Raubex uncertain about South African construction industry’s future

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Raubex uncertain about South African construction industry’s future

13th May 2019

By: Simone Liedtke
Writer

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Infrastructure development and construction materials group Raubex’s 2019 financial year was characterised by a lack of work, coupled with violent community unrest that affected several of its sites, CEO Rudolf Fourie said on Monday.

The adverse conditions resulted in Raubex having to rightsize a number of its operations, but this was offset by the group’s diversification strategy coming to fruition during the year.

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The company’s earnings a share for the year ended February 28 decreased by 86.3% year-on-year to 31.9c, while headline earnings a share decreased by 75.1% to 57c.

Revenue decreased by 0.3% year-on-year to R8.52-billion, while operating profit decreased by 69.2% to R207-million.

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Profit before tax decreased by 71.8% to R180.7-million.

Despite the challenges, the materials division recorded stable results, with activities focused on materials handling and screening services provided to the mining industry, as well as commercial quarrying operations throughout Southern Africa, having supported the group’s earnings for the year.

This will continue to differentiate the group from the overall construction sector.

“Good progress has [also] been made in the affordable housing space where conditions are more favourable,” Fourie commented, adding that the company was also benefiting from its participation in projects selected under government’s Renewable Energy Independent Power Producer Procurement Programme, where a solid order book of work has been secured.

OPERATIONAL OVERVIEW

The group’s materials division diversifies the group from the construction industry and was the main contributor to the group’s operating profit for the financial year, mitigating the losses reported in the roads and earthworks division, Raubex said on Monday.

Stable conditions have been experienced in the mining services sector where operations

have been predominantly focused on diamonds, gold, coal, copper, platinum and iron-ore during the year.

Certain diamond mining contracts reached completion towards the end of the financial year. This work has been mainly replaced with work in the coal sector. A total of 233 employees were retrenched by the division owing to end of life and changes in scope of certain mining contracts, with retrenchment costs of R17.1-million being incurred.

Commercial quarrying operations have experienced an overall increase in volumes of about 12% off a low base from the prior year, with site-specific pockets of improvement. However,

community unrest at certain sites and Eskom’s load-shedding have had a negative impact on

operations.

Contract crushing operations continue to experience weak demand in line with the low level

of activity in the overall construction sector.

Revenue for the division increased by 6.5% to R2.75-billion while operating profit decreased by 2.2% to R358.5-million. The divisional operating profit margin decreased to 13%, with the division having incurred capital expenditure (capex) of R260.6-million for the year.

The division has a secured order book of R1.93-billion.

Meanwhile, the roads and earthworks division experienced a significant reduction in the volume of road construction and maintenance work from the public sector.

The teams in this division were able to partially replace the order book with work on roads operated by concessionaires. However, the subsidiaries which supply asphalt and bitumen to Raubex contracts, as well as to the external market, experienced a significant decrease in earnings owing to lower volumes supplied. The volume of asphalt sold decreased by about 30% from the prior year.

Owing to the lower volume of work, the division embarked on rightsizing initiatives during the year to reduce excess capacity. The division has, however, retained some excess capacity in anticipation of an increase in public sector spend and said it would review its position and market conditions in the year ahead.

The rightsizing initiatives resulted in 443 employees being retrenched in the division with one-off retrenchment costs of R24.8-million incurred.

In addition to the lack of infrastructure spend in the road construction sector, the results for

the year were also adversely affected by violent community unrest in certain areas which

impacted on production efficiencies.

The results for this division also include a present value charge and work in progress

adjustment with respect to the accounts receivable balance due from the Road Development Agency, in Zambia, for R116.7-million and the goodwill impairment charge of R51.5-million.

Operationally, an onerous contract was completed on the Moloto road. This contract incurred an operating loss of R36.3-million for the year.

Revenue for the division decreased by 20.7% to R3.63-billion and operating profit decreased by 184.9% to an operating loss of R245.8-million.

The divisional operating profit margin decreased to an operating loss margin of 6.8%, while the division incurred capex of R61-million during the year.

The division has a secured order book of R3.19-billion, which excludes the two Zambia Link 8000 contracts that have been suspended.

Further, the group’s infrastructure division experienced favourable conditions during the year and has continued to expand its affordable housing and commercial building operations.

Excess capacity was absorbed in the second half of the year owing to the start of

work in the renewables energy sector, where Raubex secured four contracts valued at R729-million.

Outside of South Africa, Raubex noted that work in Cameroon has progressed well and that a conservative approach to revenue recognition has been adopted.

Further, the acquisition of Westforce Construction in Western Australia which was effective January 1, 2018, had delivered its first 12-month set of results post-acquisition and has contributed to the growth in this division.

The division undertook limited rightsizing of its operations during the year in anticipation of

future work, which resulted in 48 employees being retrenched and one-off retrenchment

costs of R1.4-million being incurred.

Revenue for the division increased by 55.1% to R2.13-billion and operating profit increased by 488.5% to R94.3-million.

The divisional operating profit margin increased to 4.4%, while incurring capex of R99.3-million.

The division has a secured order book of R2.89-billion.

Internationally, revenue increased by 37.4% to R1.53-billion while operating profit decreased by 33% to R126.3-million.

Operating profit margin decreased to 8.3%.

The international order book has decreased to R1.13-billion and is included in the group’s divisional order books. The two Link 8000 road contracts in Zambia, which have R791.6-million of work left to complete, have been excluded from the group’s order book.

The group’s secured order book, therefore, decreased by 2.2% to just over R8-billion. Of the total order book, 14.1% represents contracts outside of South Africa in the rest of Africa and Western Australia.

Raubex expects overall conditions in the South African construction sector to remain

challenging and the short-term outlook uncertain

STATEMENT BY TRANSPORT MINISTER DR BE NZIMANDE ON THE OCCASION OF THE RELEASE OF THE 2019 PRELIMINARY EASTER ROAD SAFETY CAMPAIGN REPORT AT GCIS TSHEDIMOSETSO OFFICES AT HATFIELD – PRETORIA

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STATEMENT BY TRANSPORT MINISTER DR BE NZIMANDE ON THE OCCASION OF THE RELEASE OF THE 2019 PRELIMINARY EASTER ROAD SAFETY CAMPAIGN REPORT AT GCIS TSHEDIMOSETSO OFFICES AT HATFIELD – PRETORIA

02 May 2019

Gauteng MEC for Community Safety, Ms Sizakele Nkosi Malobane;

Western Cape MEC for Transport and Public Works, Mr Donald Grant;

RTMC Board Chairman, Mr Zola Majavu;

Members of the RTMC Board and other Boards present;

Acting Director General, Mr Chris Hlabisa;

Acting Deputy Director General for Roads, Mr Prasanth Mohan;

RTMC CEO, Advocate Makhosini Msibi;

CEOs of other Transport Entities;

Head of Departments;

Leadership of SAPS;

Traffic Chiefs;

Officials from other spheres of government and Entities;

Members of the Media;

Distinguished guests;

Ladies and gentlemen,

We have come together, a day after the commemoration of the International Workers Day, popularly known as May Day, which is the day that we, amongst other
things, celebrate the role played by workers, their trade Unions, the Communist Party and other labour movements in the struggle against Apartheid.

Today, as we officially release the 2019 Easter-Road Safety report, let us all remember the impact of road carnages to the poor and the working class as they
are that section of society that are affected disproportionately by road crashes more than any other group.

Our 2019, Easter road safety campaign, was held under the theme “Arrive Alive”.

As we all know, the Easter period is characterized by increased traffic volumes, with travels to work, leisure and pilgrims.

It therefore makes sense that we align our road safety activations and law enforcement operations with the travelling patterns of the population.

Consequently, our preliminary report covers the period 18 April to 22 April 2019.

In an effort to curb the road carnages, the law enforcement agencies came together and conducted operations and increased visibility on the roads.

Amongst other offences, we targeted drunken driving, pedestrian behaviour, driver and vehicle fitness.

I am pleased to announce that the number of fatalities decreased by 48% from 309 in 2018 to 162 in 2019. This marks a decrease of one
hundred and forty-seven (147) fatalities.
However, government is still concerned even by a single loss of life on our roads.

All provinces recorded decreases in the number of fatalities.

The highest decrease in absolute figures was recorded by Limpopo with 41 fatalities followed by KwaZulu
Natal with 33 fatalities.

The fatalities as per provinces are as follows:

Gauteng – 16

KwaZulu Natal – 37

Western Cape – 18

Eastern Cape – 22

Free State – 4

Mpumalanga – 17

North West – 13

Limpopo – 32

Northern Cape – 3

This year, we recorded 128 crashes, which is a 46% decrease, as compared to the 238 crashes recorded in 2018.

The above indicates that there was a decrease of one hundred and ten (110) crashes in comparison with the previous Easter Period.

I am also pleased to report that all provinces recorded decreases in the number of crashes. I congratulate all the MECs for their dedication to the implementation of our road safety strategy and plans.

The province that recorded the highest decreases in absolute figures is Limpopo with 27 crashes followed by KwaZulu Natal with 21 crashes.

In relation to the major crashes, there were five (5) crashes recorded which resulted into forty-one (41) fatalities and twenty-eight (28) serious injuries.

We are encouraged by the behaviour of the majority of motorists and all road users, who showed willingness to obey the rules of the road.

On behalf of the Government of South Africa, I would like to send our deepest condolences to the families and friends of those who died on our roads and wish those who were injured a speedy recovery at home or in hospital.

Government immediately activated the Road Accident Fund to provide the necessary support and comfort to the affected families.

To date, we have issued 84 funeral support activations at an average R22 200 cost per funeral. To this extend, we have spent a total of 1.9 Million from the 1st of April 2019.

Beyond the funeral services, the RAF will still be there to ensure that post-crash care support is provided for both the injured and families of the deceased where
appropriate.

Ladies and gentlemen,

The total number of registered vehicles from 31 March 2018 to 31 March 2019 increased by 248 354 (2.02%) from 12 293 212 to 12 541 566 vehicles.

A total number of vehicles stopped for Easter Period 2019 was 177 182, an increase of about 27 079 compared to the previous year where 150 103 vehicles were stopped.

In 2019, we stopped 161 784 vehicles as compared to 109 771 in 2018.

Over and above notices issued, a total of 1 343 arrests were effected in 2019, as compared to 1 598 in 2018.

Eight hundred and seven (807) drivers were arrested for drunken driving. The highest alcohol readings were reported in Gauteng where the main offender tested a reading of 2.64mg/ 1000ml, followed by Western Cape with the reading of 1.30mg/1000ml, followed by Limpopo with the reading of 1.9mg/1000ml and Mpumalanga with the reading of 0.92mg/1000ml.

To continue to clamp down on offences on our roads, 192 drivers were arrested for speeding. The province with the highest speed recorded was Gauteng at 203 km/h, followed by Western Cape at 202 Km/h, then Gauteng again at 197km/h, followed by the Free State at 183km/h.

A passenger was arrested in Brooklyn – Pretoria, for offering R200 bribery to traffic officers who were arresting his brother for being above the alcohol limit. The
passenger offered a bribery while the officers were explaining the reading to the driver.

We intend to be harsher with law enforcement officers who take bribes, as this undermines all our efforts in curbing road crashes, injuries and fatalities, and tarnish the image of the good law enforcement officers.

Again, in Mpumalanga at Matsulu, the National Public Order Police member (NPOP) was charged with negligent handling of an official firearm which the National Traffic Police officers found it lying under his car seat.

Our law enforcement officers were on alert and arrested 139 drivers who were driving without
operating permits; 29 without drivers’ licenses, 22 with false documentation and 79 with warrants of arrest, 25 for reckless and negligent driving.

These arrests and offences issued were as a result of joint operations conducted between provincial authorities, SAPS and all other stakeholders involved in the operations of law enforcement.

The period was characterised by the following major incidents, which were recorded as from the 18 April to 22 April 2019.

– Three (3) major crashes reported
and investigated which contributed to twenty-three (23) fatalities and
eight (8) serious injuries. Ten (10)
of these crashes took place in Limpopo, five (5) in KwaZulu Natal
and eight (8) in the Western Cape.

The preliminary report shows that the main contributory factors to road crashes are related to human behavior, particularly recklessness.

In 2019, human factor contributed 91% to the crashes, a decrease of 3% as compared to the 91.3% in 2018.

The roads and environmental factors as causes of crashes increased by 1.7% from 5.5% in 2018 to 7.2% in 2019.

Tyre burst is the major contributor to road crashes. In 2019, tyre burst increased astronomically by 100%, as compared
to 82% in 2018. This translates to an increase of 18% of tyre burst related incidents during the 2019 Easter Period.

Male drivers contributed 72% in crashes, which is a 10% increase from the 62% in 2018.

Female drivers recorded 15% in road crashes, a decrease of 9%, as compared to 24% in 2018.

During the period under review, pedestrians accounted for 24% in crashes, which is a decrease of 6% from 30% in 2018.

Crashes relating to passengers decreased to 36.8% in 2019, from 38.6% in 2018.

Single vehicle overturns contributed 24%, an increase of 3% as compared to 21% in 2018.

The vehicle types that contributed the highest to crashes were motorcars and light Delivery Vehicles (LDV’s). However, motor vehicles recorded a decrease of 17% points from 47% in 2018 to 30% in 2019.

The light delivery vehicles also decreased from 22% in 2018 to 13% in 2019. The Minibus taxis contributed 6% of the crashes.

Further analysis indicated that Easter Friday, contributed (24%), Saturday, contributed (30%) and Sunday, contributed (21) of crashes.

Our report depicts that in 2019, the time of day were the highest crashes occurred is 18:00 to 19:00.

There was also a significant increase observed between 15:00 to 16:00 and 19:00 to 20:00 respectively.

Ladies and gentlemen,

South Africa subscribes to the modern global approach to road safety, known as the safe systems approach, it recognizes that we can best achieve our objectives to
reduce fatalities by integrating safer roads, safer vehicles, more effective post-crash responses and sustained education and awareness campaigns.

There are a number of interventions that the Department of Transport implemented in order to achievement reduced number of crashes and fatalities on our roads. We now intend to heighten focus on road safety as a 365 day and 24/7 activity in order to confront the scourge of road fatalities and injuries.

We have embraced disruptive innovative and technological methods presented by the Fourth Industrial Revolution.

Amongst these measures, we will be focusing on the following:

  1. Continue to implement the Evidentiary Breathalyser
    Alcohol Testing (EBAT)    ;
  2. The 24/7 shift has now started. Provinces are urged to plan their three shift for their maximum output to further reducing crashes;
  3. Through the South African National Road Agency (SANRAL), we developed innovate interventions in some of the hazardous locations were most of speeding, overloading and unsafe driver behavior persist;
  4. We will continuously make road surfaces safer through engineering solutions and interventions, both in the construction of new road projects and into the
    upgrading and rehabilitation of existing roads;
  5. Working with tyre manufacturing companies, vehicle manufacturers, NGOs and research institutions we remain committed to work with the tyre manufacturing industry of South Africa, including a heightened focus on the illegal tyre industry.
  6. We will also intensify work towards collating a database for foreign issued drivers’ licenses and foreign registered vehicles within the boundaries of SA; and strengthening co-operation on road transport within the SADC region.
  7. We will continue to work with the Department of the Department of Basic Education to encourage Matric learners to obtain their driving licences. By so doing we will be generating a new cadre of competent drivers.
  8. Following President Cyril Ramaphosa’s signing of the AARTO Amendment Bill into law, we will immediately introduce the Points Demerit System. This system will allow us to identify, rehabilitate and ultimately eliminate habitual offenders
    found on our road transport network;
  9. Working together with the National Anti-Corruption Unit and the Directorate for Priority Crime Investigations, we will continue to arrest traffic officers who instead of issuing fines for traffic violations, demand gratification or bribes from motorists;
  10. We will continue to crackdown of corruption and the fraudulent issuing of driving licenses and roadworthy certificates; and
  11. The re-classification of the more serious road traffic offences like drunken driving to Schedule 5 of the Criminal Procedure Act will continue to receive high priority in our endeavour and quest for a mandatory minimum sentence for ‘drunken driving, inconsiderate, reckless and negligent driving.
  12. The national Department of Transport will start in earnest to work towards a single, national database for all traffic offences, in order to facilitate traffic law enforcement generally, and particularly for purposes of the implementation of the points demerit system.

I want to categorically state that improving safety is not the responsibility of Government alone. Road safety is everyone’s responsibility.

So, I call upon all south Africans to take responsibility when using our roads.

As I conclude, I want to say that as South Africans collectively and severally, we fought a good fight, did our very best, and triumphed over adversity posed by road crashes and fatalities.

Although we have significantly reduced our crashes and fatalities on our roads, we can still do more to eradicate this calamity on our roads because one death is too many.

Let me take this moment commend the MECs, Mayors, SALGA, traffic law enforcement officers, members of the South African Police, emergency medical service, doctors and nurses who maintained high levels of visibility on the roads throughout the period.

A word of gratitude also goes to all the fraternal organisations who undertook various campaigns to raise awareness about road safety across the Country.

This includes the youth, faith-based organisations and organisations of people living with disabilities, Taxi Industry, Bus Industry, Coca Cola, Drive Dry, Brand SA, SAB, Our Sister Departments, Lifeline Outreach programme, Vodacom, Total Garage and Sasol Garage.

Let me also thank the media for their role in promoting and publicising our road safety initiatives, and ensuring that everyone in the country is aware of their responsibility.

We look forward to a continued and improved relationship even further with all the organisations.

Lastly, I call upon all of you to go out in numbers to exercise your democratic rights by voting on the 08th May 2019. Remember always that our freedom was not free.

It was sealed by the blood of many freedom fighters on our liberation movement. So, it is important that we value their contribution by casting our vote in support of our democracy.

I thank you

Phone addicts worse than drunk drivers

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Phone addicts worse than drunk drivers

April 29, 2019

By Eugene Herbert

 

Distracted driving has surpassed drunk driving and speeding to become the top roadway threat.

 

A recent study shows how dangerous driving has become. While it is true many drivers are sensitised to the dangers of driving under the influence and, which coupled society’s desire to be healthier, stigmatises noncompliance.

 

Drivers are 10% more distracted behind the wheel than last year and the number of cellphone addicts has doubled, according to Zendrive’s third annual “Distracted Driving Study,” which analysed over 160 billion miles of data.

 

Key among the findings: ‘Phone addicts’ have replaced drunk drivers as the top roadway threat today, note the authors.

 

According to the report, a phone addict is someone who uses a phone 10% or more of the time while operating their vehicle. The findings showed that phone addicts spend three times more drive time using their phones and 28% of their driving time actively ignoring the road.

 

In addition, phone addicts are more frequently on the road — 1.5 times more often than the general driving population.

 

To better understand the study findings, Zendrive conducted a survey with drivers. The findings indicate that while people know distracted driving is a major problem, they aren’t concerned enough to change their behavior.

 

Some 85% of respondents acknowledged distracted driving is a problem. While 90% claimed to be safe drivers, nearly half (47%) admitted to using their phones 10% of more of the time while driving, classifying them as phone addicts.

 

However, of those considered phone addicts, 93% said they are “pretty safe” or “extremely safe” drivers.

 

It is about time that the ‘abuse’ of cellphones is afforded the same negative connotations as driving under the influence. While the habitual culprits will no doubt continue responsible drivers can ensure that they set the right example – if only to the occupants of their vehicle.

 

 

Vadi launches R114 road rehabilitation project

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Vadi launches R114 road rehabilitation project

25th April 2019

By: African News Agency

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Gauteng MEC for roads and transport Ismail Vadi has officially launched the R114 road rehabilitation project near Muldersdrift in the West Rand.

The R157-million project is fully funded by the provincial roads and transport department and partly implemented under the auspices of the expanded public works programme.

The R114 road connects Johannesburg and Mogale City whilst also serving as a major route to the North West province.

“This road serves as an alternative to the N14 freeway and as a collector and distributor of traffic for peri-urban areas en route to Johannesburg and the North West Province,” said Vadi.

“The rehabilitation of this road is in line with the provincial government’s commitment to delivering a high-quality road infrastructure that promotes economic growth, social cohesion and inclusivity.”

The road is extensively used by taxis transporting commuters between various settlements and Mogale City and Johannesburg.

Vadi said the project, expected to be completed in 18 months’ time, would rehabilitate the road surface and reconstruct its intersection with Cedar Road.

Other work would include the construction of edge beams; reinstating road markings and damaged signs, repairing guardrails; cleaning the road reserve; cleaning and repairing drainage structures as well as constructing new ones.

“Upon completion the benefits to motorists and other road users include improved road user mobility, reduced travel times, enhanced driving experience, easy access to business, residential and agricultural estates as well as improved road safety,” said Vadi.

Van der Merwe to lead establishment of Gauteng Transport Authority

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Van der Merwe to lead establishment of Gauteng Transport Authority

 

18th April 2019

By: Irma Venter
Creamer Media Senior Deputy Editor

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Gautrain Management Agency (GMA) CEO Jack van der Merwe will, in the short term, steer the establishment of the Gauteng Transport Authority (GTA), says Gauteng Roads and Transport MEC Dr Ismail Vadi.

‘Short term’ refers to a period of six months.

Van der Merwe will remain in his position as head of the GMA during this six-month period. Following the six-month period, the arrangement will be reviewed.

Speaking at the Transport Forum held in Pretoria, on Thursday, Vadi noted that Van der Merwe would “start from today” to establish the GTA.

The Gauteng provincial government adopted the GTA Bill earlier this year.

The Bill provides for the creation of a transport authority across the Gauteng city region, incorporating the provincial Department of Roads and Transport and various municipal transport administrations.

The GTA will be responsible for integrated transport planning across local and provincial boundaries; contracting and management of subsidised transport services and enforcement and regulation of public transport operations.

The GTA will be governed by a board of directors, which will be broadly representative of the authorities it is coordinating, as well as a number of transport specialists.

Vadi emphasised on Thursday that the Gauteng government did not envisage the GTA to be “a large body filled with political office bearers”.

He said it was important for the GTA to be a streamlined entity.

“It should be a technical administrative unit with a high level of expertise . . . otherwise it becomes a political platform that does not move us forward.”

Vadi said ensuring a high level of technical expertise in the GTA would be in keeping with global standards at transport authorities worldwide

 

Saice requests Ramaphosa’s urgent intervention to address construction site attacks

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Saice requests Ramaphosa’s urgent intervention to address construction site attacks

17th April 2019

By: Nadine James
Creamer Media Writer

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The South African Institution of Civil Engineering (Saice) has joined other industry bodies in strongly condemning the recent spate of alleged “mafia-style” coordinated gang activity on project sites across the country.

In a statement issued on Wednesday, Saice referred to pleas from the South African Forum of Civil Engineering Contractors (Safcec), which noted that such attacks have disrupted and halted projects worth over R25-billion and caused engineers and personnel on sites to flee in fear for their safety.

“This is an issue that has reached crisis levels and affects the safety of professionals in industry, as well as investor confidence. The outcomes of this situation will have far-reaching effects if not responded to as a matter of urgency by President [Cyril] Ramaphosa and his Cabinet,” Saice acting CEO Steven Kaplan said.

He noted that the attacks have included violent protests at project and construction sites that subsequently ended in arson, property damage and violence against professionals who were accosted by armed individuals demanding stakes in projects.

Kaplan referred to incidents highlighted by Safcec, such as the incident when armed gangs demanded to be part of the R1.65-billon South African National Roads Agency Limited (Sanral) bridge project in the Eastern Cape, and caused Aveng and the Europe-based Strabag International to pull out of the project.

He also cited a “much more recent incident”, in March, where construction on the R2.4-billion German oil storage investment project in Saldanha, in the Western Cape, was halted after armed gangs arrived on site.

“The Black Business Council in the Built Environment (BBCBE) has also recently issued a letter to [Police Minister] General Bheki Cele to request urgent intervention. The BBCBE reported that some of its members who are engaged in construction activity have been subjected to victimisation and disruption on a daily basis due to local business forums demanding participation in projects.”

The Association of South African Quantity Surveyors has also expressed its concern and has called on the National Prosecuting Authority and local police to address the situation.

“Saice stands with the construction industry in speaking out against these incidents, and calls upon President Ramaphosa to intervene . . . [the] effects of these incidents will set severe consequences in motion, which will compound the already dire situation the construction industry finds itself in [owing] to the serious brain drain resulting from professionals seeking greener pastures,” Kaplan stated.

Further, he noted that given that many companies in the industry are closing down and many others find themselves near bankruptcy owing to a lack of work and poor payment by clients, the industry could not afford any further setbacks.

The South African construction industry is in a state of accelerated decline, says South African Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe

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The South African construction industry is in a state of accelerated decline, says South African Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe.

 

This is caused mainly by a lack of new contracts flowing from government’s purse, as well as increased violence and thuggery on local construction sites.

 

“Let’s put it in perspective,” says Mfebe, who has been Safcec CEO since 2013. “Public infrastructure spend has been declining. In the 2017/18 financial year government’s infrastructure budget was R947.2-billion. This was reduced to R834.1-billion in 2018/19. This is a whopping 12% nominal decrease.

 

“Also, in 2018 there was a 15.3% decline in the nominal value of contracts awarded, with the building industry hardest hit

“Add to the mix that all of this is happening in an industry that is historically a big investor in capital expenditure and skills development.”

 

Mfebe notes South Africa can ill afford to lose any more depth in its construction industry.

Already, Group Five and Basil Read, among others, have filed for business rescue.

 

“Once we lose that capacity, it will take years to rebuild,” says Mfebe. “We’ll increasingly see the likes of the Chinese and the French coming to Africa to build infrastructure.”

It is not only the roster of available construction companies becoming smaller.

 

Many highly skilled engineers and technical staff are in the process of leaving the country. Safcec has identified 110 who have already left, as they flee the low-growth environment and increasing violence on construction sites.

“This has to be attended to. The conditions contractors face are fast deteriorating,” notes Mfebe.

 

One of the most notable cases in recent times have been the Aveng/Strabag joint venture (JV) quitting the Mtentu bridge project, in the Eastern Cape, owing to continued violent protests within the surrounding communities.

 

The client, the South African National Roads Agency Limited (Sanral), and the JV are currently doing legal battle regarding the costs involved around the JV’s departure.

 

“Again, let’s put this in perspective,” says Mfebe. “Sanral is a State-owned institution, therefore, we are talking about the government of the Republic of South Africa.

 

“It is the government’s constitutional responsibility to maintain law and order. That responsibility cannot be abdicated to private individuals such as contractors. Contractors are trained on how to build infrastructure, not on warfare.

“What does government expect them to do? Outgun the thugs?”

Mfebe says contractors have repeatedly gained interdicts against violent groupings threatening to disrupt construction sites should they not receive some form of benefit.

 

“People are arrested, yes, but then they are released again and they go back to site with a vengeance.

 

“It cannot be that the situation is left in the hands of the contractor. What happened to law enforcement agencies’ ability to maintain law and order?

 

“Both corporate and individual citizens are part of South Africa. Government has a constitutional responsibility towards all of them.”

 

Mfebe notes that construction projects worth around R27.5-billion have been violently disrupted or halted in South Africa in recent times.

 

Mafia State
Mfebe believes that the unrest often witnessed at construction sites are driven, to a degree, by the desire of the surrounding communities to become involved in and gain economically from projects in their area.

 

“We cannot dismiss that. Those expectations are genuine and have to be met.

 

“On the other hand, you see violence driven by gangs operating mafia style. Even worse, they are often alledged to be linked to local, provincial and national political figures.”

 

Mfebe says KwaZulu-Natal seems to have been the epicentre for this mafia-like behaviour, which has now assumed a national footprint.

 

“They have used violence and got what they wanted. What will stop them now? In this we are seeing the building blocks of a mafia state,” he warns.

 

“In a project in the Western Cape, with a German private investor, the police waited three hours for a public order unit to arrive, while they looked on as private property was destroyed.

 

“What message are we sending to the international community?”

 

Letter to Ramaphosa
Mfebe has drafted a letter, explaining the plight of the industry, and sent it to the Minister of Finance, Tito Mboweni, as well as to President Cyril Ramaphosa.

 

Mboweni’s office has acknowledged receipt, noting that the matter is receiving attention.

There has been no response yet from the President’s office.

Mfebe’s ideal outcome would be for construction industry body heads and company CEOs to meet with the President, in order to “highlight the gravity of the situation and the dire state the industry finds itself in, as well as the impact the industry’s demise is having on the economy”.

 

“Hate or love Gwede Mantashe, but when there are concerns in the mining industry, he is there. He engages. Something happens in our industry and no intervention takes place – even though it contributes 3.5% to the country’s gross domestic product and 8.3% to total employment numbers.”

 

Ultimately, notes Mfebe, the South African construction industry needs an intelligence-driven multidisciplinary task team at the highest level of government, acting against increasing mafia-like behaviour threatening to close down the industry.

“We need to stop this right away.

 

“While a lot of it happens under the mantra of radical economic transformation,  extortionist behaviour has affected both black- and white-owned companies, which tells you it is all about the money.

 

“We are teaching our children that they don’t have to work. They just have to carry the biggest gun.

SME building and construction industry in the doldrums, says CIDB survey

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SME building and construction industry in the doldrums, says CIDB survey

 

9th April 2019

By: Irma Venter
Creamer Media Senior Deputy Editor

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The 2019 first quarter Construction Industry Development Board (CIDB) small and medium-sized enterprise (SME) Business Conditions Survey, released on Tuesday, suggests that the South African building and construction industry remains under pressure.

General building confidence declined by one index point to 33.

“Sentiment remains at a very depressing level as building activity growth slowed even further,” says CIDB construction industry performance project manager Ntando Skosana.

Grades 7 and 8 registered the sharpest drop in confidence in the newest survey, dropping from 40 to an almost six-year low of 23.

“The marked deterioration in sentiment among general building class [businesses] in grades 7 and 8 was largely driven by weaker activity growth,” says Skosana.

General building companies in the Western Cape, which previously outperformed their provincial counterparts, have now also came under pressure.

“Despite a marginal uptick to 27 index points in the first quarter of 2019, building confidence in the Western Cape is still 30 index points lower than at the end of 2017.”

After improving from a historical low of 27 to 35 in the previous quarter, civil engineering confidence levels fell back to 31 in the newest survey.

“This is alarming because at 31, close to 70% of respondents are dissatisfied with prevailing business conditions. Like with general building businesses, activity growth just isn’t forthcoming,” comments Skosana.

Similar to general building businesses, the drop in confidence was most pronounced among civil engineering businesses in Grades 7 and 8 where business confidence is now at 20 index points.

The other grades also registered marginal declines in sentiment.

On a provincial level, civil engineering businesses in the Eastern Cape and Western Cape experienced the sharpest deterioration in sentiment in the newest survey, to zero and 27 index points respectively.

The CIDB SME Business Conditions Survey is conducted quarterly among grade 3 to 8 CIDB registered contractors, both for general building and civil industries.

The main indicator used for analysis purposes is business confidence, which indicates whether respondents find the current business conditions satisfactory.

A business confidence index can vary between zero (indicating an extreme lack of confidence) and 100 (indicating extreme confidence).

The 50-index-point mark is interpreted as neutral.

The fieldwork for the 2019 first quarter survey was conducted from January 28 to March 4

Pilot Crushtec partners with Sanral to help smaller contractors tender for projects

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Pilot Crushtec partners with Sanral to help smaller contractors tender for projects

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Photo by Creamer Media’s Dylan Slater
At the MoU singing at Pilot Crushtec on Monday

8th April 2019

By: Tasneem Bulbulia
Creamer Media Reporter

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The South African National Roads Agency Limited (Sanral) on Monday signed a memorandum of understanding (MoU) with rock crushing equipment supplier Pilot Crushtec to engender relationships with smaller contractors in the lower end of the construction industry.

The MoU will facilitate access to equipment, finance, training, development, aftersales service, maintenance, leasing and rental options for crushing and related equipment.

The continuous expansion and maintenance of the country’s roads generates billions in revenue and employs tens of thousands of individuals. However, the barriers to entry for newcomers are restrictive, owing to the high cost of capital equipment and lack of expertise within the field.

The MoU is posited to, among others, give small, micro and medium-sized enterprises access to expertise and machinery required to tender and execute major Sanral projects.

“We hope that, via our cooperation with Pilot Crushtec we are able to promote growth of black business and take constructive steps to support a sector that has immense potential for growth and job creation,” said Sanral CEO Skhumbuzo Macozoma.

“Lack of access to sophisticated machinery and equipment is a major barrier for small contractors and prevents them from participation in large tenders. By working together with established companies, we can remove these barriers and enable black-owned companies and enterprises owned by women and the youth to participate on a level playing field.”

Meanwhile, Pilot Crushtec sales and marketing director Francois Marais indicated that the company was well poised to equip up-and-coming contractors and quarry owners with the opportunity to be educated by its team, which boasts over 30 years’ experience in the field, to fully capitalise on their operations.

As part of the MoU, Pilot Crushtec will through its affiliated training entities, educate contractors on how to use the equipment properly, thereby producing high quality road aggregates, which will, by extension, improve roads across the country.

Marais acclaimed that the MoU also presented an opportunity to promote the company’s locally produced products for road building and manufacturing such as top grade road stone and aggregates; with these being used locally and internationally

Construction industry in rapid decline as work wanes, ‘mafia’ takes over, warns Safcec

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Construction industry in rapid decline as work wanes, ‘mafia’ takes over, warns Safcec

 

8th April 2019

By: Irma Venter
Creamer Media Senior Deputy Editor

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The South African construction industry is in a state of accelerated decline, says South African Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe.

This is caused mainly by a lack of new contracts flowing from government’s purse, as well as increased violence and thuggery on local construction sites.

“Let’s put it in perspective,” says Mfebe, who has been Safcec CEO since 2013. “Public infrastructure spend has been declining. In the 2017/18 financial year government’s infrastructure budget was R947.2-billion. This was reduced to R834.1-billion in 2018/19. This is a whopping 12% nominal decrease.

“Also, in 2018 there was a 15.3% decline in the nominal value of contracts awarded, with the building industry hardest hit.

“Add to the mix that all of this is happening in an industry that is historically a big investor in capital expenditure and skills development.”

Mfebe notes South Africa can ill afford to lose any more depth in its construction industry.

Already, Group Five and Basil Read, among others, have filed for business rescue.

“Once we lose that capacity, it will take years to rebuild,” says Mfebe. “We’ll increasingly see the likes of the Chinese and the French coming to Africa to build infrastructure.”

It is not only the roster of available construction companies becoming smaller.

Many highly skilled engineers and technical staff are in the process of leaving the country. Safcec has identified 110 who have already left, as they flee the low-growth environment and increasing violence on construction sites.

“This has to be attended to. The conditions contractors face are fast deteriorating,” notes Mfebe.

One of the most notable cases in recent times have been the Aveng/Strabag joint venture (JV) quitting the Mtentu bridge project, in the Eastern Cape, owing to continued violent protests within the surrounding communities.

The client, the South African National Roads Agency Limited (Sanral), and the JV are currently doing legal battle regarding the costs involved around the JV’s departure.

“Again, let’s put this in perspective,” says Mfebe. “Sanral is a State-owned institution, therefore, we are talking about the government of the Republic of South Africa.

“It is the government’s constitutional responsibility to maintain law and order. That responsibility cannot be abdicated to private individuals such as contractors. Contractors are trained on how to build infrastructure, not on warfare.

“What does government expect them to do? Outgun the thugs?”

Mfebe says contractors have repeatedly gained interdicts against violent groupings threatening to disrupt construction sites should they not receive some form of benefit.

“People are arrested, yes, but then they are released again and they go back to site with a vengeance.

“It cannot be that the situation is left in the hands of the contractor. What happened to law enforcement agencies’ ability to maintain law and order?

“Both corporate and individual citizens are part of South Africa. Government has a constitutional responsibility towards all of them.”

Mfebe notes that construction projects worth around R27.5-billion have been violently disrupted or halted in South Africa in recent times.

Mafia State
Mfebe believes that the unrest often witnessed at construction sites are driven, to a degree, by the desire of the surrounding communities to become involved in and gain economically from projects in their area.

“We cannot dismiss that. Those expectations are genuine and have to be met.

“On the other hand, you see violence driven by gangs operating mafia style. Even worse, they are often alledged to be linked to local, provincial and national political figures.”

Mfebe says KwaZulu-Natal seems to have been the epicentre for this mafia-like behaviour, which has now assumed a national footprint.

“They have used violence and got what they wanted. What will stop them now? In this we are seeing the building blocks of a mafia state,” he warns.

“In a project in the Western Cape, with a German private investor, the police waited three hours for a public order unit to arrive, while they looked on as private property was destroyed.

“What message are we sending to the international community?”

Letter to Ramaphosa
Mfebe has drafted a letter, explaining the plight of the industry, and sent it to the Minister of Finance, Tito Mboweni, as well as to President Cyril Ramaphosa.

Mboweni’s office has acknowledged receipt, noting that the matter is receiving attention.

There has been no response yet from the President’s office.

Mfebe’s ideal outcome would be for construction industry body heads and company CEOs to meet with the President, in order to “highlight the gravity of the situation and the dire state the industry finds itself in, as well as the impact the industry’s demise is having on the economy”.

“Hate or love Gwede Mantashe, but when there are concerns in the mining industry, he is there. He engages. Something happens in our industry and no intervention takes place – even though it contributes 3.5% to the country’s gross domestic product and 8.3% to total employment numbers.”

Ultimately, notes Mfebe, the South African construction industry needs an intelligence-driven multidisciplinary task team at the highest level of government, acting against increasing mafia-like behaviour threatening to close down the industry.

“We need to stop this right away.

“While a lot of it happens under the mantra of radical economic transformation,  extortionist behaviour has affected both black- and white-owned companies, which tells you it is all about the money.

“We are teaching our children that they don’t have to work. They just have to carry the biggest gun.”