The slow pace of transformation in the metals and engineering sector continues to be of concern, Steel and Engineering Industries Federation of Southern Africa (Seifsa) president Michael Pimstein said during his presidential address in Johannesburg on Friday.

He urged the sector, which represents about 3.5% of gross domestic product, to embrace change and advocate transformation. He argued that such a course was not only in the interest of South Africa, but also the long-term sustainability of individual firms in the sector.

“The manufacturing industry in general and the metals and engineering sector in particular are in need of transformation. This is the case not only when it comes to general business ownership, but also with regards to occupation of senior leadership positions,” Pimstein said.

Concerted efforts were required to create “meaningful opportunities” in line with the Broad Based Black Economic Empowerment (BBBEE) Amendment Act, compliance with which was being “vigorously” pursued by government.

The Department of Trade and Industry (DTI) has indicated that all future government incentives will only be extended to firms with a minimum BBBEE rating of Level 4 and has listed transformation and industrialisation as its top priorities.

The DTI had also undertaken to support, through a targeted incentive, 100 black industrialists by the end of March next year and confirmed that disbursements under its Black Industrialist Scheme had risen to 62.

“It is of critical importance that a concerted effort is made by the sector towards creating meaningful opportunities for all South Africans to play a crucial role in taking our industry to new heights,” Pimstein said.

However, Seifsa also remained concerned about the state of both manufacturing and the metals and engineering subsector, which Pimstein described as a reflection of the “extremely disappointing” performance of the South African economy.

“We [currently] hold a 0.4% share of the global economy and unless we embrace and implement plans and strategies to improve the manufacturing, value creation and export sectors we have no hope of improving our position and our share of the global economy will continue to decline.”

Seifsa would continue to pursue collective solutions, with government and labour, to the industry’s problems, arguing that its strategic role in influencing policy could not be underestimated.

“Challenges will continue to confront us, and potentially worsen, until such time that South Africa Incorporated – government, business and labour – gets together to address them constructively, putting the country’s interests above all else, and then implementing the solutions agreed to.”

There was also a need to “marry” the trade protection afforded to the upstream industry participants with appropriate and reciprocal benefits for the downstream participants. “We need to grow the downstream market place beyond South Africa’s borders and we need secure and appropriate government support for our industry and export incentives ensuring the competitiveness and ongoing viability of the downstream participants in the export market.”

Pimstein praised the fact that the 2017 three year wage agreement had been concluded in the absence of a strike, noting that the settlement was the first in ten years to be concluded without industrial action.

Seifsa and all trade unions in the sector had also committed to continuing discussions on urgent challenges in the sector, particularly the difficulties faced by small businesses, deepening the discourse on the future format and structure of collective bargaining and reviewing the current exemptions policy to accommodate businesses in need.

With regard to Labour Court judgments setting aside the applicability of the 2011 to 2014 and the 2014 to 2017 Metal and Engineering Industries Bargaining Council (MEIBC) main agreements, steps were being taken to prepare a new consolidated main agreement for Gazetting and extension to nonparties.

“The parties, working together with the bargaining council, are preparing the new agreement and will be submitting it to the Department of Labour. The Minister of Labour will be requested to publish the agreement and make it legally binding on all employers and scheduled employees in the industry.”

However, there remains opposition to the extension of agreements to nonparties, with National Employers Association of South Africa (Neasa) arguing that the extension to nonparties is undermining the viability of small firms, which is leading to job losses.

Neasa CEO Gerhard Papenfus was of the view that small firms were being prejudiced as a result of high increases that were being forced upon them.

He argued, too, that Seifsa’s representativity levels were low, occupying 4 out of 21 seats on the MEIBC management committee.

"These four employer bodies employ, collectively, about 90 000 employees. The employer bodies on the Manco which did not sign this agreement, and which will therefore oppose the extension, occupy 17 seats, collectively employing approximately 150 000 employees. I therefore simply cannot see how Seifsa and the trade unions can get the required vote, as required by the Labour Relations Act, to even permit them to request the Minister to extend the agreement," Papenfus said.

"They might, as in the past, attempt to achieve that through unlawful means. Should they do so, however, we will stop them by bringing an urgent application in the Labour Court."