Papenfus calls for steel industry businesses to resign from Seifsa

Gerhard Papenfus, CEO of the National Employers Association of South Africa (Neasa) has called for businesses involved in the metal and steel industry in South Africa to resign from Seifsa and escape the Seifsa/Numsa stranglehold on the industry.

In an open letter Papenfus says: “Avoid being bound by the Seifsa/Numsa agreement. Resign now! Negotiations in the Metal and Engineering Sector are upon us once again.”

“The current Seifsa/Numsa agreement prescribed a wage of approximately R11 500.00 (cost-to-company, for an unskilled, entry level employee) to employers bound to that agreement through their respective Seifsa affiliated employers’ organisations.”

“Since 2011, Neasa has succeeded in preventing this job destroying and entirely business destroying, unsustainable Seifsa/Numsa agreement to be made applicable to the remaining 90% of the Steel Industry. Neasa will do it again this year.”

“This 90% of the steel industry (because of Neasa’s intervention), has consequently been able to conduct their business much more freely, since 2011, paying affordable wages.”

“If, by June2020/July 2020, when Seifsa will most probably sign an agreement with Numsa (adding an increase to the already outrageous R11 500.00 agreement), you will be bound to their agreement.”

“Therefore, if you are a member of a Seifsa affiliated organisation, which cannot afford the approximate R11 500.00 (cost-to-company) arrangement (plus the anticipated increase in July 2020), ensure that you resign from your Seifsa affiliated organisation now.”

According to Neasa the following are Seifsa affiliated employers’ organisations. Association of Electric Cable Manufacturers’ of South Africa, Association of Metal Service Centres of South Africa, Cape Engineers and Founders Association, Constructional Engineering Association, Eastern Cape Engineering and Allied Industries Association, Electrical Engineering and Allied Industries Association, Electrical Manufacturers Association of South Africa, Gate and Fence Association, Hand Tool Manufacturers Association, Iron and Steel Producers Association of South Africa, KwaZulu-Natal Engineering Industries Association, Lift Engineering Association of South Africa, Light Engineering Industries Association of South Africa, Non-Ferrous Metal Industries Association of South Africa, Refrigeration and Air Conditioning Manufacturers and Suppliers Association, South African Electro-Plating Industries Association, South African Pump Manufacturers Association, South African Refrigeration and Air Conditioning Contractors Association, South African Reinforced Concrete Engineers Association and the South African Valve and Actuator Manufacturers Association.

Steel master plan protects ArcelorMittal as a monopoly
In further correspondence Papenfus wrote: “During his state of the nation address earlier in the year, President Cyril Ramaphosa referred to a steel master plan to save the steel industry from its rapid decline. However, if this proposed master plan is implemented it will greatly accelerate the de-industrialisation the steel industry is already experiencing.”

“The unintended consequences will be immense, achieving exactly the opposite of what the president may have in mind.”

“In a recent opinion piece in Engineering News, Charles Dednam, a former ArcelorMittal SA employee, now general secretary of the ArcelorMittal sponsored South African Iron and Steel Institute, expressed the necessity for trade measures (import duties on raw material to protect ArcelorMittal). In addition to this, the department of trade and industry, and competition’s proposed master plan, drafted by Dednam, is (not surprisingly in light of his close connections to ArcelorMittal), riddled with support for import duties to protect the company.”

“In his article, Dednam could not ignore the indisputable fact that the steel industry’s main challenge is its un-competitiveness. He consequently concluded that competitiveness constitutes the master plan’s top priority. However, he also emphasised the importance of the continuation of import duties (protecting the ArcelorMittal steel monopoly), a measure currently preventing the downstream manufacturing industry from having access to cost-effective input material for their production processes, which already renders the steel industry uncompetitive.”

“Dednam’s admission that competitiveness is of critical importance for the survival of the steel industry therefore directly contradicts his proposed intervention of continuing import duties to protect ArcelorMittal. Over the past decade, the steel industry employment figures have dropped drastically. Since 2015, when the duties were imposed, close to 1 000 companies have been liquidated. In addition to this, more than 300 companies have been put into business rescue.”

“The protection of ArcelorMittal is not solely responsible for this, though it is a major contributor to the industry’s woes. The government’s commitment to protect ArcelorMittal, regardless of the devastating impact it has downstream, remains a mystery.”

“These duties are only delaying the inevitable, as far as ArcelorMittal is concerned, while the downstream sector is severely prejudiced. If these duties had not been introduced:

ArcelorMittal would still have existed, albeit not in its current form and definitely not as a monopoly
Tens of thousands of jobs would not have been lost;
The steel industry would have adapted to the logistical constraints associated by importing raw material for production;
The industry would have been more competitive;
Many of the companies that were liquidated would still have contributed to the preservation of the South African steel industry.”

“The problem with the steel master plan is that it addresses all kinds of issues but not the two main causes of the devastating de-industrialisation (the decline of business and job losses) plaguing the steel industry, which are:

The custom and safeguard duties protecting the failing ArcelorMittal steel monopoly;
The current labour law dispensation, which facilitates the once powerful Seifsa and Numsa’s impact on, particularly, small, medium and micro-enterprises in the steel industry, and their wage agreement, which provides for an outrageous minimum wage (currently R11 500.00 cost to company) against which the industry constantly needs to defend itself.”

“In response to the proposed steel master plan, the National Employers Association of SA’s approach is simple: Scrap these industry, business and job destroying duties.”