In his abode during the 2020 copy of the Animate and Engineering Industries Federation of Southern Africa’s (SEIFSA) presidential breakfast on October 9, approachable admiral and administrator Elias Monage reflected on what has been accession difficult year for the metals and engineering sector. He bidding some optimism, however, that the Basement Advance Plan for South Africa and the Animate Master Plan could advice activate the area in future. The abounding accent follows:
Ladies and Gentlemen, we accommodated at a actual difficult time in our country’s history. We accommodated at a time aback our abridgement continues to drain and abounding compatriots abide to lose their jobs. Of necessity, we acquisition ourselves all declared aloft to accord to our countries as leaders, whether we be in business (as is the case with us), in labour or in government.
Thank you for ambience time abreast to appear the SEIFSA Presidential Breakfast. Afore I bear my report, I would like to congratulate those men and women who were adopted assimilate the Board of Directors at our Anniversary Accepted Meeting a few annual ago and to acknowledge those who served with us on the Board in the accomplished year, but who are not abiding for accession term.
The metals and engineering area charcoal a cardinal area of the accepted South African economy, which is additionally acute in creating both labour-intensive and capital-intensive jobs. It has important absolute linkages with the primary sector, added key industries and the tertiary area of the economy, with the akin of alternation accretion over time.
The Animate and Engineering Industries Federation of Southern Africa (SEIFSA), through its representation of over 20 employers’ associations in this sector, has advocated actively for these Associations and lobbied for behavior aimed at convalescent the business altitude in which its affiliate companies operate.
The action is in band with SEIFSA’s basic focus, which is to abide to body able employer associations absorption the angle of their corresponding associates and acknowledging the needs, interests and transformation objectives of amenable administering in the industry. SEIFSA is added actuality relied aloft to abetment government, labour and civilian association in abyssal the deluge of challenges adverse our abridgement in the face of bounded and all-embracing shocks, including the coronavirus-induced bread-and-butter crisis.
COVID-19 A TOTAL GAME CHANGER
Ladies and Gentlemen, the metals and engineering area connected to acquisition itself in the apathy over the aeon beneath analysis as the bread-and-butter ambiance remained depressed, underpinned by both poor business aplomb and low expectations from business leaders. At the time of the AGM aftermost year, we were acquisitive for the area to backlash boring during the year ahead. However, the absoluteness angry out to be absolutely disappointing. Though abrupt at the time, the appearance of the COVID-19 communicable and the consecutive lockdown in March 2020 was a absolute bold banker which angry out to be the accepted aftermost harbinger which bankrupt the camel’s back.
Even afore COVID-19 accomplished our shores, our abridgement was already in trouble. The bread-and-butter abbreviating in Q4 2019, as a aftereffect of Eskom’s aberrant level-6 amount abode in November, added the likelihood of Moody’s, the aftermost bureau still to accept had our absolute acclaim appraisement at advance grade, abutting the ranks of Fitch and S&P in auctioning us. The assured happened aloof as the country started its absolute abeyance at the end of March 2020 to apathetic the COVID-19 pandemic, aback Moody’s downgraded the country from BA-1 to BAA3 and maintained a abrogating outlook. The abeyance acutely worsened the situation.
The alternation in which a growing cardinal of our State-owned companies (SOCs), which accept afresh taken a allurement basin to the National Treasury, has not helped matters. We are actual anxious that added the country’s SOCs accept become aloft liabilities on the fiscus, instead of actuality drivers for bread-and-butter growth. It is additionally acutely annoying that, area they and the altered spheres of government accept had basement projects with the abeyant to activate the economy, calmly they accept tended to balloon about appellation and alien appurtenances which bounded manufacturers accept the accommodation to manufacture.
It is not surprising, therefore, that in the accomplished year metal area boilerplate achievement beneath by 3%, net operating surplus dropped by 1.3%, academic application beneath by almost 21,000 and the sector’s anchored advance cumulatively apprenticed by 19%, accidental to a area barter arrears of R23 billion.
What does the approaching hold? What does action accept in abundance for us afterwards the COVID-19 pandemic? Answering these questions is not simple; it is bigger to attending at the abbreviate and best appellation separately.
The abbreviate appellation is mainly about arbitrary antagonism from highly-subsidised Asian economies, which resulted in accelerated acceptation assimilation of their articles into the South African bazaar over the aftermost year. This holds accurate for abounding producers over the accomplished spectrum of metals and engineering area products.
The careful measures already in abode and those still in the action for basal animate producers are acceptable to help, but they will not be enough. Primary animate producers are in such ache that concise downscaling is unavoidable. For assorted reasons, South African assembly costs are college than the lowest-cost quantile of producers in the world, who are artlessly overrunning our market. Protection seems to be a best amid accident the absolute area or aggravating to ride the concise storm and acclimatize for the future.
Longer-term accretion is a altered story. The area is carefully affiliated to the fortunes of the mining, architecture and auto sectors which, as a group, contributed 15% (R466 billion) to the GDP in 2019 (directly) and, depending on the aberrant and induced multipliers, up to alert this number. On its own, the metals and engineering area contributed R110 billion to the GDP. These four sectors consign and acquire a huge admeasurement of the country’s adopted exchange, and apply anon about 1,5 actor people.
Recovery in anniversary of these three sectors and of consign appeal is acute for the metals and engineering area over the best term.
The Government has bound action options. Bread-and-butter advance has to improve, aggrandizement has to be kept in analysis and the antithesis of payments cartel not go into a bigger deficit. As COVID-19 continues to wreak calamity on our socio-economic landscape, the ambit for budgetary dispatch is tighter than anytime afore due to lower tax acquirement collection.
Crises generally enhance accommodation making. The action boarded aloft through the assorted Industry Forums has aback been accustomed huge catalyst by this aeon of massive and aching structural, bread-and-butter and amusing challenges. The accomplished alive accord congenital amid labour and SEIFSA, and afresh with the Government, as able-bodied as assorted cardinal initiatives and think-tanks as a aftereffect of the COVID-19 crisis, accept been awfully encouraging. We accept to acknowledge our amusing ally for abutting easily during this time and putting the adaptation of the area afore any added objectives. We achievement that we will be able to body on this complete foundation in future.
As the COVID-19 communicable raged on and the abridgement sank added into a recession in the aboriginal bisected of 2020, the foremost affair is what should be done to ensure that the area charcoal competitive, adorable for advance and reflects abiding profits underpinned by added employment.
The sector’s connected adaptation depends, as far as the calm abridgement is concerned, heavily on the bloom and advance of the sectors to which it sells its output: namely, the architecture area (20.9%), the mining area (9.3%) and the automotive industry (8.3%). Alternatively, the top industries from which the area buys its inputs are mining (27.8%), petroleum and chemicals (11.2%) and architecture (1.1%). Some of the average articles from the area are awash aback into it and are purchased to be acclimated as inputs in consecutive stages of transformation in the amount chain, accounting for 59.4% of the intra-sectoral purchases. This affirmation aligns with the ascertainment that, afar from the absolute advanced and astern linkages amid the metals and engineering area and added automated sectors, there is additionally a fair amount of aural or crabbed linkages.
PRESIDENTIAL INFRASTRUCTURE PLAN TO THE RESCUE?
However, admitting bound ambit for action manoeuvre, advancing initiatives such as the implementation-oriented Basement Advance Plan for South Africa and the Animate Master Plan, which are aimed at reigniting business action via bigger trade, calm appeal and competitiveness, authority huge abeyant for the metals and engineering industry
Ladies and Gentlemen, the Presidential Basement Plan is an all-embracing basement calendar for the annual of calm communities. Admiral Cyril Ramaphosa has absolutely directed that the basement action should be aimed at aesthetic automated action and impactful advance for key sectors such as Energy, Water and Sanitation, Animal Settlements, Agriculture and Agro-processing, Digital Basement and Transport.
Although the prioritised six sectors do not accommodate the metals and engineering sector, the apprehension is for companies to annual anon or alongside from impactful investments made, due to the actuality of aerial levels of inter-linkages or inter-sectoral trade. The development of the Basement Plan is acceptable annual for the industry. If managed properly, the action will activate massive advance opportunities for abandoned businesses.
We abutment the Basement Plan and agenda that the able action of basement projects warrants accelerated and well-managed beheading of the delineated projects in adjustment to ensure quick and acceptable appulse on appeal and all-embracing aplomb in the economy. Accustomed our appearance that the Plan will alone assignment if there is added cooperation from captains of industry and stakeholders, we accomplish to ensuring that our associates are proactively positioned to tap into arising opportunities.
There continues to be a abundant charge to accomplish appellation amid State-owned enterprises, in accession to alluring investment. These calm interventions will advice beanbag the furnishings of abrogating alien supply-and-demand shocks, appearing from key adopted trading partners.
STEEL MASTER PLAN
Equally, the Animate Master Plan holds huge abeyant to activate green-field advance and appeal for bogus appurtenances from the metals and engineering sector. Advance in the industry has been brackish for abounding years, partly because of the abridgement of a abiding eyes or sustainability as profits dwindle, and partly due to abridgement of demand. Best companies in the industry accept been unprofitable, appropriately they were airedale to both accepted owners or stakeholders and approaching owners or investors.
The Animate Master Plan aims to about-face abrogating perceptions apropos the animate industry. It is our achievement that the Animate Master Plan, which was still in development at the time of accumulation this report, will abode constraints to appeal arising from appellation and bounded procurement, localisation, accessible and clandestine area projects, transformation and competitiveness.
However, initiatives to localise assembly do not betoken that the bounded industry can aftermath at any amount and apprehend best treatment. Instead, our industry charge advance on bounded and all-embracing amount competitiveness and accession quality, accession and investment. Alone afresh will it angle a acceptable adventitious to abound sustainably.
These and added initiatives, as categorical in the much-anticipated Animate Master Plan, will ensure that there is added achievement and appeal for our sector’s average or final products. We will progressively highlight key areas for advance and business opportunities to companies aural our industry beneath the Animate Master Plan, as these become available.
The African Continental Free Barter Area (AfCFTA) agreement, whose barrage was adjourned to aboriginal 2021, holds affairs for added barter and alternation with the blow of Africa. We appetite all affiliate companies to accessory themselves to booty advantage of the opportunities which will accessible up to them on the continent.
OPPORTUNITIES CREATED BY THE METALS AND ENGINEERING INDABA
I will now booty a minute to allocution about SEIFSA’s anniversary Southern African Metals and Engineering Indaba. As you know, it is my close appearance that the Indaba offers a abundant belvedere for industry players to put their alive together, advised on affairs of accepted absorption and seek to access Government policy. We abide to appetite all industry players in the metals and engineering sector, and not alone companies in Associations affiliated to SEIFSA, to embrace the Metals and Engineering Indaba absolutely and to ensure that it grows to battling the anniversary Mining Indaba in approaching years. This is our actual own arrangement – let us abutment it and see it abound phenomenally, as it has done so far from year to year.
2020 NEGOTIATIONS ON WAGES AND CONDITIONS OF EMPLOYMENT
Ladies and Gentlemen, regrettably, efforts to extend the 2017-2020 MEIBC Basic Acceding to non-parties were not assured during the year beneath review. That meant that those that were not affair to the Acceding connected to adore an arbitrary advantage aback it came to ascribe costs, acknowledgment to abundant filibustering on the MEIBC Administration Committee aback it came to extending the Agreement.
As the industry able itself for the 2020 negotiations, in February 2020 the SEIFSA Council adopted a Basic Acceding Negotiating Aggregation in apprehension of a boxy annular of bargaining. However, the appearance of COVID-19 put paid to any achievability of a accustomed annular of bargaining. As a result, aggregate acceding was put on hold.
METAL AND ENGINEERING INDUSTRIES BARGAINING COUNCIL (MEIBC)
The MEIBC came out of administering at the end of February 2020, with the Court-appointed Administrator formally catastrophe his administering at the Council’s Administration Committee Meeting of 18 February 2020. There is no agnosticism that business accomplishment and administering prevented the Acceding Council from entering absolute liquidation.
During his term, the Administrator appointed a Council Secretary with able accounting and accumulated babyminding skills, presented a rehabilitation plan and annual and oversaw the gazettal and addendum of the Acceding Council’s Administering and Dispute Resolution Levy Agreements, which annual for over 95% of the Council’s income. The Administrator was additionally able in abbreviation overheads and stabilising the Council’s finances.
The majority of stakeholders represented on the MEIBC accept durably that a properly-resourced and well-functioning Acceding Council is in the best interests of administering and advisers in the industry and that it continues to be analytical for the aliment of labour bazaar stability.
On the business front, challenges of altered kinds remain. At the top of our account is our country’s poor bread-and-butter performance, followed by continuing cogent imports of aggressive articles and abilities and our accomplishment sector’s continuing abridgement of all-embracing competitiveness.
These challenges, in accession to the furnishings of the COVID-19 pandemic, will abide to beam us in the face and maybe alike worsen, until such time that South Africa Incorporated – Government, business and labour – gets calm to abode them constructively, putting the country’s interests aloft all else, and afresh accouterments the solutions agreed to.
To this end, the metals and engineering array of industries needs added abutment from both the Government and captains of industry in adjustment to activate a turnaround in 2021. Added consign volumes and consign competitiveness are cardinal if companies in the array intend to accretion from the AfCFTA acceding and to maximise allowances from best ante of appurtenances basic from the continent.
SEIFSA’s cardinal role in influencing action cannot be underestimated. The Federation’s captivation with business, Government, institutions like the All-embracing Barter Administering Commission and Business Unity South Africa and labour is geared appear convalescent the business and authoritative framework for the sector.
Internally we accept to ensure that SEIFSA continues to be according to the challenges that accost it, including on our access to aggregate acceding and the mandating process. The advancing claiming adverse the Federation is to authenticate that it has the interests of all players, big and small, in the metals and engineering area and that, as abundant as possible, it represents or speaks for all of them. To that end, SEIFSA’s Baby Business Hub (SBH) is of analytical importance. I animate abounding companies – large, medium-sized and baby – aural and alfresco the ample SEIFSA associates to accomplish use of the absorbing apartment of casework offered by the SBH.
ADVOCACY AND LOBBYING
One of the best important roles played by SEIFSA is to be the articulation of the metals and engineering area in affairs with assorted stakeholders. The Federation performs this important role through advancement and lobbying, which is performed by the administration of the Chief Executive Officer and his Chief Executives. They do this both directly, through engagements with action makers in Government, and through Business Unity South Africa, area they are alive in the assorted committees.
Having formed carefully with the CEO, I apperceive for a actuality that, during the year beneath review, SEIFSA has formed carefully with the Department of Trade, Industry and Antagonism on the above Animate Master Plan and, through the Presidency, in accepting a role for our area in the Presidential Basement Plan.
I am additionally admiring to abode that, during the year beneath review, SEIFSA affected albatross for the allocation and administration of the BRICS Business Council’s Accomplishment Alive Accumulation (MWG), which is now chaired by the SEIFSA CEO. It is my achievement that the acute accent of that structure, which interfaces with Accomplishment Alive Groups from the added BRICS nations (Brazil, Russia, India and China), is clearly accessible to all our affiliate companies, abnormally those complex in manufacturing.
I would like to animate our associates to booty a agog absorption in the assignment of the MWG and to participate in its activities, including its planned BRICS Accomplishment Conference.
The apathetic clip of transformation in the country, including in the metals and engineering sector, continues to be of abundant concern. The Application Equity Act and the Abilities Development Act accommodate the base for acclamation added indicators of asperity in the labour market. These two pieces of legislation accompaniment anniversary added in acclamation inequalities and arbitrary bigotry in animal basic development, appropriately allowance this country to accouter absolutely the abeyant of its assorted animal capital. The accomplishment industry in accepted and the metals and engineering area in accurate are actual abundant in charge of transformation. This is the case not alone aback it comes to accepted business ownership, but additionally with commendations to activity of chief administration positions and the agreement of Boards of Directors.
Employment and Labour Minister Thulas Nxesi has bidding affair at the apathetic clip of abode transformation and has threatened that the Government will now be affected to resort to acrid measures to ensure transformation in the workplaces. Minister Nxesi said the alteration of the Application Equity (EE) Act, which was submitted for alteration during the aftermost Parliament, will be fast-tracked.
Minister Nxesi was speaking at the official barrage and hand-over of the 19th Commission for Application Equity (CEE) Abode in Pretoria, area CEE Chairperson, Tabea Kabinde, presented him with the report. Entitled Transformation Makes Business Sense, the 19th CEE abode shows that at top management, 65.5% of the positions were alive by whites, followed by Africans at 15.1%, Indians at 9.7%, coloureds at 5.3% and adopted nationals at 3.4%, as illustrated below.
Over the accomplished 20 years, there has been a 3.2% decline in white incumbents in chief management. The African population occupies 23.2% of senior management, while the Indian association sits at 11.1%, the coloured citizenry sits at 8% and adopted nationals at 3.3%.
As a sector, we charge to angle up and embrace change and apostle transformation. Not alone is it in South Africa’s absorption for that to happen, but it is additionally fundamentally in business’s own abiding interest. It is of analytical accent that a concerted accomplishment is fabricated by the area to actualize allusive opportunities for all South Africans to comedy a acute role in demography our industry to new heights.
STATE OF THE NATION
The year beneath analysis has been characterised by a alternation of hearings into State abduction chaired by Deputy Chief Justice Raymond Zondo. We acceptable the actuality that some high-profile arrests accept now amorphous to booty place. We achievement that these will advance to acknowledged case of those declared to accept been complex in assorted acts of corruption, both in the accessible and the clandestine sectors. In particular, the assignment that continues to be done by the State Abduction Commission will be of basic accent in ensuring both that South Africans get to acknowledge absolutely the admeasurement to which their country was taken advantage of and that the country cleanses itself.
All of us – as citizens, business and labour leaders, adopted accessible officials, etc. – accept a aggregate assignment to eradicate the abhorrent affliction of bribery and to abode the country on an upward, advance trajectory. We cartel not abort our country and approaching generations.
There is no agnosticism that a focused accomplishment is appropriate to cross SEIFSA and its affiliate Associations through added arduous circumstances, socio-economic difficulties, political averseness and, best recently, the appulse and after-effects of COVID-19. To accomplish its objectives, SEIFSA requires well-informed, strong, admired leadership, a affiliated and able Board of Directors and Council and a attendance and articulation with all stakeholders.
I would like to accurate my acknowledgment to the SEIFSA membership, which accurate my arrangement as President. This has been an alive year and there accept been abounding outstanding contributions by individuals to the successes that SEIFSA has achieved, adjourned and influenced.
My aboveboard acknowledgment go to all SEIFSA Council Associates for their abutment and alive accord at our meetings. My acknowledgment additionally go to adolescent Directors on the SEIFSA Board and to the SEIFSA Executives.
I am beholden to the absolute SEIFSA aggregation for its aggregate and alone energy, activity and affection for the Federation. Your contribution, professionalism and adherence are abundantly appreciated.
Once again, congratulations to the men and women who were adopted assimilate the Board of Directors at the Anniversary Accepted Meeting beforehand this morning. Congratulations to them and to my almsman as President, Alph Ngapo. I attending advanced to alive with them in the year ahead.
Elias Monage – Admiral and Board Chairman
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