As SEIFSA is planning to host Mainstreaming the Steel Master Plan conference to be held on May 19 and 20 at Industrial Development Corporation in Sandton, Johannesburg, South Africa, Elvis Mboya, Founder and Managing Editor of the Smart Africa Media asked Lucio Trentini, CEO of SEIFSA, to take us inside the activities of the largest employers’ federation in Southern Africa region.
JOHANNESBURG, South Africa: The Steel and Engineering Federation of Southern Africa [SEIFSA] is planning to host the Mainstreaming the Steel Master Plan conference to be held on May 19 and 20 at Industrial Development Corporation in Sandton, Johannesburg, South Africa.
Born out of conferences in Bloemfontein in 1941 and Cape Town in 1942, SEIFSA, is a National Federation representing 18 independent employer Associations in the metals and engineering industries, with a combined membership of 1,223 companies in South Africa.
At the height of COVID-19, SEIFSA has struggled stabilising businesses amid challenges involving wage negotiations with the unions and cushioning employers from the pandemic shock and industrial action.
As SEIFSA is planning to host Mainstreaming the Steel Master Plan conference to be held on May 19 and 20 at Industrial Development Corporation in Sandton, Johannesburg, South Africa, Elvis Mboya, Founder and Managing Editor of the Smart Africa Media asked Lucio Trentini, CEO of SEIFSA, to take us inside the activities of the largest employers’ federation in Southern Africa region.
Tell us a little more about this ‘Steel Master Plan’ that will form the basis of discussion at the conference.
The Steel Master Plan (SMP), already signed by representatives of business, labour and government, is an integral part of the new enabling environment that the Government is heralding. It’s not going to create any miracles over-night but it’s the first time, for quite a while, that the Government has come to business to ask what it can do together with labour to address the challenges the steel sector faces. The hurdles we face in significantly reigniting economic growth in our economy and sector are huge. We have to sit down, we have to talk, we have to be honest and we have to confront the brutal truths if we are going to make progress. If we don’t, the SMP will become another vision that doesn’t see the light of day.
As a nation we all know the power of collaboration. It is always easier to complain, blame and criticize rather than to put in a meaningful effort to create sustainable solutions. The SMP creates a platform to collaboratively map a way forward with the support of the government. The SMP has been developed on three pillars, namely:
- boosting demand for steel and steel products, primarily by reviving South Africa’s stalled public infrastructure roll-out; driving localisation, or import substitution; and by leveraging the market access being created through the implementation of the African Continental Free Trade Agreement;
- addressing supply-side constraints, including electricity disruptions and tariff hikes, logistics bottlenecks, uncompetitive inputs and inadequate skills, and research and development; and
- a series of cross-cutting interventions, including the creation of a Steel Industry Development Fund, to be capitalised through the introduction of a levy on all steel sold domestically, whether it be produced locally or imported.
In a nutshell it’s about increasing domestic demand for steel. The big gains will be made by moving our infrastructure programme from shallow waters to deep waters and to get it moving on a bigger scale and then introducing a localisation requirement not only on primary steel, but also downstream steel.
Give us a glimpse of the confirmed speakers, number of delegates and topics to be discussed.
Minister Patel, DTIC will give the keynote address, followed by the General Secretary of NUMSA and Deputy General Secretary of Solidarity Mr I Jim and M Croukamp respectively. Dr Bernie Fanaroff will follow-on and set the scene for delegates by providing an overview of the six Workstreams, namely: Demand-Side Measures; Supply-Side Measures; African Continental Free Trade Area Agreement; Transformation; Human Resources; A Shared Vision and Resource Mobilization and the Steel Fund. Each session will involve an address by a key leader from Business, IDC or the DTIC and a panel discussion amongst a select team of Senior Business, Government and related Stakeholder Representatives critically evaluating, discussing and engaging one-another and the audience on each theme, progress to date and the way forward. All panel discussions will be hosted by a professional facilitator. We expect a jam packed two days, we will be preparing a report of proceedings focusing on undertakings made, time-frames committed etc as our intention is not only to track progress against targets and to actively participate in each work stream going forward, but, more importantly, to reconvene the Conference and report back on actual progress against goals in order to ensure that the Steel Master Plan moves beyond a grand policy statement to actual delivery on the ground.
The conference will take place at a time when the Southern Africa’s economy is struggling from the effects of Covid-19 pandemic. What solutions are you seeking from these thought leaders to rescue the sector and help drive economic recovery?
SEIFSA has a combined affiliated membership of more than 1 200 companies that employ more than 150 000 employees. Our affiliated members range from giant steelmaking corporations to small to medium size enterprises employing fewer than 50 people.
The message SEIFSA wants to put out is that this industry stands ready to make its contribution to translating the government’s vision of reindustrialising the metals and engineering sector and to start translating visions, promises and policy into action and deliverables.
What we need is for the government to significantly accelerate the roll-out of its infrastructure spend, which is absolutely central to the reigniting of industrial capacity in the sector. When this happens, the sector will ignite, move forward and create the much-needed economic growth, jobs and job opportunities that this country so desperately needs. Our membership and employers across the board are ready, they want to play their part as key investors and stakeholders in the sector and our country.
Last year the subsector faced challenges, where steel industry workers lost more than R200 million in wages in South Africa alone. What’s the level of discussions with the unions to provide a lasting solution?
Regrettably and tragically during last years’ three-week stoppage more than R300-million a week in lost wages and more than R600-million a week in lost revenue was shed by the sector. The knock-on effects were felt throughout the economy owing to the sector’s role as supplier and customer into the mining, automotive, motor, construction and other manufacturing sub-industries.
Whilst there can never be any winners when industrial action overtakes dialogue and consensus seeking, the industry did manage to conclude a three-year deal which locks-in stability, certainty and industrial peace from now until 2024. The reality is that labour is a key stakeholder in the sector and any mapping of the way forward cannot exclude labour. This is a lesson learned over almost 80 years of collective bargaining and only five industry or national stoppages having been experienced in the last 30 years (i.e., 1992 – 2022) in the metals and engineering sector.
SEIFSA places a high premium on building and deepening relationships with all of the industry trade unions and we readily acknowledge that good deals are founded on solid and professional relationships. Business needs labour and labour needs business, the two are mutually dependent on one another.
SADC Ministers of Employment and Labour and Social Partners recently convened a meeting to deliberate and make decisions to strengthen labour administration systems and enhance the prospects of decent work for people in the region. What’s SEIFSA’s working relationship with the regional bodies and does your mandate extends to other Southern African countries?
SEIFSA’s mandate does not extend beyond the borders of RSA. We do keep abreast of developments in the SADC Region through our involvement and membership of Business Unity SA but our focus and attention for the moment, as we come out of arguably the most difficult period we have experienced as a sector and as a nation, is the metals and engineering industries in RSA.
Despite industrial action, increased energy costs, and effects of the pandemic, wholesale trade sales data released by Statistics South Africa recently showed an increase in sales of 10.6% in March last year, compared to March this year. What are the key drivers to this success?
This is the story of the broader South African economy in the first few months of 2022. Almost all the data points released in the first quarter of 2022 were positive: quarter 4 gross domestic product numbers, purchasing managers index, business confidence index, and consumer confidence were all showing signs of recovery. Importantly, the sector that SEIFSA represents, the metals and engineering sector, also had a strong start to the year recording a 1.2% year-on-year growth and 4.7% month-on-month between December 2021 and January 2022. This strong start was a function of much of the stimulus and recovery plans that were implemented post covid-19 starting to take shape. However, the developments in Eastern Europe between Russia and Ukraine have dampened global sentiment and continued recovery.
Most economic analysts are revising downward their economic assumptions for the year ahead. One of the immediate risks that are already playing out is inflationary pressures that are building in the system because of supply chain disruptions due to the Ukraine and Russia war and uncertainty about supply of commodities from oil to wheat. As the inflationary pressures build up, central banks around the world are under pressure to act to contain the inflation through increasing interest rates. This unfortunately is happening at a time when the recovery from the covid-19 pandemic is relatively fragile. These geopolitical risks are likely to shape the economic fortunes for the year, which is why urgent resolution is necessary.
How do you strike a balance between growth and environmental sustainability?
The metals and engineering sector constitutes 30.9% of the manufacturing sector. Given its size, if the sector does well, the broader manufacturing sector’s fortunes will improve – also considering the fact that the sector is a major supply of product to multiple industries and sectors in the economy.
The sector also directly employs 397 586 people and working on the traditional employment multiplier of 1.6 people for most industrial sectors, the metals and engineering sector indirectly employs a further 657 896. Considering South Africa’s dependency ratio of 6 to 10 people per job, the sector’s socio-economic impact is huge.
Ultimately the sector’s fortunes are linked to higher levels of economic activity. As the sector stabilises and begins to grow, the focus on finding a balance between economic growth and environmental sustainability will sharpen, but for the moment for many engineering concerns who have yet to regain ground lost over the last three years the task remains herculean.
The technology is there, what’s not there are the conditions in order to operate it economically. Switching to environmentally friendly steel production and investing in new plant technology on an industrial scale remains expensive and simply put the economic hurdles are higher than the technical ones.
