New labour law bills cause for concern – Sassda

27th May 2011 By: Tracy Hancock - Creamer Media Contributing Editor

The Southern Africa Stainless Steel Development Association (Sassda) is concerned about the consequences of government’s four proposed labour laws for the local stainless steel industry, should the laws be implemented as is.

The association has targeted the three amendments proposed by government, concerning the Labour Relations Act No 66, of 1995, the Basic Conditions of Employment Act No 75, of 1997, the Employment Equity Act No 55, of 1998, as well as the new Employment Services Bill in its lobby strategy.

Sassda executive director Sethakgi Kgomo believes before this legislation is imple- mented, it must be framed to be more business friendly to the stainless steel industry.

Sassda’s concerns include preventing the industry from implementing third- party placement of artisans, which will result in job losses, as well as compelling employers to appoint temporary employees to permanent positions after a certain period of time.

“This is direct State interference with the relationship between an employer and employee and, if implemented, will be catastrophic and should be amended,” states Kgomo.

Consumer Protection
Sassda welcomes the new Companies Act No 71, of 2008, which promotes trans- parency in business, and the Consumer Protection Act No 68, of 2008, and continues to educate its members about the importance of complying with both pieces of legislation.

In terms of the Consumer Protection Act, Sassda has informed the South African Department of Health (DoH) about the consequences of importing inferior- quality stainless steel tubing used in food production.

“Stainless steel is used in the processing of all food in South Africa, therefore, Sassda has suggested that the DoH moni- tors stainless steel imports destined for food manufacturing processes, as part of health regulations. Under the Consumer Protection Act, the health authorities will be held liable for inferior products imported into South Africa.

“In food production, a seamless tube is required, as a welded tube will enable food to get trapped in the seam. Sassda has already been alerted to radioactive tube imports,” says Sassda marketing and communications manager Yumna Emeran.

She adds that government did monitor imported stainless steel tube for about six months, but was unable to find any infe- rior products at the time of its investigation, and has since scrapped the project.

However, Emeran says this initiative needs to be reactivated, as constant monitoring is integral to government protecting the consumer.

Localisation
The Industrial Policy Action Plan empha- sises localisation and outlines govern- ment’s duty to promote and protect the local industry.

“However, government’s implementation of localisation is ambiguous. Government needs to clearly define localisation in terms of material conversion to identify what percentage of a finished product should constitute locally supplied material and imported materials.

“There are five main job drivers set out in government’s New Growth Path, with certain targets set for different sectors; but how will this be achieved if localisation is not revisited and unpacked? How will the creation of decent jobs be achieved if localisation is a free-for-all?” Kgomo questions.

Emeran says mineral beneficiation is a significant aim for government but it has not specified what percentage of a project’s mineral beneficiation should be localised. Government requires about 50% of an entire project to be localised; however, this target is mainly met through civil works, services and maintenance, while sustainable beneficiation, such as stainless steel products, is imported.

Further, if stainless steel imports are regu- lated, Kgomo believes the stainless steel industry will be able to assist its primary strategic supplier, Columbus Stainless, in achieving a production rate of one-million tons a year. Currently, the steel mill is producing 700 000 t/y of stainless steel.

ISO Compliance

Sassda believes complying with Interna- tional Organisation for Standardisation (ISO) standards is key for the local stainless steel industry to become globally competitive.

Currently, about 20% of the associa- tion’s members, most being fabricators, are compliant, while the majority of noncompliant members are small, medium-sized and microenterprises.

The association has started to engage its almost 500 members and expects to drive ISO compliance to a minimum of 80% by May next year.

Assisting member companies with ISO compliance, which has become a mandatory requirement to access busi- ness internationally, is one of the major projects being undertaken by Sassda this year, explains Kgomo.

The association has appointed two consultants to undertake gap analysis of its member companies to assist with ISO certification.

Meanwhile, through its involvement with the United Nations Industrial Development Organisation, Sassda is also undertaking company profiling and benchmarking programmes for its member companies, which assist with improving global competitiveness.

The association is also partnering with the Nuclear Industry Association of South Africa (Niasa) to undertake an industry capability study.

“Sassda’s involvement with Niasa enables its members to secure work in the nuclear energy market, as government has already expressed a keen interest in exploring nuclear energy in its second Integrated Resources Plan. Sassda has also discussed the stainless steel industry’s involvement in the implementation of the IRP2010 with the Department of Energy, and submitted a proposal to government to this effect at the beginning of May,” states Kgomo.

The proposal also covers the socioeconomic impact of the stainless steel industry in terms of government’s New Growth Path and localisation strategy. However, Kgomo feels the existing trade barriers have to be removed before the industry can make a meaningful contribution.

These barriers include the need for government to impose import duties and control the influx of inferior material and products from countries involved in market dumping.

“The playing field is not level, as other countries, such as Brazil and India, impose import duties, while South Africa has not diligently implemented this safeguard,” he says.

Further, Kgomo calls on government to explain the benefits of South Africa’s inclusion in the Brazil, Russia, India, China and South Africa (Brics) bloc of emerging economies.

“Sassda would like Brics to translate into increased tonnages in terms of stainless steel conversion in South Africa. The association will soon line up meetings with Department of Trade and Industry officials to discuss trade barriers,” says Kgomo.

Regional Integration
Sassda would also like to aid its members in establishing or consolidating footholds in neighbouring African countries and is planning a Botswana trade mission for November.

The association was invited to undertake a trade mission to Botswana by the Botswana Export Development and Investment Authority.

The mission, which coincides with four-day international trade fair Global Expo Botswana, is expected to be partly or wholly funded by provincial trade and investment promotion agency Trade and Investment KwaZulu-Natal.

Other countries identified for trade missions are Angola and Mozambique, which are both experiencing rapid growth in terms of mining.

The prerequisite for undertaking a trade mission involves quantifying the potential stainless steel consumption and the economic and political stability of a specific country.

Therefore, Zimbabwe will not be considered for a trade mission for the immediate future, says Kgomo.