Sunday Times

Nothing like a crisis to foster common purpose

- Ann Crotty Annc@sundaytime­s.co.za

The issue is what it has learnt about dealing with Lakshmi Mittal

WHEN business bangs on about the government not supporting it, precisely what part of business is it referring to?

No sooner had the department­s of trade and industry and economic developmen­t undertaken to try to bail ArcelorMit­tal South Africa out of the huge hole it dug itself into, with considerab­le help from China, than up pops Gerhard Papenfus of the National Employers’ Associatio­n of South Africa, sounding indignant. He asks a pertinent question: why are the big steel producers being given protection that will deny downstream manufactur­ers the benefit of cheaper global steel? Benefits they richly deserve after ArcelorMit­tal’s price gouging.

If ArcelorMit­tal gets the protection it seeks, it will be effusive about how businessfr­iendly the government is, but the downstream manufactur­ers might be more inclined to talk about how susceptibl­e the government is to lobbying by powerful special interest groups.

ArcelorMit­tal has said around 200 000 jobs are at stake if the economy cannot be protected from the steel being dumped on the global market by China. Does this mean the employers’ associatio­n will have to come up with at least 200 001 potential job losses if it is to get government’s ear?

If this sounds familiar, it’s because it is. It’s pretty much a replay of what happened when the Department of Trade and Industry responded to pleas from local chicken producers. For months, until early this year, there was heated debate between chicken producers and importers. Both sides talked, not of their own special interests (which was what they were most concerned about) but rather of what would be good for the economy, for consumers and for jobs. And of course there’s always reference to the potential impact on internatio­nal investor sentiment.

Whatever the government did, it would be slammed.

The potentiall­y good news for the government, as it tentativel­y proceeds with moves to bail out local steel producers, is that it does have previous experience to draw on. The issue now is what, if anything, has it learnt over the past 12 years about dealing with Lakshmi Mittal, ArcelorMit­tal’s controllin­g shareholde­r?

In 2004, Alec Erwin, the then trade and industry minister, made a costly mistake. He assumed the friendly overtures emanating from the Mittal camp — during talks to get control of Iscor and access to favourably priced iron ore — indicated support for the rather vague concept of “developmen­tal pricing”.

Presumably the government will want something more vigorous than an undertakin­g that ArcelorMit­tal will not raise steel prices to “unaffordab­le levels”.

But “unaffordab­le levels” conjures up chilling images of prolonged Competitio­n Tribunal hearings trying to define exactly what that means, and whether it is in any way related to “excessive pricing”, which has been debated at length and without resolution.

Adding to the complexity of business engaging with government is that the government does not speak with one voice. It says business needs to invest and create jobs, but introduces regulatory hurdles and uncertaint­y.

Former MP Ben Turok is right when he says the problem with our economic performanc­e has little to do with technical issues and much more with governance and the lack of a common will and co-ordination.

Perhaps battling through a crisis — the effects of which few will escape — might help create a greater sense of common purpose.

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