Founder: Turnaround Talk
As we wind down for the rest of the year, we are generally filled with a sense of relaxation, joy, gratitude and love as we look forward to a time spent with family and friends enjoying a well deserved break.
But is it going to be a Holly Jolly Christmas? Electricity Minister Kgosientso Ramokgopa has pointed out that he plans to provide South Africans with the gift of electricity as he anticipates that the demand for the precious commodity will be lower over the Festive Season. Eskom disagrees and points out that there will be plenty of loadshedding over December. It is hard to determine who to believe because Eskom said we switched between Stages 5 and 6 last week while some parts of Johannesburg were clearly experiencing Stage 10 or 11 power cuts (where the lights were off for up to 12 hours at a time). How will this continued loadshedding impact the economy?
Whatever your reason for the season is, BRPs should switch off their work phones and disengage for a month; 2024 will be a rough ride!
Mining pressure
Moneyweb reported that several mining companies announced plans to cull jobs amid a commodities downturn and deteriorating efficiency at South African ports. The situation has become so dire that the ANC has asked Anglo American to hold off on planned job cuts in South Africa until after the 2024 elections.
The deteriorating state of SA’s ports is just the latest in a series of mishaps at state-owned companies that have left many firms contemplating their future operations in SA.
Volkswagen SA has refuted recent rumours that it is planning to leave SA due to the deteriorating business environment, but firms across the country dependent on reliable energy and speedy access to ports are having these fateful discussions in private.
The question is: can Government repair Eskom and Transnet sufficiently to avoid a tsunami of job cuts as we head into 2024?
The Moneyweb article points out that miners have had to contend with more than just erratic electricity supply and choked-up ports – their costs have risen above inflation rates while commodity prices have fallen.
They are accustomed to this kind of existential threat and the restructuring that comes with it. That will likely lead to more mechanised mining and permanent job losses.
Wesizwe Platinum recently announced that some 571 staff out of a total of 761 at its Bakubung mine in the North West could be retrenched following three labour stoppages, the last one unprotected, that had hurt the company’s mine development progress. The adverse effects of the strikes were compounded by the downturn in the mining industry, the company said in a Sens statement.
Image By: Getty Images
The Moneyweb article adds that the National Union of Mineworkers (NUM) has issued a statement following its National Executive Committee, saying it is “shattered and disappointed” by the high levels of possible job losses, particularly in mining.
“To this date, close to 10 000 jobs stand to be lost between now and January 2024,” it says, adding that workers who are about to lose their jobs have nothing to celebrate this festive season, and the recent slight drop in unemployment is likely to reverse. “The NUM is very disappointed with Transnet’s inability to smoothly transport minerals to the country’s terminal ports. Mining companies are sitting with stockpiles of minerals that need to be transported to terminals in Richard’s Bay.”
The trade union plans a recently marched to President Cyril Ramaphosa’s office and the Department of Public Enterprises to protest job losses due to Transnet’s decay.
R700 million in goods stuck at sea
A News24 article points out that PEP and Ackermans owner Pepkor has confirmed it has goods valued at about R700 million stuck at sea as SA’s port chaos continues unabated.
The retailer, which has a market capitalisation of about R68 billion on the JSE, flagged in a full-year results presentation on Wednesday that the port congestion causing havoc in SA was a key challenge it had faced in the first few months of its new financial year.
CEO Pieter Erasmus told News24 that the company had “significant value items stuck on the sea at the moment, between one and two weeks late”. But the group, which also owns footwear chain Tekkie Town and Brazilian retail group Avenida, also did not expect a major impact on Christmas trade, he said. Going forward, however, the port woes are a growing concern, with Erasmus saying the company will have to adjust its planning processes.
“We don’t know how long this will take to sort out. Generally, the feedback we are getting is eight to 12 weeks, but there is no certainty around it.”
News24 has reported that port congestion issues appear to be escalating, with some 100 000 containers now stuck outside the country’s major ports.
Vessels have been waiting nearly nine days to enter Port Ngqura and 32 hours to enter the Port Elizabeth port in the Eastern Cape, while vessels are waiting 227 hours to enter Durban port, according to the South African Association of Freight Forwarders. Transnet says the backlog at the Cape Town port has been cleared.
Image By: Waldo Swiegers/Bloomberg
The definition of insanity
Let’s answer the question posed by Ciaran Ryan in the Moneyweb article. Can Government repair Eskom and Transnet sufficiently to avoid a tsunami of job cuts as we head into 2024? The answer is an emphatic no. Government has proven time and again that it is wholly ill-equipped to deal with these crises. Even if Government does make headway in addressing some of the biggest challenges of the crises, too much damage has been done throughout the year to put a pause on job losses and profit reductions.
We either need a regime change or policy change because the only truth that is pertinent at the moment is the famous Albert Einstein quote where he famously said: insanity is doing the same thing over and over and expecting different results. One cannot fathom how Public Enterprises Minister Pravin Gordhan will keep his job for much longer. And if Eskom’s December prediction of plenty of loadshedding proves to be accurate, President Cyril Ramaphosa will have to put his hand up and admit that the gamble of creating a Minister of Electricity proved to be an ill-informed choice.
BRPs will have to relook and rediscover their mojo this festive season. Entering into 2024, they may also have to disrupt their traditional methodology in favour of tailor-made fit-for-purpose tactics to address current and future disruptors. As we have seen, challenges can escalate very quickly, and resolutions are not easy to come by.
