After years of trials and tribulations, the Sheltered Employment Factories (SEF), an entity of the Department of Labour (DoL) is to undergo a corporate identity change, open two new factories and create a further thousands of jobs following its unveiling of a new turnaround strategy designed to stabilise the business operations.
SEF chief executive officer, Silumko Nondwangu said in terms of the name change SEF will soon be officially known as Protected Employment Enterprises (PEE). He said as part of the ‘metamorphosis’ - two new factories are to be opened - in Mpumalanga and Limpopo provinces, a process that would ensure a national coverage of SEF business.
“The existing factories employ just 1 100 people and have a potential to hire 3 000 people. We want to elevate the Protected Employment Enterprises into first choice employer for people with disabilities.
“The next two year will be about stabilising the business operations of SEF by ensuring well administered and effectively run institutions. We want to achieve this by putting in place a coherent strategy in regard to securing long-term contracts from various government departments and marketing the business,” Nondwangu said.
SEF was established in 1949 as a government intervention posts the Second World War to alleviate the plight of people with disabilities in the labour market. SEF operate as a non-profit organisation.
The SEF has 12 factories across South Africa operating in seven provinces. The factories are located in Bloemfontein, Cape Town, Durban, East London, Johannesburg, Kimberley, Pietermaritzburg, Port Elizabeth, Potchefstroom and Pretoria. Collectively they employ some 1 100 people with disabilities, supported by 120 administrative, management and technical staff.
The factories have the manufacturing capability that produces furniture; textiles; metal work; leather work; canvas work; book binding; and screen printing. Its products combine the positive aspects of price competitiveness and quality that is compliant with the South African Bureau of Standards (SABS). SEF currently have 0.00459% market share in South Africa’s multi-billion rand manufacturing sector and plan to grow their mark.
According to Nondwangu a business analysis of SEF has showed that the factories have a potential for growth, employment of disabled people and that they needed to be conferred a legal status.
The primary purpose of the SEF is the economic empowerment of people with disabilities. There are more than 2.5 million people with disabilities in South Africa of with some 10% to 15% requiring an environment such as the Sheltered Employment Factories provide.
“Faced with this situation society and government in particular has a responsibility to ensure that disabled are bestowed dignity and enabled to participate in productive employment.
“Given the business and sales orders, we can deliver the goods and in so doing make a significant difference to the lives of these deserving people,” he said.
Nondwangu said: “after years of uncertainty, the expected passing of the Public Employment Services (PES) bill which is currently in Parliament would ensure SEF officially secure a legal status. This will ensure that we adhere to better-practice corporate governance principles of separating oversight and management”.
An independent advisory team is to be put in place and will advise on issues related to effectively dealing with disability in the context of the SEF.
Currently, SEF operates on a budget of more than R40 million from the DoL, and was looking at further injections. The factories face challenges regarding their future financial sustainability. During financial year 2011/12, it posted a R11.9 million loss.
Nondwangu said: “transformation in the SEF has also been a major challenge spanning over decades of what we have defined as ‘pure neglect’ of these entities. With the factories losing their Preferential Procurement Status post-1994, these factories could not proceed to absorb employees to meet their EE targets and as result a change in gender and racial demographics has proceeded at a snail pace for these reasons.
“We have in the past relied reaching our employment equity targets through natural attrition, and this meant a very slow transformation process. To this extent, we have undertaken major transformation at managerial level by ensuring that all senior posts reflect our demographics. Going forward our strategy involves improving sales and revenue in the organisation so that we could increase employment opportunities, this will go a long way in assisting us to implement our employment equity plan”.
The overall SEF staff profile is 60% White, 22% Coloured, 17% African and 1% Asian of which 72% is male and 28% is female.
Nondwangu is under no illusion of the mammoth task that lie ahead. He said he was inspired that SEF had recently obtained its first unqualified report in years, a sign of a change in its fortunes, and was now on top of issues raised by the Auditor General in regard to the control environment.
According to Nondwangu, as part of the broader marketing effort, SEF was also planning to recruit business development managers who will reside at factories to help ramp up sales.
Previously SEFs had preferential supplier status which was revoked in 1999, and this has impacted on their revenue and resulted in their reliance on increased levels of DoL funding.
Nondwangu said some of the departments that have over the years supported SEF by procuring goods and services include: Justice, SAPS, the Compensation Fund, Unemployment Fund, Water, Council of Geosciences, Health and Education.
“The next phase of our strategy is to secure long-term contracts to ensure survival of business,” Nondwangu said he was also encouraged by the support from the Parliament’s Portfolio Committee on Labour; and the Select Committee on Labour and Public Enterprises which wants to see the SEF reaching apex point.
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