METALS AND ENGINEERING PRODUCTION DISAPPOINTS AGAIN, IGNORING THE HEALTHIER GDP FIGURES
The July 2016 figures, from Statistics South Africa (StatsSA), paint a dismal picture of activity on production, which directly affects the sub-industries in the metals and engineering sector.
Commenting on the data, SEIFA Chief Economist Henk Langenhoven said the July 2016 production numbers confirmed the cliff-hanger scenario against which the Federation has consistently warned.
July 2016 production was 2,1% lower than that in the previous month, while year-to-July 2016 production was 4% lower than the previous year. When analysed over a 12-month period, the recent numbers are 5,4% lower than in 2015.
“SEIFSA warned on 6 September that the healthier gross domestic production and manufacturing numbers for the second quarter of 2016 were not a reflection of the persistent dire situation in the metals and engineering sector,” Mr Langenhoven said
He said that notwithstanding the helicopter view of the numbers released this week, a closer look at the metals and engineering sector reveals a grim picture, indicating further risks to jobs and business stability.
The production performance of some sub-industries in the metals and engineering sector is on an opposite direction to the gross domestic production and manufacturing:
- On a 12-month basis, only electrical machinery and equipment manufacturing showed growth (+5,5%).
- Over the seven months of 2016, electrical machinery and equipment grew (+3%) and “other fabricated metal” production by (+0,5%). Basic ferrous metal production was on par with a year ago, while all the other groupings contracted, resulting in a cumulative 4% decline.
- Another cause for concern is that July production was 2,1% lower than June’s, indicating a worsening performance than that even in the very low first half of the year.
- Only rubber (+1%), plastics (+1,9%), special purpose machinery (+6%) and household appliance production (+3,2%) improved.
Explaining the chain reaction that continues to hurt the sector, Mr Langenhoven said that the numbers are the result of continued deteriorating spending on gross fixed capital investment (-4,6%) in the economy. The demand drivers for the metals and engineering sector underpin fixed capital investment spending.
Spending on construction works (civil and structural steel construction) declined by over 14% and spending on machinery and other equipment went down by as much as 13%. He emphasised that the latter two components contribute over 60% of capital formation in the economy and represent the bulk of demand for the sector.
Mr Langenhoven said that it did not help matters that the sectors in the economy driving the relevant fixed investment which stimulates production in the metals and engineering sector are not doing well either.
The numbers show that:
- Production in the mining sector recovered from a very low base, but is still 7,9% lower for 2016 (year-to-July) than in the previous period;
- The metal-intensive components of construction suffered double-digit declines;
- Production in the automotive sector is nearly 6% down year to date and 5,6% down on a 12-month basis (ending in August 2016), although exports seem to be accelerating and bringing some relief in this regard; and
- According to the Bureau for Economic Research (BER), the export sales of basic (ferrous and non-ferrous) metals were slightly higher in the second quarter of 2016, with this being the only sub-industry recording improved export sales.
Mr Langenhoven said that according to available survey results from respondents to the BER quarterly manufacturing survey, the third quarter will be tougher than the second quarter, with all sub-industries in the sector being less confident about the third quarter than they were over the last 12 months.
Mr Langenhoven added that perceptions about third-quarter production reflected by the manufacturing survey are more negative than those reflected by the purchasing managers’ business activity sub-index. The latter index leads metals and engineering production by between 12 and 18 months and, therefore, looks further into the future than the manufacturing survey.
“The two surveys, therefore, seem to indicate that production in the immediate future will be weaker still, but that there may be hope for improvement towards the end of 2017. These are harsh conclusions of grave concern,” Mr Langenhoven said.
From the Chief Executive Officer’s Desk - September to October 2016
For the second year in a row, the SEIFSA Golf Day was over-subscribed: 156 golfers making up 39 four-ball teams participated in the event at Reading Country Club this year, and 160 golfers making up 40 four-ball teams participated in the event at the Glendower Golf Club in 2015. Both events took place on the back of a successful Southern African Metals and Engineering Indaba three months earlier.
On behalf of the Federation, I take this opportunity to express our deepest appreciation to the companies that entered teams into the 2016 SEIFSA Golf Day and to the individuals who participated in the respective companies’ four balls. Without their support and participation, the SEIFSA Golf Day would not be the exciting event that it is.
This is an annual industry Golf Day that brings together companies in the metals and engineering sector and some of their customers and suppliers for networking, team building and fun. Your Federation, SEIFSA, is merely the organizer and facilitator. This is a day that makes it possible for people from different companies to build or strengthen relations with counterparts from other companies.
It is wonderful to see so many business leaders putting a day aside in a year to participate in an important industry event to build or strengthen relations with their stakeholders. Colleagues and I are grateful to these leaders and deeply appreciate their support.
During the past two years we have worked hard to improve the SEIFSA Golf Day. We will continue to make improvements to ensure that it becomes an event not to be missed in the industry. Look out for more innovations next year.
This year’s event stood out particularly because of the phenomenal amount of support that we received from sponsors, some of which are SEIFSA’s established suppliers. So high was the level of support that, in addition to the various prizes that were distributed during the prize-giving ceremony just before dinner, almost all 18 holes at the golf course were sponsored.
With almost every hole being a watering hole, golf players and their caddies were spoilt for choice when it came to drinks to quench their thirst on what was a very warm day. There were drinks, crisps, peanuts and biltong aplenty – in addition to other edibles – at every hole. This was a major change from what SEIFSA Golf Days used to be in the past.
My thanks go to each one of the companies that were among our sponsors for the 2016 SEIFSA Golf Day, and to the members of our staff – particularly Marketing Assistant Kristen Botha – who worked hard to encourage as many companies as possible to come on board as sponsors. We hope that we will be able to count on these companies’ support again in the years to come.
It was also very pleasing to see a number of member companies prominently exhibiting or displaying their products and services at some sponsored holes and distributing their business cards to potential customers or clients. The SEIFSA Golf Day, like the annual Southern African Metals and Engineering Indaba, is intended to serve, among other things, as a great platform at which member companies exhibit or display their expertise and products and services in an effort to win new business or increase their market share.
We remain deeply indebted to these companies.
______________________________________________
Over the past three months Operations Director Lucio Trentini, Chief Financial Officer Rajendra Rajcoomar and I have held a series of meetings with the Chief Executive Officers / Managing Directors of some of our member companies in the Gauteng region. I have been very happy with responses from these captains of industry to my written requests for courtesy meetings with them so that we would get to understand their companies and their concerns better and take the opportunity to brief them on SEIFSA and the metals and engineering sector.
It has been most heartening that senior business leaders – some of whom lead multi-national companies – have seen merit in making time to meet with colleagues and me. Some have taken us on tour of their plants, while many others undertook to ensure that their respective companies were much more meaningfully involved in the activities of SEIFSA and their member Associations.
More importantly, we were deeply touched by the fact that many of these business leaders were themselves greatly appreciative of our efforts to reach out to them. Often we were told by people whose companies had been members of SEIFSA for many decades that they had never before had such a courtesy visit from SEIFSA and that they were very happy to have heard from us.
Time permitting, we intend to continue with such engagements, over the next months, with leaders of companies affiliated to SEIFSA member Associations. We hope that all business leaders with whom we ask for an audience will make themselves similarly available.
For now, I want to convey my thanks and appreciation to the CEOs and Managing Directors who have made time to see us in the past three months.
The year is fast coming to an end. Soon December will be here and we will be looking forward to the beginning of new calendar year, 2017, with the hoping that it will be a much better year economically and otherwise for Southern Africa. Among our wishes, no doubt, will be that South Africa will have a much better quality of political leadership than it has at the moment.
It is no secret that, even though the global economy is not exactly flying at the moment, South Africa would be performing much better than it has done in the past few years if it had a better quality of leadership that put the country first, and not itself or some factional interests. Regrettably, 2017 is not likely to be much better politically. Instead, it is likely to be a year characterised by even more tepid leadership as the governing ANC shifts its focus to internal battles ahead of its elective congress in December.
As year-end approaches, I would like to invite all readers of this publication to look at the criteria for the SEIFSA Awards for Excellence (www.seifsaawards.co.za) and to prepare their entries. Any work done in the 2016 calendar year is eligible for the 2017 SEIFSA Awards for Excellence, for which entries will be invited early next year. Winners in each category will be announced at a function to take place in April/May next year.
Kaizer M. Nyatsumba
Chief Executive Officer
SEIFSA WELCOMES G-20 LEADERS’ DECISION TO ADDRESS EXCESS STEEL CAPACITY
SEIFSA’s Chief Executive Officer, Kaizer Nyatsumba, said that the decision, announced at the G-20 leaders’ summit in Hangzhou, China on Monday, was very important not only for domestic steel producers, but also for the international market. He said that it was because of the dumping of cheap, often subsidised steel mostly from China that affected stakeholders in South Africa approached the Government last year with a request for the imposition of import tariffs for steel.
The tariffs, subsequently approved by the International Trade and Administration Commission, have since been very unpopular in certain quarters, especially among downstream steel users.
“The decision by the G-20 leaders to form a global forum that will seek a solution to this challenge and report to the next G-20 summit next year is a most welcome development. The international steel glut has resulted in massive job losses in the sector around the world and the unavoidable imposition of punitive tariffs by most countries with steel production capacity.
“We can only hope that in the months and years to come, excess steel capacity will decline from its current levels of 700 million tonnes and eventually eradicated. More importantly, we hope that the current practice of subsidising steel production through interest-free loans, which makes it possible for Chinese producers to undercut their global competitors, will also give way to fair international competition,” Mr Nyatsumba said.
Press Release - 2016/09/06: FIXED-INVESTMENT EXPENDITURE IS IMPORTANT TO STIMULATE GROWTH IN THE METALS AND ENGINEERING SECTOR
Commenting on the data released by Statistics South Africa (StatsSA) – which indicated a general 4,6% decline in spending on gross fixed capital formation and a 3,8% decline in metals and engineering production – SEIFSA’s Chief Economist, Henk Langenhoven, said while sustained improvement in economic conditions was necessary to arrest the decline in the metals and engineering sector, it was equally important that gross fixed investment improved simultaneously.
“Surplus capacity in many important sectors makes gross fixed investment unnecessary at the moment, and the drawdown on inventories further suppresses the signal to restart. The intensity of such a signal may be small in the sense that it could be a warehouse running empty, but it could be massive as fear of possible misalignment between electricity generation capacity and demand begins to show,” Mr Langenhoven said.
He said the only positive was that a substantial drawdown had taken place on inventories (-R35 billion), which will have to be replenished at some stage in the future, thus potentially generating demand. He cautioned that there is likely to be a time lag before this happened.
While welcoming the fact that the economy has averted a recession, Mr Langenhoven said regrettably that did not offer much consolation to the metals and engineering sector. This is because so far production in the three related sectors – mining, construction and auto manufacturing – has not yet fully recovered.
According to the information released by StatsSA, mining sector production recovered from a very low base (+12%), construction sector production recovered by 0,1% (and mainly in building activity, which is also not as metal intensive as construction works which need reinforcing and structural steel as well as machinery), and automotive sector production has also suffered due to greatly reduced demand for its products.
However, export sales of basic (ferrous and non-ferrous) metals – the only sub-industry to record improved performance – were slightly higher in the second quarter of 2016.
Mr Langenhoven said the real contraction of the main demand drivers for the metals and engineering sector is shown in expenditure on fixed capital in the economy. According to StatsSA, overall gross fixed capital formation declined by 4,6% in the second quarter (after a contraction of 10% in the first quarter). Although spending had improved on some of the other components, such as residential (+20%) and non-residential (+5%) building, spending on construction works had declined by over 14% and spending on machinery and other equipment by as much as 13%.
He said while the latter two components contributed over 60% of capital formation in the economy, collectively they represented the bulk of demand for the metals and engineering sector.
Mr Langenhoven said that it was worrying that, according to indicators from the Bureau of Economic Research’s quarterly manufacturing survey, production in the sector deteriorated substantially during the third quarter, with the exception of plastics.
The BER survey results showed that all sub-industries in the sector are less confident about the third quarter than they were over the last 12 months – and this trend was more negative than that reflected recently in the purchasing managers’ index recently.
Press Release - 2016/09/02: SEIFSA CONCERNED ABOUT SERIOUS DISTRESS FOR THE METALS AND ENGINEERING SECTOR INDICATED BY LATEST PMI
After analysing the data, SEIFSA Chief Economist Henk Langenhoven said: “The steeper decline in the downward trend reflected by the August purchasing managers’ business activity sub-index yet again indicates a further delay in any possible metals sector revival.”
Mr Langenhoven explained that the PMI, which leads metals and engineering production by 12 to 18 months, declined by 10% on a month ago, as against 8% during July on the previous month.
“This confidence index is now also 10% lower than during August 2015,” he added.
Mr Langenhoven said that that the acceleration in this downward trend is also evident in other comparisons. The year-to-date (January 2016 to August 2016) level of the index is now 3% lower than during the same period last year, as against 1,7% up to July this year. Over the past 12-month period ending in July this year, the decline was 4%, whereas one month later (ending in August 2016) the decline is 5,5%.
He highlighted five key data points that demonstrate the intricate dynamics playing out in pushing the trend south:
- New sales orders declined by 22% on last month, thus bringing the 12-month period into negative territory;
- New sales orders and business activity move in unison and the former explains the latter;
- The PMI leading indicator (ratio between new sales orders and inventories) declined below 1. New sales orders declined faster than inventories, explaining this result. It is known in the sector that inventory levels have been dropping for some time.
- The price sub-index continued to decline (-10%) in August this year, also indicating softer demand conditions. This is apart from the positive cost impact of a slightly stronger Rand exchange rate. It is known that domestic primary steel prices will be kept constant during September 2016, on their August 2016 levels. It is expected that prices may even decline due to persistent low domestic demand, further suppressing orders.
- The uncertainty regarding the possible introduction of safeguard measures for steel products also has a dampening effect on imports. The perception is that Import orders placed today will only land on South African shores after the introduction of safeguards, increasing prices by the added duty and making the products uncompetitive in an already depressed market.
Mr Langenhoven said that these prevailing uncertainties in the metals and engineering market may very well result in inaction from companies.
“Weak domestic and export demand, coupled with the 2016 year-end period closing in, further contributes to the possibility of weak activity for the rest of the year,” he added.
Mr Langenhoven said SEIFSA expected a 3% contraction in production during 2016 on last year; data releases later in September will hopefully show improved performances than the 5% year-to-date actual declines measured up to now. He said that PMI survey respondents were 11% more optimistic about the next 12 months in August than was the case in July this year.
SA’s metals sector and engineering are at a crossroads
We are locked in this zero-sum-game scenario because we are asking the wrong questions. The reality is that the sector is diverse. It does not consist individually of the basic ferrous industry and the rest or downstream industries. Analysis should be focused on the dynamics of the component sub-industries, with sustainable solutions devised that will revive them individually. In time, this holistic approach would, in turn, put the sector as a whole on a growth trajectory.
To break it down, the overall South African market for metals and engineering products consists of production by local producers, minus their exports to the world, plus imports into the country. This aggregate market kept on growing and peaked in 2013 – higher than in 2008. It has since fluctuated somewhat, but is estimated to be at virtually the same level as in 2008.
For each sub-industry, this situation differs due to its unique dependence on exports and the dynamics of its own domestic market. Since 2000, for example, the domestic markets for rubber products grew by 33%, ferrous products by 66%, metal products by 18%, machinery by 56%, electrical machinery and equipment by 54% and other transport equipment by 73%.
Why, then, is the sector production languishing at 30% below the 2007 peak levels? Part of the answer lies in export markets being important, at around 50% of production, but weak. This weakness is coupled with depressed export prices in tandem with commodity price trends. The other side of the coin is that domestic producers continued to lose market share in their own market, from about 50% in 2013 to only 43% this year. The opportunity cost is a massive R50 billion worth of production forfeited and an estimated 40 000 jobs not created (going by the current sector employment multipliers). Again, the numbers differ widely for each sub-industry.
When one looks at the current job losses in isolation, the situation looks dire, especially due to an apparent acceleration in jobs lost recently. Alarmingly, jobs are shed slower than current production declines, indicating that the worse may still come. Over the last 12 months (middle 2015 to mid-year 2016), an estimated 25 000 people lost their jobs in the sector, from a total of 400 800 employees to 375 000 at the last count (mid-2016).
The cost, in terms of company closures and value destroyed, makes for equally bad reading. At an average company size of 50 employees, these numbers translate into 500 companies closing down during the year. (The losses differ again per sub-industry.) However, in the context described above, a set of different questions should be asked.
Surely, in-depth analyses of what each individual sub-industry is exporting to which countries, and what competing products are being imported will yield an array of answers and options of what could be done to regain South Africa’s product share in the domestic market, and larger export successes. To look at the overall sector and attempt one-size-fits-all solutions seems unproductive.
The issue of the sector’s inability to compete with cheap imports is often thrown in the fray willy-nilly. Almost in the same breath, the perceived benefit of a weaker exchange rate comes up, and the fact that exports are not rising concomitantly is then used as further evidence of lack of competitiveness.
Instead, questions must be directed at how to regain domestic market share in niches where the sub-industries can compete and improving efficiencies through modernisation and fixed investment where they are lagging. Recovery in each of the mining, construction and auto sectors is crucial for demand growth. World-class cost effectiveness and moral suasion will ultimately attract private sector demand. Stimulation and redirection of domestic general government procurement demand towards domestic metals and engineering producers is a policy measure over which South Africa has control.
The net result of losing domestic market share is, of course, lower production (-4,5% over the last 12 months) and lower capacity utilisation (-2,4%). At 77% capacity utilisation (against a benchmark of 85%), it means that fixed cost of production could be up to three times higher than at full capacity. Variable production costs have also shot up dramatically during the last two years. The combination of labour costs (20% weight), dollar-based prices (40% weight), administered prices (15% weight) and other costs (25% weight) increased by 12% during the year, while producer and merchant prices increased by only 10% and 3% respectively. The continued pressure on profits is obvious.
Mitigating against some of these variable costs seems critical. A “labour partnership for growth” will have to be formed. The reciprocal damage caused by industrial disruptions (autos, mining, construction and metals) in the past is something to be avoided. The exposure to international prices for inputs makes exchange rate movements a double-edged sword. It helps with export earnings, but simultaneously pushes input prices up. The situation is different in the case of administered prices, over which the country has control.
The debate about the costs of energy (and Eskom’s flier that it may sell electricity cheaper when in surplus) and carbon taxes, for example, is critical for the survival of the sector.
It cannot be over-emphasised that each sub-industry in the metals and engineering sector has unique circumstances and has to be treated individually and policy designed to support growing and successful entities and mitigate against the constraints each may experience.
It seems as if the structural shifts in market dynamics have not sunk in for companies, with some still viewing it as a cyclical downturn, and policymakers who are largely stuck on the “pipeline” construct of how to focus policy. The result of these tendencies is that the wrong questions are asked and the changing of course on a new path of efficiency and competitiveness is delayed.
Henk Langenhoven is the Chief Economist of the Steel and Engineering Industries Federation of Southern Africa.
PRESS RELEASE - 2016/08/17: SEIFSA WELCOMES THE COURT’S DECISION TO SET ASIDE ESKOM’S ELECTRICITY PRICE INCREASE
Commenting on the court’s decision to set aside the increase, SEIFSA’s Chief Economist, Mr Henk Langenhoven said: “Electricity is an absolutely essential input for the metals and engineering sector. Any price increase in electricity further erodes the sector’s competiveness and contributes to job losses. It is a fact that electricity inflation has been rising significantly faster during 2016 than other costs. The fact that this has been reversed by the court is appreciated.”
Mr Langenhoven said that, with the metals and engineering, mining, construction and auto manufacturing sectors contributing nearly 20% of the country’s GDP, it was important to keep in mind that higher electricity increases would reverse any gains made in alleviating challenges in these key sectors.
Mr Langenhoven said that stability in electricity supply is almost as crucial as its availability. He said that current lower electricity demand from the sector because of production declines has contributed to alleviating some of the pressure and allowed for increased maintenance to be done by the utility. He expressed the hope that the court ruling would not see Eskom cutting back on its maintenance plan.
“We are concerned that any possible appeals by Eskom and/or Nersa may lead to a whole period of uncertainty regarding electricity prices. Such a situation would not be conducive to business planning and investment,” Mr Langenhoven said.
Speech by SEIFSA CEO Kaizer Nyatsumba, on the occasion of the official launch of RSC AVELO in Roodepoort
Speech by SEIFSA CEO Kaizer Nyatsumba, on the occasion of the official launch of RSC AVELO in Roodepoort
8 December 2016
Programme Director;
The Honourable Mr Lebogang Maile, Gauteng MEC for Economic Development;
Our Gracious Host, Mayleen Kyster, and the Management Team and Staff of RSC AVELO;
Members of the Fourth Estate present;
Honourable Guests;
Ladies and Gentlemen:
Good morning.
It is a great pleasure for me to have this opportunity to say a few words to you on this wonderful occasion.
Three years ago, South Africa and the world lost a very special man, the iconic and inimitable Nelson Rolihlahla Mandela, who had the singular – and richly deserved – honour of being the Founding President of A Democratic South Africa. From the moment his passing away was announced publicly on 6 December 2013, right until he was laid to rest on 15 December, the world joined South Africa in mourning his passing and in celebrating his life, the tremendous sacrifices that he made for his compatriots and the gargantuan achievements that he attained.
Throughout his life, Madiba stood for and cherished justice, freedom, fairness and equality. He actively championed – and personified – reconciliation and believed fervently in all that is good. He loved children so much that he nourished the dream of a hospital that would cater for them, and he believed in the innate capacity of all human beings, men and women, to confront head-on any challenges that they encountered and to go on to conquer. He believed that South Africans had it within them to go on to become the best that they could be in anything that they dared to undertake.
As we stand here this morning, Madiba would be immensely proud of one of South Africa’s daughters, Mayleen Kyster, who has defied all the odds historically stacked against her as a black person and as a woman. Madiba would look at her proudly, take her into his big arms and congratulate her on the official launch of AVELO, South Africa’s only black youth-woman-owned and managed reinforcing steel and reinforcement steel manufacturer.
As one who had the privilege of personally knowing Madiba, I am certain that he would rejoice at Mayleen’s business-mindedness, at her passion and at her success. I think that he would be filled with enormous pride and embrace her as a shining example worthy of emulation by our compatriots, young and old. I think that, looking at Mayleen’s physical and mental beauty, the ever-smiling, flirty Madiba would whisper, as he did to beautiful female journalists with whom I worked in those days, that he wished that age were still on his side!
Ladies and Gentlemen, the South Africa in which we live today is, in many ways, quite different from the country that Nelson Mandela wanted for us all. For a start, our economy has been seriously under-performing over the past few years, together with the global economy, and in recent months and years our leaders have managed to score some spectacular own goals that have cost us very dearly. Manufacturing’s contribution to our Gross Domestic Product has continued to shrink by about 1% per decade and our own metals and engineering sector has continued to take a beating. In the process, tens of thousands of jobs have been lost.
All the data available to us indicate that 2015/16 has been the worst year in recent years for the metals and engineering sector. Among our challenges have been ever-growing imports of just about everything that we manufacture in this country, relatively higher input costs when compared to our Asian competitors, high administered costs and much higher logistics costs when compared to other exporting economies.
Since our sector is primarily a supplier to the mining, construction and auto manufacturing sectors, inevitably it is affected by lacklustre performance of any one of those three sectors. We have felt most acutely the slowdown in the global commodities trade and, after the highs of the pre-2010 FIFA World Cup that we had the privilege to host in this country, the slowdown in construction. We can only hope that what currently looks like a gradual return to decent performance by the mining sector will last and get even better.
Since the beginning of 2016, most economically literate South Africans have worried deeply about the possibility of a sovereign credit rating downgrade to junk status and the devastating impact that would have had on our ailing economy. As we get ready to bid 2016 farewell, we do so with a great sense of relief that we have twice successfully avoided such downgrades, thanks to the Herculean efforts of Finance Minister Pravin Gordhan and his team in the Treasury, who have meaningfully reached out to the business community and organized labour to form a strong partnership.
Long may such a partnership continue. We cannot but wish that others in Government, including in our provincial administrations, would emulate Minister Gordhan by adopting a similar posture to business and labour, instead of repeatedly and monotonously referring to business – which creates jobs and pays corporate taxes – as though it were an enemy.
Honourable Guests, Ladies and Gentlemen, Mayleen Kyster’s entrepreneurial spirit has seen her leaving a comfortable job with a big company in the sector to take on the risk of raising capital to venture into the brave world of business ownership. She has done so in an industry that is not known for transformation and that is not renowned for its friendliness or accommodativeness to women. Within a relatively short space of time, she has made her presence felt by winning the Most Transformed Company Award in the 2015 SEIFSA Awards for Excellence and by being invited to be one of the speakers at the inaugural Southern African Metals and Engineering Indaba in 2015.
As we all know, the South African economy desperately needs to be transformed. Those who say that there is a great need for our political transformation to be followed by a thorough-going, radical transformation of our economy have a very valid point. Unless all South Africans can feel that they have a legitimate stake in our economy, our beautiful country will not know the true meaning of stability.
Therefore, we welcome the Department of Trade and Industry’s Black Industrialists initiative and the Department of Small Business Development’s Gazelles initiative. For both those programmes, Mayleen Kyster and her partners at RSC AVELO are richly deserving of serious consideration.
Congratulations, Mayleen. May you and the RSC AVELO team grow from strength to strength. We wish you everything of the best – and we are immensely proud to count your company among the members of the progressive Steel and Engineering Industries Federation of Southern Africa.
SEIFSA CEO Kaizer Nyatsumba presents Company of the Year Award to Voith Turbo at 2015 SEIFSA Awards for Excellence
SEIFSA CEO Kaizer Nyatsumba's speech as he presents Company of the Year Award to Voith Turbo at 2015 SEIFSA Awards for Excellence
12 August 2016
Thank you very much, Charl, for the invitation and that introduction. My colleagues and I are delighted to be here with you on this important occasion.
Before I proceed to present Voith Turbo with its richly-deserved 2015 Company of the Year Award, I would like to take a few minutes to talk generally about the SEIFSA Awards for Excellence, by way of context. At a time when the world has become so intricately intertwined in every conceivable way and when globalisation and technological innovation are galloping at a frightening and previously unforeseeable pace, innovation remains one of the few possible enduring sources of sustainability, let alone competitive advantage.
We experience phenomenal changes almost on a daily basis. Some of you will no doubt relate to how few of us are able to take full advantage of the technological advancement in our mobile phones, cars and other high-tech products or gadgets, and how often we have to turn to our children for assistance to navigate such innovations.
In their book, No Ordinary Disruption: The Four Global Forces Breaking All The Trends, McKinsey Global Institute Directors Richard Dobbs, James Manyika and Jonathan Woetzel warn about “four forces colliding and transforming the global economy: the rise of emerging markets, the accelerating impact of technology on the natural forces of market competition, an aging world population, and accelerating flows of trade, capital and people.” They stress that any business or country hoping to remain in business or competitive simply has no choice but to understand, embrace and anticipate these powerful forces and to move either in tandem with or, whenever possible, ahead of them.
Innovation, then, is the name of the game. If there is any business out there to which that has not yet become clear, that business is seriously in danger of being left behind.
That is the context in which, two years ago, we launched the SEIFSA Awards for Excellence. We launched these Awards in order to recognise the excellence that we know exists within the metals and engineering sector in Southern Africa, and to encourage many other companies to embrace innovation and to excel. The inaugural SEIFSA Awards for Excellence took place on 27 May 2015 at Emperor’s Palace, on the first day of the Southern African Metals and Engineering Indaba, and the 2015 SEIFSA Awards for Excellence – at which Voith Turbo was one of the proud winners – took place at the IDC Conference Centre on 27 May 2016, the second day of the 2016 Southern African Metals and Engineering Indaba.
There are seven categories for the Awards, and any company in the metals and engineering sector in Southern Africa is eligible to enter. There are clear criteria for each one of these categories and judging panels made of independent experts adjudicate in each category. Those categories are:
- The Artisan of the Year Award;
- Health and Safety Award of the Year;
- The Most Innovative Company of the Year;
- Best Customer Service Award of the Year;
- The Most Transformed Company of the Year Award;
- Best Corporate Social Responsibility of the Year; and
- The Environmental Stewardship Award.
In addition to these seven categories for which companies submit entries, we, the SEIFSA Executive Committee, also offer what we call the CEO Awards to a member Association of the Year, a member Company of the Year and individuals whose service to the sector deserves recognition. For instance, our former Presidents, Scaw Metals Group Executive Chairman Ufikile Khumalo and Duys Engineering Chairman Henk Duys, were the individuals so honoured for 2015. For 2014, former Cobra Watertech CEO Tubby Boynton-Lee received a Lifetime Achievement Award.
At the SEIFSA Awards for Excellence Ceremony on 27 May this year, your wonderful company, Voith Turbo (Pty) Ltd, was announced as the deserving winner of the SEIFSA 2015 Company of the Year Award. This is an honour conferred on a member company that, in the calendar year under review, has made a significant contribution to Supplier Development, which is key in the equitable and sustainable growth of the country’s economy. Companies are required to spend 3% of their net profit after tax on Supplier (2%) and Enterprise (1%) Development. Although it is not a particular requirement, Voith Turbo was intimately involved in the process of developing five black owned suppliers and invested a considerable amount of time and effort, over and above the financial investment. The manner in which Voith Turbo immersed itself in the development of these small companies while excelling in its own right, made it stand out and earned it this prestigious award.
On behalf of my colleagues on the Executive Committee and the SEIFSA Board, I congratulate Voith Turbo on winning the 2015 Company of the Year Award. We are immensely proud of you and are honoured to be associated with yourselves. May you grow from strength from strength.
In conclusion, if I may, I would like to express the hope that we may see Voith Turbo entering for one or more of the other categories for the 2016 SEIFSA Awards for Excellence, which will be presented a function to take place in April/May next year. We look forward to your company’s continuing involvement in our unrivalled annual conference, the Southern African Metals and Engineering Indaba.
Congratulations, Charl and your team. Well done.
In the July/August issue of SEIFSA News
Annual Wage Increase
No further changes to employment conditions for the second year of the three year agreement. The wage rates effective from 1 July 2016. See issue.
Environmental Stewardship
Environmental stability is very important. We take a closer look at how Steloy Castings takes the initiative on environmental stewardship and how they got to win the SEIFSA Awards for Excellence. See issue.
Women of steel
We chat to Noma Nibe of Steloy Castings and Ntsakisi Mkhize of Voith Turbo SA about boardrooms and work floors in this Women’s Month-themed issue. We take a closer look at how these phenomenal women handle the pressures of being in a male-dominated industry. See issue.
State of the metals and engineering sector
Henk Langenhoven, SEIFSA’s Chief Economist, speaks on the state of the sector and also compares it with our predictions at the beginning of 2016. See issue.
Priorities and B-BBEE Codes
The dynamics of Broad- Based Black Economic Empowerment have changed. In this issue of SEIFSA News, we take a closer look at the points that need to be achieved within skills development. See issue.