Once bitten, twice shy they say, and Metair is living proof. After last years’ brutal nine-week strike, the auto industry is focusing on building good relationships with staff, creating a positive working environment, and hopefully avoiding another paralysing multi-week strike in the bargain. One of the things that struck me in this interview was the way Metair dealt with the strike last year – according to MD Theo Loock, labour and management struck a deal whereby half of the workers picketed and stayed away, and another half came in and kept things running in a barebones way. It’s a pity the platinum industry hasn’t hit on this as a way to manage its strike, given the huge costs associated with shuttering and reopening mine shafts. – FD
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ALEC HOGG: Metair today announced annual results for the year—to-end December 2013. The company said its focus on improving the daily experience of employees will be a priority in the year ahead, not surprisingly, and we’ll find out why in just a moment. Joining us is Theo Loock, who is the Managing Director of Metair. It’s all about labour disruptions last year. It’s a similar refrain in South Africa – companies getting too far away from their employees and paying the price.
THEO LOOCK: Yes, I think it’s important. Last year the motor industry was exposed to a nine-week strike, four to five weeks at our customers, and four weeks at ourselves. We therefore identified already in the Marikana crisis that this employee wellness is very important in executing business in South Africa and we have to have a new approach. We are fortunate, we now have a three-year agreement and we can put a lot of effort into the next three years in finding a new way of handling annual wage negotiations and demands from the unions and labour expectations so that we don’t have this disruptive labour environment any more. Nine weeks is a big disruption in any business.
ALEC HOGG: Have you thrown away the old books and maybe started at a new page?
THEO LOOCK: Yes, definitely. We believe the working environment must be so pleasant that people prefer coming to work, that they must have a relationship where they’re nurtured and looked after in a work environment, and where their concerns can be aired and addressed and it’s a safe working environment. We had a little test case in one of our companies, where the workers still came to work during the strike period and they shared the labour action outside the gates – 50/50 – some of them worked and some of them did the action on the outside and therefore enabled the company to still continue working. However, we need to, as a microcosm, roll that out to the whole of South Africa.
ALEC HOGG: Extraordinary, so half of them were striking and they agreed which half would take the day off.
THEO LOOCK: Yes, it was a natural process.
ALEC HOGG: Which half would ‘toyi-toyi’ and the other half would actually work? This is interesting. It almost reminds me of the Spur and Gugu, where one guy asks for a ladies’ steak and his friends around him say, “kiss-kiss” because only ladies ask for ladies’ steaks. In the motor industry, in the manufacturing centre, where you’re being really nice to workers, others would be looking at you and thinking, “maybe they’ve lost their steel that one expects to have from that sector.”
THEO LOOCK: I think we can learn, we’ve just done an acquisition of Mutlu, the biggest battery manufacturer in Turkey and we had… Because of what’s happening in the Turkish environment – and we need to breathe with the market – we had to lay off 350 people, as we took over the business – in the Turkish environment. There, we learnt a lesson on how, in a mature labour/worker relationship environment, you can actually do it inclusively – working together, so we did it without any problems or any disputes on a voluntary basis, on ‘how are we going to be able to breathe with the market?’ It just shows that if there is a mature relationship – and I think there are unions in South Africa, which are very mature – we must just nurture that maturity of their relationships and work for the collective. We need to look at the business first and how we continue because we can’t serve as international contracts with a disruptive local labour environment. It is not possible. We will lose those international contracts. The lessons already learned, is that we can transfer from Turkey into South Africa but it all focuses on employee wellness.
GUGULETHU MFUPHI: Are you feeling the pinch on international contracts, from your perspective?
THEO LOOCK: Yes, you know, at the moment there have not been big fallouts on international contracts. We still believe that the South African motor industry has a good opportunity. It can recover from the five-hundred-and-fifteen-thousand vehicles produced last year back to the 550 in a stable labour environment, but we need the peripheral labour environment to be stable, too. We are quite bullish that the markets that we are in offer some nice growth opportunity. In the Turkish market, we’re in vehicle manufacturing markets three times the size of the South African market. Our Romanian market has grown into the equivalent size of the South African vehicle manufacturing market but that is just 50 percent of our business. The other 50 percent of our businesses…in the aftermarket, we are close to the end users and the customers, so it’s a very nice balance.
ALEC HOGG: It’s quite smart thinking. It reminds me as well, a little of what Laurie Dippenaar did when he went into Momentum, you might remember. Momentum was a very sleepy organisation and then it became – not too long thereafter – one of the most admired companies and one of the best companies to work for. Who are your role models? Whom are you learning for, getting back to this whole employee wellness, because it is transformational in your sector.
THEO LOOCK: I think it comes with a little bit with our history. Metair was traditionally a Toyota company – let’s call it Japanese-based manufacturing philosophy and Japanese-based employee associate. Just in the Japanese environment, employees are not referred to as employees. They are referred to as associates – partners in business – and I think we have a 30-year relationship with that tradition and we’ve seen how the challenges on Japan’s economy where they’ve transferred maybe 50 percent of their manufacturing capacity to outside of Japan, into emerging market countries and how they’ve done it. We’ve therefore had a very good model to look on how the focus is and on how you transfer skill technology into a new market. How do you build your business dependency away from your own economy, and how do you inclusively participate with labour in that process?
GUGULETHU MFUPHI: From a South African perspective, do you think it requires legislative changes?
THEO LOOCK: I think we all need to work together. Unfortunately, everything is done under an umbrella, of what’s allowed in law. We need to get business and labour input to say, “let’s adjust it to what works for us in South Africa”. How do we get flexibility? How do we get trust back into the environment and how do we breathe with the market? If we can accommodate that… In addition, how do we remunerate? The motor industry is quite responsible. We’ll always say ‘we don’t want to be invested in a business that pays the lowest wage in the world’ – why – it’s not the business that you want to be in. We are responsible in our remuneration of our people.
ALEC HOGG: You say everything revolves around the law. Does that include the way that you talk to people?
THEO LOOCK: No, not at all but I think the implementation of that/the approach must be different. You mustn’t take the approach from the structured law environment because then you’ll get nowhere. What is your end desire? Your end desire is to have a work environment where everybody wants to be at work and be seen as a partner in the business. I can give you a role. Our ethical role in Metair is that we talk about custodianship. We are all just custodians of the business that we look after. That means that everybody’s work is as important as the next one. I’m the custodian of the shareholders. Somebody that cleans the factory environment is the custodian of that environment. Both of our jobs are of equal importance but we have a different skill set and a different remuneration set, but we are both custodians in our business.
ALEC HOGG: Well that is again, as I’ve said before, transformative. Before we leave though, your shareholders will be looking at these results and saying, ‘my goodness, down from R3.10 to R2.19, headline earnings per share.’ I like all this talk but when is it going to translate?
THEO LOOCK: Yes, we fortunately continue to pay a dividend. We’ve managed to do a 70 cents dividend in the year of a major equity acquisition. For us, unfortunately, we bought only 75 percent of the Mutlu business but, at the moment, we are able to increase it to 95 percent and there’s a little bit of dividend lockup in the Mutlu business. One way we bought the Mutlu business was no dividends were allowed to be cleared by the previous shareholders, and as soon as we can affect the minority take out, we believe there’s a nice opportunity for dividend unlocking in the Mutlu environment and then obviously, the growth by selling the spare capacity, and that’s our focus. We bought businesses in a growth market with spare capacity, and now the focus is on marketing excellence. That is why I appointed somebody like Brian Pretorius to our board, to come and help us to get our marketing excellence to sell our spare capacity.
