Issue 1: The boom train won’t wait for Transnet
A few years ago Kumba Resources enjoyed 11% market share of China’s iron-ore purchases. Today, this market share is just 5%. In the time Kumba’s market share declined, China’s demand for iron-ore increased significantly. A key reason Kumba is struggling to meet demand is that the company cannot ship more iron-ore out of the country. It cannot do this because Transnet, which transports the mining company’s commodities, cannot increase its capacity.
Kumba has suffered as a result. Crucially, the economy has suffered.
This week the JSE has reached new highs. A significant contribution is the impact of surging commodity prices driven by China’s appetite for raw materials. Sub-Saharan Africa has about 65% of the commodities China needs to meet its astonishing growth but the region supplies less than 30%.
Issue 2: The Asian tigers will not wait for Transnet
We need to seize this commodities wave early and grow with it. According to The Wall Street Journal, ”China’s demand for raw materials [such as iron-ore] is driving global prices higher and catching some suppliers flat-footed.” Some countries are responding though. Australia has stated that its ambition is to be ”the world’s best supplier of industrial inputs to developing Asia”. This should be South Africa’s ambition. To do that we must create a more efficient and reliable freight company and we must invest in our infrastructure to improve productivity. Transnet must restructure. Countries and foreign firms will not wait for our restructuring.
Issue 3: Negotiation is essential, but you can’t talk forever
According to labour unions, there is consensus about Transnet’s restructuring. They claim that their protest is about management’s unilateral restructuring of the group. They would have us believe that the only questions are how we manage the conditions of employment of our employees, to what extent we co-manage the restructuring of Transnet, and how quickly do we execute the restructuring.
Almost six years ago there was a decision to dispose of Transnet Housing Company. It is still in Transnet. In 2002 there was a decision to dispose of Autopax. Again this company is still a part of Transnet.
We cannot continue to talk about restructuring indefinitely. At some point we must implement it. We have given ourselves a two-year deadline. We set these targets as guidance to ensure that we go through with our decisions.
We are also mindful of the country’s target of average gross domestic product growth of 6% by 2014.
Issue 4: There can be no sunset clauses
We have and continue to spend a considerable amount of time in talks with the unions. In the past 12 months we met more than 10 times. The Transnet restructuring committee, which is co-chaired by the unions, has already met twice this year. We are willing to continue consulting but what we cannot do is endorse indefinite co-determination.
We have said there will be no retrenchments during the disposal and transfer of non-core businesses. Unions want guarantees that jobs will be protected after these disposal and transfers. We cannot offer sunset clauses where there are guarantees of jobs for life.
Issue 5: Management must manage
We will continue to consult for the duration of the restructuring but will not compromise on managing the company. It is what our board and shareholder expects of us. It is also what our economy and the challenges of jobs and poverty alleviation demand of us. We do not think we should postpone economic growth. It is time to implement the restructuring of Transnet.
Maharaj is Transnet’s group executive: strategy and transformation
Keeping mama off the train
Transnet’s spin strategy to deal with this week’s unprecedented strike action by black and white workers has been to deliberately keep the heat off chief executive Maria Ramos.
Instead, the role of fronting the counter-strike propaganda has fallen to Minister of Public Enterprises Alec Erwin (himself a former unionist who can talk the talk) and to Pradeep Maharaj, Ramos’s second-in-command, who has focused on the potential losses to the national economy from the strike.
At a briefing to senior editors on Thursday morning Ramos did not touch on the strike action but sought only to reiterate her continued confidence that her four-point turn-around plan was on track.
The strategy will see Transnet become a focused rail, ports and pipelines business. This will see South African Airways and Metrorail being transferred to government while other non-core assets, such as Autopax, the Blue Train and interests in the second national operator will be sold. In her only comment that could be aimed at placating workers, Ramos noted: ”Probably the most important part of the Transnet story is human capital”, referring to the group’s ongoing efforts to train staff for the R40-billion capital expenditure that lies ahead. — Thebe Mabanga