Address by the Deputy Minister of Economic Development, Prof Hlengiwe Mkhize, MP at Metal and Engineering Industry National Conference, Birchwood Hotel
The General Secretary of the Metal and Engineering Industries Bargaining Council – Mr. Thulani Mthiyane,
The Acting Operations Manager – Mr. Vice Ngonyama,
Centre for Dispute Resolutions Manager – Mr. Themba Manganyi,
Manager Communications – Ms. Monki Hlutwa MEIBC National Council Committee, President MEIBC Employer and Labour Representatives,
MERSETA Chief Executive Officer – Dr. Raymond Patel,
CGF Chief Executive – Mr. Terry Booysen,
Representatives from labour organizations: COSATU, NACTU, FEDUSA,
Representative from business: Chamber of Commerce and Industry, Busa and BMF,
Colleagues from national, provincial and local government.
Introduction
I would like to take this opportunity to thank the organizers of this conference for having afforded my department a chance to address the Metal and Engineering Industry. The Metal and Engineering Industry is one of the important industries to us as the Economic Development Department and is an important industry for the country as well.
The Metal and Engineering Industry forms part of what we call the productive sectors of our economy. With the productive sectors work area we aim to prioritize sectors with high labour absorptive capacity and high impact on equality.
Historically, South Africa has experienced periods of high output growth with low levels of labour absorption, while at other times during phases of declining output, rapid and deep labour shedding. South Africa still remains one of the most inequitable countries in the world. The apartheid regime has left us some deep inequalities in asset ownership and access to education and as a result South Africa has high shortages of skills.
On the other hand the statistics on the quality of university education are disconcerting. South African universities are still characterised by historical inequalities and distortions.
The National Development Plan considers South African Universities to be mid-level performers in terms of knowledge production, with low participation and insufficient capacity to produce the required levels of skills. South African universities are under considerable strain. University enrolments have almost doubled in the past 20 years yet the funding has not kept up, resulting in slow growth in the number of university lecturers, inadequate student accommodation, creaking university infrastructure and equipment shortages.
In the New Growth Path, it is said general education must equip all South Africans to participate in our democracy and economy, and higher education must do more to meet the needs of broad-based development. Quality and relevant education is a stepping stone to a more equal society.
The statistics by The Engineering Council of South Africa are disquieting. Until the end of the previous year, it is reported that South Africa had only 16 129 registered engineers with most of these engineers operating in civil, electrical and mechanical engineering. Numbers of registered engineers in fields such as Industrial & Electronics, Materials, Mineral and Electro-mechanical are still very low.
South Africa needs enough engineering skills to deliver the massive infrastructure programme which is currently underway. Infrastructure is critical to strengthening key value chains across our economy. The implementation of the National Infrastructure Plan will strengthen domestic demand for local capital goods industries, services and products. The more locally-produced inputs the infrastructure build programme uses, the more South Africa will grow its manufacturing industry, businesses and jobs.
Through the National Infrastructure Plan we are mobilizing social partners to develop the capacity and skills required to meet the demands of South Africa’s growing investment programme, not only for construction materials and structural steel inputs, but also for sophisticated equipment like locomotives and turbines.
This includes developing the skills to implement, operate and maintain our infrastructure assets. Leveraging job creation, skills development and localization through the 20-year infrastructure pipeline will be one of the ways that South Africans can collectively build an equitable society.
In response to the jobless growth that South Africa has been experiencing, the government has in 2010 adopted the New Growth Path framework. The principal role of adopting the NGP was to take the economy on a new jobs-rich growth trajectory. It was in 2011 when the Social Partners concluded
four Social Accords to set out what needs to be done to achieve the jobs goals and commit to work together on clear targets and within defined time-frames. Since then considerable work has been done and we have a number of clear successes.
Amongst these accords were the National Skills Accord which develops targets and joint actions to skill school-leavers with training, apprenticeship and work placement opportunities; the Basic Education and Partnerships with Schools Accord which sets out the framework for partnership to strengthen the performance of South Africa’s Schools; the Local Procurement Accord which brings together spending and localisation efforts of the public and private sectors to boost jobs and the local industry and the Green Economy Accord which launches green partnerships to create new jobs, spur industrialization and help create a sustainable future.
Later on, the Youth Employment Accord was released with the aim of ensuring Social Partner collaboration in formulation of focused programmes to address challenges of youth employment.
I am happy to share with you progress made since launch of the social accords.
Achievements made in terms of the skills accord are as follows:
- Over 41 000 learners have enrolled for artisan training by 2013
- 150 learners being trained at the Eskom Welding Academy
- Over 21 500 learners have completed artisan training by 2013
- Association of Colleges of SA established
- 4 500 students placed in engineering sector by March 2013
- 14 961 FET and University of Technology students placed by March 2013
- R827.7m allocated by National Skills Fund for 26 initiatives will benefit 20 000 trainees
- State Owned Companies’ capital expansion & Competitive Supplier Development programmes aligned with skills development initiatives
- 1 000 students placed in services sector by March 2013
- 34 FETs had 343 combined partnerships with industry by 2012
In order to address key blockages to national artisan development as identified by the Human Resource Development Council, government has:- Established a National Artisan Development Support Centre on 17 September 2012 which will provide a national single, integrated and accurate database of artisan learners.
- Developed a National Generic Artisan Funding Policy for a single guaranteed funding, grant administration and disbursement system which will be implemented in 2013/14, subject to Ministerial approval.
- Allocated R41m from the National Skills Fund for the development of a National Artisan Recognition of Prior Learning System.
A partnership between the National Business Initiative, JET Education Services, the Swiss South African Cooperation Initiative and MerSETA, has developed a model for the placement of NCV Level 4 students in a six-month internship in industry. Under this partnership, a pilot to place 50 students was completed. This pilot has worked well and all indications are that a model for internships has been developed that could be substantially scaled up overtime with adequate funding.
The Minister of Higher Education has approved a new framework for the allocation of funds from the National Skills Fund to support the National Skills Development Strategy III and other priorities of government. R827.7m has been made available by the National Skills Fund for 26 multi-year projects
in support of the New Growth Path and will benefit 20,000 trainees over a 5 year period. A framework has been issued and communicated to SETAs complemented by assistance to develop more up to date and relevant Sector Skills Plans that are aligned to the New Growth Path and the Industrial Policy Action Plan.
A Task Team, comprising of all government departments, has been launched to review and assess Sector Skills Plans and support the DHET on the development of the framework.
Achievements in terms of the Local Procurement Accord are as follows:
- Minibus taxis are now assembled locally in two factories
- ITAC set Set-Top Box import duty at 15% in December 2012
- 65% local content requirements incorporated in Transnet R300bn Market Demand Strategy which will create 15,000 jobs
- PRASA R123bn rolling stock procurement –65% local content trajectory in first 10 years
- Wal-Mart R240m Supplier Development Fund through the Competition Appeal Court
- R6.1bn spent by Anglo Ashanti Gold on local suppliers in 2012
- 80% minimum local content for R624m Joburg and Cape Town busses
- R7.17bn invested in local production capacity by BMW, Ford Toyota and BAW –110 500 cars produced in 2012
- R42bn local content spend on Eskom new power station build by December 2012
- R3.4bn Ford SA locally-based global production hub will produced 54 000 units in 2012
- 70% of government R5.9bn Single Dose ARV programme will be manufactured locally –setting a new global benchmark for ARV pricing3
- BMW R2.2bn 3-series production facility launched in 2012
- 3 Waves of Designations announced to date by government
- 800 local jobs supported R225m transversal clothing, textiles, leather and footwear tenders in 2012/13.
The National Infrastructure Plan includes a localisation strategy to leverage spending on raw material inputs, capital equipment and machinery in the 18 Strategic Integrated Projects. The Strategic Integrated Projects will be leveraged to drive job creation and industrialization through amending existing shareholder compacts to require State Owned Companies and
relevant public entities to give effect to these goals and by setting appropriate terms in tender specifications and projects for the private sector. PRASA and Transnet have launched extensive localisation drives in the acquisition and construction of locomotives and train coaches.
Their new locomotives and coaches will move towards meeting the government designated local content threshold of 65%. The revival of our train manufacturing capabilities, driven by Transnet and PRASA, is opening up additional industrialization and export opportunities for the industry.
To complement government’s designation of bus bodies, the IDC has launched a Medium and Heavy Commercial Vehicle funding strategy. The strategy intends to promote increased local content, as well as the creation of jobs in this sector. The criteria for consideration of funding by the IDC for bus operators include:
- Bus manufacturers have entered into a strategic joint development agreement (pertaining to local content, training and job creation) with the IDC
- Bus bodies are manufactured locally with a minimum local content of 80% as specified by government
- Chassis are assembled from a ‘complete knocked down’ state
- Buses comply with Euro IV emissions levels and/or run on refined biogas or compressed natural gas.
The Chamber of Mines and Government have started a process to analyze procurement trends in the mining sector through a survey to establish the extent to which Chamber members’ requirements are sourced locally.
An investigation is planned on the types of machinery purchased by mines to determine feasibility of localisation, including analyzing the sector's top 50 suppliers and the main products being procured.
The Chamber intends looking at machinery which has the most impact in terms of spend e.g. dumpers, drillers, pumps and belting. A draft Terms of Reference for the study has been finalized. Government departments are now coordinating their involvement in order to launch the study.
Government has created an environment using industry support measures and trade instruments for increased production and localisation in the Automotive Sector. This is complemented by industrial financing offered by the IDC exemplifying what integrated; coordinated government actions can achieve working with the private sector.
Organized Labour has undertaken advocacy and facilitation initiatives on procurement of local products, including Clothing, Textile, and Footwear and Leather products. Initiatives include engaging with corporates on Business’ Accord commitments and offering assistance to identify local manufacturing capacity.
The Youth Employment Accord was signed on 18 April 2013 at Hector Peterson Memorial in Soweto by representatives of Government, Organized Business, Organized Labour as well as Community and Youth constituencies. Since the launch:
- The IDC has launched a R1bn Youth Enterprise Fund
- Gauteng Provincial Government has pledged to employ
300 unemployed graduates in its offices in areas of tourism, engineering, ICT, design, food and beverage. - The Department of Higher Education has released a report on Second Chance Matric for public comment.
In conclusion, my department (EDD) has published a policy directive on the exportation of ferrous and non-ferrous waste and scrap metal in the previous year. According to this policy directive ferrous and non-ferrous waste and scrap metal should not be exported unless it has been offered to domestic users of
scrap for a period determined by the International Trade Administration Commission of South Africa (Itac), and at a price discount or other formula determined by Itac intended to facilitate local rather than export sale.
Furthermore, to ensure the type and quality of scrap metal that is intended for export are accurately reflected on applications for export permits, all permit applications should be accompanied by confirmation by a metallurgical engineer or a suitably qualified person, confirming the type, quality and quantity of scrap at hand for export, and information as to when and where such scrap metal may be inspected by prospective buyers.
Through policy directives such as this that support is given to the industry and as a result we will be re-industrializing the country’s economy and create jobs.
I thank you!
