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Closing Address: Metals and Engineering Indaba

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13 SEPTEMBER 2010: 16:45 – 17:00
DELIVERED BY: MARTIN L KINGSTON
VICE PRESIDENT – BUSA

1. Introduction

As we mark the 25th anniversary of South Africa’s democracy and within the first few months of the 6th democratic Government in our country, we have the opportunity to reflect on the advances that South Africa has made over the past two and a half decades:

  • We have the most advanced economy on the continent with a thriving democracy;
  • Real GDP per capita has almost doubled from c.$3,500 p.a. in 1994 to c.$6,300 p.a. today;
  • [Our banking sector, with assets that have grown more than 15 fold since 1994 to R5.8tn today, is one of the leading in the world; and
  • Foreign direct investment, although coming off a low base and currently under pressure, has grown almost 15 times to R71bn in 2018].

However, and as discussed earlier, South Africa is facing significant headwinds, coupled with a growing sense of negativity as illustrated by Wednesday’s announcement of the business confidence index having reached a 20 year low. The environment facing the country is one that is hallmarked by 6 key issues:

  1. A constrained global macro environment, aided and abetted by unprecedented geopolitical tensions;
    Current growth levels continue to significantly lag global GDP growth of 3.3% (Q1 2019). South Africa’s growth now lagging both developed economies (2.2%) and emerging economies (4.2%). The constant downward revenue of our growth statistics undermines both our credibility and confidence levels in the environment. Importantly, in recent years GDP growth has lagged population growth, implying that average incomes are falling;
  2. Stubbornly high unemployment, with South Africa’s expanded definition of unemployment at almost 40%, whilst youth unemployment is 55%;
  3. Infrastructure challenges, SOE governance and fiscal constraints;
  4. A hostile labour market. Accordingly to the most recent WEF Global Competitiveness Report, South Africa is ranked 136th out of 140 countries in terms of cooperation in labour employer relations;
  5. The need to address the skills shortage. The most recent OECD Survey ranked South Africa 75 out of 76 countries based on maths and science; and
  6. The country’s credit rating at risk of being downgraded to subinvestment grade. Moody’s, the last remaining investment-grade rating, is set to reassess South Africa’s credit rating in November 2019, although recent indications may offer us a brief respite.
  • We are in the eye of the storm where we need to take responsibility for the circumstances confronting us.
    • All stakeholders need to urgently accelerate efforts to create an environment conducive to stability and investment given the significant headwinds we need to navigate.
    • We need to accept the link between investment, growth and jobs. In so doing, we must honestly assess the constraints and address them decisively and collaboratively, involving all social partners (government, business, labour and community).
  • As outlined by the National Development Plan (“NDP”) and National Treasury’s recent Economic Strategy for South Africa, the most effective weapon in the campaign against the triple challenges of poverty, unemployment and inequality is faster economic growth, underpinned by education and skills development.
  • The private sector, including the metals and manufacturing sectors, has a critical role to play in assisting the State to achieve inclusive economic growth and reach its developmental goals, primarily through investment but also through collaboration with government and its social partners. It is increasingly acknowledged by government including the Minister this morning that it is the private sector that is the key contributor to economic activity: GDP, taxes, employment, fixed direct investment. However, that does not translate adequately into clear and aligned patterns of co-operation and partnership.
  • Structures such as Business Unity South Africa, and its members including SEIFSA, SACCI, Business Leadership South Africa, and other sectoral and country chambers play an essential role in ensuring a coordinated effort across all stakeholders to optimise the investment environment.

2. Role of the metals and engineering related sectors

  • The mining, metals, engineering and manufacturing sectors have long been viewed as labour-absorbing industries that could provide a significant solution to South Africa’s structural unemployment and assist in driving GDP growth.
  • Key Government policy documents, including the NDP, outline the basis upon which these sectors can assist in driving inclusive growth.
  • However, both the manufacturing and mining industries have seen a decline in their contribution to the overall South African economy:
    • Manufacturing’s contribution to GDP has decreased from almost 16% in 1994 to 13% in June 2019.
    • Over this same period, the manufacturing sector’s overall contribution to South Africa’s employment has steadily decreased from 15% in 1994 to just above 10% in 2019.
    • The mining sector’s contribution to GDP has halved over the last 25 years, with the current contribution to GDP being less than 8%.
    • Employment by the sector has followed a similar trend, with the sector’s contribution to employment falling from 11% to below 5%, shedding 220,000 jobs in the process.

3. Key sector challenges

  • The downturn in South Africa’s manufacturing sector has been driven largely by unreliable and uncompetitive electricity supply, high administrative costs, inadequate skills, outdated technologies, cheaper global competition and weak demand.
  • The latest statistics show that South African manufacturing production is running at 81% utilisation – almost 20% below available manufacturing capacity.
  • Rectifying this is critical as manufacturing is a key enabler of development given its role in promoting productivity growth, skills development and relatively high-income elasticity of demand in world markets. The metals sector has a significant role to play in South Africa’s economic trajectory.
  • In mining, a number of leading South African mining companies have restructured their operations. By way of example:
    • Anglo American completed the sale of its domestic coal assets to Seriti;
    • South32 has announced the sale of its SA coal assets; and
    • Impala Platinum recently announced the closure of some of its less profitable shafts.
  • Further challenges facing the sector include:
    • Soft commodity prices, combined with high input cost inflation,
    • Infrastructure constraints including electricity, transportation and water availability and competitiveness; and
    • Labour relations – managing wage inflation, whilst productivity remains under pressure
  • The new Mining Charter was finalised in 2018 and has been a positive development relative to the uncertainty that existed for an extended period of time prior to its finalisation.
  • Although we are making some progress, much more needs to be done if we are to ensure the growth of the mining, metals, engineering and manufacturing sectors.

4. Infrastructure constraints impact growth

  • Eskom:
    • The manufacturing, metals and mining sectors account for just under two-thirds of
      South Africa’s electricity consumption.
    • Eskom’s current financial crisis (in excess of R440bn in debt), represents a material threat to these industries (as it does for the rest of the South African economy), with the key issues relating to the reliability, predictability and competiveness of electricity.
    • In March 2019, the National Energy Regulator of South Africa approved electricity increases of 9.4%, 8.1% and 5.2% for the next three financial years. These increases were significantly below Eskom’s application for double-digit tariff increases – which were opposed by business and labour.
    • However, current and future tariff increases, which are above inflation, will continue to put the mining, metals and manufacturing sectors under pressure.
    • Failing to deal comprehensively with Eskom is no longer an option. It must be restructured, a significant proportion of its debt must be assumed by the state directly, its workforce must be right-sized, its cost base and clients addressed and competition introduced.
  • Other:
    • Rail and port capacity remain a concern.
    • We need to investigate solutions to fund the development of increased capacity to assist in driving new investment and the expansion of manufacturing and mining output.
    • Given the funding constraints of Government and SOEs more broadly, public-private partnerships need to be seriously considered for future infrastructure rollout. There is no doubt that public private partnerships represents not only an opportunity but a fundamental solution to dealing with the deficit of capital and skills in key areas of the economy. I am glad that government is now acknowledging this.

5. Investment

  • Inbound FDI was at its lowest level in a decade in 2017 – at R27bn. In 2018, the FDI recovered to R71bn assisted, in part, by President Ramaphosa’s drive to attract investment of $100bn over a five year period. The Investment Conference held
    November 2018 and scheduled to occur again in November 2019 are designed to provide a platform to maximise investor interest.
  • South Africa is in desperate need of increased investment, this starts with the government actively taking steps to increase investor confidence, which will drive increased investment leading to improved economic growth, creating sustainable jobs
    and employment. We cannot create jobs without investment and growth. Increased tax revenue, enabling the government to tackle poverty and inequality as well as to address the challenges facing the public sector, will predominantly come from the private sector.
  • As BUSA, we recognise that if we are to maximise investment and deal with constraints underpinning viable and sustainable commercial operations at an individual, sectoral and national level, a number of key issues need to be addressed. We have accordingly raised them directly with the President and the political leadership of the country. These include:
    • Lack of policy alignment and implementation;
    • Corruption, maladministration and malfeasance (both in the public and private sector);
    • Failure to address political and populist rhetoric, which alienates investors and the citizenry more broadly, including the vexed issues of the status of the SARB, land expropriation, attitude towards immigrants;
    • An inflexible attitude often displayed by labour suggesting that there is an inadequate acceptance of the parlous state of the economy;
    • Dysfunctional, poorly managed and governed SOEs, which are inadequately capitalised and generally not fit for purpose. We need to take difficult decisions as to how we address these challenges, recognising that failure to do so will simply exacerbate problems in the future;
    • The recent examples of gender-based violence, civil unrest and xenophobia, the high levels of criminality and a culture of impunity matched by a limited accountability; and – Debt levels that are unacceptably high, threatening the viability of individual businesses and the economy at large.

6. Other actions that could be taken by the Government to assist

  • National Treasury, in its recent Economic Strategy for South Africa Paper, estimated that manufacturing could grow by as high as 3.9% over the short term and 4% over the long term with the right policy approach. I would encourage SEIFSA to review and comment on this paper.
  • In this context, potential areas of Government support include:
    • The Sectoral Master Plan for the Steel & Metals Sector is in the process of being concluded between the Department of Trade, Industry and Competition and industry. This should be encouraged, considering the success of interventions
      such as the Automotive Production and Development Programme – generally seen as a successful example of state support and intervention.
    • Steel products and components for construction are designated by government, meaning that designated sectors’ goods must be manufactured locally. [However, designation is not always implemented by municipalities and SOEs. Consequently, the success story on the Competitive Supplier Development Programme by Eskom and Transnet, for example, is limited. This needs to be addressed and Business has tabled this for consideration by the Minister of Trade, Industry and Competition.]
    • The decline in the Infrastructure Spend Programme arising from the fiscal crunch has resulted in a significant reduction in construction activity, including the demise of a number of large South African construction companies. Government action to invest effectively in infrastructure is critical.
    • To improve the potential of Special Economic Zones (“SEZs”) to incentivise investment.
    • The Chinese interest in and commitment to Africa presents both an opportunity and a threat. To ensure that local businesses and skills development are not prejudiced, Government needs to explicitly prioritise the use of local skills, contractors and engineers and complies with designation of inputs in local projects.
    • The African Continental Free Trade Agreement (“AfCFTA”) has been signed and will enter into force in July 2020. The AfCFTA represents a significant opportunity for South African business. Regional growth opportunities should be harnessed to promote export growth, and , as Minister stressed, the AfCFTA may provide a much-needed boost to South Africa’s manufacturing sector.
  • [To support and encourage the aforementioned areas, BUSA have agreed to participate in various structures recently established by Minister Patel, including:
    • The SEZ Reference Group;
    • A Ministerial Export Promotion Panel;
    • The National Committee on the African Continental Free Trade Agreement; and
    • A Committee on Digital Trade.]
  • Non-tariff barriers in the form of transport and logistics bottlenecks, customs barriers and high port charges, etc. also need to be addressed across the region to fully exploit the potential benefits of regional integration. On this, BUSA has established a BUSA /Transnet working group and has commenced engagements with Government in the context of the Ports Charges Joint Committee (led by BUSA and the DTIC) to explore ways of reducing ports charges to render exports more competitive.

7. Conclusion

  • It is critical that all stakeholders recognise that economic growth is the most effective instrument to address South Africa’s challenges.
  • As I have said, whilst the private and public sectors are collectively looking to drive growth and attract investment, it is in fact private sector investment that is the key lever to delivers sustainable and inclusive growth given public sector constraints.
  • As the apex body for organised business in South Africa, BUSA believes that it is our responsibility to take the lead on behalf of and alongside our members, such as SEIFSA, in defining how business can maximise its contribution and, together with our partners in labour and government, ensure we deliver on South Africa’s undoubted potential, despite the current challenges.
  • As Kaizer said at the opening yesterday, South Africa can be saved if we work together as a team. I fully agree that neither government not business can achieve this independently of one another. We need to harness the energy that I have seen here, speak openly and directly and commit to implementable actions where we take individual and collective responsibility for navigating our problems thus ensuring that South Africa properly positions itself for success.
Kaizer M. Nyatsumba

Introductory Remarks At The Fifth Southern African Metals And Engineering Indaba

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By Kaizer M. Nyatsumba, Chief Executive, SEIFSA

Date: 12 September 2019

Thank you, Melissa, for that fantastic introduction.

Ladies and Gentlemen, we meet at a most inauspicious time for our beautiful country. Unlike a year ago when there was so much hope of a New Dawn in the air, when the Commission into State Capture had just begun its public hearings and so much was expected to come of the President’s inaugural Investment Conference, we meet today at a time when our country is engulfed with bad news and our leadership has been exposed to be weak and so far unequal to the gargantuan task ahead.

Everywhere we look, leadership has taken cover and, as I had occasion to write in a poem more than two decades ago, “the sanguinary are in control”. We have become the rape and misogyny capital of the world, where just having been born female is enough to mark one out for all kinds of abuse. Our mothers, sisters, wives and daughters live in palpable fear of being molested and murdered with what looks like absolute impunity, while our leadership limply throws its hands into the air, mouths yet more empty condemnations and makes more unconvincing promises and undertakings.

Our streets have been taken over by angry, vile and unemployed men who rape, murder and pillage with gay abandon, comfortable in the knowledge that they will get away with it because our police are either on the take or useless and our law-enforcement agencies are impuissant. With unspeakable savagery, they lay into men and women whose only sin is that they are from another African country; torch trucks on the country’s roads for no reason other than that those who drive them across our towns, cities and borders are employed and are unknown to them; and target construction sites in our industrial areas to demand – by brute force – a stake in other people’s businesses, to which they will add not an iota of value.

Our borders exist in name only, with anybody who so desires free to walk in and out of them any time, in the process worsening our unemployment crisis and seriously inflaming passions among the indigent who do not know where their next meal will come from and for whom the only asset they have in abundance is time. Our borders are porous, our police are useless – I guess I have earned the right to say so: my brother was murdered in 2009 and, more than a decade later, nobody has yet been arrested – and our Department of Home Affairs and the National Defence Force are laughing stocks.

All this goes on while our political mandarins are either conspicuous through their silence or, when they dare surface to make some pronouncements, either make the same mealy-mouthed excuses for their failure to do the jobs for which they were elected or threaten – yet again – fire and brimstone, fully knowing that their words are not worthy of the pieces of paper or the Notepads from which they read them.

To our utter dismay, it would seem that our beautiful country is on auto pilot. Its leaders have either gone to ground or are too pre-occupied with their internecine conflicts and sundry machinations. It is as if we are left to our own devices.

Is it any wonder, then, that our economy has continued to flounder so badly and that our State-owned companies are in such a pitiable state? I don’t think so.

Far be it from me, Ladies and Gentlemen, to depress you right at the beginning of our Fifth Southern African Metals and Engineering Indaba. That is not at all my intention. I point these things out because it would be irresponsible of us, as business and labour leaders, to stick our necks in the sand and pretend that everything is hunky-dory. In my view, we all have a duty, individually and collectively, not only to face our current reality squarely in the face, but also to do something about it. We are not as helpless as we may sometimes believe ourselves to be.

We are far more powerful beyond measure. We must, each one of us, speak out robustly against the many ills confronting our country, and join hands with those who are similarly concerned and are keen to get involved in various efforts to reverse the very evident decay confronting us. We need to stop romanticising about a non-existent nirvana and face up to the challenge that ours is a sick country that is dangerously close to tipping over – unless we fold our shirt sleeves and put shoulder to the wheel.

The responsibility to save South Africa belongs to us all. In any society, this is way too important a task to leave to politicians alone. It is even worse in our case, where a growing number of politicians are exposed in various forms almost on a weekly basis to be self-serving individuals who worry only about themselves, their families and their political parties, with the country coming stone last. We need to reach out across the racial, political, class, gender and whatever other divides to work with all who profess to love South Africa and want to see it prosper.

That is the context in which we hold this Southern African Metals and Engineering Indaba. We believe that South Africa can – and will – be saved, if we all work together as a team. We believe, as I often point out, that, however much the men and women of goodwill and integrity in government may be willing to do so, the Government cannot execute this mammoth task alone. Obviously, with business not pulling the levers of legislative power, business also cannot do it alone. Instead, we need a strong partnership involving, in the first instance, Government, Business and Labour, followed by the general community.

Regrettably, it is sad to observe that, even during this period of a supposed New Dawn, we still have some people in Government behaving as if they were some demi-gods, rather than Servants of the People who elected them into office in the first place. It is a great pity, for instance, that among the nine members of the Ramaphosa Government invited to address this conference and interact with you, the Shareholders of this Beautiful Republic, all but two contrived to come up with various excuses for their absence. Even with one of the largest Cabinets in the world, in which every Minister has a Deputy, those who showed disdain to the metals and engineering sector by spurning our invitation would not even dispatch their Deputies or Directors-General to address this conference.

Sadly, both we and others who organise similar industry conferences have come to know that some among our Cabinet Ministers prefer events where theirs will be the only voices to be heard, without any other stakeholders to challenge them or hold them to account. Some would even go as far as to seek to control a conference’s agenda by insisting that members of political parties other than their own should not be invited.

We at SEIFSA have doggedly resisted such pressure – and will continue to do so. We are a Federation representing important stakeholders in our economy, and have no appetite whatsoever for any political gimmickry or games. We invite to our conferences any individual that we deem to have the experience, insights, wisdom and the power to contribute meaningfully to discussions of any issues being considered.

As always, Ladies and Gentlemen,   we look forward to a fruitful, robust engagement with our speakers in the course of the next two days.

As you may recall, during the Indaba last year, we asked you to consider adopting resolutions on some of the important issues that came under discussion. To refresh your memory, those resolutions saw delegates:

  1. Expressing disappointment at the failure of some Cabinet Ministers to attend important sessions of the conference to which they were invited;
  2. Calling on the Government to enforce designation of local content more rigorously in production processes across all value chains and expressing disappointment at the awarding of tenders to foreign companies by some State-owned enterprises when there is capacity for local businesses to manufacture the same products;
  3. Calling on the Government to include the local manufacturing industry in decision making regarding foreign and domestic investments to promote beneficiation and job creation;
  4. Calling on the Government to prioritize local businesses in all investment and construction projects, including Black Economic Empowerment partners, to comply with South African rules to address racial disparities;
  5. Calling on the Government to find a way of extending to the mid- and downstream group of industries in the metals and engineering sector the support available to primary steel producers; and
  6. Calling on the Government to reconsider the introduction of a carbon tax in the country, at a time when business is already struggling.

These resolutions have formed the basis of SEIFSA’s lobbying activities during the course of the last year. Regrettably, we have all lost the fight on the carbon tax, thanks in no small measure to the parlous state of the fiscus.

Ladies and Gentlemen, we at SEIFSA believe very firmly that, however difficult things may be at the moment, there continues to be a future for Manufacturing in South Africa and our region, and we believe that that future also includes a thriving Metals and Engineering Sector. However, for the sector to realize its full potential, it behoves all of us – in business, Government and labour – to get all hands on deck.

Thank you very much, yet again, for your attendance. Let us have a fruitful engagement that will be seen by future generations to have been vital for the continued survival of our Sector.

Thanks, too, to our host, the IDC, and all our Sponsors and Media Partners.

Ends

Free Trade Area

SEIFSA Welcomes Launch of Africa Continental Free Trade Area, Which Provides a Wider Market with Huge Value for Local Businesses

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Johannesburg, 2 June 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the official beginning of the African Continental Free Trade Area (AfCFTA) on 30 May 2019, which provides access to a continent-wide market of 1.2 billion people worth $2.5 trillion.

SEIFSA Chief Economist Michael Ade said the deal, which effectively places Africa as the world’s largest free trade zone by population since the 1995 creation of the World Trade Organisation (WTO), has remarkable potential for intra-continental trade.

“This is a huge milestone in achieving African economic integration. SEIFSA commends the 24 countries that had ratified the Agreement by 30 May, thus bringing it into force,” said Dr Ade.

The Agreement’s operational phase will be launched on July 7 at an African Union summit in Niger, with some minor issues – including rules of origin – still to be resolved. The Agreement which will effectively breathe life to the largest trading bloc in the world,  enables the creation of a single continental market for goods and services, with free and unfettered movement of business people and investments. It cuts duties on 90% of goods and is expected to boost regional and international trade and to improve on the proportion of trade by African nations with continental neighbours.

Dr Ade said the AfCFTA presents a unique opportunity for South African-based companies to trade with those of other regions, such as in West and Central Africa where there is a dearth of trade agreements. He encouraged companies in the metals and engineering sector to take advantage of the Agreement to boost trade further North and East of the continent.

“Due to challenges principally caused by poor logistics and infrastructure, most businesses had limited their trading opportunities to the southern part of the continent. The Agreement provides a scope for more improved trade in line with the African Union’s Agenda 2063 – and this is good news,” he said.

Dr Ade cautioned that rather than limiting themselves to producing a particular set of goods, local companies should conduct market research, move with the times and produce goods currently needed by other African countries. He said it was very important for trade among Africans to be expanded, since uncertainties in international trade increase the premium on regional intra-African trade.

“The AfCFTA proves that Africa has learnt from the experience of East Asia and Latin America to build productive trading capacities through regional value chains. This will help build collectively the competitiveness of African products – including raw materials – internally and internationally. By trading with other African member states, South Africa will strengthen its position and improve gains from international trade,” Dr Ade said.

However, Dr Ade also urged African leaders to do away with remaining challenges that pose a threat to intra-African trade. He said non-tariff barriers such as the plethora of documentation needed for cross-border trade transactions were even bigger impediments to intra-African trade.

Issued by:
Ollie Madlala
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

Chairing a Disciplinary Hearing: Doing it the right way

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Once you need to initiate or chair a disciplinary hearing it’s not the time to start learning what’s involved. As a manager or supervisor this is an important part of your skills set. Making a mistake can be costly, both financially and in terms of company credibility. Therefore it is important to get it right the first time and every time. This course is aimed at making sure you understand the process in full.

The workshop will cover
  1. Implementing Disciplinary Action
    • Substantive and Procedural Fairness
    • Code of Good Practice and the New Labour Relations Act
    • Investigating the Misconduct
    • Gathering evidence and documentary support
    • Preparing the Charges
    • Issuing Warnings
    • Notices of Suspension and Hearing
    • Preparing Witnesses and Evidence
    • Presenting Evidence
  2. The Disciplinary Hearing
    • The Role Players
    • Stages of the Hearing
    • What happens if it goes to the CCMA
  3. Chairing the Hearing
    • The Role of the Chairperson
    • Assessing Evidence
    • Reaching a Verdict
    • Assessing Mitigating and Aggravating Circumstances
    • Deciding on a Sanction
    • Guidelines for Determining Appropriate Penalties
    • Administration of Dismissal
    • The Appeal Hearing
GORDHAN, NAIDOO AND DUVENAGE PRESS RELEASE

Further Decrease In Broader Manufacturing Output in December 2018 Worries SEIFSA

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Johannesburg, 12 February 2019 – The decrease in output in the broader manufacturing sector in December 2018, as released by Statistics South Africa (StatsSA) today, is worrying, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist  Marique Kruger said today.

The latest preliminary data published by StatsSA today indicated that production in the broader manufacturing decreased on a year-on-year basis in December 2018, when compared with November 2018. On a continuous three-monthly basis, output in the manufacturing sector has been very volatile, slowing down from 3.0 percent in October 2018 to 1.3 percent in November 2018 and to 0.1 percent in December 2018.

Ms Kruger said the performance in December 2018 was generally unexpected, especially after the release of promising data for the Purchasing Managers’ Index (PMI) which increased to 50.7 points in December 2018, effectively signaling the first time that the data trended above the benchmark level of 50 in 2018.

“The deceleration in output does not augur well for manufacturers since a positive performance is imperative towards lifting the real Gross Domestic Product figures for the fourth quarter of 2018,” said Ms Kruger.

However, Ms Kruger said the expectation was for businesses to remain resilient in the face of the current difficulties, including volatility in production, subdued domestic demand and high unemployment levels.

“Hopefully, a rebound in production in January 2019 will help in clawing back lost job opportunities from the sector,” concluded Ms Kruger.

Issued by:
Ollie Madlala
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

SHEQ Legislation

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HEALTH AND SAFETY LEGISLATION REVIEW

 

1. Occupational health and safety

A. Occupational Health and Safety Amendment Bill

For reasons unknown, there has been a delay in the publishing of the Draft Occupational Health and Safety (OHS) Amendment Bill for comment. Nedlac deliberations had commenced in October 2014 and concluded in March 2016.

 

The following Regulations were published for comment:

– Draft Ergonomics Regulations

– Draft Asbestos Abatement Regulations

– Lift, Escalator and Passenger Conveyor Regulations Incorporation of the Code of Practice for Inspection and Testing of Lift

 

No regulations have been promulgated in 2018.

 

ENVIRONMENT LEGISLATION

Carbon Tax and Climate Change Bill

The 2017 Draft Carbon Tax Bill is a refinement of the initial 2015 Draft Carbon Tax Bill. The main aim of the carbon tax bill is to put a price on the environmental and economic damages caused by excessive emissions of greenhouse gases. A secondary aim is to change the behaviour of firms and consumers, by encouraging uptake of cost-effective, low-carbon alternatives.

Once the Bill comes into effect, the National Treasury will levy carbon tax on emissions above the absolute carbon budgets (a greenhouse gas emissions allowance allocated to a person over a defined time period). The Department of Environmental Affairs (DEA) is currently devising methodology for the level of the budgets. The DEA also published a Climate Change Bill which, once It comes to effect, will enable the enforcement of Carbon Budgets.

 

The business position on both Bills is that there is no reason for a developing country, whose GDP growth has remained below 2% since 2016, to have one of the most stringent environmental legislation in the world. Moreover, the imposition of carbon budgets where there are no alternative technologies is prejudicial towards business.

 

b. Industry Waste Management Plans

On 6 December 2017 the Minister of Environmental Affairs published a notice directing the following industries to submit industry waste management plans for approval:

Lighting

Electrical and Electronic Equipment and

Paper and Packaging Industry

 

This was after SEIFSA and BUSA raised flags against the previous notice, citing impractical requirements and compliance unachievable deadlines. The deadline for subscription to approved Industry Waste Management Plans was 6 September 2018. However, by August 2018, there had not been a single plan approved by the Minister. To this end, affected companies may find themselves unable to comply with this requirement. The SEIFSA SHEQ Executive continues to lobby on this matter and keeping the Associations informed.

 

SHEQ BUSINESS SOLUTIONS

ISO 9001 Quality Management Systems (QMS) is an effective tool for assuring quality of products. According to research, it increases the bottom line and enhances access to markets.

The SHEQ division provides consultancy and training services to assist with the implementation or improvement of  QMS.  ISO 9001 implementation is offered to small enterprises at competitive rates.

Quality related offerings include internal QMS audits are to evaluate the effectiveness of your system, and second party QMS audits to your suppliers to enhance your supply chain.

manufacturing production

Subdued Domestic Demand Likely To Constraint Promising Manufacturing Production Outlook, Says SEIFSA

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Johannesburg, 11 October 2018 – The latest manufacturing production data released by Statistics South Africa today confirms the resilience of the Metals and Engineering (M&E) cluster of sub-industries, despite the country officially stuck in a technical recession, Steel and Engineering Industries Federation Southern Africa (SEIFSA) said this afternoon.

SEIFSA Economist Marique Kruger said surprisingly, production in the M&E cluster of industries continue to trend upward in August 2018 from July 2018, in line with the broader Manufacturing sector, despite signs of headwinds underpinned by weeks of uncontrollable petrol price increases, generally weak exchange rate, high energy costs and municipal tariffs.

“The official output statistics released today is good and encouraging to businesses in an environment interlaced with doses of economic, policy and political uncertainty,” she said.

Output for August 2018 in the M&E cluster improved to 3.9% on a month-on-month basis, from a lower 3.2% recorded in July 2018, while there was a corresponding year-on-year increase of 4.6% in August 2018 from 3.4% in August 2017. The annual performance of the sub-industries was generally in line with the broader Manufacturing production which increased on an annual basis by 1.3% in August 2018 when compared with August 2017.

“Moreover, it is encouraging to note the dominant performance of key M&E cluster of industries, which were the largest positive contributors to the improved performance of Manufacturing. Specifically, the basic iron and steel, non-ferrous metals products, metal products and machinery all registered 2.1% improvement in the volume of production and contributing 0.4 of a percentage point,” Ms Kruger said.

She added that the improvement in Manufacturing output was generally good for the economy

“The current subdued domestic demand is likely to constraint Manufacturing production outlook. The expectation is for its cluster of sub-industries, including the metals and engineering industries, to continue to benefit from a possible up-turn in domestic demand (albeit mild) in due course. However, the continuous improvement in domestic growth will depend, amongst other factors, on the rapid implementation of the President’s stimulus plan – with the detail to be revealed in the upcoming Medium-Term Budget Policy Statement.

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

METALS AND ENGINEERING INDABA CONFERENCE DELEGATES

METALS AND ENGINEERING INDABA CONFERENCE DELEGATES PASS A RESOLUTION FOR GOVERNMENT TO BE EFFECTIVE IN IMPLEMENTING AND MONITORING DESIGNATION OF LOCAL CONTENT

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Johannesburg, 21 September 2018 – Delegates attending the 4th Southern African Metals and Engineering Indaba organised by the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) at the IDC Conference Centre in Sandton passed a resolution for Government to be effective in implementing and monitoring designation of local content.

During discussions in the 5th and 10th sessions, delegates expressed a strong need for the Government to be much more effective in monitoring the implementation of designation of local content in production processes across all value chains, and also expressed disappointment about the awarding of tenders by State-owned enterprises to foreign companies, when there is capacity for local businesses to manufacture the same products.

Delegates stressed the fact that designation of locally-sourced products (towards improving local content) should be complied with and that infrastructure investment without designation of products that can be sourced locally will be futile.  However, delegates acknowledge that there may be instances where domestic capacity may be less than stated demand, owing to the contraction or closure of some sectors or in the event of new product ranges. In these instances, delegates felt that a temporary allowance for imports may be granted, after full utilization of domestic capacity, with the knowledge that the supply deficit would undoubtedly induce expansion investment.

During the 3rd, 6th and 10th sessions at the conference, delegates made up of captains of industry, labour leaders, academics and senior international partner organisations also called on the Government to include the local manufacturing industry, and the diverse metals and engineering cluster within it, in decision making regarding foreign and domestic direct investments in order to promote beneficiation and job creation. Specific reference was made to Chinese investments which are often concluded without involving business with potential negative effects on local jobs. Given that it is important to create jobs and not lose them, the delegates repeatedly highlighted the importance of investment deals to be concluded transparently and with the maximum participation of the local industry.  

Recognizing the need for local manufacturers to be more competitive, in plenary session 8 delegates nevertheless called on Government to prioritize local businesses in all investment and construction projects, including Black Economic Empowerment partners in order to comply with South African rules designed to address racial disparities which continue to exist more than two decades after the end of apartheid.

During the 11th plenary session at the Indaba, delegates reflected on some constraints to South Africa’s international competitiveness, highlighting the need to benchmark the local cost curves with international standards with the aim of reducing skyrocketing costs. While also acknowledging the continuous efforts made by the government to protect local manufacturers from cheap, subsidized imports from Asia, via the imposition of necessary tariffs, delegates resolved that equal support should also be made available to the mid and downstream group of industries of the M&E cluster.

Delegates also resolved to call on the Government to reconsider its position on the introduction of a carbon tax in South Africa, arguing that it would amount to a production tax, which would further squeeze businesses’ margins. They warned that the introduction of carbon tax would impose additional costs to business, harm the economy and impact negatively on jobs at a time when South Africa badly needs more jobs to be created. Arguing that the country cannot afford carbon taxes, delegates said that it was vital for the Government to follow Australia’s example and abandon its plans to introduce carbon tax, as it did with its nuclear ambition earlier in the year.

 

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

Metals And Engineering Sector’s Performance To Be Better Than Originally Expected

Rebound In The Purchasing Managers’ Index For July 2018 After Months Of Subdued Performance Is Encouraging

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Johannesburg, 1 August 2018 – The rebound in overall business activity in the broader manufacturing sector is encouraging and bodes well for the future, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

Commenting after the release of the latest Absa Purchasing Managers’ Index (PMI), SEIFSA Economist Marique Kruger said the results of the lead indicator for August, which provides forward-looking insight into manufacturing’s health,  were encouraging.

The index improved from 47.9 percent in June 2018 to 51.5 percent in July 2018, placing the data above the neutral level of 50, which separates expansion from contraction. Ms Kruger said the improvement provided some relief following two consecutive decreases in May and June 2018, and that it was expected that it would also have a positive knock-on effect on output levels.

“The PMI data specifically provide hope and modified expectations for companies in the metals and engineering (M&E) cluster going into the month of August, especially given that all the sub-indices improved in July relative to June,” said Ms Kruger.

Ms Kruger said it was particularly encouraging that the employment sub-index improved from 46.0 percent in June to 50.8 percent in July, providing hope for an eventual improvement in the unemployment rate. She said that was important following Tuesday’s release of the Quarterly Labour Force Survey results which captured a total loss of 105 000 jobs in the manufacturing sector, which compounded the official unemployment rate to 27.2% in the second quarter of 2018.

Ms Kruger said the PMI data continued to reflect the burden of fluctuating input costs, fuel and energy costs borne by manufacturers, largely underpinned by the weaker rand.

“We welcome the data and hope for a continuous improvement in business activity in the short term, as the information provides some promising indications for the broader manufacturing sector, which has the largest indirect job creation potential,” she said.

Ends

Issued by:

Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za

SEIFSA PIPS A FUN FACTS GUIDE 300x300

SEIFSA CAUTIOUSLY OPTIMISTIC FOLLOWING A REBOUND IN METALS AND ENGINEERING SECTOR OUTPUT IN MAY

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JOHANNESBURG, 12 JULY 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is cautiously optimistic following the release of production data reflecting an increase in output in the Metals and Engineering (M&E) sector, despite a corresponding decline in business confidence and a volatile rand, the Federation’s Chief Economist, Michael Ade, said this afternoon.

The latest preliminary seasonally-adjusted data, released by Statistics South Africa today, captures an increase in output in the sub-industry, in line with the broader manufacturing sector, which also increased by 2,3 percent in May 2018 when compared with May 2017. After adjusting for the sectoral weights, the data indicated that production in M&E sub-sectors increased by 6,2 percent in May 2018 on a year-on-year basis, and by 10,8 percent on a month-on-month basis.

“The acceleration in output in the M&E cluster is welcome, albeit with a slight level of apprehension, given THE existing global trade war with the potential of constricting global demand, benign local demand and generally low domestic business confidence. However, the improvement in output augurs well for manufacturers in the M&E cluster and is necessary towards lifting the real Gross Domestic Product (GDP) figures for the second quarter of 2018, especially considering that current production conditions are relatively better when compared to some few months ago,” Dr Ade said.

Moreover, Dr Ade said that the rand has been very resilient in the face of headwinds, including prevailing uncertainty in the markets and heightened rhetoric from the world’s two largest economies about trade war.

He is optimistic that the relatively strong rand will help in reducing imported input costs, thereby enabling companies to bolster their margins.

“However, it should be pointed out that while this is generally good for importing businesses in the M&E cluster, there will be a slight set-back in export volumes, warranting the need to continuously monitor the trends,” Dr Ade concluded.

Issued by:

Ollie Madlala

Communications Consultant

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.seifsa.co.za

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.