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SEIFSA Elects Its Most Transformed Board To Date As Elias Monage Assumes The Presidency

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Johannesburg, 14 October 2016 – Arabela Holdings Executive Chairman Elias Monage was elected President of the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) and Chairman of its Board of Directors with effect from Friday, 12 October 2018.

A seasoned business leader with vast experience in business in general and the metals and engineering sector in particular, Mr Monage was elected President during SEIFSA’s 76th Annual General Meeting in Parkton, Johannesburg on Friday.  ArcelorMittal South Africa Marketing Director for Africa Alpheus Ngapo, Babcock International Africa Division Company Secretary Neil Penson and Auto Industrial Group CEO Andrea Moz were elected as Vice Presidents.

Mr Monage has also served as the Black Business Council’s Convener at NEDLAC and is the former President of CAPES and a former Director of Steloy Casting. He was first elected onto the SEIFSA Board in 2016.

Other Board Members also elected at Friday’s AGM were South African Mint Company (Pty) Ltd Managing Director Tumi Tsehlo, MphoNo Energies Managing Director and KSB Pumps & Valves (Pty) Ltd Board Member Nonhlanhla Ngwenya,  Lixil Africa Chief Legal and Human Resources Officer Seneca Lutchmana and Murray & Roberts Power & Energy Human Resources Executive Patrick Metswi. They join Africa Steel Holdings Founding Director Mayleen Kyster and Zimco Group (Pty) Ltd Human Resources Manager Ellen Veldhoven on the SEIFSA Board.

SEIFSA Chief Executive Officer Kaizer Nyatsumba congratulated Mr Monage as President and the others as Board Members. He said that this was the most diverse that the Federation’s Board has been in its history.

“We commend SEIFSA membership Associations for having elected the most transformed Board in the Federation’s history, both in terms of race and gender. Colleagues and I are encouraged by this development, which we believe to bode well for transformation in the metals and engineering sector. We look forward to working with the new President and Board Members,” Mr Nyatsumba said.

Delivering the Presidential Address, outgoing Interim President Alpheus Ngapo said although production in the metals and engineering sector was generally increasing alongside international commodity prices, the cluster was still going through a structural adjustment and its challenges were still prevalent.

“Its growth pattern still fluctuates, productivity is generally poor, capacity utilisation is still below the required 85% and investment and profit levels are low.  Domestic production costs have also been rising alongside output levels,” Mr Ngapo said.

He added that although these challenges signal the resilient nature of businesses in the metals and engineering sector, regrettably the optimism and hope for better future business prospects was not shared by all purchasing executives. He said there continued to be understandable concern among a number of stakeholders and observers that the country is de-industrialising.

“That concern is a direct consequence of the ongoing decline of broader manufacturing’s contribution to South Africa’s GDP over the past few decades, at a time when other sectors such as finance, real estates and business services and wholesale and retail trade, catering and accommodation grew at a higher pace,” he said.

Mr Ngapo said other challenges currently facing the sector were South Africa’s lacklustre economic performance, followed by continuing significant imports of cheap products and skills as well as the manufacturing sector’s apparent lack of international competitiveness.

“These challenges will continue to stare us in the face, and maybe even worsen, until such time that Government, business and labour get together to address them constructively, putting the country’s interests above all else, and then implementing the solutions agreed to,” he said.

University of Johannesburg’s Pan-African Institute Associate Professor Mcebesi Ndletyana, a keynote speaker at the AGM, provided an insightful analysis of the country’s political economy.

He said while the initial optimism that came about as a result of the replacement of Jacob Zuma by Cyril Ramaphosa as President of the country in February has since subsided, he remained hopeful that a new dawn and a promise of renewal was still possible, but only if the ruling party worked hard to distinguish itself from Zuma’s ANC.

“The ANC Ramaphosa inherited was not only riddled with corruption, but it had also turned South Africa into a clientelist state that served as client for the Gupta family. For the current administration to stand a chance of securing victory at next year’s election, it is of paramount importance for it to cleanse itself of corrupt leaders, including Ministers implicated in State capture,” Professor Ndletyana said.

He said for a different ANC to emerge, a new, morally-conscious leadership would have to rise and reform the ANC, adding that failure to do so would result in the organisation losing the 2019 elections.

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

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

SEIFSA Employment equity

MAY THE FORCE BE WITH YOU – THE SERIOUS CONSEQUENCES OF THE EMPLOYMENT EQUITY ACT

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“Don’t put it off”, that’s the warning from SEIFSA to its members and all other companies within the Metals and Engineering Sector.

The Department of Labour has ramped up its enforcement mechanisms in a concerted effort to force compliance with the country’s labour laws. Although busy, with companies fulfilling the last orders for the year or trying to make targets with one last push, the October-December period is also the time to compile and submit Employment Equity Reports online.

The harsh reality is that The Department of Labour’s (DoL’s) deadline looms large on 15 January 2019; with the Metals and Engineering Sector, amongst others, shutting down towards the middle of December until the second week in January, companies cannot afford to be caught short. Human Resource professionals must lead the charge because the Department can impose – and has previously imposed – fines of R1.5 million.

“We are here to help,” says SEIFSA Human Capital and Skills Development Executive Melanie Mullholland. “Our auditing, training and consulting services are personal and can really enable the focus of a company’s reporting capability. We prepare you for exactly what the Department of Labour is looking for”.

SEIFSA’s support speaks directly to our mission: the Federation needs to ensure that its member companies have the tools to transform themselves so that companies can focus on their core business.

Transformation makes business sense,” says Ms Mulholland.

During the launch of the 18th Employment Equity Report, Labour Minister Mildred Oliphant had this to say:

The trouble is that, broadly speaking, we are not making much progress.  There are times when one feels that even the EE Plans are put together grudgingly, with no real will to implement them.  Twenty years since the Employment Equity Act was introduced, there is not much to show for it.

The word “grudgingly” and the phrase “no real will” should worry businesses. It speaks to the Government’s perceived attitude of business. It also demonstrates why there is a renewed appetite for ensuring compliance.

“All of us must commit to transformation; we simply must lift our respective games, especially in the Metals and Engineering sector”, says Mullholland.

“We are resolute about scaling up inspection and enforcement and targeting those areas that will give us the bigger impact”, said Minister Oliphant.

In October 2018 the Department of Labour’s Employment Equity Directorate embarked on Employment Equity roadshows in the form of Public Hearings throughout the country. Its focus is on the amendments to Section 53 (the ability to trade with Government) and proposed sectorial targets, contained in the Employment Equity Act Amendment Bill and the Draft Regulations released in September 2018. SEIFSA strongly recommends that Sections 24 Managers, Human Resource (HR) practitioners, especially those in the Metals and Engineering Sector, attend these hearings to ensure that they stay fully informed of the requirements and implications for businesses that do not comply.

In the meantime, let’s begin with what your company needs to start doing immediately.

THE BASICS

  1. Designated employers that employ 50 or more employees or have an annual turnover that exceeds or equals the amounts in schedule 4 of the EEA.
  2. For the Manufacturing Sector, the threshold is R30 million.
  3. Check the process below
  4. Communicate and Consultwith the workforce;
  5. Establish a committee representative of all occupational levels;
  • Conduct an analysis to ensure a Review all Policies and any potential barriers;
  1. Prepare an Employment Equity Plan and Monitor and Evaluate targets against Goals.
  2. Submit the Reportonline on or before 15 January.
  3. It is vitally important to follow the practices set out above as it mitigates risk and gives your company a better chance to be compliant. Non-compliance to this Act attracts fines and penalties.
  4. The Department of Labour’s (DoL’s) online portal for EmploymentEquity submissions is open – CEOs and Section 24 Managers receive an activation code from DoL to access the portal.

SECTION 53: Alert! Your business’s ability to trade with Government is at Risk

The amendments, particularly Section 53, should make the Metals and Engineering Industry stand to attention.

Even though you may have long-standing contracts with Government Departments and related entities, your business will now need a Department of Labour (DoL) certificate to prove compliance with the Employment Equity Act. This could effectively see many in the industry potentially missing out on lucrative infrastructure projects under way or being planned, such as those announced by President Cyril Ramaphosa as part of the stimulus package.

Those who are ready and compliant will have an enormous advantage of other businesses that are lagging behind.

“This is the ‘carrot’ that must incentivize the industry to get its house in order. It certainly adds weight to the phrase that transformation is good for business,” says Ms Mulholland.

SEIFSA plans to play a pivotal role in getting the Metals and Engineering Sector ready for this new reality. Through its relationship with the Department of Labour, its advice, training, consultation and audits will be strategic tools for members of the Federation and the industry in general.

Trying to achieve employment equity and BBBEE targets in the absence of an integrated employment equity and diversity management strategy could be one of the main reasons for the lack of progress in the industry. There is too much at stake, so don’t waste time – and don’t be left behind because transformation makes business sense.

The Presidential Jobs Summit Framework Agreement

THE PRESIDENTIAL JOBS SUMMIT FRAMEWORK AGREEMENT

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President Cyril Ramaphosa announced the Jobs Summit during his inaugural state of the Nation Address in February and subsequently requested NEDLAC to convene Social Partners to address the crisis of unemployment and to come up with practical solutions for South Africa’s ailing economy.

Since 2014, economic growth in South Africa has slowed down and become more volatile. At the same time, joblessness and inequality have deepened. These twin burdens remain arguably the main blockages to sustained economic progress.

Mining and formal manufacturing have been particularly hard hit by the slowdown of the past few years, which has worsened South Africa’s high joblessness and inequality. Among countries that report a Gini coefficient, South Africa invariably ranks amongst the top two or three most unequal in the world.

The Social Partners approached these challenges on the basis that there is an urgent need for visible changes in the lives of ordinary South Africans and the economy. Government, business, labour and community leaders have worked collaboratively to identify solutions to job retention and job creation blockages and opportunities that each social partner can work on to stimulate greater participation in the economy.

The Jobs Summit convened on 4 and 5 October 2018 lays the basis for more responsive and effective collaboration to deliver on the promise of a better economy for all South Africans by ensuring that commitments are clear and precise, that they strengthen existing initiatives and develop new ones, and that they take into account the challenges faced by each Social Partner. This includes finding solutions to unlock the bottlenecks identified in job creation, including – where relevant – addressing policy and regulatory uncertainty to unlock inclusive growth and employment.

The Jobs Summit commitment carries with it the recognition by all stakeholder groups that the weaknesses in South Africa’s economy can be addressed only if all social and economic stakeholders work together.

On Thursday, 4 October 2018, all Social Partners formally declared their commitment to the Jobs Summit Accord and Framework Agreement. These commitments include clear statements on the timescale for implementation and envisaged employment impact and a monitoring and evaluation framework that is expected to ensure accountability amongst partners and to the wider community.

The Jobs Summit is part of President Cyril Ramaphosa’s drive to build a Social Compact amongst the various stakeholders on what is needed to ensure that the economy grows, becomes more productive and attracts greater investment.

To view the detailed Presidential Jobs Summit Framework Agreement, please click here:

To view the accompanying Annexure, please click here:

PERSISTENTLY POOR PMI PERFORMANCE DURING THE THIRD QUARTER OF 2018 IS INDICATIVE OF A FRAGILE ECONOMY – SEIFSA

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Johannesburg, 1 October 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) notes with concern that the seasonally-adjusted Absa Purchasing Managers’ Index (PMI) released today for September 2018 remained largely unchanged, with the lower-than-expected level being indicative of a fragile economy.

The latest seasonally-adjusted preliminary PMI data show that the composite PMI trended lower in September 2018, when compared to the previous month of August 2018. The data show a very weak level of 43.2 points recorded in September 2018, when compared to a less-than-inspiring performance of 43.4 points registered in the month of August 2018.

“The deteriorating trend confirms the challenges faced by businesses amid increasing operational costs underpinned by a volatile exchange rate, rising energy costs and galloping petrol prices,” SEIFSA Chief Economist Michael Ade said.

He added that given the poor GDP growth recorded in the second quarter of 2018, the performance of the PMI in the third quarter of 2018 is worrisome as it invariably adds to concerns of whether the South African economy will rebound immediately from the prevailing technical recession.

Moreover, the PMI data which capture the third consecutive decline from July 2018, also registering a sharp contraction for the month of August 2018, correlate with consistent declines in both the business expectation and the business confidence indices over the same period, thereby adding to the stress faced by businesses. The PMI for September 2018 is the lowest since January 2017. Dr Ade said there were  indications that the PMI may get worse next month, unless there is a clear policy direction from Government in the short to medium term.

He warned that as the country eagerly looks forward to Finance Minister Nhlanhla Nene’s Medium-Term Budget Policy Statement (MTBPS) for implementation detail on the President’s proposed stimulus package aimed at returning the economy to good health, businesses were likely to continue to operate under increasing operational costs. He said the rand will continue to yo-yo up and down, fuelled by increased uncertainty, capital flow will continue to respond negatively to changes in expected returns and the uncontrollable petrol price will add to increasing logistic costs, thereby squeezing what is left of business margins further.

“It is a challenging time for purchasing executives. Also, the current economic environment is problematic to businesses, which must also worry about negative external supply shocks and rising domestic costs of doing business while planning production processes.

“Hopefully, the upcoming job summit will provide some reassurances to South Africans and the business community at large of the Government’s ability to steer the ship back to safety. Importantly, a nod is needed from Moody Investors Services – the only big credit-rating agency not to have downgraded South Africa’s sovereign debt to junk –  which still has the country’s rating a notch above sub-investment grade, when it conducts its review later this month,” Dr Ade concluded.

 

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindabaseifsa.co.za

Worsening Unemployment Crisis Amidst

WORSENING UNEMPLOYMENT CRISIS AMIDST RECENTLY-LAUNCHED ECONOMIC STIMULUS PLAN A SERIOUS CONCERN – SEIFSA

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Johannesburg, 26 September 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is seriously concerned about the jobs lost in the manufacturing sector during the second quarter of 2018 and eagerly looks forward to the implementation of the economic stimulus plan announced by President Cyril Ramaphosa last week.

Speaking after the release of the national Quarterly Employment Statistics (QES) today, SEIFSA Economist Marique Kruger said although the employment numbers were depressing, SEIFSA remains optimistic that the economic stimulus package will boost employment numbers going going forward.

The data –  which comes from an enterprise-based sample survey by Statistics South Africa –  showed that the manufacturing sector, lost 1.1 percent of total employment (-13 000 jobs) in quarter 2 of 2018, with employment decreasing from 1 192 000 in June to 1 179 000 in June 2018.  The metals and engineering cluster is an important of the manufacturing sector.

The job numbers in both the mining and utilities sectors were also uninspiring, with both sectors recording a loss of 2 000 jobs and no growth in job numbers respectively. In total, 69 000 jobs were lost between the first quarter (Q1) of 2018 and the second quarter (Q2), amounting to a 0.7 percent decrease. However, between the second quarter (Q2) of 2017 and the second quarter (Q2) of 2018, an encouraging total of 13 000 jobs were created, representing 0.1 percent of jobs created.

“Given that the recently-published real GDP figure for the second quarter of 2018 revealed a weaker-than-expected growth, thus confirming a persistently low demand environment, the decrease in employment for the same period correlates with structural challenges faced by South Africa’s industrial production,” Ms Kruger said.

She added that the consistent decline in employment numbers confirms the poor state of the country’s economy, despite the existence of political will, encouraging rhetoric and initiatives aimed at rejuvenating industrial activities towards economic growth and more employment.

Moreover, Ms Kruger said the dilemma of low growth and high unemployment is compounded by rising petrol prices and persistently high inflation numbers.

“At 5.1%, the headline inflation is tantalisingly close to the South African Reserve Bank’s upper target band, effectively limiting policy makers’ ability to use expansionary monetary or fiscal policy interventions to return the economy to good health,” Ms Kruger said.

She said the Reserve Bank’s decision to leave the repo rate unchanged at 6.5% last week further supports this point, showing the Bank’s sole commitment to the mandate of maintaining price stability, despite the economy needing a rates decrease in order to boost demand.

Ms Kruger said the current low-growth scenario poses a serious challenge to dealing with the unemployment crisis and effectively implementing the President’s economic stimulus plan. She said if growth continues to be subdued, business and investor confidence will continue declining, thus further constricting economic activities and job creation.

“Clearly, these are tough times for both businesses and consumers alike. Hopefully the Medium-Term Budget Policy Statement scheduled for next month will provide some direction for the economy by expounding on both the reprioritisation and fiscal consolidation initiatives taken by the Government,” concluded Ms Kruger.

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: meindaba.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.
SEIFSA Mmusi Maimane

PRESIDENT RAMAPHOSA’S FISCAL STIMULUS PACKAGE DOES NOT HOLD KEY TO SOUTH AFRICA’S LONG-TERM ECONOMIC GROWTH

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Johannesburg, 21 September 2018 – Government’s fiscal stimulus package will not provide long-term solutions to South Africa’s ailing economy, instead Government needs to create a conducive environment for entrepreneurs in the private sector to grow their businesses and, subsequently, grow the economy, so said Democratic Alliance leader Mmusi Maimane.

Delivering the closing address at the fourth Southern African Metals and Engineering Indaba, in Sandton this afternoon, Maimane said President Ramaphosa’s stimulus package, launched today, could not address all the challenges, including decrease in investment, decrease in ease of doing business, decreasing value of the rand and constantly rising fuel and food prices, currently facing the country.

“I genuinely do not believe that a fiscal stimulus package will have a sustained positive effect in the absence of sensible economic reform. South Africa needs to take a fundamentally different approach to our economy,” said Maimane.

He said that the State was the main thing standing in the way of South Africa’s economic growth.

“Our economy is suffering from an extreme case of state intervention. The State needs to get out of the way, it needs to step aside so that all the pent-up energy and ideas and creativity and dynamism in our nation can burst forth and create wealth.”

He added that the role of the State was not to create wealth or jobs. Instead its role was to create a fertile environment for economic activity to flourish.

“Not only would getting the State out of the way free entrepreneurs up to create wealth and jobs but it would also free it (the State) up to do its job, which is to step in where the markets fail.

“There is so much that our State could and should be doing to help people become better educated, healthier and safer. To have better access to clean water, affordable electricity, reliable transport and easy communications.”

He said South Africa was crying out for these things but the State was far too busy meddling in the economy, bossing entrepreneurs around and trying to run businesses.

“Instead of meddling in the economy, the State should build a capable state committed to delivering services to all its citizens and the essential prerequisite for a capable state is to appoint people on merit, on their knowledge and experience and not on their political affiliation.”

 

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

SEIFSA Steel and Engineering

A MILLION JOBS BY 2027 POSSIBLE IF CHINESE INVESTMENT EFFECT IS WELL MANAGED

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Johannesburg, 21 September 2018 – Business and Government need to work together to increase demand for locally-manufactured products if the creation of one million jobs, in the manufacturing sector, by 2027 is to be realised, Manufacturing Circle CEO Philippa Rodseth said at the Metals and Engineering Indaba, in Sandton this afternoon.

“We need demand side interventions. Without demand, we cannot produce at full capacity, we cannot attract investment and we cannot create jobs. We, therefore, need to increase aggregate demand by buying locally-manufactured gods, replacing imports where possible and increasing local producers’ exports to markets outside South Africa.

Last year, the Manufacturing Circle launched its “Map to A Million New Jobs in a Decade” plan, with the organisation’s chairman André de Ruyter saying at the time: “If manufacturing can expand to 30% of GDP, between 800 000 and 1.1 million direct jobs can be created, with 5 to 8 times that number in indirect jobs,” he added. “Our ‘Map to a Million’ puts forward detailed proposals to deliver a million jobs in manufacturing in the next decade.”

SEIFSA Chief Economist Michael Ade said while the Map to a Million Jobs in a Decade plan was a good one, it was silent on some key points – including the Chinese effect. He said China was increasingly shaping global discourse and economic development including jobs, in key regional and global markets, and will grow in significance within a decade and can’t be ignored.

He said recipients of huge Chinese investments/loans risked piling up dangerous amounts of debt. This, in turn, provides a strategic hold by China over the indebted countries.

“The Chinese loans are often shrouded in secrecy, raising fears that local politicians may benefit more than their people. Chinese projects often make use of lots of Chinese workers (even on menial jobs), increasing their productive efficiency to the detriment of indigenous labourers,” Dr Ade said.

He added that although Chinese investments bring a different flavour and level of enthusiasm in some industries, it was a catch-22 situation in the labour intensive industries of the manufacturing sector (including its diverse M&E cluster), because of its perceived negative effects on job creation.

To mitigate the China effect, Dr Ade proposed that Chinese SOEs, development Banks and its investors partner to collaborate with South African businesses on all fronts in new projects.

“A win-win collaboration should be pursued with the intention of creating jobs and ensuring that locals are given first preference for jobs and where skills are lacking or unspecialised, efforts should be made to train or transfer skills to the locals.”

Dr Ade said the Manufacturing Circle plan also lacked detail on how to directly support black businesses. He said manufacturing needed to encourage and empower the participation of black people in the economy by securing inclusive growth.

Inspite of the plan’s oversights, Dr Ade said it was possible to create one million jobs provided that the China challenge is well managed and provided that beneficiation is systematically pursued across sub-industries within the cluster, with specific focus on upskilling and re-skilling to create new jobs, as some industries were more labour intensive than others.

In conclusion, Dr Ad said South Africa faced extraordinary challenges in dealing with the crisis of unemployment which is compounded by inconsistent growth levels and prevailing low demand. These aspects posed huge challenges in actualising the proposals made by the Manufacturing Circle plan.

“Realising the Manufacturing Circles plan of creating a million jobs in a decade will require a different mindset from captains of industry. It also needs flexibility, co-operation, hard work and above all serendipity,” he said.

Meanwhile, Department of Economic Development Deputy Director General Zeph Nhleko said, the one million jobs didn’t have to come directly from the manufacturing sector but the sector should enable the creation of jobs in other sectors such as the services sector.

 

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

SEIFSA Steel

LACK OF SKILLS, LOW ECONOMIC GROWTH AND SATURATED MARKETS CONSTRAINTS TO INVESTING IN METALS AND ENGINEERING SECTOR

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Johannesburg, 21 September 2018 – Lack of demand in the form of large infrastructure projects, expensive input costs, lack of skills required by the metals and engineering (M&E) sector as well as policy uncertainty, low economic growth, low returns on existing investment and a saturated domestic market are some of the factors identified as constraining investment in South Africa’s M&E sector.

Speaking at the Metals and Engineering Indaba taking place at the IDC Conference Centre, Southern African Institute of Steel Construction CEO Paolo Trinchero said other factors identified as barriers to investing in the sector include lack of trust between government, business and labour, lack of collaboration in pursing sustainable industry solutions and lack of innovation.

Echoing Mr Trinchero’s sentiments, Steel and Engineering Industries Federation of Southern Africa Chief Economist Michael Ade said there has, over the last decade, been a lack of both green and brown fields investment into the sector owing to low demand, among other factors.

He said, as a result, domestic producers were under pressure to shed jobs, which in turn lead to low productivity in the sector – this created a negative vicious cycle, which is bad for the economy.

However, there was hope that working in collaboration, and working with the countries’ young people, South African companies could find solutions to the challenges they face.

“There is definitely great potential in a huge pool of young, enthusiastic young people that can be trained and enabled to contribute towards our sector. There is also a need to enhance partnerships and collaborations between companies so that they approach these challenges as a collective. Industry needs to stop working in silos and work together in seeking solutions required to address constraints to investing in our sector,” Mr Trinchero said.

According to Dr Ade, interventions required to address challenges facing the sector include increasing aggregate domestic demand by committing to supporting designation and local procurement; reconsidering administered prices to put money back into the pockets of consumers, pursuing  import substitution by actively promoting collaboration between producers across all value chains to enhance in-country value addition,  improving port efficiency and considering re-instating rail subsidies for export competitiveness through implementation of export incentives.

Meanwhile, International Finance Corporation (IFC) Senior Investment Officer Paul Mukasa said the IFC, which had a long track record of providing long-term investment in the metals sector had invested billons in the sector in more than 50 countries across the globe.

He said when considering investing in a country, the IFC focused on reliable access to energy; the sector’s global competitiveness, energy efficient producers and best practice.

ArcelorMittal South Africa General Manager for Africa Overland Alph Ngapo said South Africa was yet to take full advantage of growth opportunities presented by the rest of the African continent. He said South African companies needed to specifically focus on East and West Africa as well as the SADC region where hundreds of billions in infrastructure projects will be spent.

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

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