Kaizer Nyatsumba: Sobering perspective on SA’s manufacturing sector

A four-week strike that affected the metal and engineering sectors has come to a close as Numsa's members accepted a wage settlement offer. Kaizer Nyatsumba, CEO of Seifsa joined Alec Hogg on the Power Lunch today to discuss the environment that unionised South African is operating in. The reality is stark, and as it comes to light in this interview, between the violence, the politicking and the strangle-hold on the South African economy, the resolution of the strike is not a victory for the employers, the employees or the country in the long-term. South Africa is in need of 'inspirational leadership' to turn the tide of negative trends and worrying standards that are becoming norms. – LF

ALEC HOGG: Nice to see you again Kaizer.

KAIZER NYATSUMBA: Yes, good to see you again too, Alec.

ALEC HOGG: How are you enjoying the switch, from our honourable industry to…?

KAIZER NYATSUMBA: It's been over a decade, and I'm enjoying it immensely.

ALEC HOGG: Seriously?

KAIZER NYATSUMBA: Yes, absolutely, I spent four years with Anglo American. I went to Coca-Cola, Sasol, Petro SA, so I joined SEIFSA in November of last year. I've enjoyed it immensely.

ALEC HOGG: But not so much the last four weeks?

KAIZER NYATSUMBA: Absolutely, the last four weeks were horrible.  Horrible at a personal level and horrible at an industry level because we have a situation where the metals and engineering sector has been terribly affected by the strike.   We have lost, more than R300m per day, and we have a situation where the other related sectors such as auto manufacturing have also been affected. Again, it is going to affect South Africa's credibility, as an investment destination, so not at all a good time in the past four weeks.

ALEC HOGG: You heard what Wilhelm Hertzog had to say. He is a contrarian investor, so he comes with contrarian views but in a perverse way, having this kind of turbulence in the labour sector keeps competitors out from overseas and it will also hurt the weak, who are not your members – primarily the big guys.

KAIZER NYATSUMBA: No, not at all. That's been, said many times, to an extent that people believe that. Sixty-three percent of our members are small companies. They would employ no more than 50 people. They are not listed and we do have the big guys in our fold but the majority of our members are not big players.

ALEC HOGG: So explain this…

KAIZER NYATSUMBA: We speak both with big players, within the metals and engineering sector, as well as for the small players, so it is a very delicate balancing act.

ALEC HOGG: But explain this, NEASA, who say they have only small members. They say their members can't afford eight percent. You've gone in at ten percent or agreed at ten percent. What do your small members think?

KAIZER NYATSUMBA: Well, we also have a situation where many of our small members are very concerned. We have a Council made up of the Chairpersons of Associations the companies are members of the respective Associations. They make their voice heard at the Association meetings and their Association would come to the Council, and they would also, make the views, the voices of the respective members heard, so we have taken decisions at times, which have not been unanimous decisions. The acceptance, for instance of the Ministerial Proposal on wages was done by a slim majority of our members; 12 out of 23 Associations – 12 voted in favour, ten voted against and one abstained, and the fourth one was not available at the time, so it was really 23 instead of 24. We debated at length yesterday, whether there's adequate protection available to companies, as a consequence of the compromised laws, on Section 37, that will seek to prevent double dipping and that was, approved by the majority of the members. They felt that the clause that we have in place would, indeed afford our members the protection that they require. However, with regards to the percentage increase, it hasn't been universally popular at all.   There have been various views expressed but many people have failed. We need to do whatever it takes to end the strike, to return people to work, so that there is a positive contribution to the economy.

ALEC HOGG: I suppose the problem with this, Kaizer is that members go back, they have a look at their balance sheets, their income statements, and they act accordingly and the acting accordingly in what we heard yesterday, from Arnold Goldstone at Invicta. He says that, it's on tape, it's all over our website, he says that at their un-unionised plants NUMSA members arrived there, in gangs of 100 at a time, heavily armed, and stopped un-unionised members from going to work.   They damaged equipment, now if we get into a 'mob rule' situation; you can negotiate like a gentleman, with the union members for as long as you like, but eventually it is going to have a very negative effect on the economy. How do you deal with this kind of action?

KAIZER NYATSUMBA: We couldn't agree with you more. We certainly deplore the violence that tends to accompany strikes in South Africa, and that has happened in this case. We have publically gone out to call on the leadership of NUMSA to rein its members in and they've denied that it is their members. Even though the people were carrying the colours of NUMSA, we have also had dealings with the South African Police Commissioner; last night I had a meeting with the National Commissioner of Police, Riah Phiyega and the senior leadership team saying, those who want to participate in the strike should be, allowed to do so. It is their democratic right but that should not include preventing those who want to go to work, for instance or, indeed engaging in mayhem, such as we are, told has happened on a massive scale. Our members have written to us, they've given us reports similar to the one that you've just spoken to us about, and we have made this information available to the Police.

We do know that more than 100 arrests have taken place, and we do hope that these will lead to successful convictions, so that there isn't this natural tendency in South Africa, to have strikes accompanied by violence, almost as a leverage to put pressure on employers.

ALEC HOGG: Kaizer, we have got a clip that we play very often, here on CNBC, which shows a few of the NUMSA members, clad in their red, and there's one guy there who is carrying a car tyre, now that, to you and I, who know what that means, the symbolism. For those who don't know, it's necklacing, it's if you don't listen to the way we are doing it, then we are going to get you.

KAIZER NYATSUMBA: Yes.

ALEC HOGG: Unless you have a more disciplined workforce what is the future of manufacturing in this country?

KAIZER NYATSUMBA: I wish I could say its promising Alec, but it isn't. In fact, manufacturing over the past few years has done very badly in the country and our economy cannot perform to the extent that it can and should, without manufacturing being stimulated. We've had a number of meetings with Rob Davies from Trade and Industry and we were delighted that in his State of the Nation Address, the President, for the first time, spoke about the important role that manufacturing has to play. However, manufacturing will not be able to realise its full potential. We will not be competitive. We will continue to have a massive influx of cheap imports in the country, undercutting South African manufacturers, because of the reasons that you've stated. We have not, until now had the kind of support from Government that we require.

Unfortunately, we have a situation where there isn't the necessary agreement between labour, business, and government that would ensure that the country is, taken forward. That it is competitive and that we conduct ourselves differently, even when we disagree. This was the case when we were involved in negotiations.

ALEC HOGG: Kaizer, just to close off with, going back to your media days, your days as a journalist and a very brave journalist you always have been.

KAIZER NYATSUMBA: Thank you, Alec.

ALEC HOGG: During the apartheid time, the struggle was to make the country ungovernable. It almost looks like there's a similar agenda at work here.

KAIZER NYATSUMBA: Well, I wish again, I could say that is not the case. I think, frankly, Alec we are losing it, as a country. We need a very strong Government that recognises that it's got to do things in the interest of the country and not in the interest of various sectarian interests. We are losing it, as a country, 20 years into the new democratic dispensation, our economy is not doing as well as it should. We have a situation where we have encouraged, perhaps unwittingly, a culture of entitlement. We have a situation where there have not been consequences that are, followed in instances of violence. A growing lawlessness is taking place, so it does require that there is a greater deal of inspirational leadership, than what we have had, at the moment and it isn't just Government.

The Government has got an important role to play, to lead but it requires that business and labour come to the party and that we ditch the old habits, of old, and we look at what it is that is in the interest of the country and we forge a partnership. That we don't have at the moment.

ALEC HOGG: Kaizer Nyatsumba, as always good to see you. That was an old friend. It's been a long time, as you heard, since we've been around the same table together, but a real privilege as always. He's the Chief Executive of SEIFSA.