A MUST READ: Why the so-called "consolidated main agreement" should not be extended to non-parties - 90% of employers in the Steel Industry.

Dear Steel Industry employer
 
What follows is another letter by a Steel Industry employer to the Minister of Employment and Labour.
 
Regards

Letter by employer: 

To whom it may concern:

We are a labour intensive small engineering company manufacturing XXXXXXXXX to the South African, African and international market. Exports contributes 30 – 40% to our turnover. We employ around 40 persons and our main competitors are Chinese and Indian equipment sold at low prices and against which we can only compete with high quality alternatives for which our customers are willing to pay a slight premium but no more.

Sadly the quality of South African products are no longer that which set it apart in the market previously due to constant cost increases not only for labour but also in respect of high interest rates, a weakening exchange rate making imported components more expensive, the high cost of protectionist steel – incidentally from the same people fueling the unrealistic wage demands in this so-called Main Agreement, the high level of regulation and time spent on administration, high tax rates, poor service delivery, high energy costs including diesel and electricity and a remarkably unreliable supply of electricy. Not only the need for but alo the operation of a high capacity generator during load shedding has increased our cost of manufacture and productivity dramatically.
 
With this extension of the MEIBC so-called main agreement which sees to force us to pay in excess of R75 cost to company for the lowest paid worker, we would simply not be able to compete and since we are not in the business to be loosing money and head voluntarily for bankrupcy which it seems this agreement is forcing us to, we would rather close our doors and move our manufacturing elsewhere which is more conducive to encourage business and void of the above other problems. I could cite manufacturing salary rates for Vietman, India and most of the developing world including Eastern Europe, South America and most of Africa, but of course you should know it.

It is also shocking to see the agreement attempting to set wages at 130% higher than that for the entry level in the Motor Industry in South Africa and more than 40% higher than the Road Freight Industry. I am not sure who the beneficiaries will be of a small to medium engineering industry completely destroyed by these unrealistic wage demands and the continued sabotage of the industry by SEIFSA and their co-horts.
 
The matter of having to apply for exemption, prooving that we are in fact insolvent will not remedy the situation. A company has to also have the other production factor being Capital – to expand and to maintain its position. This application process is not only demeaning, it violates every right to protection of our private information and will place another administrative burden on those who should review these applications to well beyond their capability and capacity to arbitrarily decide our and our staff’s futures.
 
We have a loyal workforce with a very low employee turnover rate and it makes absolutely no sense in sending our employees to the already swollen ranks of the unemployed because the few large, capital intensive companies in the steel industry has no problem in increasing wages to these levels since labour contributes such a small percentage to their cost and sales value on the one hand and the Union businesses (which is what they are),  only being interested in gaining their monthly payments from the employed, not the poor and unemployed.

Please put a stop to this process on behalf of our country, our workers, our businesses, our potential new entrepreneurs and job creators. I am sure you do not wish to see this proud South African industry reduced to being warehouses of imported equipment only because that is the future of the extension of this so-called agreement. A bargaining council for small  and medium steel engineering manufacturers may be the answer and pay attention to our President’s vision and pleas in this regard.

For more information:
NEASA Media Department
media@neasa.co.za