Amplats workers the main losers

THE Anglo American Platinum (Amplats) share price jumped almost 4% last week after the company said the Association of Mineworkers and Construction Union (Amcu) had ended its twoweek-long strike.

No wonder — the strike cost the embattled company about 44,000oz of platinum production alone. Total lost production translates to about R1bn in revenue.

If the viability of Amplats’ business model in the present economic environment was in doubt before, the financial and operational effects of the strike have hardly improved matters. So shareholders had every reason to be relieved even though, on the face of it, Amplats was forced to make significant concessions to striking employees to get them back to work.

After initially dropping a bombshell by tabling plans to cut 14,000 jobs, the company came under severe pressure from the government and organised labour, eventually whittling that number down to 3,300 forced retrenchments. But even such major concessions were not enough for Amcu in particular — it vowed not only to continue the strike indefinitely, but to launch sympathy strikes in other sectors of the economy. The eventual agreement had all the hallmarks of a capitulation by management, prompting industry analysts to warn that Amplats may have “kicked the can down the road” by simply postponing an inevitable confrontation with labour.

Asset management firm Investec went so far as to say in a note to clients that Amplats had “demonstrated to shareholders that it is unable to make the changes that are needed to strengthen its business”, and that its problem “runs much deeper” than the revenue lost because of the strike.

But is that an accurate reflection of the outcome of this dispute?

It is clear that Amplats has many structural obstacles to overcome in addition to coping with the production lost to the strike; that was the reason it wanted to close four shafts and cut 14,000 jobs from its lossposting Rustenburg operation, after all. Closer inspection of the eventual compromise agreement reveals, however, that it is not true that Amplats was unable to achieve its restructuring goals.

It may not have been able to do so on its own terms or in the manner it originally intended, but the outcome is not far off the original plan.

About 4,000 jobs have been saved by agreeing to keep one of the shafts tagged for closure open for a further five years, so it is possible that there will be another confrontation with the unions in future if it cannot at least break even during that period. About 2,000 workers have agreed to be redeployed to fill vacancies elsewhere in the group, and a similar number will be retrained to take on duties that have traditionally been carried out by contractors, compromises that were not part of Amplats’ original restructuring plan, but do not detract from it.

The rest of the 14,000 will be taken care of through natural attrition and a voluntary severance package, the terms of which are unchanged from those that were offered to workers before they embarked on the strike. In other words, Amcu members gained precious little after sacrificing two weeks of wages, and the strike also did not prevent Amplats from achieving its main goals, which raises the obvious question of why it had to take place at all.

The redeployments could surely have been negotiated without putting the company’s future in jeopardy or further damaging SA’s already tarnished reputation as an investment destination, especially as they mesh with both parties’ agendas. The biggest losers, apart from striking workers and their dependents, who were deprived of two weeks of income, are the employees of those contractors that now find themselves displaced, and the government.

It is the government, after all, that must ultimately deal with the social, economic and political fallout from rising unemployment and mindlessly militant trade unions. There has to be a less destructive way of getting SA through this.