SEIFSA

Following the signing of the Settlement Agreement and the commitment contained therein to prepare a Consolidated Main Agreement for submission to the Department of Labour, with a request that it be gazetted and extended to non-parties, a Drafting Committee comprising of representatives of the Parties assisted by their respective legal representatives has completed this task.

The Consolidated Main Agreement incorporates all the amendments agreed upon between the parties during the 2011-2014 and 2014-2017 Main Agreement negotiations and the recently-concluded amendments arising out of last year’s Main Agreement negotiations.

An important legal requirement in preparing a collective agreement for gazettal and extension is the incorporation of the parties’ industry membership details. This requirement, contained in Section 49 of the Labour Relations Act (LRA), requires the Bargaining Council to work collaboratively with all the parties and the Department of Labour so that the results of the membership verification report can be incorporated into the request for the gazettal and extension of the Main Agreement. To view the Determination by the Department of Labour, please click here.

At a Bargaining Council Management Committee Meeting held today, the 2017-2020 Consolidated Main Agreement – concluded between the 21 SEIFSA-affiliated Employer Associations and the industry’s five Trade Unions – was adopted, in line with the Bargaining Council’s Constitution and Section 32 of the Labour Relations Act, as a Collective Agreement concluded in a Bargaining Council, with a request that the Minister of Labour be petitioned to extend the agreement to all non-party employers and employees from a date to be determined by the Minister.

Once gazetted, the Main Agreement will set new minimum standards for all employers and employees in the metals and engineering industries.

JOHANNESBURG, 10 MAY 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is encouraged by the continuous improvement in production in the metals and engineering (M&E) sector, given that this is the third consecutive annual acceleration from January 2018, the Federation said today.

“The progress shows that local businesses are gradually responding to the generally improving consumer and business confidence, which is characteristic of the Ramaphosa era. Hitherto, the concern had generally been that despite improving sentiments from the start of the year, supply-side data as evidenced by lead economic indicators were still nondescript.

“Today’s output data for the M&E cluster is encouraging, considering its significance to gross domestic product and the fact that the economy cannot entirely depend on positive sentiments to expand,” said SEIFSA Economist Marique Kruger.

The latest preliminary seasonally-adjusted production data for the M&E sector published by Statistics South Africa (Stats SA) today indicated that output improved to 10,3 percent in March 2018, on a year-on-year basis, when compared to March 2017. The performance is recorded despite a reduction in production in the broader manufacturing sector, which decreased by 1,3 percent in March 2018, compared to March 2017. Similarly, the M&E sector performed well on a month-to-month basis, registering a growth of 9,0 percent in March 2018 when compared to February 2018, in line with the broader manufacturing which increased by 1,3 percent.

“Businesses in the cluster should build on this performance by capitalising on existing initiatives aimed at igniting domestic growth by both the public and private sectors, expand output, boost sales and margins and possibly claw back lost jobs,” Ms Kruger said.

She added that SEIFSA expects a continuous improvement in output in the M&E sector, given an up-tick in the composite purchasing managers index (PMI), which is a lead indicator for the sector. She said the constant improvement of the business activity sub-index of the PMI also provides solace to potential investors and stakeholders.

“Accordingly, higher productivity and better capacity utilisation is necessary for businesses to cushion the negative effects of volatile and increasing input costs,” said Ms Kruger.

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 is a National Federation representing 23 independent employers. 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 formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing few than 50 people.

It is important for companies involved in foreign trade to consider the options available to them to protect their bottom line, writes Michael Ade.

Despite the continuous recovery in global commodity prices from the lows recorded in December 2015, it is still too soon to tell whether the positive trajectory will continue. This is due to on-going efforts by China to re-balance its economy and the protectionist policy of the US on steel and aluminum imports, which may just be a precursor to enhanced trade wars which would have dire consequences for all.

The imposition of an import tariff on all steel products by the US, a leading global steel importer, could lead to a fall in international steel prices due to a combination of lower demand and a corresponding oversupply from China. A potential trade war between China and the US has the potential of constricting an up-tick in world growth, overlapping to temporary exchange rate shocks, as capital flows respond to changes in expected returns.

Domestically, production in the metals and engineering (M&E) sub-components continued to be variable and local steel consumption is still low, compelling many businesses to increasingly consider exploring various export markets within and without the African continent. However, exporting into foreign markets and, indeed, international trade is significantly different to domestic trade, given the number of factors such as payment, performance and transportation risks to which  companies are exposed. All these risks emanate from trade across borders which are subject to highly volatile exchange rates. Foreign exchange risk, therefore, adds considerable threat to exporters, importers and competitors with imported goods in the local market.

Although financial institutions do play a crucial role in assisting traders in mitigating risks through the provision of trade and supply chain finance solutions, including Letters of Credit, foreign exchange rate risk is still one of the biggest risk factors faced by businesses. Typically, overseas buyers of finished products would pay in their local currency, which the South African exporter then exchanges for the rand, before depositing it in his business bank account. However, while a sale transaction is in progress, the value of a foreign currency may change relative to the value of the rand.

For the exporting company in South Africa, this means that some of its export profits can be reduced in the course of exchanging currency during the trade transaction, with the company incurring losses or exports costs, which can significantly impact on margins over time, and reduce operating margins.

Hypothetically, a South African exporter thought that the pay-off from a trade transaction would be R1,000,000 from a shipment the company is exporting to Germany. However, by the time the shipments of goods make their way overseas and the buyer takes delivery, the rand may have weakened against the Euro and the exporter ends up only getting R910,000, with exchange rate costs accounting for R90,000. The time lag between when the goods are exported and when the buyer takes final possession of the goods is, therefore, very critical.

If, on the contrary, instead of the rand weakening, it appreciates suddenly against the Euro, this means that by the time the South African exporter’s goods arrive at their final destination in Europe, the costs to the buyer must have increased. It may cost the buyer more in the local currency or the Euro, to equal the rand value upon which the transaction was initially agreed upon. The sudden increase in the final selling price to the buyer, due to the appreciation of the rand, may even lead to the buyer in Europe no longer wanting to take delivery of the merchandise and effectively cancelling the deal. Businesses, therefore, need always to monitor currency variability.

A South African company can hedge and maximise benefits from currency volatility by simply opening an account in the country of import, enabling it to deposit the gains from exchanging currencies in an offshore account or in a local bank of the importing country. This will enable the SA business to have a cash buffer to cater for and offset future depreciation of the rand. However, local companies must ensure that they comply with the Reserve Bank’s foreign exchange requirements and its annual limits for companies to remit funds out of the country. The downside with this hedging method is that it’s hard to predict accurately when currency fluctuations will occur, its direction and duration.

Domestic businesses can also take up currency forward contracts agreements which specifically enable them to exchange certain amounts of rands for any foreign currency on a future date. Forward contracts allow a business to lock in an import purchase of input or export sale of output at the current exchange rate, guaranteeing the proceeds of the transaction at a price agreed upon. The benefit of this type of agreement is the protection to the business against the risk of a weakening or depreciating rand. However, the challenge is that if the rand should strengthen afterwards, businesses cannot profit from forward contracts since they are already locked into a mutually-agreed exchange rate with the bank.

Another financial instrument available to local businesses is futures contracts, which are a commitment by the business to purchase currency in the future, at a rate agreed upon rate based on current exchange rates. Although similar to forward contracts, futures contracts have an advantage over the former  since there is a secondary market for them. Companies can opt to sell their contracts to a third party before the agreed term of the contracts are up or if they have a change of mind in pursuing the business opportunity or if their businesses need more cash liquidity. The slight snag with futures contracts is that they usually allow a range of forward exchange prices rather than a fixed point. Also, the contracts are only offered in fixed amounts, which may make it hard to hedge the exact amount a company may want through futures.

Currency options as a financial instrument provide the exporter or importer with an opportunity –  but not an obligation –  to buy or sell a fixed amount of currency at a set price, on or before a chosen date. Currency options come with a “strike price”, which is the price at which the currency can be bought or sold. They also have an expiry date, after which the opportunity to purchase the currency option at a price agreed upon elapses.

However, the caveat is that each of these currencies or hedging strategies, including common spot deals, comes with fees and commissions charged by the banks or any relevant party administering the hedging vehicle. Irrespective of the route chosen, exporters and importers should assess the relevance of hedging against currency risks, before taking up any of the hedging options available. When in doubt, companies are advised to consult with their local banks for flexible and suitable cost-effective options.

Dr Michael Ade is the Chief Economist of the Steel and Engineering Industries Federation of Southern Africa.

JOHANNESBURG, 2 MAY 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is encouraged by the improvement in the Absa Purchasing Managers Index (PMI) released today, with the data showing that businesses are slowly responding to a buoyant consumer, business and investor confidence.

SEIFSA Chief Economist Michael Ade said that, following Cyril Ramaphosa’s election in December as new ANC president, domestic economic data were expected to catch up with growing domestic sentiments resulting from the Nasrec conference. He said that was more so after Mr Ramaphosa assumed the country’s presidency.

However, Dr Ade cautioned that, in addition to positive consumer and business confidence, there was a need for an equal up-tick in demand and supply side dynamics.

“SEIFSA is, therefore, encouraged by the improvement in the latest PMI numbers, which had previously dipped below the 50-neutral level, which separates expansion from contraction, in February 2018,” Dr Ade said.

The latest seasonally-adjusted preliminary PMI data show that the composite PMI improved to 50.9 in April 2018, from a lower 46.9 in March 2018. However, the headline PMI data still exhibit a lot of uncertainty and the volatility is driven by volatile input prices, because of factors affecting supply, including the variable exchange rate. Enhanced volatility is also evident in the oscillating performance of the business activity, inventory levels and new sales orders sub-indices of the composite PMI index, which have been largely unpredictable.

“Given that the PMI is the first data for the month, the updated information provides a good preview and insight into the level of economic activity to be undertaken by production and procurement managers, including other key stakeholders of businesses in the month. The data generally provide promising signs, and we are hopeful for a continuous improvement in the composite index in the forthcoming periods,” 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 employers. 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 formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing few than 50 people.

Johannesburg, 2 May 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is worried about the impact the US’s decision to permanently impose large tariffs on the importation of steel and aluminium products would have on the broader South African steel industry

Despite South African exports of steel and aluminium to the US accounting for only 1.4 percent and 1.6 percent of U.S global imports respectively, these were still deemed as significant enough to threaten or impair US national security. The import tariffs of 25% on steel and 10% on aluminum products initiated under section 232 of the action plan on the basis of safeguarding US national security are effective from June 1 2018.

“The decision by the US to reject SA’s application for exemption is a travesty. It is clear that efforts by the South African government representatives, including the formal submission by the Minister of Trade and Industry, Dr Rob Davies, to the US requesting the exclusion of South Africa from the imposition of the duties on the basis that steel and aluminium exports to the US are a source of strategic primary and secondary products used for further value-added manufacturing in the US, thereby contributing to jobs  in both countries, did not prevail,” SEIFSA Chief Economist Michael Ade said this morning.

He added that it now seems the only option available for South African exporters is to individually convince their buyers in the US to lobby for exclusions for individual companies from SA on a case-by-case basis, rather than all South African exporters benefitting from a blanket exemption.

The decision by the US government still favours the original list of countries and regions that were initially temporarily excluded, including the European Union, Argentina, Australia, Brazil, Canada, Mexico and South Korea.

“The proclamation by the US will directly cost South frican exporters roughly R3 billion worth of steel products and R474 million worth of aluminium products respectively. This will not only starve the local industry of foreign currency, but it will also have a negative impact on the country’s foreign reserves. A further disruption on trade will include possible reductions in the quantity of steel and aluminium products exported to the US as local companies seek alternative export  markets, thus negatively affecting exports competitiveness,” Dr Ade said.

He added that the second-round effects will invariably be felt by South African companies largely dependent on the US market for exports. He warned that local companies facing the stiff duties may effectively seek ways of reducing costs, including cutting jobs, given their increasing input costs baskets.

In conclusion, Dr Ade said that given the reduction in demand from the US and a possible oversupply from China, there is a possibility of a fall in global commodity prices and eventual dumping of steel and aluminium products into the SA markets.

“In this regard, SA needs to establish a steel import monitoring system that will verify any significant change in imported volumes, given the implementation of the US Section 232 tariffs, should exports to SA rise due to the US restrictions,” said Dr Ade.

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 employers. 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 formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing few than 50 people.

IMPORTANT NOTICE

merSETA stakeholders

APPLICATION FOR EXTENSION ON THE SUBMISSION OF THE YEAR 19 – MANDATORY AND DISCRETIONARY GRANT

Stakeholders are advised that should they be unable to submit their grant applications on or before Monday, 30 April 2018 that they must apply for an extension via the NSDMS system or via e-mail before the 30 April 2018 deadline.

Stakeholders who have not applied for the extension prior to the 30 April 2018 deadline will not be able to continue with the application process.

Should you be sending an email to admin@merseta.org.za, please make reference to the entity levy number, name of the company and reason for the extension request.

Employer, Employee and Labour SDF registrations and grant applications must be submitted on-line via the following website address:  http://nsdms.merseta.org.za

For assistance, please contact the merSETA regional offices or the call centre on 086 163 7738

JOHANNESBURG, 15 APRIL 2018 – Great companies make for good corporate citizens, positively impacting on their stakeholders, the lives of communities in which they operate as well as the environments in which they operate.

To celebrate the outstanding corporate social responsibility programme by a company in the metals and engineering sector and to encourage others to follow suit, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) announced its search for an exemplary business with a corporate social investment project that makes the biggest impact on the lives of its beneficiaries.

“The company to walk away with the Best Social Responsibility Programme of the Year Award will be honoured at a gala dinner to be held at the IDC Conference Centre  in Sandton on 24 May,” SEIFSA Chief Executive Officer Kaizer Nyatsumba said.

Last year, ABB South Africa walked away with the Award in this category.

Mr Nyatsumba said that the criteria for the corporate social responsibility category include:

• Highlighting the role of the private sector in addressing social challenges and improving the communities in which they operate;
• Recognising those achieving social impact through partnership, investment, pro-bono work or employee-led initiatives;
• Judges will look for evidence of where these organisations have embedded their principles, aligned them with commercial objectives and achieved a positive and lasting impact on the community;
• Staff Engagement and Development;
• The Community or a Social Cause; and
• Effective Leadership and management involvement.

Entrants will be assessed on their performance in the period 1 January 2017 to 31 December 2017.

Established in 2015 out of the need to celebrate excellence in the sector, the SEIFSA Awards for Excellence has seven different categories, with the Best Social Responsibility of the Year Award being one of them.

The other categories are:

• The Most Innovative Company of the Year Award is awarded to a company that has shown the best level of innovation in Research and Development or Production in 2016, in the process of either gaining market advantage or reducing production costs;
• The Health and Safety Award of the Year will be offered to a company with the best legal compliance record in Health and Safety or the lowest Lost-Time Injury Frequency Rate in 2016;
• Companies rated the highest in customer service performance in 2016 will receive the Customer Service Award of the Year;
• The Most Transformed Company of the Year Award will go to a company that showed the highest transformation level in the composition of its Board of Directors, Executive Management and Managerial Team in 2016 (this award category pits companies employing fewer than 100 people against those of similar size, and companies employing more than 100 companies against others of similar size);
• This is the Decade of the Artisan, and an award will be made to the company that trained the highest number of artisans in 2016; and
• The Environment Stewardship Award will go to a company that has made the biggest or best strides towards conserving the environment or mitigating the impact of its operations on the environment in 2016.

Mr Nyatsumba has encouraged manufacturers operating in the metals and engineering sector to submit their entries for the seven categories before the deadline date of 20 April 2018. The Awards are open to all companies in the sector, both SEIFSA members and non-members.

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 employers. 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 formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing few than 50 people.

Introduction

As Management may be aware from recent media reports, the South African Federation of Trade Unions (SAFTU) – of which NUMSA is a member –  is preparing for a national day of action in the form of a general strike on 25 April 2018 in protest against the introduction of the labour law amendments and the national minimum wage.

This Management Brief provides some basic background to the issue and guidance to Management in dealing with the planned protest action.

Protest Action and the Labour Relations Act

The Labour Relations Act (LRA) permits registered trade unions or federations such as SAFTU to undertake protected protest action to promote the social and economic interests of workers, provided that they observe the procedural requirements contained in Section 77 of the LRA.

It is important to note that whilst SAFTU’s application to the Section 77 Sub-Committee of NEDLAC was unsuccessful, three trade unions affiliated to SAFTU (i.e. NUPSAW, ICTU and Salipswu) made a similar Section 77 application to NEDLAC some time ago for strike action on 12 and 25 April 2018.

This application was duly considered by NEDLAC and the NEDLAC Section 77 Standing Committee determined the notice to be compliant with the administrative requirements of the LRA. Consequently, employees participating in any action on 12 and 25 April 2018 will be protected by the normal rules regarding protected strikes, namely: no work, no pay and no disciplinary action.

The action on 12 April seems to be limited to the Western Cape, with the rest of the country potentially likely to be affected on 25 April 2018.

Since the three trade unions referred to above are affiliated to SAFTU, this opens the way for other SAFTU-affiliated trade unions –  such as NUMSA –  to piggyback on the protected action.

Consequently, employees participating in any action on the 12^th and the 25^th of April will be protected by the normal rules regarding protected strike action, namely: no-work-no-pay and no disciplinary action.

Management Guidelines on Possible Absenteeism on Thursday, 12 and Wednesday, 25 April 2018

SEIFSA recommends that Management adopts the following course of action in dealing with any stay-away from work on the 12^th and the 25^th of April:

• Inform all workers that any absences related to the protest action will be treated on the following basis:
• no work, no pay and no disciplinary action;
• a shift for leave pay and leave enhancement pay qualification purposes will be lost in respect of the day’s absence; and
• any overtime worked during the course of the week will be paid at ordinary rates to make up for the lost ordinary working hours from Thursday, the 12^th and Wednesday, the 25^th of April 2018.

The Staff of the SEIFSA Industrial Relations and Legal Services Division are available on (011) 298-9400 to provide any further advice and/ or assistance to Management on the contents of this Management Brief.