do nothing more than make the sector increasingly uncompetitive.

In closing, I again take this opportunity to thank each and every one of our loyal affiliated membership. I can assure you that we remain committed and resolute to settling this round of negotiations, within mandate and with as little destruction to our economic base as possible.

We will continue to keep all members fully informed as developments unfold.

Stay safe and remain vigilant.

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by Lucio Trentini

SEIFSA confirms improved offer, NUMSA rejects and strike enters day 8.

With the strike in its eighth day, lost wages exceeding R 100 million and production in all likelihood, five times that number, the SEIFSA negotiating team is continuing to do everything in its power to find a fair, sensible and sustainable solution to the impasse.

This notwithstanding, SEIFSA cannot condone the rampant acts of violence, intimidation and indiscriminate attacks on fellow workers exercising their constitutional right to work. Indiscriminate, blatant and completely unacceptable criminal acts of destruction to plant, equipment and valuable infrastructure cannot ever be tolerated.

SEIFSA is in urgent talks with the National Joint Operational and Intelligence Structure (NATJOINTS), which is the coordinating body of all security and law enforcement agencies throughout the country, including the SA Police Force, SANDF, Metro Police etc. We will be pressing for an urgent roll-out, across the country, of more feet on the ground, visible, active and properly resourced and coordinated resources targeted at blatant acts of thuggery. We are in the process of finalising the identification of various hot-spots around the country and a plan of action with contact persons and roll-out of the intervention will be communicated shortly.

This morning the SEIFSA Council, having taken careful stock of the situation, took a unanimous decision to endorse an improved offer to settle on the following terms:

• A three (3) year deal;

• Guaranteed personal increases to workers on a rands/ cents amount in each of the three years of the agreement;

• Rate A workers (artisans) in years 1, 2 and 3 will receive a guaranteed personal increase of R 4,24; R 4,45; R 4,67 per hour respectively;

• Rate H workers (general labourers) in years 1, 2, and 3 will receive a guaranteed personal increase of R 2,97; R 3,15 and R 3,34 per hour; 

• In principle support for the gazettal and extension of the Main Agreement to all non-party employers and employees falling under the scope of the Main Agreement; and

• A special phase-in dispensation for employers and employees who have been operating outside of the scope of the Main Agreement.

For a general labourer the total cost to company moves to a minimum of R 12 734,00 per month. Given the current economic and trading conditions and economic data tracking the performance of the sector over the last 24 months, we believe the improved offer is more than fair, equitable and sustainable.

As the strike and lock out continues to play out in the industry, SEIFSA’s negotiation team, will continue to push for a settlement as quickly as possible. The longer the posturing and refusal to close continues, the more jobs will eventually be lost, in an industry which should be doing everything possible to protect each and every job in the sector.

Again, we kindly remind the membership to ensure that all necessary precautions and contingency plans are in place, reviewed and where necessary revised. Unfortunately, it does look like another week may be lost.

Should you have any queries, questions and/ or concerns during this difficult period please contact the Staff of the Industrial Relations Division on (011) 298-9400 who will assist.

As we continue this journey, we are acutely aware of what is at stake. Not just for our members but for the entire industry. We are at a cross roads and the lines in the sand have been drawn. It is regrettable and unfortunate but we have a duty to protect our industry from ever increasing costs of doing business, which do nothing more than make the sector increasingly uncompetitive. Tragically we are witnesses to a sector that is slowly beginning to show some growth, which is being eroded by the events of the last eight days. It is a great tragedy that what is unfolding is in no one’s best interests, least of all our employees, most of whom want to work.

In closing, I again take this opportunity to thank each and every member of the Negotiating Team, the Associations and most importantly you, our loyal affiliated member. I can assure each and every one of you that we remain committed and resolute to closing this round of negotiations, within mandate and with as little destruction to our economic base as possible.

We will continue to keep all members fully informed as developments unfold over the next few days.

Stay safe and remain vigilant.

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by Lucio Trentini

CCMA issues picketing rules.

Picketing Rules have been issued by the CCMA binding the Parties behaviour during the industrial action that will unfold over the next couple of days.

If you have not yet received the download it here: 

Company Lockout Letter

The NUMSA strike will commence at 0:500 on Tuesday, 5 October 2021.Concerning the strike please communicate the following to your employees:

• Management recognises the right of workers to strike;
• Management recognises the right of those workers who do not wish to participate in strike action NOT to strike;
• Acts of intimidation, victimisation and/or forcing employees who do not wish to participate in strike action to do so against their will - witnessed and/or reported to management, will not be condoned or tolerated and the appropriate and necessary disciplinary action will be taken;
• All acts of damage to company property, witnessed, recorded and/or reported to management will likewise lead to disciplinary action on the grounds of serious misconduct; and
• All absences from work and/or work stations as a consequence of participating in strike action will be treated on the basis of NO WORK; NO PAY

Please also note that we will be circulating a Strike Survey on every-day of the strike in order to track support for the strike and managements responses thereto.

The Survey will be brief and shouldn’t take you longer than 5 minutes to complete. Please complete the survey, it is critically important that we have a clear and proper understanding of what will unfold over the next few days 

With regards to implementing a lock-out in response to strike action, again this is your call and your call only, should you wish to do so.

In the interim, SEIFSA’s Negotiating Team will continue to keep all channels of communication open with all trade unions in an endeavour to mitigate the impact the strike and the lock-out will have on the industry.

Again, we kindly remind the membership to ensure that all necessary precautions and plans are in place in anticipation of what will commence on Tuesday.

Should you have any queries, questions and/ or concerns before, during or post this episode please contact the Staff of the Industrial Relations Division on (011) 298-9400 or myself directly on (011) 298-9414.

As we gear up for what will unfold, I take this opportunity to thank each and every member of the Negotiating Team, the Associations and most importantly you our affiliated membership. I can assure each and every one of you that we remain committed and resolute to closing this round of negotiations, within mandate and with as little disruption as possible to the industry.

We will continue to keep all members fully informed as developments unfold over the next few days.

Stay safe and remain vigilant.

Download Strike picketing rules:

CCMA Picketing Rules

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by Lucio Trentini

SEIFSA serves notice of lock-out.

In response to NUMSA’s declaration of strike action, which schedules strike action to commence on Tuesday, 5 October, SEIFSA today served a notice of a defensive Lock-out.

A draft copy of the Lock-Out Notice is attached together with Annexure A hereto, for your use, should you wish to declare a lock-out.

By virtue of this notice, SEIFSA, on behalf of its Associations, has reserved the rights of the membership to implement a lock-out in response to strike action, should a company wish to do so.

In the interim, SEIFSA’s Negotiating Team is continuing to explore all settlement possibilities with organised labour in an endeavour to limit the impact that the strike and lock-out will have on the industry.

Again, we kindly remind the membership to ensure that all necessary precautions and plans are in place as we continue to work towards a settlement. We will continue to keep all members fully informed as developments unfold

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by Lucio Trentini

NUMSA serves notice of strike action.

As expected at approximately 16:15 yesterday NUMSA officially served notice of strike action against the SEIFSA affiliated Associations, NEASA, SAEFA and the CEO.

A copy of the formal notice is attached which confirms that the strike will commence at 05:00 on Tuesday, 5 October, with a march to Metal Industries House in the CBD, with marches also expected in the Cape and KZN.

SEIFSA on behalf of the Associations will soon be responding with a formal notice of lock-out in response to the strike, thereby reserving the right of the membership to implement a lock-out, should a company wish to do so.

In the interim, SEIFSA, through the duly appointed Negotiating Team is continuing to explore all possible settlement possibilities with organised labour in an endeavour to limit the damage industrial action will inflict on the sector.

However, in light of the fact that the action on Tuesday next week will proceed, we once again urge all members to take all necessary precautions and plan for the worst case scenario which we will be doing our utmost to mitigate.

We will continue to keep all members fully informed as developments unfold.

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by Lucio Trentini