Madness at Medupi
At the vast construction site of the Medupi power station, set to be the largest in the nation's history, President Jacob Zuma not only boasted about the creation of an impressive number of local jobs, he proclaimed that the entire region's economy had received an incredible boost.
"This massive infrastructure [drive] in the country," Zuma said, "is going to create sufficient jobs for all of us."
Addressing thousands of workers dressed in neon yellow and blue construction clothes, he said that the construction skills they were learning and developing in this long-lasting (but ultimitely temporary) building venture could be carried on toward other jobs.
But in the tiny town of Lephalale in Limpopo, finding and keeping work is far more difficult and fraught with hardship than the president makes it sound.
Perhaps no one better exemplifies this reality than the people involved with Baarata, a local construction sub-contractor that appeared to bite off more than it could chew, and is now facing devastatingly lean times.
The black-owned brick-laying company has suffered a dramatic rise and fall. In winter 2010, Baarata employed about 260 workers, almost all of them local.
Stem its woesBut after 13 months of laying bricks on the Medupi site, Marten Nel, Baarata's manager of operations, says he has fired almost all of those 260 workers and is left with 12. He and Baraata also owe R14.7-million to its former employer and others who tried to grant the business cash to stem its woes – including R800 000 to staff who once worked there.
Nel's personal credit is so damaged he can't buy a cellphone, so he pays a friend a monthly sum to use one in his friend's name.
Baarata's downfall demonstrates how a company that seemed like an upliftment ideal – owned by a black woman from the area, and employing local bricklayers – can crash miserably, damaging efforts to empower local labourers and scuttling a once-promising local business.
It could have been a contender
Baarata began its work on Medupi with the hope that its boss, a contractor coalition called MPS-JV, would develop them as an emerging enterprise.
Nel said he thought the company would make at least R10-million in profit from three years of work at the plant.
MPS-JV's spokesperson said by e-mail that the expected profit was substantially less than that, as the contract's final value would have paid closer to R1.5-million in profit per year, and work for three years was never guaranteed.
Nel also saw stable financial rewards if he could get more lasting work on Medupi's 8.4km2 site, where the work was bound to be plentiful.
"When these sub-contractors hear about big contracts, they see it as a pot of gold, and they just want to get their hand in it," Hermann Bohmer, a former MPS-JV Senior Quantity Surveyor during Baarata's time and who left MPS-JV in April said. "It's a free-for-all."
The company had reason to be hopeful – MPS-JV could have hired and managed local workers on its own, but the coalition, led by construction contractor Murray & Roberts, felt it was essential to develop small enterprises.
But even as Baarata signed the contract in June 2010, there was some disagreement within MPS-JV about whether that contract's required rate of 650 bricks a day was even possible – suggesting that some MPS-JV officials thought the contract had its own issues from the start.
According to Bohmer, he himself was one of the relevant MPS-JV officials on-site who thought 650 bricks was possible, because he felt it was an industry norm, while Project Manager Roelf Faber, a voice of authority who oversaw several foremen and site agents, believed that rate was "almost impossible" on any large site because of the inherent delays that are involved.
Faber declined to comment for this article.
Bohmer added that because Faber thought that, his subordinates, who may not have known better, were inclined to believe him, and the attitude was infectious. "If people keep hearing on the same thing, you just believe it," Bohmer said.
Nel had already brought the company near Medupi's main site in 2009 by doing a relatively simple task – washing and cleaning the dust off rocks for the power plant's foundations. It only made sense to take on more work.
Nel asked for a tender to start laying bricks at a five-storey auxiliary bay and peripheral buildings. Baarata seemed to have proved itself competent.
Furthermore, if all went well with the bricks and mortar on the first of Medupi's six power units, Nel would be in solid standing to earn more bricklaying work on the ones after that – a task that may stretch on for at least a few more years, since Medupi's last unit is scheduled to be finished by 2018.
In June 2010, Baarata signed the contract, and by August was laying bricks in earnest. Everything slowly began to unravel.
Construction may require skills that seem less complex than other jobs at Medupi, such as in electrical engineering, but the profit margins are slim.
Tiny mistakes are financially deadly.
Though Baarata's majority owner Mary Metlae declined to comment for this article, Nel (40), who managed most of the construction work, may not have been ready for a job of this size – the nation's largest public infrastructure project ever attempted.
Though Nel has held jobs vaguely relating to construction – he sold steel supplies to large construction companies, and managed plastic injection moulding – he has been a sub-contractor for eight years, and this was the first job that threw him toward the thick of a gargantuan power station.
Workday mornings at 5am, more than 10 000 workers in taxis and vans jammed the tiny roads leading to the plant, which is chocked full of giant trucks that rumble on by, and more than 120 stationed cranes perch over the plant up to 150 metres in the air.
Dual exhaust stacks soar out from among the concrete and twisting steel at 220m tall, beacons in the veld. Medupi in 2010 was its own city of production.
If Baarata's brick-laying amid this cacophony even went somewhat well, their employment would remain stable – but this would never come close to an ordinary job.
Inherent hidden dangers
With 20 bricklayers and 30 assisting labourers to start, Nel and Baarata were small players tangled in the inherent hidden dangers of the nation's largest government project ever attempted.
Medupi's frenzy worked against Nel from the start.
Baarata's contract required its workers to be paid by the hour, no matter how many bricks each worker laid down – but MPS-JV paid Baarata by results.
So even though MPS-JV was paying Nel, who then paid his workers, it was Nel's job to keep his workers on track. If there were hold-ups, the project slowed down and everyone lost, but Nel and Baarata would take the first financial hit, since his workers come to him for money.
But all sorts of hold-ups piled up from month to month.
The company was small and never could absorb much damage, Baarata's slim profit margin quickly vanished, and soon Nel was mired in debt that he could barely keep straight.
By October 2010, four months after starting, MPS-JV asked Baarata to accelerate by taking on more workers.
The Mail & Guardian understands that Eskom had put pressure on MPS-JV to get moving faster – the Medupi project has been plagued by delays.
Nel increased his workforce to about 300, including about 20 from a bricklaying training school that MPS-JV set up in the area.
Nel insists he was required to take on these workers, but Bohmer and the MPS-JV spokesperson say Nel was only asked to take them.
These 20 bricklayers from the area were poised to be a flagship example of local empowerment – the training school had granted local labourers a skill that they could then use for further employment.
That training school also taught about 2000 workers in other skilled labour jobs that could lead to easier employment later on, such as shoveling and laying concrete.
The training centre was proof that Zuma and Eskom's local upliftment efforts were indeed possible.
There was only one problem – these workers who had finished training and were now joining Nel had no idea how to lay a brick.
"Those people were useless," Nel fumed.
But Nel felt he needed to employ them.
MPS-JV's spokesperson said the workers were unlikely to be very helpful at the start, and would need time before they became proficient on their own.
Bohmer confirmed they were inexperienced. "They were trainees," he said. "They were not qualified bricklayers."
To compensate Baarata for the new bricklayers, MPS-JV paid the difference between a skilled-labour salary and a labourer's salary – so that Baarata could pay them as if they were regular labourers until they learned their trade.
The compensation difference was about R4 an hour per worker.
Brutally tough spot
But then as the acceleration took hold in October 2010, MPS-JV scrambled to free up space on-site for faster construction, but that left Nel in a brutally tough spot – he says there was only enough space for about 100 workers, when at the time he had been adding workers and now had over 150.
Nel was told the rest of the space would free up soon, but for the entire 13 months of laying bricks, Baarata was weighed down by a costly worker surplus that stemmed in part from the effort to accelerate.
Nel panicked when he realised about half of his labour force might be standing doing nothing and costing him the whole time.
In desperation, Nel had his workers double and triple up on basic jobs.
On scaffolding 24 metres in the air, in concrete sections where only 10 workers should have worked, up to 25 Baarata workers were rubbing shoulders.
The scaffolding could fit them easily, but those cramped conditions at dizzying heights became the norm.
MPS-JV has safety inspectors who patrol the site and would have halted any dangerous conditions, but the Mail & Guardian understands that at least one MPS-JV official regularly saw large numbers of workers on scaffolds.
To up the pace even more, MPS-JV hired three more emerging sub-contractors to do brick-laying – TT61, Thlokomelang, and Zin-Zi – all of them employing local unskilled labour, but otherwise less grounded in the Lephelale area, two of those managers hailing from Pretoria and Sandton in Johannesburg.
MPS-JV both needed workers urgently and also saw a chance to develop more small-sized sub-contractors.
But all of these companies were working near each other in a limited area that left many with all but idle labourers.
Bohmer confirmed that over-crowding was an issue, but felt that Baarata took on too many workers from the start in the hope that he could make a profit out of them.
"[Baarata] just flooded the whole site with labour," Bohmer said, adding, "[Nel] was under the impression that he would get all the work." He added, "It's a big contract, nobody gets all the work at once."
The spokesperson for MPS-JV said, "The Joint Venture acknowledges that when accelerating the work it is not uncommon to have a degree of over-resourcing."
Nel, meanwhile, is still confused – why did they throw together four emerging sub-contractors on a similar job and harm them all?
Why didn't they just pick one and let it grow?
Every day Nel paid his workers as if they had worked 9.5 hours, but after all these obstacles he only got about five hours.
The production results were disastrous. Nel's contract had assumed that each worker would produce about 650 bricks a day, but instead each worker averaged 150 bricks a day, some days under 100.
Nel says that at one point Roelf Faber told him flatly there was no way he would ever get 650 bricks a day, matching his general view. MPS-JV's spokesperson denies that is the group's view.
Thlokomelang, hired for brick-laying in October 2010, is still on-site and building 1 000 bricks a day for MPS-JV, despite similar obstacles like safety meetings.
MPS-JV's spokesperson said many bricklayers who achieve over 1 000 bricks in a day become members of Thlokomelang's "1000 club."
But the Mail & Guardian understands that Thlokomelang is under less pressure now that efforts to accelerate have tapered off, though MPS-JV's spokesperson maintains the company is still under time pressure.
Throughout the 13 months, Nel says he tried to bring up these concerns about the money he was losing with management at regular meetings, but found them unsympathetic.
But according to Bohmer, Baarata tried to file several claims for compensation for lost time, yet when Bohmer asked for proper paperwork, Nel couldn't produce it.
"We thought [Nel] was doing all right because he was paying people every month," Bohmer said.
Against all logic, Baarata stuck it out for 13 months as the financial woes became alarmingly obvious, as if Nel and Baarata were hell-bent on finishing their task, even if their task led them straight into ruin.
Nel's frustration reached a boiling point, and that would only hurt him more.
At a morning meeting in May 2011 with MPS-JV, Nel began swearing and shoved a 2-meter long metal table in front him, which screeched forward, but did not tip over. Nel was asked to leave the site for good.
Nel's anger seems not to have been new – while Nel said that outburst was his first of that kind, Bohmer claims there were at least three instances in which other workers kept Nel apart from Bohmer as Nel was shouting.
Boiling anger also overcame a manager of another sub-contractor, Johan Strydom from Lezmin, as well.
Strydom admits that he "threatened to bludgeon" Hermann Bohmer during a meeting.
By May 2011, Lezmin's workers were removed from site.
Finally, in July 2011, 13 months after a hopeful beginning, Baarata, after laying about 2.5 million bricks, was the last of the four now debt-laden sub-contractors to stagger off-site.
Despite Baarata's end, Bohmer feels that MPS-JV paid Baarata "more than fair." He later said, "Everybody can be a contractor as long as you know what it takes."
Nel, now under some heavy financial pressure, or perhaps instead tormented by an enormous series of tiny delays that drove his company to the ground, has now decided that something insidious is going on.
He feels MPS-JV was not trying to develop him as a company at all – instead, they signed him to an undervalued contract he never could have handled.
He feels they bagged a cheap brick-laying job and when the financial tolls of an undervalued contract sprung up, Nel was their fall man.
"There's no development in what they're doing," Nel said. "They're breaking us down."
In August 2011 Baarata filed an action in South Gauteng High Court demanding payment of R27.7-million.
Baarata's lawyer, Ettiene Rossouw, said in a phone interview the amount was so high because Baarata owed at least that much to labour brokers and others.
But the document has no formal calculations for that amount.
Meanwhile, Nel's job is finished. Medupi's foundations for the first of its six units, the larger task of which he formed a small part, have been laid.
Baarata's court action was dismissed on Tuesday June 12, because according to Ettiene Rossouw, Baarata couldn't pay R250 000 in guarantees of legal fees.
On Monday June 18, Nel received a letter from First National Bank threatening to re-possess his house in Lephalale and sell it at a public auction.
He is currently R64 000 behind in water and power payments that he says he cannot make up.
A bank sold his bakkie for R10 000, and he also sold a golf cart, trailer and boat, though he is still behind on his water and electricity bills.
He estimates that even if his debt could be erased, it would take him years to recover his reputation in Lephalale, a tiny town where reputation matters.
"If everything is taken away that you worked for you kind of lose it, I'm close to that point," Nel said in a Monday email.
To try to stay afloat, Baarata has a contract with Clyde Bergemann for concrete work that might pay out about R200 000 - elsewhere on Medupi's site, and that will finish by August.
That contract is progressing well.
Even after the project was the origin of Baarata's financial ruin, the promise of more work on the still-developing plant – slated to finish all six of its units by 2018 – has proved irresistible.