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THE OFFICIAL MOUTHPIECE OF THE EAST RAND CHAMBER OF COMMERCE

ChamberBulletin The

SA Environment Law Update P20

Consulting profession to regulate ial c e Sp r to consulting fees fees e f of er b m P4 P4 Cha bers m me

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THE CUSTOMER MAY BE KING OR QUEEN... BUT NOT ALL CUSTOMERS ARE CREATED EQUAL

How to identify a dodgy ISO or OHSAS auditor

CHAMBERLINK - PROUD SERVICE PROVIDER TO ERCOC


Fnb would like to thank all our loyal customers for their support. We look forward to many more enduring rewarding relationships in the future.

Wishing you a merry christmas and a happy new year over the festive season. Have a safe journey for all those travelling.

Farzana Laher | Branch Manager | FNB Nigel | Branch BankingCnr of R42 | Rhodes Avenue, Northeast Cnr Angelo Mall P O Box 46 , Nigel Tel: 011 8148266 | Fax: 011 7395613 | E-mail: FLaher@fnb.co.za Web: www.fnb.co.za | Mobile: www.fnb.mobi


Chamber Bulletin

I N D E X Business News

Page 4 - Consulting Profession to regulate consulting fees Page 5 - Personal Development and the Health & Safety practitioner Page 6 - How to identify a dodgy ISO or OHSAS auditor Page 7 - Fatigue - Sleep is not cheap Page 8 - A look @ Health & Safety of third parties on site Page 9 - The causes & effects of incidents Page 20 - SA environment law update; November 2013 Page 26 - THE CUSTOMER MAY BE KING OR QUEEN... BUT... Page 28 - Economic growth in South Africa : a 20-year review

We want to encourage members of the East Rand Chamber of Commerce & Industry to submit any and all material we can publish within our next Chamber Bulletin. The purpose of the Chamber Bulletin is to give you the opportunity to put your company, your products and or services into a well compiled document, being sent out to all our members and newsletter subscribers.

Special Offer to Members Page 10 - PNG Publishers are offering all Chamber members a special deal this Christmas.

Members Area Page 12 - Acoustic & Sun Control Solutions at STANDARD BANK ROSEBANK Page 13 - Revamping your garden - Pavermoulds. Page 14 - Business Finance - Business Partners Page 15 - Mag Repairs - Mag Magic Page 16 - Fully Automated Plants - ITS Page 18 - Manufacturer of Solid Wood Furniture - FTP Furniture Page 19 - Effective Blinds Page 25 - NEW WEAR RESISTANT COATING LAUNCHED - Carlmach Engineering

We also want to encourage members to make sure that their websites are up to date. If you have new information, or photos, s e n d t h e m t o webdesigner@chamberl ink.co.za or arrange for a company representative to come visit you. He will also be able to take some photographs we can use in both the Chamber Bulletin and as updates within your website. Make use of the services you have at your disposal. If you are unsure what exactly the extent of the services are you qualify for as an ERCOC member, please let us know and we will get you up to date.

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As we are nearing the end of 2013, make sure that you have covered all the necessary angles of your company. Make sure everything is up to date so that 2014 can start at full speed.


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Editors Corner of a business practice, performs work of a conceptual nature in natural sciences or development, provides strategy guidance in planning and executing a Legal, health and safety, environmental, project, or carries responsibility for medical and other consulting fees remain quality management. open to exploitation, and should be regulated, said NIOCCSA. “These specialist fields do not exist in various state departments, and if it does, Lack of regulation in it may not be applied internally due to the the consulting requirement of independence from the industry was part of outcome of a project application,” writes the cause of state Maritz. expenditure of R 3 3 . 7 b o n “Application of a state project in terms of consultants per year. NEMA and the NCA has to be handled by A group of Consultants and the an external consultant at these statutory state could be partly Southern African determined consulting fees. Health and safety t o b l a m e . professionals plan Government is not a Construction health and safety to regulate cash buyer, and consulting fees consulting fees. payment terms are often in excess of 120 days. “The same applies to the SACPCMP, and their schedule of fees. If government “Smaller consultancies do not have the spends that much, what does the private cash flow to carry the debt for extensive sector contribute to the consulting periods, and when submitting a quote, profession? are likely to quote a ridiculous price in the subconscious hope of not being awarded “There is no mechanism to govern the tender. professional consulting practice. This is one of the reasons for the formation of “When it does result in an award, NIOCCSA, to promote and enhance the government pays too much for too little”, public image of consultants, and to writes National Institute of Compliance protect the public from exploitation, by Consulting of South Africa (NIOCCSA) s e t t i n g c o n s u l t i n g c o m p e t e n c y Verification Standards Committee standards, auditing and reporting on the director Rudy Maritz. profession.

Consulting profession to regulate consulting fees

Editors Note So we have come to the end of 2013. It still feels so surreal. We hope that this year has been one you can look back at and see all the opportunities you have grabbed hold of with both hands and made a success of each one of them. May the lessons learnt be remembered to ensure that 2014 can only turn out even better than 2013. May you end the year on a positive note. As the East Rand Chamber of Commerce & Industry we want to wish all our members and their families a marry Christmas and an amazing new year. Editor & Chief Zack Tesner

SACNASP consulting categories and “In the absence of standards of costing rates (as opposed to price fixing by setting a standard rate) consultants are free to “Another problem is a lack of a standard quote according to their own assessment fee structure based on competence and of worth. complexity of the service required. Any person wanting to benchmark a quote Health and safety institutes do not might stumble on the SACNASP rates, regulate fees citing a Category B professional can charge as much as R1630 per hour.” “Professional bodies do not always connect the dots by adding a monetary SACNASP is the statutory body for value to a professional designation, like Natural Scientific Professionals, which SACNASP did, and a graduate includes Food and Environmental professional deems him or herself worth Sciences. Their lowest recommended more than a person with a one week rate for consulting fees is R700 per hour. training certificate,” writes Maritz. Category B consultants are defined as a partner, sole proprietor, director, or member who shares the risk and liability

Continue on P23


Business News

Personal development and the Health and Safety practitioner

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or unconscious of their “incompetence”. Stage 2 – Unconscious competence

Ria Swanepoel

As they recognize their “incompetence”, they The world, more specifically the business consciously acquire a skill, environment, is constantly changing. As a result it is expected of the Health and Safety practitioner to Stage 3 – Conscious competence respond to these changes in a fitting and professional manner, to constantly evaluate own performances and Then consciously use it, requiring lots of concentration to recognize where strengths and weaknesses lie. Stage 4 – Unconscious competence No one is perfect, and no one knows everything there is to know. Socrates said “The only true wisdom is in Eventually, the skill can be utilized without it being knowing you know nothing”. Thankfully we generally consciously thought through: the individual is said to don’t need to know everything, but we should have then acquired unconscious competence. recognise when to learn something, and when to develop new skills and abilities. Personal development for growth The desire to improve should therefore be central to all Health and Safety practitioners and can be achieved by displaying a commitment to unending personal development, and by actively striving to keep Health and Safety skills and knowledge up to date. Defined, “personal development” means the conscious pursuit of personal growth by expanding self-awareness and knowledge and improving personal skills. So how can you get started on this journey of personal growth?

Would it not be fun to find out how far you can go?

1. Step number one involves acceptance. Ÿ To see your situation as it really is and accept it.

Identifying areas of your job where it might be really painful to accept the status quo. Ÿ If you accept the truth you have laid the most important foundation for real growth. Ÿ From there you can move forward. Without acceptance it is not going to work.

Invest in yourself Improving yourself proactively, working on selfawareness, improving your skills and knowledge so that you can reach your full potential, all of this is an investment into the greatest asset you’ll always have – Yourself.

2. How do you see the world and yourself in it. How But beyond self-development, personal development you see yourself will determine how you act! also includes developing and helping others. ‘You can make more friends in two months by becoming Ÿ Are you a victim or a winner interested in other people than you can in two years Ÿ Are you self-confident or not by trying to get others interested in you”. Ÿ Are you in control, successful, happy …… Or not? I pray that your path to personal development will be You have to know where you stand. You have to make truly uplifting, and that the process, as well as the the unconscious conscious. Psychologists refer to this achievements, will continue to be positive, and as the “Four stages of competence”: energizing. Stage 1 – Unconscious incompetence Individuals are initially unaware of how little they know,

“Until you make the unconscious conscious, it will direct your life and you will call it fate.”


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Business News

The ultimate service delivering chamber.

Why join the East Rand Chamber of Commerce & Industry We have what you need. Gone are the days where the Chamber of Commerce was the institution whom arranged cake and tee events so members could meet each other. The need in companies is so much bigger than this, and that is the reason we have decided to be different. You WILL benefit from becoming an ERCOC member.

Datadex Members Directory

Chamber Bulletin And more service to select from.

How to identify a dodgy ISO or OHSAS auditor

2. The auditor generates a nonconformance for a legal register not being presented.

In South Africa’s skills shortage, it is difficult to get a competent, independent and objective ISO or OHSAS auditor for 2nd and 3rd party audits.

Nowhere in any of the ISO9001, ISO14001 & OHSAS18001 standards under the clauses for legislation does it give a requirement to have a legal register. It does state that there must be access to legislation, it must be updated and communicated, but that can be done and proven in other ways as well.

3. The auditor generate the audit Frequently, auditees do not check nor report during the actual audit. verify auditor credentials prior to the You paid for 3 days of auditing, not 2 auditor conducting an audit on their site. days and then the last day they sit and Remember, you are paying the bill and generate the audit report. Ask how need to ensure that you are getting a many days the audit will be and how competent auditor to come and assist many days the audit report writing will y o u i n i d e n t i f y i n g c o n t i n u a l take. Be prepared to pay for an improvement opportunities in your additional day for the completion of the management systems. audit report off-site. A common mistake we are all guilty of is that we assume that the auditor is registered or competent. We also trust that when the individual do say that his or her registration is in order, that it actually is. Just like with any other provider of services, you need to verify the current status of the auditor prior to starting the engagement.

4. The auditor does not audit the “other” part under the standard’s legal & other clause.

“Other” refers to head office or group requirements, customer requirements or contractual requirements (not limited to these examples only). When last did an auditor prepare prior to the audit for this information and then on the day of Below are some of the signs that you the actual audit did he/she audit the might not be getting what you thought “other” requirements? you should, in your audit: 5. Under the “legal” clause, the 1. The auditor does not audit the auditor only audit the “OHS Act” or night shift or other shifts. “Mine H&S Act” and not other applicable SHE legislation. When do people take short cuts or fall asleep or are most likely to be fatigued? This clause does not stipulate only one When do we have less supervision? Is law – it implies “all” applicable shift change-over not a critical part to legislation to your operation. audit? Continue on P24 Burnshield has a wide range of both Professional and Retail products. Visit www.burnshield.com Tel: 08610 BURNS 011 440 5171 Physical Address: Levtrade International Waverley Office Park Cnr Corlett Drive &


Business News

Fatigue – Sleep is not cheap!

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form the basis for any fatigue management plan.

Celeste Erasmus

Fatigue control measures refer to a range of strategies aimed at either minimizing or counteracting the effects Fatigue affects a person’s health, increases the of fatigue when driving and working. Fatigue control chance of workplace injuries occurring, and reduces measures can only temporarily reduce the risk of a performance and productivity within the workplace. fatigue-related accident, they cannot eliminate the What is Fatigue? risk. Fatigue can be defined as increasing difficulty in performing physical or mental activities. Signs of fatigue include tiredness even after sleep, p s y c h o l o g i c a l disturbances, loss of energy and inability to concentrate, irritations, short temper, etc. Fatigue can lead to incidents because workers are not alert and are less able to respond to changing circumstances and they have impaired concentration. Fatigue can also lead to long term health problems. What are the causes of fatigue?

The only cure for fatigue is sleep. Where do you start and which control measures are the most effective and can assist the employer by managing an effective Fatigue System? Ÿ Ÿ Ÿ Ÿ

Symptoms of driver fatigue Warning signs to look out for:

Ÿ Ÿ Ÿ Roster design, eg. too many consecutive night shifts; Ÿ Aspects of the tasks being undertaken, eg. greater Ÿ workload within standard shifts; and Ÿ Stressors, eg. Work environment, dust, heat, cold, Ÿ noise, mental, physical, etc Ÿ

Work related causes

Non-work related causes Ÿ Ÿ

Ÿ Ÿ

Ÿ

Identify the hazards of fatigue Assess the risks of fatigue Implement risk control measures and Monitor and review the effectiveness of the controls.

Trouble focusing, or narrowing of attention, Head nodding, or inability to keep the eyes open, Not remembering the last few minutes, Poor judgment, slower reaction time, “Zoning out”, Daydreaming and wandering thoughts. Constant yawning or rubbing of eyes. Drifting in the lane

If a driver experiences any of these symptoms whilst behind the wheel it is very likely that your driving Sleep disruption due performance is already impaired. to ill family members; Strenuous activities Establish a fatigue safety approach outside work, such as second jobs, sport Like other risks associated with mining, the risks from activities, clubbing, fatigue need to be controlled in order to fulfill the partying, employers’ duty of care. The fact that individual Sleep disorders, behaviour outside of work can have a massive Inappropriate use of influence on fatigue does not reduce the employers’ alcohol, prescription obligation to address the issue with the principles of and illegal drugs. risk management, including following the hierarchy of Stress associated control. with financial d i f f i c u l t i e s o r Although there are many controls that can be applied d o m e s t i c to the problem, I’m only going to address 3 below: responsibilities, going through a divorce, 1. Napping children being sick, etc Napping is the most natural countermeasure against

fatigue and has been shown to reduce many of the E f f e c t i v e c o n t r o l performance impairments caused by sleep measures along with education about sleep health and deprivation, sleep restriction and working long hours. the importance of making sleep a high priority should Continue on P23


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Editors Corner

A look at Health & Safety of Third parties on site Gerrit Augustyn

Health and Safety duties when you own or rent a property

First we have to deal with the matter of owning or renting the property and how this impacts the health and safety duties of the company. Health and safety legislation in our country does not distinguish between an owner and/or renter of premises when ensuring a working environment free of risk to the health and safety of employees. Whether you own or rent the premises is of Company A is a manufacturer of automotive parts. They no concern, as the legislative requirement is set in/on all own a premises in Pretoria on which they have a areas where work is carried out to the advantage of an manufacturing plant. Next to this premises they rent a employer. property which they use as an outlet where customers can purchase automotive parts from Monday to Saturday Legislation requires an employer to take care of during normal business hours. The Health and Safety everyone’s health and safety and not only employees. manager is of the opinion that the company only has a This includes contractors, sub-contractors, facilitators, responsibility towards the health and safety of their auditors, inspectors, clients etc. On the company employees, and that this responsibility is limited to the premises the company is responsible for everyone. premises they own and not the outlet that they rent next The common law principle of take reasonable care is door. also important here and applicable to everyone, not only The Incident employers. This applies to all areas in South Africa, even A client visited the automotive company’s outlet to when someone visits a mall to go and buy groceries. purchase automotive spares. He entered the premises Health and Safety duties and Case Law The health and safety duties of employers or owners of premises are not only emphasized by law, but also supported by recent judgements in the South African Courts. Let us take a look at a scenario to demonstrate the legal position. The Scenario

and parked in the designated parking area for visitors. On his way into the outlet the client slipped on the floor due to it being wet after the cleaner washed it. No sign was displayed to warn persons that the floor is wet and could be slippery. The person severely injured his ankle and had to be transported to hospital where he had to undergo surgery. The Health and Safety manager was informed of the incident. The Question

In a recent matter, dating back to 19 August 2009, an elderly woman went to a Dischem Pharmacy in Pretoria where she fell and fractured her right hip. She alleged that one of the Dischem employees was the cause of her fall after bumping into her and subsequently instituted action for R850 000 in damages against Dischem as well as the individual employee under the law of torts.

The honourable Judge Hennie De Vos granted The Health and Safety manager of the automotive judgement in favour of the applicant and in making the company received a letter from an attorney representing order said that any person that worked in a public shop the client who sustained the injury due to the fall at the should do so in a manner as not to endanger others. parts outlet. The client is seeking compensation for the injury. The Health and Safety manager insists that the Another important matter is that of Niemand v Old Mutual company cannot be held liable for the injury of the client Investment Group Property Investment (Pty) Ltd as they only have a duty towards employees and only (35421/2009) [2012] ZAGPPHC 87 (1 June 2012). In this case the plaintiff claimed damages from the defendant, where they are the owner of the premises. the owner of a shopping mall in Pretoria, as a result of injuries sustained by the plaintiff when she slipped and fell on a slippery substance on the floor of a loading bay on the premises. The judge was of the opinion that the defendant was in fact negligent in not taking reasonable steps to keep the loading zone properly monitored and clean and in not ensuring the safety of anybody entering the area. Do you have measures and processes in place to show that you take reasonable care of anybody entering your premises and are your employees aware of the possible legal implications of third parties entering your workplace? The employer’s health and safety duties extend to every-one on site, even unexpected visitors.


Business News

The Causes & Effects of Incidents - Christel Fouche Passionate About SHEQ!

Causes of Incidents Incidents can be generally defined as being the result of unsafe workplace conditions, acts, or poor decision making by someone in the chain of events. Statistics and practitioners’ opinions about these statistics differ, but it is generally accepted that 20% of incidents are a result of poor workplace conditions and the remaining 80% are caused by some form of human error or non-conformance.

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

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Poor design and substandard conditions Inadequate maintenance Lack of or ineffective training Lack of work standards Lack of supervision and mentoring Substandard practices Failure to identify hazards and associated risks Poor or absent administrative controls.

The ANSI Code (Z16.2-1962 R1969) classifies unsafe acts and conditions as: Unsafe Conditions

Ÿ Ÿ Ÿ Technical equipment (machinery and tools) Ÿ Articles, materials and substances ( heavy, sharp, toxic) Ÿ Working environment (lighting, noise, temperature, Ÿ humidity) Ÿ

Inadequate guards or protection Defective tools, equipment, substances Congestion Ÿ Inadequate warning systems Ÿ Fire and explosion hazards Ÿ Substandard housekeeping Hazardous atmospheric conditions (gases, dusts, Ÿ Human decision making factors and actions (acts, mists, fumes, vapours) omissions, carelessness, negligence, errors of Ÿ Excessive noise judgement, poor attitude) Ÿ Radiation exposure Ÿ Inadequate illumination or ventilation. A management system failure in one or more of these areas causes incidents. Unsafe Acts Workplace conditions can be described as the general Ÿ Operating without authority state of the workplace environment. Ÿ Failure to warn or secure Ÿ Operating at improper speed Although workplace conditions only form 20% of the Ÿ Making safety devices inoperable causative factors, this is the area that needs the most Ÿ Using defective equipment attention. The reasons for first addressing conditions are Ÿ Failure to use personal protective equipment that risks can be predicted and controlled. It is also far more Ÿ Improper loading or placement cost effective to address conditions than to continuously Ÿ Improper lifting control acts – i.e. human behaviour. Ÿ Taking improper position Ÿ Servicing equipment in motion No matter how informed and competent people are, Ÿ Horseplay various factors influence day-to-day behaviour. The most Ÿ Alcohol, drugs or other substance abuse. reliable worker will at some time perform unsafe acts, or fail to follow correct and known procedures. Effects You will reduce opportunities for human errors by seeing that as many risks as possible are controlled by Incidents affect one or more of the following – individuals, engineering standards. organisations, clients, the general public, the community, and the environment. Human errors are largely unpredictable. Even with the best information, training and monitoring programmes in place, The effects may be temporary or permanent and many can there will be a time when, for whatever reason, someone be identified immediately. Health and environmental will fail to follow the correct steps and procedures. effects may only become evident after a period of time. Common factors that influence human behaviour usually SHEQ programme management is a pro-active process result from one or more of the following deficiencies or with the focus on containing risk by controlling hazardous errors: conditions. Personal Factors Ÿ Ÿ Ÿ

Lack of knowledge, skill, or ability Physical or mental stress, imbalance or incapacity Poor attitude

Job Factors Ÿ

Poor purchase specifications

Well designed and executed inspections identify issues that are related to these causes. Very closely related to this article is my article on Dominoes & Occupational Safety wherein I wrote about the late H W Heinrich’s Domino Effect.5


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Member Special

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Member News

Acoustic & Sun Control Solutions at

STANDARD BANK ROSEBANK A R E C E N T SUCCESS Motivated by ideals of “Good to Great” Aluglass will continue to attract the good and strive for great, with a leadership style that epitomises discipline and innovation in action, for sustainable socioeconomic development, social responsibility and education, in accordance to our core values of Accountability, Teamwork and Service Delight.

'People are centered in all we do, from the relationships forged and the spaces created we place passion, integrity and commitment in optimising the connection between people by purposefully and intentionally leveraging on and encouraging multiculturalism, dynamism and empathy towards the process of knowledge exchange both internally and externally.’ This was realised on Friday the 5th of March 2013 when a team of Aluglass Bautech made way to the newly built Standard Bank in Rosebank, where products innovatively and systematically complement the construction and finish of what is to be a big centralised Bank in a business hub of Rosebank, situated in the northwestern part of Johannesburg, a blend that is highly effective with a commercial centre, tourist attraction and residential suburb, very cosmopolitan, abuzz with multi-culturalism, vibrant and exciting environment. Equally, Aluglass Bautech serves to optimise environments and spaces within, through a blend of products, that offer a diverse range of internal and external sun control products (awnings and blinds), acoustic products (doors, partitions, absorption panels), glass and wooden doors and partitions, bathroom solutions (shower doors, toilet glass cubical) as well as imported European Seves glass blocks. For a building like Standard Bank the Varikust acoustic doors serves as a function that allows for uninterrupted floor finish and a required sound insulation of 40dB (measure of sound). To suit the décor of this exclusive project, finishes of these doors included glass, as entrance doors to offices and oak veneer for the ground floor doors. “All lasting business is built on friendship.” -Alfred A. MontapertNot only is acoustic control essential for an optimised working environment as well as solar control too, it is essential for achieving a 5 star GreenStar rating as per World Green Building Council rating system.

Vk63 Glass – 40dB For the north, east and west atrium, 122 blinds are fully motorised and integrated into the building management system using standard motor interface (SMI) and KNX control automation. A system that allows the blinds to function fully automated with no user input to open or close the blinds. “Delight our team members and external customers with our enthusiasm, responsiveness, service delivery and results” -The Aluglass WayIt was a day well spent where the team not only had a moment to recognise their contributions but also to learn from, the experience. One that was met with enthusiasm which had a positive impact on fellows met at the site. A valuable experience where Aluglass Bautech values of Accountability, Teamwork and Service Delight were in action!

Solux sun control blinds

Visit www.aluglass.co.za for the complete product range to find YOUR SOLUTION!


Members Area

Paver moulds is a division of plasticinject cc, based in Benoni. The range has been created over years as manufacturers and designers realised there was a need for a cheaper mould, especially for smaller production runs.

Contact Us Physical Address: 21 Golden Drive Morehill X8 Benoni allen@akwa.co.za riette@akwa.co.za Tel: 011 425 1114 Fax: 011 425 0228

www.pavermoulds.co.za

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MEMBERS AREA

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Mag Magic today, is a well-established company specialising in the repairs and refurbishing of Mag Wheels, servicing large corporate companies on a national basis, as well as smaller local clients. We boast a highly dedicated management team with hard-working employees dedicated to providing the highest of sales and service excellence to every customer, no matter how big or small.

Physical Address: 30 Leeuwpoort Street Town Centre Boksburg, 1459

www.magmagicrepairs.co.za magmagic@absamail.co.za Tel: 082 660 5549 Cell: 082 480 7865

Service Excellence Mag Magic is in continual pursuit of service excellence and is willing to assist customers with information or queries to the best of our ability, thus the reason for our excellent ongoing business and referrals. After sales service is also extremely important to us, in order to maintain strict control of our service excellence policies and customer satisfaction. Since inception, the company has prospered into an aspiring company, maintaining a steady growth, largely due to positive word of mouth marketing and advertising. "It is an interesting industry and after each day, I feel a great sense of achievement." The owner developed an engineering background whilst working for an engineering company for 10 years before venturing out on his own. "Running your own business is hard work, but you know you have to do your best because you have responsibilities."


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Member News ITS - Plant Manufacturers and Electroplaters With expertise that boasts an unrivalled combination of professionalism, quality and skill, the approach followed is that which can only translate into excellence for our clients. Our experience in evaluating our clients’ needs and compiling appropriate solutions to address these and other issues, has only benefited our clients.

Contact Us

Fully Automated Plants Physical Address: 13 Derrick Road Spartan Kempton Park Gauteng South Africa

Ÿ ITS is involved in the manufacture, installation and commissioning of Ÿ Ÿ Ÿ

Postal Address: P.O. Box 9663 Edleen South Africa 1625

Ÿ Ÿ

various types of plants. Upgrading and Repairs to existing plants. Boasting a large workshop with all the necessary machinery and trained workman to complete any task necessary. Maintenance to existing plants with the ability to manufacture, change and install individual items (i.e. pipes, tanks, ducts, scrubbers, etc.). Each client's needs are calculated on an individual basis, thus each solution is "Tailor Made" to suit the client. Full Documentation accompanies all plant commissioning.

Tel: +27 11 394 4654 Fax: +27 11 394 4654 Email: info@its-cc.com Website: www.its-cc.co.za

Types of Plants Manufactured and Installed Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Continuous Wire Pickling Plants. Pickling Plants. Fumeless Pickling Plants. Plating Plants. Effluent Treatment Plants & Clarifiers. Single Tanks Available on request.

Polymer Tanks Through the skills and expertise input of the two founding members, Anton (Tony) and Miya, ITS is now an international entity that export products abroad on a regular basis. ITS is Level 4 BBBEE (Broad-Based Black Economic Empowerment) Contributor.

Advantages Ÿ Resistant to various corrosive chemicals. Ÿ Wide temperature range (suitable for hard coat anodising - 32°F/0°C or

Type II, i.e. 'Hot' anodising - 85°F/29.4°C). Ÿ Small Thermal Expansion Coefficient - This implies that the the dimensions

will remain constant under varying temperature ranges. Ÿ Due to the small Thermal Expansion Coefficient, larger units can be supplied thus saving on valuable and often expensive floor space. Ÿ Can be supplied in varying shapes and sizes to suit the needs of the client.


MEMBERS AREA

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Plating Ÿ Electro-Barrel Plating

Electro-Barrel plating has the advantage of being able to plate multiple items at the same time, which increases productivity and reduces overall cost. The amount of items depend on the size of each item. Currently, ITS does Electro-Barrel Plating in Copper, Nickel and Tin. MEMBERS AREA

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Ÿ Electroless Nickel Plating

Electroless Nickel plating has the advantage of having a smooth even coating on the plated component and flexibility in plating volume and thickness.

Contact Us Physical Address: 13 Derrick Road Spartan Kempton Park Gauteng South Africa Postal Address: P.O. Box 9663 Edleen South Africa 1625 Tel: +27 11 394 4654 Fax: +27 11 394 4654 Email: info@its-cc.com Website: www.its-cc.co.za

Ÿ Strip Plating

Strip plating is used when the piece of metal to be plated is, well, a strip of metal. ITS currently have the technology to do Brass (an alloy of copper and zinc) strip plating. This involves the metal to be plated, to be prepared in various solutions where they are then plated at various levels, depending on the clients' needs. ITS is in the process of setting up a Nickel Strip Plating line, to be able to provide a wider choice of plating for their customers. The line should be fully functional by the end of 2007.

Through the skills and expertise input of the two founding members, Anton (Tony) and Miya, ITS is now an international entity that export products abroad on a regular basis. ITS is Level 4 BBBEE (Broad-Based Black Economic Empowerment) Contributor.


P18

Member News

For personal advice and quotations on furniture, doors, bars, mirrors and frames in any Hardwood or Railway Sleeper. Furniture Timber Palace, Meyerton, Gauteng, a Solid Wood Furniture manufacturer, a recognised name in the South African furniture manufacture industry.

European Antiques and Furniture Welcome to the Blue Beagle European Antiques and Furniture website. Our beautiful showroom in Meyerton displays our unique imported antique furniture. The antiques are imported directly from countries in Europe, focusing mainly on The Netherlands. Should you be looking for a specific piece of antique furniture / item, which is not currently on our catalogue, we will gladly assist in sourcing this for you.

Contact us Website: www.bluebeagle.co.za Email: mariannebotha6@gmail. com Cell: MariannĂŠ Botha 082 445 3145

Furniture Timber Palace (also known as FTP) is a family run business, that design and manufactures an upmarket range of Quality commercial and domestic furniture since 2000, emphasising functionality and design, catering for the discerning homeowner, Lodges and Guest houses. Physical Address: 7 Meyer Street Meyerton Website: www.ftpvaal.co.za Email: dewaldpieters@absamail.co.za ftp@telkomsa.net Tel/ Fax: 016 362 4791 Cell: Cell: 082 825 1224


MEMBERS AREA

P19

Contact us today Tel: 011 818 2167 info@effectiveblinds.co.za

www.effectiveblinds.co.za

Folding Doors

Awnings

With a little help from Wooden Folding Doors and your own imagination you can divide a room such as your lounge to accommodate a dining room...

There are many benefits to having awnings installed with the greatest benefits being energy savings.

Blinds

Shade Ports

Patio Blinds Exterior, Patio Blinds Interior, Roman Blinds, Sunscreen Roller Blinds, Wooden Venetians, Vertical Blinds...

Shade Ports have two designs, Gazebo and Pyramid. The fabric is easily cleaned, by simply hosing it down...

The services we provide is formulated to make the experience of installing blinds and awnings easy, comfortable and professional. This is how we do it: You make an appointment with us at your convenience. After hours is by appointment only. We visit you in the comfort of your home. We will offer advice borne out of years of experience to assist you in making the right choices We measure your windows, doors and skylights We custom make your blinds, and awnings We fit them to perfection We will continue to service you in the following manner; Cleaning of blinds and awnings (off site) Repairs of Blinds and awnings both on site (where possible) and off site. Re-covering of awnings. Physical Address: 116 Christian Road Nuffield Springs

Tel: 011 818 2167 Fax: 011 818 3982 Cell: 082 852 2339

www.effectiveblinds.co.za info@effectiveblinds.co.za


P20

SA environment law update

SA environment law update; November 2013 by Edmond Furter A spate of SA environment law amendments were made in 2013, with more due in 2014. Some are enforced by the DEA Enviro Management Inspectorate (Green Scorpions), some by DOE, DOH, and DOL.

1.7%. Academics in the energy sector suggested that manufacturing was capable of supporting an extended nuclear programme, and believed that more than two reactors were needed, with the added benefit of increased job creation, but stressed that proper scheduling was vital, as well as “correct communication”.

This SA environment law update of November 2013 includes new energy, air, dust, water, rail freight and waste laws, and state strategies. Comment on mandatory energy use reporting The Department of Energy (DoE) and their consultant met in October 2013 to finalise an Energy Efficiency Target Monitoring System (EETMS), to enforce mandatory reporting of energy-related data. The Nuclear Energy Corporation (NEC) noted the change in world energy perspectives after Fukushima, with heightened risk mitigation leading to increased costs, and longer timelines. Better global governance of safe and environmentally-friendly energy sources is DoE wants to track progress on industry’s aspirational needed. Interestingly, the oil-rich countries are opting for nuclear power in their plans. energy efficiency improvement target of 12% by 2015. Interested parties may comment on the web portal, or at a workshop at the CAIA offices in Johannesburg, Auckland Park, on 26 November 2013 at 09:30 (contact Shirley Parker on caiainfo@caia.co.za or 011 482 1671).

Fossil fuels are likely to account for about 80% of energy use until around 2040, with more emphasis on natural The Department of Energy has five energy efficiency and shale gas, but there will also be increased coal strategies, intended to provide the lowest cost options to consumption until after 2030. reduce energy consumption, improve energy security, South Africa is currently the only major player in Africa on global competitiveness, and job creation. nuclear generation, although other countries are Innovations have been introduced for municipal street showing greater political commitment and appetite for lighting, public buildings, solar water heaters and development. improvements in industrial efficiency. Those opposed to the nuclear industry expressed their The South African National Energy Development concern that insufficient time was allotted to informing Institute (SANEDI) manages most of the implementation Parliament of the dangers, risks, and pitfalls of nuclear power, including concerns on evacuation plans, disposal around energy efficiency and data. of nuclear waste, and review of the plan. Nuclear energy and risk management Technical Regulations for Petroleum Exploration SA Parliament’s Energy Portfolio Committee held public hearings on nuclear energy as a reliable source of The Department of Mineral Resources has called for supply. Nuclear energy is one of the components of the comment on proposed Regulations to close gaps in the regulatory framework for Integrated Resource Plan, a 20-year national electricity Hydraulic Fracturing (fracking) generation plan, due for interim review this year, which and to prescribe good seeks to direct the expansion of the current fleet of power international industry practices stations. and standards for safe exploration and production of The plan emphasises security and readiness of supply at petroleum. the right time, reports the Parliamentary Monitoring Group. SA electricity consumption last year increased by SA has five energy efficiency strategies


SA environment law update

P21

Power from trees and waste

mg/m2/day and 1200 mg/m2/day respectively. Dustfall monitoring programmes, dustfall control and reporting Blending of diesel and petrol with biofuels will be may be required by an Air Quality Officer if deemed mandatory from October 2015. Hendrina Power Station necessary. of Eskom is first to use a fuel oil and waste oil blend. Small boilers are controlled emitters Environmental Implementation and Management In terms of the National Environmental Management: Air Plans guide Quality Act, 2004, small boilers have been declared as controlled emitters and emission standards have been The Department of Environmental Affairs called for established. comment, in terms of the National Environmental Management Act, on the draft third edition Guidelines for In addition, the Pressure Equipment Regulations will Environmental Implementation and Management Plans, soon be amended by the Department of Labour. intended for national and provincial departments on preparation and implementation of environmental Atmospheric Impact Prescription in force management plans in terms of the procedures for cooperative governance. Regulations prescribing the format of the atmospheric impact report, required in terms of the National Pipeline Levies Environmental Management: Air Quality Act, have been promulgated. The National Energy Regulator of South Africa called for comment on proposed levies for the piped gas and State infrastructure takes priority petroleum pipeline industries for 2014 -2015. Levies are effectively reduced compared to the previous cycle and The Department of Economic Development will will be 37.930 c/Gj and 0.40437 c/litre respectively, from introduce the Infrastructure Development Bill to April 2014. Parliament to provide for public infrastructure as a developmental priority. Health Act sets environmental standards National Norms and Standards relating to environmental health in terms of the National Health Act, are in preparation following public comment. PCB phase-out regulated

Coastal and protected areas Bills The National Environmental Management Act: Integrated Coastal Management and Protected Areas Amendment Bills were approved by the NA Committee, with some changes. Process Controllers and Water Services Works The Department of Water Affairs has called for comment on Draft Regulations relating to Compulsory National Standards for Process Controllers and Water Services Works, provided for by Section 9(1) of the Water Services Act. A correction notice was also published for these draft Regulations. National Dust Control Regulations in force In terms of the National Environmental Management: Air Quality Act, this regulation covers residential and nonresidential areas with an acceptable limit of 600

Proposed regulations to phase out the use of polychlorinated biphenyls (PCB) materials and polychlorinated biphenyl (PCB) contaminated materials, are in preparation following public comment. Proposed regulations for phasing out and management of ozone depleting substances are also in preparation, following public comment.


P22

Business News

Containers for recycling must be certified ‘empty’

Management Area: Limiting the use of water for urban, irrigation and industrial (including mining) purposes from SANS 10405ED2: 2013 on Transport of dangerous the Middelburg Dam. Revision of general authorisations goods; Reprocessing of previously certified packaging, in terms of section 39 of the Act. will soon be updated. Department of Water Affairs, National Water Act; Used containers like metal or plastic drums offered for Proposed declaration of the exploration for and or reprocessing or reconditioning must be ‘nominally production of onshore unconventional oil or gas empty’, as far as possible by normal draining, pouring, resources and any activities, including hydraulic pumping or aspirating. fracturing as a controlled activity. Containers of division 6.1 substances, classified in accordance with SANS 10228, are deemed nominally empty if triple-rinsed with an effective solvent, or cleaned by a method proved to achieve equivalent removal. The South African Industrial Container Reconditioners Association (SAICRA) requested users to clear waste residue in packaging, and not to pass on residual waste to recyclers. SANS 10406 for Transport of dangerous goods; reprocessing of previously certified packaging, also requires that the party providing the previously certified packaging sign a ‘nominally empty packaging’ certificate with each offer. An example of the certificate is supplied in Annexure B of the standard. Responsible Care supports the request, and will audit signitories accordingly. Rail haz goods standard to change SANS 10405ED2: 2013, Transport of dangerous goods by rail; Operational and design requirements and emergency preparedness, will soon be amended. Comments have closed. Water quality standard amended SANS 9297.2013 Edition 1.2, Water quality; Determination of chloride – Silver nitrate titration with chromate indicator (Mohr’s method). Consolidated edition incorporating amendment No 2, was amended to update referenced standards. Carbon tax makes way for trade in Oz After a year of carbon taxation, Australia could switch to an emissions trading system by mid2014. The initial carbon tax was set at A$23 per tonne. New water laws Department of Water Affairs, National Water Act; National Water Policy Review. Olifants Water

And so 2013 are bidding us farewell. What a year. Although this might be the year that has flown past faster than any before, this has also been the year where people seem to be more exhausted than before. We would like to wish all our members and their families a blessed Christmas time and a happy new year. May you enjoy this time to come and get some much deserved rest. Please travel safely and we’ll see you again in 2014. Management & Staff ERCOC; Chamberlink & Cenfed

Please note: Our offices will close on Friday 13 December @ 15:00 and will re-open on Monday 6 January @ 7:30.


Business News

P23

Consulting profession to regulate consulting fees

“Engineers in the building industry, like architects and quantity surveyors, are lumped with consultants. Yet we deliver a valuable service. Without us, government couldn’t achieve building infrastructure. They genuinely do not have those skills.”

Health and safety consulting at Level 7 to 10

• Sources; NIOCCSA. City Press. EWN.

From P 4

“There is no yardstick other than self-worth assessment yet. Professional rates should be linked to the four Skills Levels as described in the SA Standard for Classification of Occupations. In terms of this standard, professionals function at skills level 4 (NQF level 7 to 10). “Consultants not meeting these levels of competence should not be allowed to charge the same rate, but also not reduce rates below the value of a person at Skills level 3, of Professional Technicians. “In a free economy, price is based on supply and demand, but without regulation of a profession, we will have a wide range in pricing structures. What the profession need is education in the process of costing, knowledge of what is deemed sellable professional knowledge, and what is not.

From Page 7

Fatigue – Sleep is not cheap! How long should I nap for? Short naps of 20-30 minutes in duration can provide measurable increases to alertness and performance that can extend for up to a few hours. (These naps can be taken during tea breaks and lunch times) 2. Caffeine

“As an example, travel time is often charged and billed at professional ‘consulting time’ rate. Travelling time should be charged at the rate for the skills needed to drive a vehicle, plus the rate per km for the type of vehicle used as determined by SARS or the AA,” writes Maritz.

Caffeine has been shown to be an effective control measure to fatigue by temporarily increasing alertness, sustaining wakefulness and delaying sleep onset. Caffeine is available in various forms (coffee, tea, energy drinks, chocolate, over-thecounter tablets, etc).

Consulting debate

3. Caffeine and Naps

The South African state has in the last financial year, spent R33.7b on consultants, and many more billions in recent decades. This has been attributed to an exodus of technical skills over the last two decades from government to the private sector.

The combination of a short nap (20 – 30 minutes) with caffeine (150 – 200mg, or the equivalent of two cups of coffee) has been shown to have the most beneficial effect for increasing alertness and improving performance up to a few hours.

The auditor general is investigating the use of consultants by municipalities. Parliament’s Standing Committee on Public Accounts (Scopa) has also expressed concern over the excessive use of consultants by various government departments.

Sleep experts and the Sleep Foundation recommend taking caffeine just before a short nap in order to get the benefit from both countermeasures. The caffeine will take 15 – 30 minutes to enter the bloodstream, during which time an operator has an opportunity to sleep. Upon waking, the operator will have the alerting benefits of sleep and the additional benefits of the caffeine.

Community Agency for Social Enquiry (CASE) Executive Director Mohamed Motala said that some projects could be handled in-house, without involving consultants.

Participation in managing fatigue is important Consulting Engineers South Africa (CESA) official Wally Mayne said government needed consultants. “We need to categorise consultants… lawyers and accountants are also consultants, but they are actually referred to as consultants.

Everyone should be involved in making the Fatigue Management Plan happen. The more people who are involved, the more support there will be for the improvements.


P24

Business News

From Page 6

How to identify a dodgy ISO or OHSAS auditor What about the Road Traffic Act, Hazardous Chemical Act and other Environmental legislation? If you comply with the OHS Act and/or Mine H&S Act it does not mean you are legally compliant. It means you are legally compliant to only that specific law. 6. The auditor does not interview top management as part of the audit. The ISO/OHSAS standards are about auditing management. It starts with management commitment and ends with management review. A substantial part of the audit is to verify senior managements’ role and responsibilities; appointments; knowledge of objectives & targets; identifying continual improvement opportunities; communicating on SHEQ and ensuring competent employees through provision of adequate resources are provided. If interviews with senior management including the CEO/MD/MM have not been done where is the proof of actually auditing the management system effectively and how can the organization then be put forward for certification if this critical area was not covered?

7. The auditor comes to the audit without the necessary and/or required PPE. It is like going to a rugby or soccer match without your gear. It should be standard for every ISO/OHSAS auditor to have their own PPE kit that can accommodate 80% of the health & safety situations on site. Bear in mind that some sites would want to issue their own PPE because of issues such as contamination of their product, legal compliance issues or a requirement to hand in the PPE after use. 8. The OHSAS auditor arrives on site for the opening meeting, not having time to complete induction training prior to the start of the audit. If you want the work as an auditor, you need to plan for logistical issues such as traveling time and induction. You cannot expect the client to be happy if you interrupt your audit to do induction training at a later stage or be in a dilemma where you cannot go on site to verify certain documentation issues because you did not do induction. 9. The OHSAS auditor cannot find their own registration cards/certificate of proof that they are registered with a registration body. It should not take longer than 10 minutes for a registered auditor/lead auditor to either show you on the SAATCA/IRCA/RABQSA websites that they are registered. Should these sites be off-line then the certificates or cards proving they are registered should be shown and available on their laptops. If it takes longer than 10 minutes, you must know there is a problem. Preferably this verification should have been done one month prior to the ISO/OHSAS auditor setting foot on your site. 10. The auditor demands proof of a management review “meeting”. The standards do not indicate that it must be in the form of a “meeting” if you have proof of the inputs and outputs being communicated, discussed and approved via e-mail – it should be acceptable.


NEW WEAR RESISTANT COATING LAUNCHED Our Company has developed and is launching a new wear resistant coating to the pump industry. The new coating, known as W.A.I.R (Wear And Impact Resistant), has been developed over the last 12 months by Carlmach Engineering cc and Kingbat Empire Trading (Pty) Ltd, based in Springs, Gauteng. Carlmach Engineering – Sales and Marketing Manager, Stan Van Rooyen, explains that this coating can be applied to most components and materials e.g. mild steel, stainless steel, cast iron and tool steel. Reconditioning of certain components can also be undertaken. “We have targeted the Pump Industry, where wear rings and shaft sleeves tend to be a major problem in this industry,” says Van Rooyen. He explains that the thickness of the coating can be varied according to customer specifications, for example, from 2mm to 5mm or more. “Our tests have shown that 3mm is adequate for most applications and tests have also shown a hardness of between 60 and 65 Rockwell and no brittleness whatsoever. Therefore, no cracks or distortion will occur. The coating has passed the acid and salt test, therefore, it is corrosion resistant,” says Van Rooyen. In highly corrosive applications, the coating can be applied to stainless steel tubing for sleeves and stainless steel plate for wear rings. The rings and sleeves are manufactured from raw materials to finished products at the Springs facility. The coating process is undertaken on a machine designed and manufactured by the companies and is fully computer controlled. A Patent on the machine and the coating process is pending at present. Company Profile- Carlmach Engineering cc Conventional and CNC Machining CNC Turning General Engineering We provide quality work and also work on CAD-CAM and Master Cam Systems. Therefore, we are able to design components to customer specifications. For more information, please call Stan Van Rooyen 0472 414 0218 (Sales and Marketing) Carlos Caeiro 082 938 6406 (Owner of Company) Email: carlmach@iburst.co.za


P26

Business News THE CUSTOMER MAY BE KING OR QUEEN... BUT NOT ALL CUSTOMERS ARE CREATED EQUAL

price less any discounts received plus all costs incurred in getting the product to your warehouse or store (transport, insurance, import duty, equipment hired or purchased to unload, the cost of labour used to unload

Do you treat all customers the same or do stock etc). you treat them differently? Do you know which clients generate substantial sales and Manufacturing business more importantly, which customers In the case of a manufacturing business, the generate substantial profits and cash flow?

calculation of the cost of sales is much more complex as one has to take into account

In order to determine the relative direct material, direct labour and other importance of your customers, rank each manufacturing overheads. customer in terms of the following criteria:

Direct material – forms part of the

1)

Sales

final manufactured product, eg.

2)

Profitability

wood used in a table, and the

3)

Payment history

quantity used varies with production volumes (you use twice as much

Stevan Delport

1)

Steven is the founder of Integer Consulting Solutions.

What is the sales revenue per month over 12 product. months or more? To calculate sales

Manufacturing overheads – include

He is a facilitator on a number of the leadership development programmes and coaches current MBA students at Wits Business School, lectures MBA finance at Mancosa and writes for Entrepreneur magazine.

revenue, we first identify the products sold

all manufacturing costs except

and then the number of units of a product

direct material and labour.

For more information, p l e a s e v i s i t

Look at profitability by product purchased

is not worth calculating eg cotton for

and then adjust/ reduce for discounts,

sewing a suit.

www.integerconsultingsolutions.com

Sales

wood for two tables as you would for

How much and how regularly does the

one).

customer spend money with you? Is sales

Direct labour – is the labour

revenue stable, increasing or declining? physically applied to manufacturing the

sold x selling price per unit, we then deduct

Ø

Indirect material – does not form part of the final manufactured

any discounts granted.

product eg. cleaning materials or

2)

Profitability

delivery and returns. When we talk about

materials whose cost is so small that it

Ø

Indirect labour – cannot be directly

client profitability we are referring to gross

linked to the final product eg the

profit. Gross profit is equal to sales less the

factory supervisor or people who

cost of buying or manufacturing stock.

maintain

and

service

the

machinery. The calculation of the cost of sales for a

Ø

Factory rental

wholesale or retail business is very different

Ø

Rates and taxes

to that of a manufacturing business.

Ø

Water

Ø

Electricity

Wholesale or retail business

Ø

Insurance of the factory and stock

In the case of a wholesale or retail business,

Ø

Leasing of machinery and

the actual cost of a product is the purchase

equipment


Business News

THE CUSTOMER MAY BE KING OR QUEEN... BUT NOT ALL CUSTOMERS ARE CREATED EQUAL Ø

P27

business. Do they buy exclusively from you or occasionally from you? Are their businesses well managed?

Depreciation of machinery and equipment How many of the intermediate and especially marginal

3)

Payment history

customers have substantial future revenue potential?

How do the credit payment terms compare to other customers? Look at the frequency and ease with which you

You should now have the following clients:

are paid for your products and services. If you are paid late

1.

premium – in terms of existing revenue spend

and have to follow up frequently with regards to payment,

2.

intermediate – with good opportunity for future revenue and profit growth

this adds to your costs and should be used to adjust the customer profitability mentioned above. The key question

3.

intermediate – with little opportunity of future sales and profit growth

here is: “Are the credit terms reasonable for that customer and are you paid on time in terms of the agreed credit

4.

marginal – with good opportunity for future growth

terms?”

5.

marginal – with little opportunity for future growth

You have already identified your key customers who

In categories 1, 2 and 4 you need to ensure that the

generate the majority of your sales and profits. How many of

relationship and service levels are maintained or improved

these are your late or bad payers?

still further. You should develop the relationship at multiple levels within the customer.

From your categorisation you now have customers which roughly fall into the following categories:

In category 3 the relationship and service levels should be

·

premium

maintained or possibly reduced.

·

intermediate

·

marginal In category 5 you need to exit or improve profitability. Since

Is there over reliance on any of your premium customers?

sales volumes cannot be increased, then the way to

Would the livelihood of your business be threatened if one of

increase profitability is to:

these customers closed down or moved their business

1.

increase prices and/ or reduce discounts

elsewhere? If the answer is “Yes”, then you firstly need to

2.

reassess the credit terms

ensure that these customers are exceptionally well looked

3.

strictly enforce payment terms

after and secondly that you actively identify and target

4.

do not accept returns

potential new premium customers so that your reliance on

5.

establish a minimum value for goods to be delivered

your current key customers is reduced.

or charge for delivery reduce the number of client calls made or limit customer

Now assess those customers in the intermediate and marginal categories with a view to determining their potential future revenue and profit potential for your

contact to phone calls


P28

Business News

Economic Commentary Jac Laubscher Group Economist 4 December 2013

Economic growth in South Africa : a 20-year review With the twentieth anniversary of the transition to a democratic dispensation in South Africa imminent, it is becoming the in thing to evaluate the country's progress during this period, particularly in economic terms. Measured against average standards of living as reflected in real GDP per capita, South Africa appears to have done quite well, with an increase of 33% since 1994. However, this is not the full picture. Firstly, South Africa does not compare favourably with its peers. During the same period the GDP per capita of emerging markets and developing countries increased by 115% on average. Brazil, India, Indonesia and Turkey, for example, all fared much better than South Africa. Secondly, not all South Africans shared to the same extent in the increase in GDP per capita, as is evident in a relatively high GINI coefficient of between 0,6 and 0,7, depending on how it is calculated, and an unemployment rate of approximately 40% in terms of the wider definition. The primary importance of high economic growth for South Africa's future, with the emphasis on the correlation between growth and employment to address poverty, is being acknowledged increasingly across ideological boundaries. Although economic growth is not the absolute answer to all South Africa's problems, it is inconceivable that large-scale unemployment can be addressed without a drastic expansion of the economy. The differences of opinion evolve around how to achieve this. The accompanying graph shows a sustained acceleration in economic growth from 1994 to 2007, except for the period 1998 to 2002 as a result of the then crisis in emerging markets, the millennium effect and the worldwide economic slowdown early in the previous decade. The accelerated growth followed on an international slump and a fairly severe drought in the early nineties and can therefore not be attributed only to the political transition in 1994.

To my mind, the main reason for the improvement in South Africa's growth performance after 1994 lies in the lifting of economic sanctions and the subsequent reintegration of the South African economy with the


Business News

P29

Economic Commentary Jac Laubscher Group Economist 4 December 2013 global economy. Although the lifting of trade sanctions was important (the volume of exports plus imports did increase by 65% from 1991 to 1998), with an accompanying improvement in productivity as a result of greater global competition, it was the lifting of specifically financial sanctions that made the critical difference. This resulted in South Africa having unrestricted access to foreign capital for the first time since 1985 and consequently being able to allow a deficit on the current account of the balance of payments. Although the five years preceding 1994 were characterised by an enforced surplus on the current account of on average 1,6% of GDP, the following five years showed an average deficit of 1,2% − a reversal of 2,8 percentage points. Since then it has increased further and is currently more than 6% of GDP.

The second marked feature of the economic growth performance since 1994 was the sustained acceleration in private sector investment from 8% of GDP in 1992 to 14% in 2008, after which it levelled off at 13% of GDP in response to the recession – see the accompanying graph. This shows that the allegation of a private sector investment strike does not hold water. The public sector only followed later but has nevertheless also shown a remarkable acceleration in capital spending since 2002. Several factors have contributed to this trend: new business opportunities, increased competition, a predominantly business-friendly and fairly predictable policy environment up to 2007, and a reduction in the cost of capital in response to lower inflation and the consolidation of the government's financial position. Measures to promote the transformation of the economy, for example black economic empowerment, affirmative action and stricter labour legislation, have been accepted as imperative for stability and offset in business models, in spite of the fact that they have increased the cost of doing business.


P30

Business News

Economic Commentary Jac Laubscher Group Economist 4 December 2013 A third distinct phenomenon over the past 20 years has been the shift in the relative importance of various economic sectors and the underlying reasons for this. It shows, for example, the difference new industries can make, with the cellphone industry contributing to an increase in the transport and communication sector's contribution to GDP from 6,7% in 1993 to 10,1% in 2012. It also shows the importance of competitiveness: The financial, property and business services sector, which has time and again been rated highly in global competitiveness comparisons, increased its share from 17,2% in 1993 to 24% in 2012. This is also the sector that has possibly benefited most from technological development and has been least disrupted by labour unrest. The negative side of the financial sector's good performance is that it is partly based on a sharp rise in debt levels, especially as far as households are concerned, which is not repeatable. These trends also emphasise the finiteness of natural resources, with the mining sector's contribution to GDP declining from 11% to 5,5%. The contribution of the manufacturing sector, which along with mining was hardest hit by labour instability and infrastructure bottlenecks, has also decreased: in 1993 it was 19% compared with 17,2% in 2012. If the stabilising influence of food and liquor production is ruled out, the picture is much worse. The above graph shows how the South African economy lost momentum over the past five years. This trend is certainly worrying, especially if one considers that the decade-long continued improvement in South Africa's terms of trade has come to an end and is moving in the opposite direction. It is therefore not surprising that the government, judging by its pronouncements, is becoming concerned about the low growth and employment figures. The risk is that it could resort to counterproductive action in an attempt to improve the growth rate, for example extending the role of government enterprises or interfering in die allocation of capital. To my mind the expectation that a social pact between the government, business sector and unions is the answer, is overoptimistic as it is based on a poor understanding of the drivers of private investment. Although sound relations between the parties concerned will naturally have a positive effect on the business climate, this is not how businesses decide whether or not to expand their operations. Economic growth is not achieved by agreement, but by creating favourable conditions for it to occur. This is clearly illustrated by the lack of success of the Growth and Development Conference held in 2002. The acceptance of the profit motive as the most powerful incentive for private economic activity holds the key. It will be much better for the state to align its developmental objectives with the private sector's natural pursuit of higher profits than to expect businesses to put the profit motive aside for the sake of social objectives.

We want to encourage East Rand Chamber of Commerce Members to submit your company newsletters (up to 2 x A4 pages) so we can add them to the Chamber Bulletin. Please send all newsletters to bulletin@chamberofcommerce.org.za The Chamber Bulletin is sent to all DATADEX members and Newsletter subscribers which brings the total to more than 20 000 viewers.


Chamber Bulletin December 2013  

Business & Member News

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