Kill the Company…Kill the Job

June 25, 2009

Living in a country governed by slogans, we may as well join in. My contribution, “Down with Work…Give me Money”, seems fitting enough amidst rising unemployment and an increase in unrealistic wage demands.

The South African economy, which was hailed as relatively unscathed by the global financial crisis, according to vote hunting politicians as recently as three months ago, when Trevor Manuel denied South Africa was in a recession, miraculously imploded. This rapid collapse must therefore be quite a shock to the naïve believers, arc-optimists and proud carriers of good news stories. In the last few weeks “no recession” became the worst recession in years, manufacturing output dropped dramatically, mine output dropped and South Africa became a net importer of food.

The three biggest employers after the state are struggling to remain competitive and jobs are being lost at alarming rate, making the Presidents promise of 500 000 new jobs by year-end meaningless. With nearly 200 000 jobs lost in the first five months of the year, the target, sucked out of our President’s miracle producing thumb, must now be seen for what it is, another empty and unattainable promise. It will require very creative mathematics to get to the target. However, with the “Math Literacy” skills, combined with the warped logic displayed by “nieu-economists” in the ANC government, we could end up with an interesting and surprising claim to success come year-end and time to account.

All the job losses in these critical industries are conveniently attributed to the global economic crisis, obscuring the fact that our unemployment woes are entirely attributable to misguided economic policy and mismanagement. The mere fact that the South African economy was outperformed by most emerging economies in the years prior to the “Great Global Economic Crisis” bears proof. The gold mining industry, which, at current prices, should be booming but because of high costs, it remains marginal, output continues to fall and with it jobs. Volkswagen, whilst announcing cutbacks in South African manufacturing are opening new manufacturing facilities in India. Commercial farmers, whilst selling farms in South Africa for coastal residential development, are increasing production of products such as sugarcane elsewhere in Africa. The employment of domestic servants is falling rapidly. I can site many more examples.

Why is this happening? The problem must be laid at the feet of the ANC government and its partners COSATU and the SACP. Our employment woes can be attributed to laws, regulations and policies related to labour, land ownership and mineral rights and the insecurities arising from it. To complicate matters the emphasis on decent meaningful jobs has given rise to the perception that gardening and house-work are inferior jobs which, combined with regulated and unrealistically high minimum wages, resulted in a large number of job losses. People who used to earn R1800 per month plus accommodation and food are now lying idly about, doing nothing but breed in order to increase their share in social grants. Whilst people are retrenched and companies go belly-up, trade unions are encouraging their members to demand wage increases,  in most cases, considerably higher than the current inflation rate, with no prospect of improved productivity.

The president of NUM, Senzeni Zokwana, recently stated unequivocally that the unions do not strike at the drop of the hat, this whilst they were holding a gun against the heads of the employer leaving him little option other than to capitulate and hope for a miracle. So much for Zuma’s pre-election call on his supporters to follow the example of unemployed “poor white” Afrikaners, who after the great depression, took their picks and shovels and worked for a pittance. Instead of following basics, the government will proudly point to their prize-winning job destroying social plan which makes South Africa proportionally the highest payer of social grants in the world, not realizing this is one of the evils causing our high unemployment and low productivity levels. Their misguided and warped sense of depravity, results in the firm believe that social spending equals upliftment. Any intelligent psychologist worth his salt will tell you social hand-outs in most cases discourages the will to work, not that some of the unemployed and even employed need too much encouragement to lie around idly at home. Some would say certain people would strike, kill and wreak havoc for the opportunity to be unemployed. This brings me to the next, and certainly, the main reason for South Africa’s employment dilemma.

COSATU, whilst people are wallowing in misery, are instigating the destruction of jobs by demanding unjustifiable wages. To them it is not about the protection of the worker, it is all about doing less for more. It was therefore rather almost laughable when that brilliant economist of our time, Zwelinzima Vavi, solemnly declared, in an interview yesterday referring to people losing jobs, “COSATU are standing with you in this troubled time”. Pity they do not stand with the unemployed masses, the “worthless” people out there that have no hope of ever working as a result of restrictive labour practices forced on the economy by the government and COSATU.

My call on those union members who lost, or will lose their jobs, think back and count the hours and days lost by the company you work(ed) for as a result of your right to strike. As you count those days and hours, realise this; those were nails in the coffin of a dead or dying company. Many of you are probably delighted with your retrenchment package, which will enable you to lie around at home, drinking beer. Soon however, the money will be gone and you will be in the same leaking boat as your unemployed, starving neighbour. When you start to suffer the hunger pangs, and your family and begs for food, when you turn a darker shade of black because of your malnutrition, spare a thought for those loyal workers who worked when you and your union friends were wreaking havoc on the company and the economy in the name of your inalienable right to strike. Once your confused mind and empty tummy, allows you to make sense of the suffering you brought on those dear to you, go to Mr. Vavi and thank him for what he did to you, your dear ones, the country and the economy. I doubt you will have the guts to do that. Generally, your brevity and that of your ilk only exists when you are part of a mindless mob receiving suitable incitement from the likes of the Vavis of our world.


Eskom and Fani (the Funny) Zulu

June 24, 2009

The Eskom disaster is just not going to die and quite rightly so. The contrasting statements made by Barbara Hogan and Dipuo Peters highlights a disaster of gargantuan proportion and allowing liars, sorry, “Spin Doctors”, like Funny Fani Zulu and his incompetent boss, to create perceptions aimed at minimizing the devastating effect on our economy, is nothing less than criminal. Unfortunately, government representatives, having been the main contributor to our perilous situation, and Eskom are diverting attention away from the real issues once again, minimising the extent of the crisis and diverting attention from the real issues. They are, very successfully aiming their message, modeled for the consumption of the uninformed masses with deadly effect. Millions of South Africans believe them, many of them are payment defaulters, not necessarily poor, and beneficiaries of illegal connections, who do not, for the most part, understand or care about the impact of an imploding power utility.

Pointing out the disaster facing the South African consumer and economy inevitably results in the popular, head-in-sand retort;”Pre-94 Power generation was for the privileged part of the population, it now caters for a wider population”. This argument is only partly true. Domestic use of power constitutes only 15% of the utilities’ capacity; the balance is utilized by industry for worthless job creating pursuits such as manufacturing, mining, beneficiation and many others. Imagine the small-minded self-interest of money-grabbing capitalists wanting to light up hotels so that the privileged can stay in luxury, forcing the poor and perpetually disadvantaged to do meaningless jobs like cleaning rooms and waiting on tables.

Eskom committed four deadly sins that brought us to the precipice. The first sin was committed when, in 1999 the esteemed, and still valued despite his spectacular failures in Trade and Industry and Transport , Jeff Radebe and the incompetent Nosizwa-Ngakula, was told that  infrastructural capacity investment in Eskom is critical to sustainability. Their reaction, in typical African visionary fashion was; “Live for today, tomorrow will look after itself”. Some will justify the inaction, saying they must be forgiven for thinking the request to expand the utility was an evil plot by white counter-revolutionaries trying to force the new masters into making costly mistakes. Anyway, it is not very African to make quick decisions. Because of the postponement of expansion projects Eskom could now spend their money and efforts on other things such as the accumulation of bad debt, compliments of the payment defaulters.

Management could now embark on the second deadly. They could focus their full attention on the sacred crusade against the sins of the past. Their single-minded commitment to transformation left the organization purged of white management- and technical skills. In a noble campaign to rid Eskom of the injustices of the past and to make it an AA benchmark, huge resources, which could’ve been used to build infrastructure, was paid out in voluntary separation packages to highly skilled and experienced people. The waste of money was exacerbated on fast tracking of under-qualified, inexperienced and incompetent replacements. The successful implementation of corrective action was probably a bonus criteria and management rewarded themselves handsomely for their efforts. Ironically, they re-hired, often through “vile”  labour brokers, many of the skilled people purged from the company, at an exorbitant price. These former employees, unpatriotic swine,  are like mercenaries, only in it for a quick return with no long-term commitment.

The third sin committed by the newly liberated Eskom management was their mind-boggling inventory management strategy. I can only imagine it being instigated by some recently appointed “black diamond”, who successfully and with a “Cum” completed a “six month” on-line Executive Development Progamme for Inventory Managers. Our “whiz-kid” was probably so taken by JIT-management, he missed the chapter on strategic inventory and his excuse for his oversight is the fact that he comes from a part of the country where it does not rain too much. The Eskom executive team was so taken with the effect of inventory reduction on the balance sheet and their bonuses, the strategy was accepted with much acclaim.

Continuing their journey to self-destruction Eskom sinned in their dogged commitment to BBBEE initiatives at any cost. By awarding transport contracts to unsustainable companies, one-man operations with a “bakkie” and a busted scrap-yard truck and often-fictitious companies their actions are analogous to risking the oxygen flow to the heart of our economy. On top of the transport fiasco, coal supply contracts with BEE compliant coal miners were concluded on terms weighed in favour of the supplier. The tried and trusted cost plus contracts flew out the window and soon Eskom was faced by rising coal prices based on buoyant coal demand.

It was hoped that, with the appointment of Godsell as Maroga’s mentor and Ras Myburgh as his coach, we would see the end of stupidity that have beset ESKOM. One would’ve hoped to see the end of statements by Bulwica Sonjica advising us on electricity efficient sleeping habits. We should be forgiven for hoping that the return of competence and skill would be a main priority. Alas, the more things change the more they stay the same.

The inane statements continue. Should Maroga continue to tell us about good of power supply and the absence of load shedding I think I will hang myself on the roof rafters. We are not stupid. With the number of Ferrochrome furnaces shut down because of the economic crisis, we should have enough spare power capacity to feed a city the size of Johannesburg.  Maroga should be drawn and quartered every time he tries to shift the blame or put the “guilt monkey” on our shoulders, we did not cause this mess. As for the Funny Fani asking for understanding, I’m sorry no can do, it is unfair to put the bulk of the financial load on household consumers using 12% of your output.


Anglo American – Demise or Sign of the Times?

June 22, 2009

Merger of equals? I doubt it. The biggest and hottest mining news, whilst not entirely unexpected, remains a shock too many because it signals an end to an era and the death of a South African institution that cannot be taken lightly, it is bit like imagining a world without IBM, Ford or GE. The Xstrata initiative has been rumoured for a while and the announcement of a proposed merger of equals ring hollow in light of strong rumours that the Xstrata initiative was partly at the behest of some influential and disillusioned Anglo shareholders. The discussions with shareholders are particularly interesting and are an indication of the disillusionment with Anglo management in general and Cynthia Carrol in particular.

 The deal, if successful will see probably see the name Anglo American assigned to history, much like some of their BEE offspring. Something that would have been considered inconceivable ten years ago is now imminent. In a very short time a great and proud entity were transformed into a weak and vulnerable target for predators. A mere eight years ago Anglo was the top miner in the Forbes list of top 2000 companies, at position 113 with BHP Billiton coming in second at 127 and Xstrata a lowly 764. In the 2008 list, Anglo had dropped to 266 with BHP Billiton, the number one miner, at position 183 and Xstrata at 272. Ranking miners the mining companies, Anglo has gone from number 1 in 2000 to number 5 whilst Xstrata climbed from position 16 to position 6. A truly remarkable slide in fortunes.

The embarrassing disintegration of Anglo American despite its high quality assets can be laid squarely at the door of management and an all out governmental assault on business and the mining industry in particular.

Tony Trahar during his tenure in 2005, made the fatal mistake of enraging the vindictive Thabo Mbeki with his “Anti-African” statement on South Africa’s perceived risk profile with investors. His justified criticism was however not openly supported by his peers, a common South African business leader’s disease, akin to the cowardice Trevor Manual recently referred to, and he was hanged out to dry. Anglo American’s management of BEE policy, partly prompted by their need for acceptance and perceived dependence on government goodwill, was less than successful and their focus on political issues resulted in them taking their eye of the ball, which in turn caused the company to lose direction.

At the end of 2007, with great fanfare, Trahar was replaced by Cynthia Carrol, who was to lead Anglo at astounding pace in a desperate dash to oblivion.  Her appointment as CEO was hailed by many. She was going to bring a new approach to South African mining, change our poor safety culture and turn Anglo into a mean effective super miner. She was, being American, hailed as far superior species to stereotype South African CEO’s and Chairmen, suitable for companies like BHP Billiton, Rio Tinto and the unmentionable Swiss upstart with the funny name. In reality, Cynthia Carrol was soon found wanting. The relationship with the government did not show a perceptible improvement, on the contrary, her naivety and approaches were seen as weakness and resulted in further exploitation by officials, the politically connected and “The Entitled”, more money and assets were poured into bottomless BEE pits, executives left the organization and their replacements are rumoured to feel isolated. Public spats with the likes of Davidson and Trahar, in the hallowed halls of Anglo American, were akin to mutinous behaviour and the company clearly found itself on a precipice. The inability of Anglo Management to judge the climate in South Africa, and Africa for that matter, could not be ameliorated by there high quality mineral resources.

Unfortunately, in my opinion, Carrol will not do the honourable thing and fall on her sword. The reference to a “Merger of Equals” is nothing more than an attempt to allow her to maintain some semblance of respectability as a business leader. I do not see how the retention of Carrol will add value to a merged entity. The value in Anglo lies in their mineral assets and their people, value that Anglo executive management has been unable to unlock for a long time and the real value in the merger lies in the leadership and proven ability that Xstrata brings to the party. This was born out by the sharp rise of the Anglo share price on the announcement and the drop in the Xstrata share price. 

The role played by politicians in the demise of Anglo American must not be ignored. The manner in which the government, through mindless doctrine and misguided economic policy, has set out to destroy the mining industry under the guise of corrective action, will haunt us for a long time to come.

The message from the market is clear; get the deal over and done with, thus reducing  insecurity and uncertainty. Anglo shareholders want the deal, Xstrata shareholders do not like the “Merger of Equals” idea and who can blame them, since it may imply the animal that results from this union may have more than its fair share of Anglo genes and culture. To those who are worried and concerned, remember this, a year ago the mighty Anglo American, once referred to, as “The Evil Empire” would have been highly offended by references suggesting they were equal to the likes of Xstrata.


Manuel’s Sucker Punch

June 15, 2009

Trevor Manuel, like Barbara Hogan, must be lauded for their frankness and disregard for political correctness, which they proved during the Dalai Lama fiasco and now on labour and privatisation issues. By speaking out, hey have proven that anyone can, like the Vavis, Mantashes and Nzimandis say what they want about sensitive issues, with total disregard for political correctness. All people should feel free to put their opinions of, and feelings about holy cows across in plain and understandable language.

As for Manuel, he has to be lauded for his stance on the behaviour of unions and business. Labour for their economic sabotage and the unholy fear of confrontation shown by business. His views, not unexpectedly, raised the ire of both business and labour. Labour has not had a very good relationship with Manuel and we have not forgotten Vavi’s threat to take a nutcracker to Manuel’s family jewels, much to Maria’s consternation I’m sure. With Manuel adding “cowardly business” to his list of enemies will soon leave him totally isolated, unloved and even shunned by Maria who, by implication, are one of the cowards.

The sabotage and destruction of our economy by unions with unreasonable demands are not in question. However, the underlying cause of the behaviour of the unions must be equally shared by the ruling party who, for two decades, have given tacit approval and, in some cases even incited unacceptable behaviour by Unions. The attitude of Ministers and government leaders in most instances laid the blame for strikes and misbehaviour squarely at the feet of the employer. Good examples are recent SATAWU strikes and the Johannesburg Metro Police strike a year ago. Union members in these strikes behaved boorishly with violence, destruction and intimidation rife (JMPD actually firing at SAPS members). Guilty parties have, to date, not been disciplined or brought before court.

Business probably deserves the label of “cowards”. Like many in South Africa, they will blame their dilemma with labour on all manner of things, ranging from Apartheid, past injustice, the government and labour. Truth is, because of their fear for being branded exploiters, oppressors and racists, they remain quiet or at least, should they risk commenting, politically correct and take it on the chin. In their minds, they make the decision not to invest another cent. They express their discontent with the situation to their friends, peers locally an abroad. Very few speak out and the government, ruling party and its labour partners can go away and tell the proletariat things are great. Political and labour leaders can point to a lousy growth rate of 5% during the minerals super cycle and say, “We are doing great” without fear of contradiction from cowardly business. When things do go wrong everybody blames somebody else. As for business leaders, as much as Mbeki was famous for “quiet diplomacy”, they are famous for “silent disinvestment”.

As for Manual, the way he approached this issue is out of line. In effect, he distances one of the biggest contributors, the government and ANC, from the problem. They now become spectators and business have no inclination which way they will jump when push comes to shove. For those who has had dealings with Gwede Mantashe and understand his duplicity, you cannot be blamed for wondering if this is typical “Mantashe divide and rule” tactics at play. Having been one of the first to tell the Unions to moderate their attitude it looks increasingly like Mantashe could be “His Masters Voice”, as serious obstacle because he is hard to trust. The biggest fear for business, is making a stand in the best interest of the economy, only to find themselves on the receiving end of attacks by the joint forces of Government, labour and the ANC.

The answer to the dilemma facing South Africa lies in the brutal truth, trust and a shift away from the blame culture. A big ask, but to expect things to change in the light of our current performance is expecting too much. We will see a broken economy long before the much treasured and celebrated “pain” from the “wounds” caused by our “troubled past” has subsided.


Illegal miners – Unsung Heroes

June 3, 2009

                  

The President of the Association of Informal and Illegal Miners of SA, Malaisha Kipastofile, called on the minister to enforce a code of practice that will ensure illegal miners can apply their trade safely. He was reacting to the minister’s call for a coordinated attack on the problem and her denial of their inalienable right to earn a living. Kipastofile said the reason for their activities must be laid squarely at the door of the government and the unions. He said the protectionist intent of the NUM and Cosatu has resulted in an out-of-balance labour market with artificially inflated salaries, causing large-scale unemployment and ever increasing job losses in an uncompetitive South African gold mining industry. Other mines will become targets when they, like the gold and diamond mines, become uncompetitive because of high cost of legal mining, which result in the willful and reckless abandonment of valuable in-situ gold resources. To the DME’s comment that the state will not carry the cost of the death of the illegal miners, Kipastofile said he was already in touch with Richard Spoor and the Associaton will sue NUM, The State and the Company for damages. Kipastofile further declared his intention to form a Union representing the unemployed. He said, we do not care about meaningful, and decent jobs, we just want jobs and pay so that we can feed our families.

 When told about the views of the Association of Informal and Illegal Miners of SA (AIIMSA), the spokesperson for the National Union of Mineworkers, Mina Kokomoya, said Kipastofile was a counter-revolutionary with ties to the security establishment of the old Apartheid regime and a cohort of Willie Madisha COPE. Kokomoya added that NUM would demand subscription arrears for the deceased miners since they were working on a mine where NUM has an agency agreement, which compels workers to become members of NUM. The union will however, not entertain claims against the Union by deceased illegal miners or their next of kin. Kokomya vigorously denied the accusation that Unions in general and NUM in particular were destroying employment opportunities. He said, “It is better to die like dogs than to work like slaves” He said he knew for a fact that at least 80% of the unemployed agrees with NUM on this issue.

 In a separate statement, Slack Notsosmart, COSATU spokes person, warned anyone contemplating the formation of organisations opposing COSATU of grave consequences. He said COSATU will not tolerate interference by non-workers in employment matters and threatened mass action in support of the wage demands, the banning of labour-brokers and subversion of the social dream. This tragedy of illegal miners must be laid at the door of labour brokers who undermine union efforts to uplift workers thereby promoting capitalist market myths. Asked about COSATU’s alleged intimidation tactics, Notsosmart said allegations of intimidation during any COSATU industrial action were perceptions created by the white owned media.

Leading economist, Adam Smith, believed that this tragedy could lead to a fresh look at the sustained viability of South African mines and could signal a reversal in the sagging fortunes of the South African gold mining industry. “This could provide us with an alternative model to extract gold from deep ore bodies”, he excitedly said.

A mining industry spokesperson, Tyranny Fortune expressed his admiration for the efficiency of the illegal miners and said, “Their commitment to the task ahead should be a lesson to all. Their ability to remain underground for long periods gives new meaning to the expression. “sleeping on the job” and the management are examining the possibility of applying this principle to current operations”. He added; “This is what we had in mind when we first thought about continues operations.” Fortune denied that the mine owners were discussing off-take agreements with the illegal miners.

The national director of Lawyers for Human Rights, advocate Jakob van Esel bemoaned the fact that the illegal miners, known as zama-zamas, had to recover the bodies of their colleagues themselves. He questioned the commitment and so-called bravery of Mine Rescue Teams and referred to them as ninnies for not volunteering their lives to safe the illegal workers, it is not that they are oppressed like the Emergency Workers currently on strike. The striking workers have the right to refuse assistance to the malingering elite, accident victims, who probably contributed to the situation they are and innocent victims of violent crime, committed by the oppressed poor. Unlike the striking emergency workers, the Mine Rescue Brigades consists of volunteers and have no real right to refuse laying their lives down for the oppressed illegals.

It is believed that the Inspector of Mines issued the illegal miners with a Section 54 order, which could result in a suspension of operations of at least 48 hours. It is also rumoured that the incident may result in a “DME Blitz” on Harmony operations. NUM are debating whether they should call for a 24-Hour sympathy stay away at Harmony operations.