CASE IN POINT | MEIBC
by Andrew Ngozo
Manufacturing: A Vital Cog for Growth
The metal and engineering industries are a vital component of a growing and sustainable economy. In South Africa’s case, the sector has been recognised as one of the facets that will push the growth agenda. In early 2014, the Metal and Engineering Industries Bargaining Council (MEIBC) hosted its annual Metal and Engineering Industries Bargaining Council National Conference 2014: A Summit on Job Creation, at which speakers brought this issue closer to home, as well as, most importantly, how stakeholders can grow the economy and create sustainable jobs.
Industry experts and speakers from various sectors emphasised the importance of the sector, in addition to the role that the Council could play as a catalyst for realising all the goals envisioned. A few years after the global meltdown, economies – South Africa’s included – continue to feel the effects of the meltdown.
As dire as the situation may be according to the statistics, delegates were told that the sector can and will, primarily through manufacturing, create sustainable jobs. “We have a huge capacity for all the mineral wealth we possess, but it is surprising that we still have not created capacity for that particular industry,” Karl Cloete, Deputy Secretary General of the National Union of Metal Workers of South Africa (NUMSA), said. According to him, there are vast opportunities for the growth of imports, which, in his view, is a clear sign of a lack of beneficiation. Beneficiation has become the new buzz word in the government’s resource-nationalisation plan, which proposes taxes on the export of raw materials in a bid to boost manufacturing in downstream industries and create jobs.
Reaping Ripple Effects
The manufacturing sector is important not only for South Africa, but also for the continent as a whole, because the latter is regarded as the fastest-growing economic region in the world. With a growing economy comes increased trade, which will require serviceable routes and infrastructure to facilitate such growth. In the maritime sector alone, according to the South African Maritime Safety Authority (SAMSA), the MEIBC is strategically positioned to provide an opportunity for the growth of such a sector through the use of more South African services. Maritime infrastructure development holds shipbuilding, ship repair and port equipment maintenance opportunities, which translate into South Africa having a capable sector that is going to deliver on this particular mandate.
A ripple effect is clearly visible as the sector endeavours to sustain the economy. Firstly, all these developments require that factories are properly equipped with machinery to supply the maritime sector. Secondly, in the factories, there need to be skilled individuals who will see to it that high-quality products are produced. These combined mean that the manufacturing sector is contributing to growing the economy and ensuring skills development at the same time. With the recent discovery of oil and gas in various parts of Africa, oil rigs and refineries provide further opportunities that emphasise the importance of the manufacturing sector at home and beyond.
The manufacturing sector is considered to be a major contributor to a country’s ability to grow its economy, to innovate and to build intellectual capital, says Thulani Mthiyane, the General Secretary of the MEIBC. “There is a direct link between the advancement of manufacturing capabilities in a country, the complexity of its economy, and its ability to grow and create prosperity for its citizens. I believe that South Africa has everything on our side through the manufacturing sector,” he says. Mthiyane explains that, once a country begins to manufacture goods, it builds knowledge and capabilities that allow it to prosper more easily.
With the onset of de-industrialisation, South Africa has found itself in a situation where, in a fast-evolving global economy, it faces challenges with regard to competitiveness. “The implementation of selective tariff protection will allow us to achieve many goals at once,” said Cloete. “On the one hand, it will allow for industry to create decent work and employment protection for citizens. On the other, through a viable manufacturing sector, it will allow South Africa to compete on a global scale in order to support domestic value chains as well as build capabilities.”
Yet to Industrialise
Echoing what many a conference speaker emphasised, Cloete said that adopting a ‘Proudly South African’ mentality would certainly win the battle for South Africa, which, incidentally, is faced with a lot of foreign goods from countries like China. “All stakeholders should support localisation through the negation of exports, raw minerals, metals and petrochemicals, among other things. If we do not do this, we are essentially exporting jobs to other economies while our own suffers,” he stated.
Daniel Lengoabala, President of the Metal and Electrical Workers Union of South Africa (MEWUSA), was one of the speakers at the conference. According to him, the key to solving any problem lies in identifying its root cause. In his view, there are various blockages that stand in the way of creating more jobs within the sector and in the economy. He named a few. “Our basic education system is poor and is further worsened by ... not nearly enough opportunities in further education and training and higher education. [From] another angle, there is a lack of synergy between the skills produced by our institutions and those that are required by the industry.” Furthermore, he elaborated that we are unable to create entrepreneurs who will take the all-important manufacturing sector forward.
The truth of the matter is that South Africa has yet to industrialise. Instead, ours is an economy that exports jobs in the absence of localisation and diversification. There is also the double-barrelled challenge of poor wages and poor infrastructure. “To contain these, we need ... wage-led growth and a mixture of manufacturing- and consumption-led growth.”
A unanimous sentiment among conference attendees was that the Chinese have a role to play in South Africa’s economy owing to China’s rise as the world’s superpower. However, another strong belief that reverberated during the conference – which was further explored during Working Group 2’s deliberations on the second day of the conference – was that China’s encroachment on, and its role in, the South African economy is largely at the expense of the local economy. “Most of the industry workers know the value chain of production from raw materials right up to the final products.
As such, when we allow the dumping of finished Chinese goods into South Africa, we are wasting the valuable skills we possess and we may seriously want to start to think of empowering employees with at least two other skills [basic business and financial skills] so that they can utilise them [together] with existing skills to start new companies and create employment. Essentially, employees should be prepared and empowered to be tomorrow’s business owners,” observed a member of the audience.
The Global Manufacturing Competitiveness Index
Working Group 2’s deliberations ended by tackling the MEIBC’s role vis-à-vis job creation in the industry and in South Africa which can result in growth. Conference attendees agreed that the Council mandate in this respect was hugely important. Working Group 2 pointed out that it would like to see the MEIBC being at the forefront of the creation of an industry Enterprise Development Fund (EDF) similar to the one in the mining sector. Hopefully, such an initiative will result in job creation and make inroads into curbing the rise of China in the industry.
In 2010, South Africa was ranked 22nd (out of 38 countries) in terms of the Global Manufacturing Competitiveness Index put together by Deloitte and the World Economic Forum. South Africa was expected to move up to 19th spot in the next five years.
However, three years later, in 2013, South Africa had dropped to 24th and the expectation was a further drop to 25th over the next five years. There are many underlying factors contributing to the decreasing competitiveness as a nation. Some of these include market challenges and issues like labour, input costs, the threat of cheaper imports, rising electricity costs, and the impact of government on industry. Industry and government can together create a road map that will not only alleviate current issues, but will also capitalise on the competitive advantages Africa has as a continent. Through continental collaboration and fostering effective private–public partnerships, there is an incredible opportunity to position Africa and South Africa as global manufacturing hubs.
No Room for Mistakes
A gala dinner was held during the conference with the sole purpose of honouring those companies that have held their heads high and have endeavoured to take the manufacturing sector forward. One of the speakers at the gala dinner was Bonang Mohale, President of the Black Management Forum (BMF) and Vice President of Shell South Africa. Mohale said the world today is a fast-evolving space and that there is a need to make the most of the available resources. “There is no room for making mistakes, and more so because not only are we living in a world that has more children than adults, we are [also] in a world where the power is shifting from the West to the East largely as a result of the global crisis. How we tread in dealing with this is going to be crucial for our general and economic well-being.”
Mohale urged South Africa and the rest of the continent to keep a close watch on the Chinese encroachment into the continent. “Apart from that, we should look at how they conduct business and what makes them successful and hopefully learn from there. For instance, the Chinese do not take the average of five years to complete such a project as a power station as we do here. Instead, they complete projects and move along, and surely we can learn a thing or two from that,” he observed.
Towards Creating a Sustainable Sector
In his address to the gala dinner attendees, and speaking on behalf of Aerospace Maritime and Defence, the organisation’s President, Dean Mogale, continued from where the BMF President had left off. He noted that the giant that stands in the way of progress for South Africa is that we are still beset by the ills of 2013, but there is light at the end of the tunnel, he emphasised. “However, instead of us working together we often allow our egos to take centre stage. We will not realise the change we want and desire in this manner.” He further observed: “For us to create a sustainable manufacturing sector, we don’t need a total overhaul of systems and processes. We need to start doing it for ourselves instead of expecting the next person to do it for us.
“South Africa’s problems lie not with the government, but with each and every one of us gathered here. That will require forward thinking on our part,” he shared. He stressed that, as a collective, South Africa needs to find ways to reposition itself, as there is no way that new entrepreneurs will come into the market and create the jobs the economy requires. In Mogale’s view, the South African government should speed up infrastructure development that will allow the country to conduct more trade with fellow African counterparts. “Above all ... we should sit together to address matters affecting us, and [by doing so] we will [rise] above the challenges facing us, for the future lies with each individual,” indicated Mogale.
Perhaps saving the best for last, the Programme Director gave the floor to Deputy Minister Thabethe, who made an impassioned plea to conference attendees and South Africa at large to, “do something to contribute in the lives of others. South Africa belongs to all those who live in it. In that sense, when we talk about a successful manufacturing industry that creates jobs, we should desist from seeing it as an activity solely in the hands of the government. The private sector needs to have a buy-in in the process,” she observed. “We hope to get the economy back on track, because we have all the right fundamentals. The key is in realising the importance of partnerships and [making] the most of them. South Africa is also blessed with talented young people [to] whom we will be doing a huge disservice if we [do] not nurture in order for them to take the country into the future.”
A Satutory Body
The Metal and Engineering Industries Bargaining Council is a statutory body created under the Labour Relations Act (LRA) to provide for the co-regulation of stable and productive employment relations in the metal and engineering industries. The Council provides the necessary, administrative infrastructure and technical expertise to ensure effective collective bargaining, industry compliance, dispute resolution and social protection services.
The MEIBC aims to:
Ensure stable and sound relationships between labour and business in the industry by serving all stakeholders with commitment, fairness and integrity
Ensure stable and sound relationships between labour and business in our industry by serving all stakeholders with commitment, fairness and integrity
Brand the MEIBC as a neutral and objective organisation of equal value to labour and business
Facilitate and positively influence the relationship between labour and business.
Its scope covers a wide range of activities within the metal and engineering industries, including the following sectors:
The production of iron, steel, alloys and metallurgy
Building and repairs of ships and boats
Certain sections of the electrical engineering industry
The lift engineering industry and
The plastics industry.
The oldest bargaining council in South Africa, the MEIBC employs over 140 staff, spread across the National Office (Johannesburg), six regional offices and four satellite offices as well as a dedicated Centre for Dispute Resolution in Johannesburg.