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From the Chief Executive Officer’s Desk – February 2016

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From the Chief Executive Officer’s Desk – February 2016

By Kaizer M. Nyatsumba | Chief Executive Officer

By all accounts, this will be another tough year for South Africa. The prospects are not good at all. Our economy continues to be on the doldrums and our currency, the Rand, is far from recovering from the downward slide of 2015, which was worsened by President Jacob Zuma’s inexplicable decision to drop then Finance Minister Nhlanhla Nene from the Cabinet.

Ordinarily, tough times require us, as compatriots, to work much closely together to solve whatever challenges confront us, in the interest of our beautiful country. This makes close co-operation and collaboration between and among all key stakeholders – in particular the Government, business and labour – all the more imperative.

Regrettably, for a whole host of reasons, it appears that some South Africans are drawing apart at the very time when they need to be cohering. Last year ended on a terrible note, with all sorts of racial insults flying around, and 2016 started in very much the same way. On 2 February 2016 – which marked the 26th anniversary of the day on which the last president of apartheid South Africa, Frederik Willem de Klerk, took the country and the world by surprise when he announced, during his State-of-the-Nation address to Parliament, the unbanning of thitherto proscribed political organisations and the unbanning of Nelson Rolihlahla Mandela and other political prisoners – a group of South Africans indicated its intention of laying charges of apartheid-era human rights violations against Mr De Klerk.

As respected political analyst Professor Steven Friedman noted during our strategic planning session in December last year, racial frictions are growing more pronounced at a time when South Africans need to be pulling together in the same direction. That is most unfortunate. At a time like this one wishes that one had a magic wand that one would wave around and ensure that South Africans overcome their racial hang-ups and work together as a coherent nation.

Similarly, one wishes that the same magic wand would ensure a higher degree of maturity among the three stakeholder groups vital for our economy’s performance: the Government, business and labour. For as long as these important stakeholder groups do not accept one another’s bona fides and work together as a team, our beloved country, South Africa, will not realize its true potential.

This non-alignment between business and labour is likely to play itself out yet again when our sector negotiates with labour on wages and conditions of employment next year. When that time comes, we are likely to see business and labour speaking past each other, as though they live on different planets, at a time when the metals and engineering sector is bleeding.

Those negotiations are still a year away from now. At the end of each round of negotiations, inevitably some companies in Associations affiliated to SEIFSA cry foul, arguing that a deal was struck without their mandate or knowledge. Objectively, of course, such claims are not valid because SEIFSA acts strictly in accordance with the mandate given to it, and does not take decisions at all on matters that are the subject of negotiations.

Following the complaints that we received at the end of the 2014 negotiations and what we were told by various companies when we subsequently met them to explain how the process had gone, one thing became blatantly clear: there is considerable room for improvement when it comes to communication between some Associations, which are the ones which give SEIFSA a mandate, and the companies that belong to those Associations.

We at SEIFSA are keen to ensure that the apparent chasm that exists in the aforementioned case is bridged so that the mandate coming from the respective employer Associations will be truly representative of the companies that they represent. Therefore, we ask that all member companies in Associations affiliated to SEIFSA participate actively within their Associations, especially in discussions leading to the formulation of negotiating mandates. It is vitally important that that active involvement starts now and continues right into and throughout the negotiations in 2017.

Please, do participate, dear member company. The Associations represent you and your interests, and SEIFSA represents their collective interests. They cannot represent your interests effectively unless they know what they are because you will have articulated them in their meetings.

However, member companies must also be aware of the fact that their views, expressed through their Association, do not on their own constitute SEIFSA’s mandate. Just as companies have to make their voices heard within Associations and get matters debated until a consensus emerges which represents the views of that Association, the same happens in the case of Associations at SEIFSA Council Meetings. There, too, our member Associations debate matters vigorously among themselves and emerge with a consensus which represents the views of the SEIFSA Council. It is the consensus views of the SEIFSA Council – and not those of one Association or two – that constitute SEIFSA’s mandate.

Personally, I am very keen to ensure that we do not have companies complaining, after the conclusion of the 2017 negotiations on wages and conditions of employment, that they were kept in the dark or did not participate in shaping the Federation’s mandate through their respective Associations. We at SEIFSA have absolutely no interest in this or that kind of settlement. Instead, our role is strictly to execute the mandate of our member Associations, and not to lead them in one direction or another. When it comes to negotiations, we no more than agents carrying out the wishes of their members. It is important that all companies keep that in mind as they begin their preparations for the 2017 MEIBC negotiations. It can hardly be fair for SEIFSA to be blamed, as has often been the case, for negotiation outcomes that were not of the Federation’s doing.

My challenge to all companies that are members of Associations affiliated to SEIFSA is simple: get involved in shaping your Association’s – and, therefore, indirectly SEIFSA’s – mandate for the 2017 wage negotiations. You will have nobody but yourself to blame if you should choose not to be involved.

The SEIFSA Awards for Excellence for 2015 are upon us. This is yet another opportunity for us to recognise excellence in our sector.

If you care enough about manufacturing in Southern Africa in general and the metals and engineering sector in particular and believe that you are one of the companies that excel in one or other part of business, then you also don’t want to miss out on the opportunity to enter for the SEIFSA Awards for Excellence so that you can be recognised publicly for your excellence and be rewarded for it.

There are seven categories in which you can seek to be recognised by a panel of independent experts. These are:

  • Most Innovative Company of the Year, to be awarded to a company that has shown the best level of innovation in Research and Development or Production, in the process either gaining market advantage or reducing production costs;
  • Health & Safety Award of the Year, to be awarded to a company with the best legal compliance record when it comes to Health and Safety or the lowest Lost Time Injury Frequency Rate (LTIFR);
  • Best Corporate Social Responsibility Programme of the Year, to be awarded to a company with a CSI project that makes the biggest impact on the lives of its beneficiaries;
  • Customer Service Award of the Year, to be awarded to a company with the best/highest rating by its customers for its performance in customer service;
  • Most transformed company of the Year (X2), to be awarded to the most transformed company in terms of the composition of its Board of Directors, Executive Management and Managerial Team: one category will pit companies employing fewer than 100 people against one another, and the second category will pit companies employing more than 100 companies against one another.
  • Decade of the Artisan Award, to be awarded to a company with the highest number of artisans trained each year (for itself and/or the industry).
  • Among the awards to be given out in the CEO’s Awards category will be one for the SEIFSA-affiliated Employer Association of the Year, to be given to an Association that has worked hard to grow its membership and to ensure alignment with the Federation and its other Associations.

So, does your company excel in anyone of the categories mentioned above? If so, enter the SEIFSA Awards for Excellence and stand a chance to be recognised for your excellence. Such recognition should help you to improve morale among your employees, to motivate them and, through your marketing efforts, to get your company to stand out among its competitors. For more details, please visit www.seifsaawards.co.za.

Winners of the SEIFSA Awards for Excellence will be announced at a dinner that will take place on 26 May 2016, the first day of the Southern African Metals and Engineering Indaba 2016. Now in its second year, this vital conference will take place on 26-27 May at the IDC Conference Centre in Sandton, following our conclusion of a strategic partnership with the Industrial Development Corporation.

Now in its second year, the 2016 Southern African Metals and Engineering Indaba will be bigger and better, with speakers from our sector and related sectors, such as auto manufacturing, construction and mining. Former President Kgalema Motlanthe will open the conference and Democratic Alliance leader Mmusi Maimane will deliver the closing address. For more details, please visit www.meindaba.co.za.

Register now. In recognition of the current state of our sector and the economy, delegate fees have been reduced – and there is a 10% discount for those registering before 15 March 2016! Don’t miss out. Book now.

I look forward to seeing you at the second Southern African Metals and Engineering Indaba in Sandton on 26-27 May.


From the Chief Executive Officer’s Desk – November/December 2015

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From the Chief Executive Officer’s Desk – November/December 2015

By Kaizer M. Nyatsumba | Chief Executive Officer

There are probably not many South Africans who will look back upon 2015 as a year in which they made much economic progress. For many of us, this will go down as having been an annus horribilis on many levels.

For a start, most South Africans are poorer at the end of 2015 than they were this time last year or, indeed, at the beginning of this year. The terrible depreciation of the South African Rand has meant that South Africans’ buying power has been considerably reduced when it comes to imports from the United States of America, the United Kingdom and the European Union, among other countries. Individually and collectively, we can buy less now than we could a year ago.

While a weak currency is supposed to be good for exports, South Africa Inc. has not really benefitted much during this period. Instead, the balance of payments has worsened, jobs have been lost in different sectors of the economy and Government debt has soared. Some sectors have been hardest hit than others, with the problem faced by the metals and engineering sector worsened by the glut of steel around the world as well as the poor performance of the mining sector locally and internationally as the Chinese economy cooled down.

On top of that, South Africa’s international credit ratings and, therefore, creditworthiness deteriorated in the course of the year, with the country now merely a notch above junk status at the time of writing. We have also plunged on various indices that compare countries’ performances in various areas, with South African schools placed last for performance in mathematics.

The metals and engineering sector has suffered probably its worst performance in years. As a result, some companies have folded, while others ended up in business rescue or barely surviving and having no option but to embark on retrenchments to reduce their input costs. We at SEIFSA were similarly affected. With companies being liquidated or laying employees off, inevitably the Federation found itself with fewer companies being members of its affiliated Associations and with those companies employing fewer people at the end of 2015 compared to the same time last year.

The metals and engineering sector has suffered probably its worst performance in years. As a result, some companies have folded, while others ended up in business rescue or barely surviving and having no option but to embark on retrenchments to reduce their input costs. We at SEIFSA were similarly affected. With companies being liquidated or laying employees off, inevitably the Federation found itself with fewer companies being members of its affiliated Associations and with those companies employing fewer people at the end of 2015 compared to the same time last year.

As we get ready to bid 2015 farewell, many compatriots cannot wait for the year to end and for 2016 to begin in the hope that it will be a much better year. Judging by how far the country has regressed in many areas in the current calendar year, there is a good chance that we have reached a nadir as a nation and that things can only be better from here on. We can, but, only hope. After all, hope for a better tomorrow is all that makes today bearable.

While the global economic situation is anything but satisfactory, nevertheless our problems as a country are compounded by lack of visionary leadership and dogged commitment to long-discredited ideologies. Our country is crying out for visionary, inspirational political leadership that will reach out to business and labour in a living partnership that will propel South Africa on a new economic trajectory. Regrettably, there is no promise of such political leadership on the horizon at the moment.

However, we – as ordinary citizens and business leaders – are not entirely powerless. Our country needs all of us to do our bit, in our little corners, to speak out and to make a difference. This entails us accepting one another for who and what we are and working together and with other stakeholders in business, labour and government to bring about what little difference we can.

As you take time off to recover during the December holidays from the trials and tribulations of 2015, do the best that you can to focus not on the year that was, but on a hopefully much better year. Do not dwell on what was and might have been, but focus on what may still be. Here is hoping for a safer, stabler and more prosperous 2016.


From the Chief Executive Officer’s Desk – September 2015

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From the Chief Executive Officer’s Desk – September 2015

By Kaizer M. Nyatsumba | Chief Executive Officer

The health and effectiveness of organisations depends, to a great extent, on the degree to which their members participate or take interest in their affairs. Generally, active or interested members make for healthy and more effective organisations.

No doubt, the same logic applies in the case SEIFSA and its affiliated Associations, and in the case of the Associations and their member companies. This is particularly so when it comes to matters that require inputs, directions and mandates from members. It is critically important that such mandates are developed by the members, through a series of debates and discussions with and among one another, and then communicated to the entity that has the responsibility to carry out or discharge that mandate.

In our environment, the one example with which everybody will be familiar is the wage negotiations with the unions. Before their onset and during the whole process, Associations affiliated to SEIFSA discuss their positions among themselves and come to the meeting of the SEIFSA Council – which includes all member Associations – with mandates from their members, which they then articulate and debate with the other Associations. In the end, a common position emerges from the Council, which becomes the mandate given to SEIFSA.

Regrettably, even that process has not worked as well as it should have done. Weeks and months after the conclusion of the 2014 wage negotiations, which left a lot of unhappiness in their wake, colleagues and I had a series of companies that alleged that they were not involved in the internal formulation of mandates within their Associations. In essence, they claimed that they were kept in the dark by their respective Associations and were not informed about developments before and during the negotiations. In fact, many such companies did not even know the Associations of which they were members; all they knew was that they were “members of SEIFSA”.

There is a lesson here for all of us: collectively, together with the Associations, we have to do everything possible to ensure that member companies are active within their respective Associations so that they can make themselves heard. Similarly, all Associations need to be just as active within the SEIFSA Council so that they, too, make themselves heard in the formulation of mandates for the Federation.

Whenever I have shared these companies’ sentiments with the elected leadership of member Associations, invariably those in leadership positions have argued that there has been a high level of apathy on the part of member companies. They have said that while they have scheduled regular Association meetings and made every effort to invite their members to those meetings, generally only a few companies have bothered to attend those meetings, with the usual companies represented. Understandably, they have argued that it is difficult – if not impossible – to brief people who are absent from meetings and obtain a mandate from them. This, they have said, has been the reason why some companies have been angry with SEIFSA, labouring as they do under the false impression that the negotiated wage settlement was approved by the Federation when, in fact, it was approved by the Associations themselves. On its own, SEIFSA has absolutely no authority to devise a negotiating mandate with the unions and to conclude a deal with them. Both positions are understandable: just as companies need to be active within and make themselves heard in their Associations, they also have to invest time to attend their Associations’ information sessions and annual general meetings. Once the majority of them have taken a decision in their meeting, that decision is binding on all members of that Association. Similarly, once the majority of Associations have taken a decision at a SEIFSA Council Meeting, that decision is equally binding on all members of SEIFSA.

With different Associations currently holding their respective annual general meetings, and with the SEIFSA AGM coming up in October, it is important to conclude with a few remarks on corporate governance.

While companies should be active within their Associations and the latter should be active within the SEIFSA Council, once individuals from companies are elected onto the Executive Committees of Associations, it is imperative for them to understand that they are then required to serve the interests of their Associations. As members of their Associations’ Executive Committees, they are required to advance the overall interests of their Associations, and not those of their respective companies. Otherwise, they would have a serious conflict of interest.

Similarly, once individuals have been elected onto the SEIFSA Board, corporate governance, in terms of the 2008 Companies Act, enjoins them to advance the interests of SEIFSA, and not those of their respective Associations or their own companies. Elected individuals who fail to distinguish between their individual company roles and those of the Association on whose leadership they serve are guilty of a serious conflict of interest, as are elected individuals who fail to distinguish between their individual Associations’ interests and those of SEIFSA, once they are elected to serve on its Board.

I would like to take this opportunity to wish all Associations well as they hold their respective annual general meetings. I hope that they will emerge with leaders who understand their roles, in terms of corporate governance, and not those who may be tempted to use their positions on Associations’ Executive Committees for their personal interests.

Finally, I would like to thank members of the SEIFSA Board for the service that they have rendered and continue to render selflessly to the Federation and for their full appreciation of corporate governance. The importance of the 2008 Companies Act for Boards, including our own, can never be over-emphasised.


From the Chief Executive Officer’s Desk – July 2015

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From the Chief Executive Officer’s Desk – July 2015

By Kaizer M. Nyatsumba | Chief Executive Officer

By the end of this month, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) will have been registered in Zimbabwe, Namibia, Zambia and, possibly, Mozambique. This is consistent with the Federation’s decision, approved by the Board in February 2014, to extend its reach to the Southern African Development Community (SADC), with the “SA” in SEIFSA’s name now standing for “Southern Africa”.

This was a very important strategic decision. Any company with an ambition to grow must, of necessity, look beyond the borders of South Africa. Indeed, a significant percentage of companies that are members of employer Associations affiliated to SEIFSA and many others outside our membership fold already have a presence in other countries in our region. Increasingly, they are in Mozambique, Namibia, Zambia, Zimbabwe and other markets as far as Kenya and Tanzania in East Africa and Nigeria and Ghana in West Africa. We expect many more to do so in the months and years to come. With countries on the continent having greater opportunities for infrastructure improvement compared to South Africa, which is generally more advanced in this area, they will also have more opportunities for infrastructure development. Necessarily, that will mean that they will present more opportunities for companies in the metals and engineering sector to do business. It is important that South African companies place themselves in a position where they can compete for those opportunities.

While South Africa continues to be a major economy on the continent, despite its dismal performance in recent years, generally most of the sizeable economies on the continent have registered higher levels of growth – admittedly off a lower base – and are in better shape that our beautiful country. While South Africa could manage pedestrian growth of 1,5% last year, the picture elsewhere on the continent was quite different. For instance:

  • Chad grew by 9,6%;
  • Democratic Republic of Congo – 8,6%;
  • Ivory Coast – 8,5%;
  • Mozambique – 8,3%;
  • Ethiopia – 8,2%;
  • Sierra Leone – 8%;
  • The Gambia – 7,4%;
  • Tanzania – 7,2%;
  • Nigeria – 7%;
  • Mauritania – 6,8%;
  • Burkina Faso – 6,7%;
  • Zambia – 6,5%;
  • Uganda – 5,9%;
  • Mali – 5,9%;
  • Togo – 5,6%;
  • Benin – 5,5%;
  • Djibouti – 5,5%;
  • Kenya – 5,3%;
  • Cameroon – 5,1%;
  • Gabon – 5,1%;
  • Sao Tome and Principe – 5%.

Clearly, South Africa has lost its competitiveness as an economy and the country could be much better governed. With the listed African countries all growing above 5%, and many more doing much better than South Africa, the inescapable question is why it is that our economy is under-performing to the extent that it is. Instead of creating jobs, we have been shedding them on a massive scale.

The picture that emerges from the growth rates listed above is that there are considerable opportunities on the continent – including in neighbouring Mozambique and nearby Zambia – for the metals and engineering sector. Companies with ambitions would want to place themselves in a position to compete for opportunities in those countries, instead of continuing to languish in growth-less South Africa.

As these African countries register healthy growth rates and develop, addressing their considerable infrastructure backlogs must certainly be one of their key priorities. In fact, in a matter of a year or two from now some parts of previously war-ravaged Mozambique will be unrecognizable from what they are now or used to be. This much was evident in some of the presentations made at the first-ever Africa Iron and Steel Conference that took place in Maputo, Mozambique in June, where impressive projects were unveiled.

At a time when steel producers in South Africa and around the world are hurting and, as a result, working short time or retrenching workers, in Mozambique British company Baobab Resources Plc is building a brand-new steel production company in the Tete province, in partnership with the International Finance Corporation. Baobab describes the project thus: “The Tete Steel Project has the potential to form the cornerstone of Mozambique’s steel industry for the next 100 years, delivering robust investor returns and unprecedented local and national socio-economic benefits.”

Following the major oil and gas finds there, Mozambique is a country with enormous opportunities for companies in the metals and engineering sector. Although not much has changed yet in terms of its dilapidated infrastructure, nevertheless the capital of Maputo is such a hive of activity, with entrepreneurs and senior business executive from around the world travelling there.

South African companies dare not be left behind. When they enter Mozambique, Zambia and Namibia, among other countries, they will find SEIFSA there, ready to help them by offering its expert services. They will find in SEIFSA a reliable name with which they are familiar, which understands those countries and has entered into vital, strategic relationships on the ground.

Africa presents opportunities for the local metals and engineering sector, whether they be local exporters or investors in those countries. Local companies that have yet to seize the emerging opportunities elsewhere on our continent are encouraged to explore them as a matter of urgency.

Here at home, the eventual implementation of the National Development Plan should also create opportunities for transformed companies in our sector (I say “transformed companies” because those that perform poorly in this area will not be considered for contracts by the Government and State-owned companies).

Although most of us have so far seen no developments on the NDP front, in his address at the Vision 2030 Conference at Emperors Palace in June, Minister in the Presidency Jeff Radebe catalogued a long and impressive list of projects currently being implemented.

If, indeed, there are so many NDP projects currently being implemented, then, perhaps, the Government needs to communicate much better on this front.

As I indicated in this space last month, our inaugural Southern African Metals and Engineering Indaba and the SEIFSA Awards for Excellence were a run-away success. Reports on both innovative events accompanied by pictures are carried in this issue of SEIFSA News. More information on these events is also available on their respective websites, www.meindaba.co.za and www.seifsaawards.co.za. Go through this newsletter and visit these websites to take a peek at those who were there – and to see what you missed out on!

Once again, my thanks go to all the pioneers who attended the Indaba as speakers and delegates and the companies that entered for the inaugural SEIFSA Awards for Excellence. Next year’s Southern African Metals and Engineering Indaba, taking place on 26-27 May, and the SEIFSA Awards for Excellence, taking place on 26 May, will be much bigger and more prestigious. You don’t want to miss them.