SEIFSA-Affiliated Member Companies May Apply For Exemption From A Collective Agreement.
There has been a significant amount of commentary doing the rounds on the outcome of the recent Free Market Foundation’s challenge concerning the extension of collective agreements in line with section 32 of the Labour Relations Act.
Attached : A letter from SEIFSA’s CEO, Mr Kaizer Nyatsumba
From the Chief Executive Officer’s Desk - May to June 2016
The three-year agreement on wages and conditions of employment reached in July 2014 in negotiations between employers and labour in the metals and engineering sector was not perfect, as is the case with all agreements that are products of negotiations.
By their very nature, negotiations are a give and take. They bring together at least two sides that often approach them with differing – and often conflicting – interests and desired outcomes in mind. If the parties to negotiations are equally strong, often the final product of the talks is something that addresses most of their respective concerns, something that the respective parties can live with. However, if one side is considerably stronger than the other or the others, then a real possibility exists that the final product of the talks is likely to be more favourable to that party.
In South Africa’s pre-democracy talks at the Convention for a Democratic South Africa (CODESA) at the World Trade Centre in the Auckland Park area, the same principles applied. The then-governing National Party (NP) and those supporting it managed to extract some important concessions, as did the African National Congress and those supporting it.
Among other things, the NP and its allies got Afrikaans maintained as one of the country’s official languages and a section of Die Stem incorporated into post-apartheid South Africa’s national anthem. The Inkatha Freedom Party – which had insisted on a federal or even confederal government system – and the Progressive Federal Party managed to secure a deal that saw South Africa with nine provincial governments. General Constand Viljoen’s Freedom Front extracted a concession for a referendum – as part of the founding democratic elections – on a homeland for Afrikaners, as part of “self determination”, and the ANC managed to get affirmation action and the need for land redistribution (with compensation) written into the Constitution.
Except for those on the extreme left and the extreme right (think of the Pan-Africanist Congress of Azania and the Afrikaner Weerstands Beweging), each one of these parties managed to get some concession on what they considered to be of paramount importance to them. None got everything that it had wanted. In the process, South Africa was the winner, emerging with one of the best Constitutions in the world, which is sovereign, unlike in the apartheid era when Parliament was sovereign.
That is the nature of negotiations.
The historic agreement that led to our founding democratic elections of 27 April 1994 became possible because the main parties in those negotiations recognised that South Africa had to be put first and accepted one another’s bona fides as compatriots. Although politically and ideologically they belonged to different schools of thought, nevertheless they accepted the basic fact that they were interlocutors who saw the world differently and had different experiences during our dark era of apartheid, and were not enemies. Some, like ANC and NP chief negotiators Cyril Ramaphosa and Roelf Meyer respectively, even developed so strong a relationship that at times they went fishing together and subsequently became personal friends.
Therefore, although the three-year Settlement Agreement that ended the month-long strike in July 2014 was not perfect, nevertheless it offered employers and labour something that was of importance to them. In the case of employers, that was a concession on Section 37, which protects employers from union demands for company-level bargaining on matters that were up for discussion in the negotiations within the Metals and Engineering Industries Bargaining Council – such as housing. So strongly did employers feel on that issue that there could not possibly have been a settlement without them being accommodated on it.
Equally importantly, employers managed – despite labour’s initial vehement objection – to obtain a three-year settlement, thus guaranteeing stability in the sector for a three-year period. Such stability is not to be scoffed at or taken for granted. At a time when our economy is doing so badly and the metals and engineering sector is bleeding, instability would have been absolutely disastrous. It has been good to have three years of stability since the 2014-2017 MEIBC Settlement Agreement.
Although negotiations are, by definition, a process of give and take, it helps to ensure that one enters them fully prepared. The three-year agreement concluded in July 2014 expires in June next year, and negotiations on a new agreement are set to begin formally early next year, most likely in March. Although that may seem to be far away, it is, in fact, just around the corner.
Therefore, it is vital that SEIFSA and its member Associations start preparing seriously now for the 2017 negotiations on wages and conditions of employment. Of necessity, part of those preparations must be a very careful assessment of which issues are of such fundamental importance to employers that they will not be willing to make any concessions on them and which ones employers would be happy to drop or make concessions on in the course of the negotiations.
Similarly, it will be important to ensure that a careful assessment is made – taking into consideration all economic and socio-political developments in present-day South Africa and the mood of the country – of which issues or employer “demands” are realistic and which ones are not realistic. Going into negotiations with unrealistic demands that subsequently have to be dropped weakens – rather than strengthens – one’s position in talks.
Therefore, it is crucial that, as SEIFSA and its member Associations spend time debating other issues, they do not lose sight of the need to prioritize preparations for next year’s all-important MEIBC negotiations on wages and conditions of employment. Necessarily, this will entail them having serious – and even robust – discussions and debates among themselves, ahead of the emergence of a firm SEIFSA mandate for the 2017 negotiations.
We at SEIFSA stand ready to assist and play our part in the process. We remain clear in our minds about our roles: member Associations, through the SEIFSA Council, will develop the negotiating mandate and, working with representatives from the respective Associations, we will do the very best that we can to implement that mandate. Operations Director Lucio Trentini will be our Main Negotiator (to use the CODESA analogy, he will be our Cyril Ramaphosa or our Roelf Meyer). He is a very experienced man who has been around for many years and who enjoys the respect of our labour partners. The CEO will get involved in the event of a deadlock when talks need to be arranged with our labour partners’ Secretaries General.
________________________________________
The Southern African Metals and Engineering Indaba (www.meindaba.co.za) and the SEIFSA Awards for Excellence (www.seifsaawards.co.za), which took place at the IDC Conference Centre in Sandton last month, were a great success. My thanks go to all the companies that sent delegates to the conference and to those individuals who were the delegates.
The Indaba is the cover story for this issue of SEIFSA News, which also features winners of the SEIFSA Awards for Excellence. My congratulations go to all the winners in the respective categories and to the many other companies that entered for the Awards.
From the comments of the Chief Judges in the different categories during the awards ceremony, it was evident that the SEIFSA Awards for Excellence, now in their second year, have grown considerably both in popularity and in importance among companies in the metals and engineering sector. It was also clear that the quality of entries for 2015 was much higher than was the case in the Awards’ inaugural year (2014). We are confident that that there will be many more, high-quality entries for 2016, with the results to be announced around May 2017.
In their first two years, the SEIFSA Awards for Excellence ceremony has ridden on the back of the annual Southern African Metals and Engineering Indaba. Last year it took place during dinner on the first day of the conference, and this year it took place during a light breakfast on the second day of the conference. From 2017 onwards, the SEIFSA Awards ceremony will be a grander, stand-alone event most likely on a Friday evening in May, with the Southern African Metals and Engineering Indaba scheduled for 14-15 September 2017.
We are keen to make the annual SEIFSA Awards for Excellence ceremony an event not to be missed. Therefore, we would be delighted to have companies which embrace excellence to partner with us, as sponsors, for the awards ceremony next year. They should please contact our Marketing Manager, Ms Faith Mabaso, on the e-mail address faith@seifsa.co.za.
As I indicated in my opening and closing remarks at the Second Southern African Metals and Engineering Indaba, I am immensely grateful to our Partners, the Industrial Development Corporation, which hosted the Indaba as value-in-kind sponsorship, and the Department of Trade and Industry. My thanks also go to our various sponsors – MerSeta, Investec, Standard Bank, Old Mutual, Novare, SMS Group, Sage VIP, RMA and Transman – and media partners. The Indaba would not have taken place without them.
We look forward to a long, mutually-rewarding partnership with all of them – and with new sponsors that would like to come on board.
Kaizer M. Nyatsumba
Chief Executive Officer
Press Release - 2016/04/28: TOP COMPANIES THROW THEIR WEIGHT BEHIND 2ND ANNUAL SOUTHERN AFRICAN METALS AND ENGINEERING INDABA
To take place on 26 and 27 May at the Industrial Development Corporation (IDC) Conference Centre in Sandton, the Southern African Metals and Engineering Indaba is aimed at encouraging growth in the metals and engineering sector, which has under-performed over the past five years.
To date, other sponsors of the Indaba – which is presented by SEIFSA in partnership with the Department of Trade and Industry and the IDC – are MerSeta, Aveng Trident Steel, SMS Group, MIBFA, Transman, Atlas Copco and Sage HR and Payroll. Engineering News, The Star, Business Report, finweek and The African Independent are the media partners.
SEIFSA Chief Executive Officer Kaizer Nyatsumba expressed gratitude and appreciation to all the sponsors and partners, saying that their support concretely signaled the value that they placed on manufacturing in general and the metals and engineering and related sectors of the economy in particular.
Mr Nyatsumba said that SEIFSA was very pleased to see that, even during these tough times, captains of industry in different sectors recognized the strategic importance of the metals and engineering and related sectors – mining, construction and auto manufacturing – to our ailing economy enough for them to partner with the Federation in making the Southern African Metals and Engineering Indaba possible. He said that collectively the four strategic sectors directly contributed 17% (R570 billion) to South Africa’s gross domestic product (GDP) in 2014, earn up to 80% of the country’s foreign exchange and directly employ about 1,7 million people.
One of the important sessions at this year’s conference will focus on the linkages among the metals and engineering, mining, construction and auto manufacturing sectors, featuring speakers from all four sectors.
“Therefore, it makes sense for anyone concerned about the state of the economy in South Africa and the Southern African Development Community (SADC) region to support a worthy initiative that brings all relevant stakeholders together in a constructive search for solutions. We are immensely grateful to all our sponsors. Their support indicates that they are businesses with the necessary foresight,” Mr Nyatsumba said.
He said that the partnership that the Federation had concluded with the Department of Trade and Industry – which is the champion of business in government – and the IDC, an institution with a proud, 75-year history of supporting industrialization, was of strategic importance to SEIFSA, the metals and engineering sector and manufacturing as a whole.
“I can only hope that this important partnership will continue in the years to come and, in the process, take the metals and engineering sector to great heights,” Mr Nyatsumba said.
The Southern African Metals and Engineering Indaba will be attended by policy and decision makers, business owners, senior executives and other stakeholders in the metals and engineering sector in the Southern African Development Community region, and will focus on the following topics, among others:
- The Economy, GEO-Politics and Manufacturing: Has Brics negatively affected South Africa’s Economic Relationship with the West Irrevocably?
- Partners, Not Adversaries: How to Forge A Stronger Partnership Between Business and Labour to Improve Southern Africa’s International Competitiveness
- A Delicate Balancing Act: The Link Between the Metals and Engineering Sector and the Mining, Construction and Car Manufacturing Industries
- Parasitic or Symbiotic: Relations Between Small Business and Big Business in the Metals and Engineering Sector
- Southern Africa and the Huge Infrastructure Backlog - How to finance it.
Organised and hosted by SEIFSA in partnership with the IDC and the Department of Trade and Industry, the 2016 Indaba features speakers and panelists such as Former President Kgalema Motlanthe, Shell South Africa Executive Chairman Mr Bonang Mohale, Black Business Council Vice-President Mr Sandile Zungu, International Monetary Fund Senior Resident Representative Dr Axel Schimmelpfennig, Executive Chairman of the EU Chamber of Commerce and Industry in Southern Africa Mr Stefan Sakoschek, and US Embassy Economics Minister Mr Laird Trieber, among others.
Press Release - 2016/04/21: NATIONAL DEVELOPMENT PLAN TO COME UNDER SPOTLIGHT AT THE SOUTHERN AFRICAN METALS AND ENGINEERING INDABA
Dubbed the long-term socio-economic development roadmap, the NDP is a policy blueprint aimed at eliminating poverty and reducing inequality in South Africa by 2030. Among other things, the plan identifies the key constraints to faster growth and presents a roadmap to a more inclusive economy that will address the country's socio-economic imbalances.
Eighteen Strategic Integrated Projects (SIPs) that would support economic development and address service delivery are identified in the NDP. The SIPs, which are expected to provide a much-needed stimulus to South Africa’s stagnating economy, would provide new infrastructure as well as rehabilitate and upgrade the existing one.
“However, since the NDP’s introduction and adoption by the ruling party in 2012, very little, in the form of implementation, has taken place and, with the country’s stagnating economy showing no signs of recovery, hope that the SIPs would be rolled out urgently is beginning to fade,” Steel and Engineering Industries Federation of Southern Africa Kaizer Nyatsumba said.
He added that the Government’s cost-cutting measures announced through Finance Minister Pravin Gordhan’s 2016 Budget Speech added to the business community’s concerns that the much-needed implementation of the NDP would not take place urgently.
But, were the SIPs to be implemented next year, would South Africa have the skilled human capital to see the successful implementation of the projects? Answering this question and unpacking this important topic will be:
- SEIFSA Human Capital and Skills Development Executive Mustak Ally,
- University of the North-West’s Potchefstroom Business School Professor Raymond Parsons,
- SA Academy of Engineering Vice President Mr Trueman Goba, and
- Democratic Alliance Shadow Minister of Trade and Industry Geordin Lewis-Hill, among others.
The Southern African Metals and Engineering Indaba will be attended by policy and decision makers, business owners, senior executives and other stakeholders in the metals and engineering sector in the Southern African Development Community (SADC) region, and will focus on the following topics, among others:
- The Economy, GEO-Politics and Manufacturing: Has Brics negatively affected South Africa’s Economic Relationship with the West Irrevocably?
- Partners, Not Adversaries: How to Forge A Stronger Partnership Between Business and Labour to Improve Southern Africa’s International Competitiveness
- A Delicate Balancing Act: The Link Between the Metals and Engineering Sector and the Mining, Construction and Car Manufacturing Industries
- Parasitic or Symbiotic: Relations Between Small Business and Big Business in the Metals and Engineering Sector
- Southern Africa and the Huge Infrastructure Backlog - How to finance it.
Organised and hosted by SEIFSA in partnership with the IDC and the Department of Trade and Industry, the Indaba is aimed at encouraging growth in the metals and engineering sector, which has under-performed over the past five years.
The list of the 2016 Indaba speakers and panelists includes Former President Kgalema Motlanthe, Shell South Africa Executive Chairman Mr Bonang Mohale, Black Business Council Vice-President Mr Sandile Zungu, International Monetary Fund Senior Resident Representative Dr Axel Schimmelpfennig, Executive Chairman of the EU Chamber of Commerce and Industry in Southern Africa Mr Stefan Sakoschek, and US Embassy Economics Minister Mr Laird Trieber.
Press Release - 2016/04/18: SEIFSA AWARDS FOR EXCELLENCE ENTRY DEADLINE EXTENDED BY A WEEK
“Owing to an enormous number of requests and last-minute enquiries that we have received from SEIFSA members as well as non-SEIFSA members for the extension of the submission deadline for the entries, we have decided to extend the deadline from 15 April to 22 April 2016,” SEIFSA Chief Executive Officer Kaizer Nyatsumba said.
Born out of the need to encourage growth and celebrate excellence in the metals and engineering sector, the SEIFSA Awards for Excellence offer a great opportunity for companies operating in this vital sector to receive well-deserved recognition by industry peers for their capabilities, expertise and innovation.
“In such turbulent economic times and a challenging business environment, we at SEIFSA believe that it is critically important for those companies which excel at what they do to get the acknowledgement and recognition that they deserve,” Mr Nyatsumba said.
The SEIFSA Awards for Excellence have seven different categories, namely:
- The Most Innovative Company of the Year, which will be awarded to a company which showed the highest level of innovation in research and development or production in 2015;
- The Health and Safety Award of the Year will be offered to a company with the best legal compliance record in Health and Safety or the lowest Lost-Time Injury Frequency Rate in 2015;
- Entries are also invited from companies whose Corporate Social Investment (CSI) programme/s in 2015 had a major impact on the lives of their beneficiaries;
- The company rated the highest in customer service performance in 2015 will receive the Customer Service Award of the Year;
- The Most Transformed Company of the Year Award will be received by a company that showed the highest transformation level in the composition of its Board of Directors, Executive Management and Managerial Team in 2015 (this award category pits companies employing fewer than 100 people against those of similar size, and companies employing more than 100 companies against others of similar size);
- This is the Decade of the Artisan, and an award will be made to the company that trained the highest number of artisans in 2015;
- The Environment Stewardship Award will go to a company that has made the biggest or best strides towards conserving the environment or mitigating the impact of its operations on the environment in 2015.
Mr Nyatsumba encouraged manufacturers operating in the metals and engineering sector to take advantage of the deadline extension and submit their entries for the seven categories before the new cut-off date.
Winners of the Awards will be honoured in a ceremony that will take place on the second day of the two-day Southern African Metals and Engineering Indaba, scheduled to take place on 26 and 27 May 2016 at the IDC Conference Centre, in Sandton.
Press Release - 2016/04/13: SENSE OF URGENCY REQUIRED TO ADDRESS CHALLENGES FACING METALS, ENGINEERING, MINING, CONSTRUCTION AND AUTOMOTIVE SECTORS
Speaking ahead of the 2nd Southern African Metals and Engineering Indaba, SEIFSA Chief Economist Henk Langenhoven said that the metals and engineering sector – with its symbiotic relationship with the auto, mining and construction industries – was going through a structural correction on its development trajectory and innovation in terms of business solutions, hence political and policy certainty and better social cohesion were urgently needed in order to prevent these four strategic sectors from withering away.
Mr Langenhoven said that as a group, the four strategic sectors directly contributed 17% (R570 billion) to South Africa’s gross domestic product (GDP) in 2014 and, depending on the indirect and induced multipliers, up to twice this number. They export and earn up to 80% of the country’s foreign exchange and directly employ about 1,7 million people.
“Therefore, it goes without saying that we must go out of our way as a country to ensure the survival and sustainability of these sectors, which contribute immensely to the country in terms of the GDP, employment and the payment of royalties and various taxes,” Mr Langenhoven said.
The link between the metals and engineering sector and the mining, construction and car manufacturing industries will come under scrutiny at the 2016 Indaba scheduled to take place on 26 and 27 May at the Industrial Development Corporation (IDC) Conference Centre in Sandton.
Assessing the nature of the symbiotic relationship between the metals and engineering sector and its competitiveness as a customer and supplier to the mining, construction and car manufacturing industries will be:
- Cadiz Corporate Solutions Mining Director Peter Major;
- SEIFSA Chief Economist Henk Langenhoven;
- Master Builders South Africa Executive Director Patrick Roy Mnisi; and
- National Association of Automobile Manufacturers of South Africa Director Nico Vermeulen, among others.
The Southern African Metals and Engineering Indaba will be attended by policy and decision makers, business owners, senior executives and other stakeholders in the metals and engineering sector in the Southern African Development Community (SADC) region, and will focus on the following topics, among others:
- Government Policy Interventions for a Sustainable, Globally-Competitive Steel Sector
- Partners, Not Adversaries: How to Forge A Stronger Partnership Between Business and Labour to Improve Southern Africa’s International Competitiveness
- Parasitic or Symbiotic: Relations Between Small Business and Big Business in the Metals and Engineering Sector
- Southern Africa and the Huge Infrastructure Backlog - How to finance it.
Organised and hosted by SEIFSA in partnership with the IDC, the Indaba is aimed at encouraging growth in the metals and engineering sector, which has underperformed over the past five years.
The list of the 2016 Indaba speakers and panelists includes Former President Kgalema Motlanthe, International Monetary Fund Senior Resident Representative Dr Axel Schimmelpfennig, Executive Chairman of the EU Chamber of Commerce and Industry in Southern Africa Mr Stefan Sakoschek, US Embassy Economics Minister Mr Laird Trieber, National Empowerment Fund CEO Ms Philisiwe Mthethwa and Massmart Chairman Mr Kuseni Dlamini.
Press Release - 2016/04/08: LATEST PRODUCTION DATA CONFIRM HARSH CONDITIONS STILL PREVAIL IN THE METALS AND ENGINEERING SECTOR
According to the data, metals and engineering sector production declined by more than 6% (when the first two months of 2016 are compared with the first two months of 2015), and by 4,3 over the last 12 months (ending February 2016 compared to the same period in 2015).
SEIFSA Chief Economist Henk Langenhoven said that when adjusted for the effect of the July 2014 strike on production, the full-year figure is even worse (-6%).
“However, the February 2016 production was 2,8% higher than in January. Month-onmonth improvements must continue for some time though, to affect a lower turning point in the downward spiral, which the sector finds itself in currently,” Mr Langenhoven said.
Mr Langenhoven said that the month-on-month improvement may reflect the (anecdotal and purchasing managers’ index evidence) that inventories are being worked down, meaning that production needs to be increased to keep inventories at ‘normal’ levels - catering for future demand.
“As we stated earlier when the March purchasing managers’ index (PMI) was released, a lot will depend on growth in demand, from both the domestic and export clients,” Mr Langenhoven said.
Although the general PMI sub-index indicating ‘new sales’ orders for manufacturing as a whole, has improved over the last three months (+10% on average) the indications from the Bureau for Economic Research’s (BER) quarterly manufacturing survey showed different, and very weak domestic and export sales orders for the metals and engineering sector, specifically.
Only the fabricated metals industries indicated that their export orders for the 2nd quarter of 2016 have improved; all of the rest indicated lower export orders for the 2nd quarter.
Domestic sales orders for the 2nd quarter have deteriorated for all of the sub-industries in the sector, which indicate the uncertainty about sustained production improvements.
“The production numbers released today are not in conflict with the BER manufacturing survey (confidence) results. ‘Structural metal’ production shows some improvement as well as ‘electrical machinery and equipment’ production. Plastic and rubber production are also accelerating. All the other sub-industries recorded lower production over the first two months of 2016 as well as on a12-month basis,” Mr Langenhoven said.
Sustained improvement in economic conditions (mining, construction, automotive and exports) is necessary to reverse the downward trend in the sector, and although the PMI data released last week and today’s production numbers reflect improvements, it is over the very short term.
“This data does not change our view that recovery will only be felt towards the end of 2016 if not the middle of 2017,” Mr Langenhoven concluded.
Press Release - 2016/04/07: HIGH PROFILE BUSINESS EXECUTIVES TO JUDGE SEIFSA AWARDS
Born out of the need to encourage growth and celebrate excellence in the metals and engineering sector, the SEIFSA Awards for Excellence offer a great opportunity for companies operating in this vital sector to receive well-deserved recognition by industry peers for their capabilities, expertise and innovation.
“In such turbulent economic times and a challenging business environment, we at SEIFSA believe that it is critically important for those companies which excel at what they do to get the acknowledgement and recognition that they deserve,” SEIFSA Chief Executive Officer Kaizer Nyatsumba said.
Among the panel of this year’s judges are Business Unity South Africa CEO Khanyisile Kweyama ,Chamber of Mines Safety, Environment and Quality Executive Thuthula Balfour; KPMG Director Boitumelo Ngutshane; Constructional Engineering Association Executive Director Louis Breckenridge; Centre for Industrial and Scientific Research Project Manager: Fabrication, Capital and Transport Equipment Sector Chule Qalase; Consulta Founder and CEO Professor Adre Schreuder; Gijima Managing Executive Werner Guse, and Environmental Impact Management Services Senior Environmental Consultant Nicus Durieux.
“The panel will meet over two rounds of adjudication to determine the category finalists and winners,” Mr Nyatsumba said.
The SEIFSA Awards for Excellence offer seven different categories, namely:
- The Most Innovative Company of the Year, which will be awarded to a company which showed the highest level of innovation in research and development or production in 2015.
- The Health and Safety Award of the Year will be offered to a company with the best legal compliance record in Health and Safety or the lowest Lost-Time Injury Frequency Rate in 2015.
- Entries are also invited from companies whose Corporate Social Investment (CSI) programme/s in 2015 had a major impact on the lives of their beneficiaries.
- Companies rated the highest in customer service performance in 2015 will receive the Customer Service Award of the Year.
- The Most Transformed Company of the Year Award will be received by a company that showed the highest transformation level in the composition of its Board of Directors, Executive Management and Managerial Team in 2015. This award category pits companies employing fewer than 100 people against those of similar size, and companies employing more than 100 companies against others of similar size.
- This is the Decade of the Artisan, and an award will be made to the company that trained the highest number of artisans in 2015.
- The Environment Stewardship Award will go to a company that has made the biggest or best strides towards conserving the environment or mitigating the impact of its operations on the environment in 2015.
Mr Nyatsumba encouraged manufacturers operating in the metals and engineering sector to submit their entries for the seven categories as soon as possible. The Awards are open to both SEIFSA members and non-members.
Winners of the Awards will be honored in a ceremony that will take place on the first day of the two-day Southern African Metals and Engineering Indaba, scheduled to take place on 26 and 27 May 2016 at the IDC Conference Centre, in Sandton.
Last year’s winners included Scaw Metals, ABB Group, Hazelton Pumps International and Voith Turbo, among others.
Press Release - 2016/04/04: EMPLOYMENT DATA CONFIRM CRISIS, BUT MARCH 2016 PMI GIVES GLIMMER OF HOPE
However, when the trend from quarter to quarter is analysed, a much more serious picture emerges, showing a deepening crisis towards the end of 2015, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.
From the beginning of 2015 (1st quarter) to the last quarter, 11 140 people lost their jobs in the sector, with the majority of them (nearly 7000) doing so in the 4th quarter alone.
The losses were widespread. On an annual basis, only the rubber, shipbuilding and non-ferrous industries showed growth, with the remaining sub-sectors showing increased job losses during the second half of 2015.
SEIFSA Chief Economist Henk Langenhoven said that expectations for job creation during 2016 are not high.
The Bureau for Economic Research manufacturing survey indicates that since 2010 no companies indicated any intention to employ more people, and the purchasing managers’ index’ (PMI) employment sub-index has been in negative territory for two years now. Further contraction is expected in metals and engineering production during 2016.
“However, the latest PMI numbers released today might have shown a glimmer of hope for the future, albeit very faintly,” Mr Langenhoven said.
The business activity sub-index improved in March by 11% on February 2016, and by 5% on March 2015. The index measuring expected business conditions in six months’ time was also up by 14% in March, when compared to February 2016.
“The significance of this improvement is that it might indicate a break in the progressively deteriorating downward trend towards the end of 2015. The index leads metals and engineering production by between 12 to 18 months and last year’s movements pointed to a delayed recovery beyond 2016. Any sign of the actual index reaching a lower turning point would indicate a turning point in the trend line somewhere in future, which in turn would indicate actual production growth,” said Mr Langenhoven.
However, sustained improvement in the business activity sub-index will be necessary to reach a lower turning point in the trend. The index for the first quarter of 2016 was 15% lower than during 2015, and on an annual basis 3,5% lower than 12 months ago.
Mr Langenhoven said that a lot will depend on growth in demand from domestic and export clients.
Although the general PMI sub-index indicating new sales orders for manufacturing as a whole has improved markedly over the last three months (+10% on average), indications from the BER quarterly manufacturing survey showed very weak domestic and export sales orders for the metals and engineering sector.
Only the fabricated metals industries indicated that their export orders for the 2nd quarter of 2016 have improved, with all the rest indicating lower export orders for the 2nd quarter. Domestic sales orders for the 2nd quarter have deteriorated for all of the subindustries in the sector.
“The metals and engineering sector is in a critical condition and any sign of improvement is eagerly awaited,” concluded Mr Langenhoven.
PRESS RELEASE - 2016/03/30: INDUSTRY TRANSFORMATION TO TAKE CENTRE STAGE AT THE 2ND ANNUAL METALS AND ENGINEERING INDABA
The manufacturing industry in general and the metals and engineering sector in particular are in dire need of transformation. This is the case not only when it comes to general business ownership, but also with regards to occupation of senior leadership positions.
“While there are commendable exceptions in some companies, most companies in our sector continue to be among the poorest performers when it comes to transformation,” Steel and Engineering Industries Federation of Southern Africa Chief Executive Officer Kaizer Nyatsumba said.
A recent BEE Survey conducted by KPMG ranked the manufacturing sector as the second-worst performer, after mining, as it struggled to adhere to the codes on employment equity, skills development and transforming management control.
“As a sector, we need to embrace change and advocate transformation. Not only is it in South Africa’s interest for that to happen, but it is also fundamentally in business’s long-term interest,” Mr Nyatsumba said.
“It is of critical importance that a concerted effort is made by the sector towards creating meaningful opportunities for all South Africans (black and white) to play crucial roles in taking our industry to new heights,” Mr Nyatsumba said.
Sharing their insights on the important topic of industry transformation as a strategic weapon and business enabler in Southern Africa will be:
- MerSeta CEO Dr Raymond Patel;
- Shell South Africa Executive Chairman Mr Bonang Mohale;
- Black Business Council Vice-President Mr Sandile Zungu;
- Business Unity South Africa CEO Ms Khanyisile Kweyama; and
- Diversi-T Managing Director Teresa Oakley-Smith.
The Southern African Metals and Engineering Indaba will be attended by policy
and decision makers, business owners, senior executives and other stakeholders
in the metals and engineering sector in the Southern African Development
Community (SADC) region, and will focus on the following topics, among others:
- Government Policy Interventions for a Sustainable, Globally-Competitive Steel Sector
- Partners, Not Adversaries: How to Forge A Stronger Partnership Between Business and Labour to Improve Southern Africa’s International Competitiveness
- A Delicate Balancing Act: The Link Between the Metals and Engineering Sector and the Mining, Construction and Car Manufacturing Industries
- Parasitic or Symbiotic: Relations Between Small Business and Big Business in the Metals and Engineering Sector
- Southern Africa and the Huge Infrastructure Backlog - How to finance it.
Organised and hosted by SEIFSA in partnership with the IDC, the Indaba is aimed at encouraging growth in the metals and engineering sector, which has underperformed over the past five years.
The list of the 2016 Indaba speakers and panelists includes Former President Kgalema Motlanthe, International Monetary Fund Senior Resident Representative Dr Axel Schimmelpfennig, Executive Chairman of the EU Chamber of Commerce and Industry in Southern Africa Mr Stefan Sakoschek, US Embassy Economics Minister Mr Laird Trieber, National Empowerment Fund CEO Ms Philisiwe Mthethwa and Cadiz Corporate Solutions Director Mr Peter Major.