You can also listen to this podcast at iono.fm.
advertisement
Continue reading below
Download the free LiSTN audio app on Google Play, Apple, or here.
JElemy Muggs: The decline in jobs in the metals and engineering sector has been alarming, with new figures from the Confederation of Steel and Engineering Industries of Southern Africa (Seifsa) showing just over 300,000 people are currently employed, a significant drop from 500,000. is decreasing. 2-3 years ago. So the big question, of course, is can this industry survive?
I am now going to speak to the CEO of this organization, Mr. Tafadzwa Chibanguza. First of all, a warm welcome, but what are the main factors contributing to this situation?
Tafadzwa Chibanguzha: Therefore, the decline should be viewed in two stages. Here's what we've reported from 2008 to now and 2023. That number has increased from 577,000 to 362,000, and that's where we are now. That means approximately 214,000 jobs will be lost. That first round really took issue with the problems plaguing the local economy, low GDP growth, and especially low growth fixed capital formation and spending, both at the state and private sector levels.
What we also saw around 2008 was that a large portion of the export market went to the EU and a large portion to Africa. So, while that in itself is an opportunity, the volume has also decreased.
So [we] This structural decline will continue.
We also know that the power crisis began to worsen in 2008. Transnet's problems have also particularly worsened since around 2015. So what's driving this number up is actually the underlying structural headwinds facing the economy, and of course the real sector economy is responsive to economic activity, and private Because we don't see it, it's decreasing.
Read: The collapse of SA’s steel master plan and the collapse of the industry
Jeremy Maggs: And of course all those elements remain. So it's not like we're somehow significantly arresting that decline, right?
Tafadzwa Chibanguzha: correct. That's a good point. That actually leads to the next number that we're looking forward to. The second tier of numbers captured in this article basically shows that without reforms it would be number 1, but now the ArcelorMittal development has also surfaced. If we calculate the rate of employment decline, we believe we can predict the figure in the medium term, since reforms take time. Therefore, we would expect historic job losses and maintain that rate.
Then modify it to match the impact of the ArcelorMittal closure. That would give us about 48,000 jobs. It's a direct job. Applying this sector's economic multiplier to the economy as a whole yields 290,000 jobs. So the last important point I want to close on is the economy-wide job loss of 290,000 people, including about 48,000 direct jobs and the remainder indirectly induced jobs. about it.
Listen/Read:
Urgent appeal to prevent closure of ArcelorMittal long steel business
President urges big companies not to lay off workers
Serious accusations regarding government interference in scrap metal market
ArcelorMittal to cut 3,500 jobs in South Africa as growth slows
Jeremy Maggs: Do you think the industry can survive under these circumstances?
Tafadzwa Chibanguzha: History has shown us that without reform, the economic headwinds we are experiencing now, if they continue without reform, will continue to worsen and basically this industry will not survive. Perfectly shown. However, what is riding on it is that there is no reform. This is because history has already shown us that this structural decline continues, and this is not even a subjective observation.
So if we look to the future, I think those are the two key areas where energy and rail don't exist.
The third problem is becoming quite serious. It is the deterioration of local government…
advertisement
Continue reading below
This is where rubber hits tar by injecting costs to manufacturers operating in different municipalities, impacting competitiveness. So, by combining the three, [if not] Even if they are arrested in terms of the decline they are contributing, this sector will continue to deteriorate to the numbers I have already mentioned.
Jeremy Maggs: When you raise this issue with national and local governments, are you confident that your opinion will be heard, given the two types of issues you have outlined?
Tafadzwa Chibanguzha: To be honest, I have to say that my ears have turned a corner in terms of hearing. So I think historically, when you bring up these problems and solutions, you've generally felt like you've hit this wall, but a lot of the solutions include rail, energy, Includes more private sector participation in other areas.
We are starting to have our voices heard as we see in energy reform.
On the logistics front, there are at least early signs of reform, especially given Treasury's comments that Transnet's rescue is conditional on private sector participation. As for local governments, not so much. So what I'm really saying is that we're aging so fast that we're forced to consider the alternative of bringing in the private sector.
Read/listen:
Transnet receives R47 billion Treasury 'support package'
Transnet bailout: government capital injection essential for recovery plan
Why Transnet needs a government bailout
Lack of infrastructure development spells death for long-term steel demand
Jeremy Maggs: I would like to focus on the private sector. It is fine. However, this is not a complete panacea, given the reluctance of the private sector to engage due to the pace of change needed to achieve a stable society. investment.
Tafadzwa Chibanguzha: Fair point. But as you've seen, we as President, as Safsa, have been involved in a number of work streams to unlock engagement in a number of work streams, some project-based, some higher level. directly involved. We again have him directly involved in the National Energy Crisis Committee (Necom) as Seifsa. But to answer your point more directly, the involvement of companies that are currently making offers, especially at local government level, is that that's exactly where the problem lies, and that's where they feel the most. It means that we are stepping in again. amount of pressure.
So, if they can get involved, they should do it for patriotic reasons, not just to maintain their own survival, but also for profiteering, although it must not come across in a way that is controversial. Not even from. For their own survival, that's why they get involved.
As a real-life example, a large multinational company underwent an insurance audit, but on the day of the insurance audit there was no water on site, so naturally they decided to take out interim insurance until a solution was found. became. After R20 million, an on-site solution is now in place due to the fire risk.
So what I'm really trying to say is that it's the micro-level impact of the impact on local government. We're seeing a lot of companies step up to participate in trying to stop at least some of these declines. And our role as an organized business at the time is to aggregate those offers of assistance and bring them to the fore to our government counterparts.
Jeremy Maggs: Thank you very much, Tafadzwa Chibanguza, CEO of Seifusa.