Transnet ‘re­struc­tur­ing’means job cuts

Mail & Guardian - - News -

Transnet chief ex­ec­u­tive Siyabonga Gama has con­firmed that the state-owned en­ter­prise has started to of­fer sev­er­ance pack­ages to em­ploy­ees as part of cost-cut­ting mea­sures.

But he de­nied re­ports that the com­pany in­tended to re­trench at least 8 000 em­ploy­ees to ad­dress its fi­nan­cial con­straints.

Gama said the so-called vol­un­tary sev­er­ance pack­ages were part of on­go­ing re­struc­tur­ing, which also in­volved ef­forts to ne­go­ti­ate lower prices with sup­pli­ers and iden­ti­fy­ing new mar­kets abroad.

“They [the Transnet em­ploy­ees] make a choice that ‘yes, I would like to leave’ and we make an as­sess­ment of whether the skills that they have are skills we will re­quire go­ing for­ward.

“If we think we will not re­quire them we agree; if we think we will re­quire the skills we will not agree to the vol­un­tary sev­er­ance pack­age,” said Gama.

The “vol­un­tary pack­ages”, Gama said, did not nec­es­sar­ily equate to shed­ding Transnet’s em­ployee base of nearly 60 000, be­cause the com­pany would still con­sider re­plac­ing em­ploy­ees with out­dated skills with those who have dig­i­tal pro­fi­cien­cies.

“We will con­tinue to em­ploy more peo­ple as we be­come more dig­i­tal and we em­brace the im­pact and the ef­fects of the fourth in­dus­trial revo­lu­tion. We will em­brace new skills,” he said.

The re­struc­tur­ing comes af­ter a dif­fi­cult eco­nomic cli­mate in the 2016-2017 fi­nan­cial year, which Gama said was “more se­vere than we thought”.

Dur­ing the pe­riod, Transnet En­gi­neer­ing had pro­duced only 100 wag­ons of the 4 119 it had planned.

It said the economy had caused a de­crease in the de­mand for wag­ons from the Transnet’s freight rail unit, which in turn af­fected the lo­cal in­dus­tri­al­ists that were ex­pected to sup­ply the paras­tatal.

Geo­graph­i­cally, Transnet had also started to re­struc­ture its sources of rev­enue — look­ing be­yond South Africa’s bor­ders to coun­tries such as Nige­ria, Zam­bia, Kenya and Benin for busi­ness.

“We had to take a dif­fer­ent course and a dif­fer­ent di­rec­tion be­cause the mar­ket re­quired that we do not look at Transnet in the tra­di­tional sense that we had looked at it,” Gama said.

“There’s a few good things that have come out of the tough South African eco­nomic en­vi­ron­ment. We have had to say ‘let us di­ver­sify, let us look at new sources of mar­kets, let us look at new sources of rev­enue’.” Dubai, on a stopover from Davos, to buy items for his daugh­ter’s ma­tric dance. He was then asked by Essa to stay the week­end.

“I was go­ing to stop there and then he [Essa] asked me if I could stay there longer. I said I hadn’t re­ally booked a ho­tel. I was just go­ing to stop there, buy and then go straight into an aero­plane again,” he said.

“He booked, sent me a note say­ing this is the name of the ho­tel, the peo­ple from the ho­tel will pick you up from the air­port. Then, when I left, I paid.”

His meet­ing with Essa was about Transnet’s con­tract with Reg­i­ments Cap­i­tal, which had ceded some of its work for the paras­tatal to its break­away com­pany Tril­lian Cap­i­tal, which is partly owned by Essa. The Tril­lian Cap­i­tal and Reg­i­ments con­tract, ac­cord­ing to Gama, was for the im­prove­ment of the freight busi­ness.

Gama can­celled the con­tract a few months af­ter the Dubai meet­ing, be­cause of “messy” le­gal bat­tles be­tween the two com­pa­nies, which he said were harm­ing Transnet.

“We said to them: ‘When you have a ver­dict or an out­come we will then read what the court tells us to do.’ That was the end of that,” he said.

Since Gama’s ap­point­ment Transnet has also re­fused to re­new the freight rail util­ity’s con­tract with the Gupta-owned news­pa­per The New Age, whose busi­ness break­fasts the paras­tatal had partly spon­sored.

Transnet also com­mis­sioned two in­ter­nal in­ves­ti­ga­tions into al­leged state cap­ture at the paras­tatal. One is into al­leged kick­backs paid by prospec­tive Transnet sup­pli­ers to the Gup­tas in ex­change for se­cur­ing con­tracts.

The sec­ond is into a multi­bil­lion­rand lo­co­mo­tives con­tract with China South Rail (CSR), which al­legedly sub­con­tracted Te­questa Group Ltd, a com­pany owned by Essa.

It is al­leged that from this agree­ment the Gup­tas and their as­so­ciates ben­e­fited by R10-mil­lion for every R50-mil­lion lo­co­mo­tive Transnet bought.

In cor­re­spon­dence seen by the M&G, CSR de­nied hav­ing any agree­ment with Essa. The Chi­nese man­u­fac­turer claimed that, al­though Essa did show in­ter­est in the lo­co­mo­tives con­tract, no agree­ment was reached be­cause of un­hap­pi­ness with his pay­ment ex­pec­ta­tions.

Essa, through his VR Laser, is said to have de­manded 30% of the lo­cal con­tent com­mit­ment of the multi­bil­lion-rand lo­co­mo­tive deal.

Gama said there was no need to sus­pend the con­tract pend­ing the out­come of the probe.

“There is a process and that process may un­cover other things. But you can’t then be re­quired to stop the process just be­cause some­body made an al­le­ga­tion. The al­le­ga­tion has been made and we take it very se­ri­ously,” he said.

“So we have taken the steps to make sure that we safe­guard the in­ter­ests of Transnet, but also we have to con­tinue with the process to man­u­fac­ture the lo­co­mo­tives.”

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