TOUGH TALK

TOUGH TALK

It’s no surprise I’m sure, that tough talk ruled the hours we spent discussing our industry at Emperor’s Palace on September 9. But it was so much more than talk. This Congress, probably more so than any other in the history of Master Builders South Africa, was charged with the urgency of our situation, and we wasted no time on airy theory. We were looking for solutions.

John Matthews, President, Master Builders South Africa

And, as the editor of our industry journal, SA Builder, observed in his commendably comprehensive report on the Congress, there was no shortage of controversial opinion from some surprising participants that included SAPS, the SA Reserve Bank, and the Forum for Radical Economic Transformation, among other more likely protagonists.

We were lavishly well-informed, and in this respect not least by our keynote speaker Choeu Makabate, of the Faculty of Engineering and the Built Environment, Centre for Applied Research and Innovation in the Built Environment (CARINBE) of the University of Johannesburg. His discussion of ‘The Collapse of Construction Companies in South Africa and Implications for the Sector’, commissioned by MBSA, was loaded with the list of ills that have beset us, that include non-payment of contractors, and disruption of construction sites among a host of others that have led to unprecedented company failures.

In the face of this, and in the spirit of our industry, I ventured to arouse our flagging spirits with the old adage that the show must go on, and also reminded members that it was our collective responsibility to continue working for solutions. It’s a tough job, but there’s really no alternative – nobody’s going to do it for us. In response to a panel question from Lynette Ntuli, our programme director, about whose problem it was and what would it take to rebuild the sector, I gave the simple answer, that we couldn’t talk about it any more, we had to take action.

I am on record as having commended Minister of Public Works, Patricia de Lille, for addressing the issue of non-payment of contractors, and if there is any light right now, it’s that these payments are progressing. My apprehension continues to be that the amounts paid are far short of the huge outstanding debt, so it’s her tenacity that is being put to the test here.

The Congress, as you will all read in this issue of SA Builder, covered a welter of issues, some of them highly contentious, but I was pleased to note the observation that however heated the discussions may have become, the spirit of debate was observed and any animosity was not carried from the auditorium into the common spaces where delegates mingled and interacted cordially.

Here’s hoping that this mood of collaboration will last and that the concerted action by everyone who has a role to play will, as a result, be more effective.

John

CAMERA OBSCURA

CAMERA OBSCURA

This time last year, as we once again gathered to examine and discuss the state of our industry, I wrote that we lived in interesting times – not an original pronouncement, but certainly accurate for the time. And it holds true to this day 12 months later.

However, we can’t say that there hasn’t been a slight lifting of the mood, a lightening of the step, notwithstanding more members of our industry continuing to fail or going into business rescue. There are even those who have put a shine on that, and perhaps they have a point.

John Matthews, President, Master Builders South Africa

Times are still hard, but at least something seems to be getting done about the situation. Not least was the news that feisty former Mayor of Cape Town, Patricia de Lille, now Minister of Public Works and Infrastructure, is taking aim at nowhere less than Parliament, with a full-scale investigation into its non-payment of service providers within a prescribed period.

It was time to put the people first, she said, and return to the Batho Pele principles which require public servants to be polite, open and transparent and to deliver good service to the public. And to pay them on time for services rendered, we hope.

Significantly, a media release on July 31, from the Department of Public Works and Infrastructure, announced that almost 70% of service providers had been paid, following her investigation. Seems there’s a chance that she’ll get it right.

As for the continued failure of companies in the building industry, architect Patrick McInerny, writing about the gloom of the recent SAPOA Convention, wondered why, if things were that bad, do we have a record number of building cranes operating in places such as Sandton, Rosebank and Cape Town.

He believes the reason for the cranes is the ‘enormous property boom in the central nodes’. Many new A-grade buildings are coming on stream and being filled by tenants previously in B-grade buildings, he says. So there’s now an oversupply of B-grade property and, because of all the new projects, an oversupply of A-grade as well. But he says, it is part of the natural cycle of the industry and not the harbinger of its imminent doom. ‘Those empty B-grade spaces represent a massive opportunity for the future’. Pipe dreams, or just plain fact – we have yet to see.

Another little pinpoint of light piercing the gloom (it may just be spin but has a glimmer of hope), is a particular belief among some members of our industry that the failures of the ‘big guys’ opens doors for SMME contractors.

The argument seems to be that SMMEs represent the future of the industry, and as sector interests converge, interesting new SMME development models are emerging.

Individuals whose lives are turned upside-down by loss of work are filling the gaps left by the fallen giants. And clients might well like the idea of dealing with smaller, highly skilled groups, hungry to make their mark and probably more inclined to make a deal on the contracts they pitch for.

Given that these workers are short on business skills, there might even be an emerging market for professional management groups to offer their services. Opportunity knocks in sundry places.

Good wishes to everyone and let’s make the Congress memorable.

John

HIGH ANXIETY

HIGH ANXIETY

As an indicator of how statistics can create either joy or despair and be wrong either way, take the first three months of 2019 when, the record shows, South Africa’s economy shrank by 3.2% – the largest drop since the notorious 2008 market crash. But as a reliable gauge of whether our country’s economy is in a terminal state, that statistic is questionable.

John Matthews, President, Master Builders South Africa

Given the levels of uncertainty throughout 2018 about the succession of our political leaders, the first quarter of 2019 in South Africa was never going to be an economic recovery blockbuster. And there was the small matter, in the fourth month of the year, of a General Election, the outcome of which was unpredictable on several levels. We were a nation in a state of high anxiety.

We took comfort in an orderly election with few surprises and a generally unchallenged outcome. The difference in mood, at the end, came from the heightened expectation of improved trade, a stronger currency and all the good things that go with responsible governance.

And to be honest, there is cause for hope that the shrinking economy has reached its low point and that a strong hand on the wheel could steer us into better times. But internecine battles within the ruling party mean that there’s still some sorting out of reporting lines to do. And that’s the tipping point on which South Africa balances, and where the real test of moral strength lies.

What it means for us, in a country that has had to wait too long for a stable political platform, is realising that, as individuals and collectives representing the foundation of our healthy economy in vital industries, we have to set an example by taking responsibility for ensuring the maintenance of standards. This means that both in our work performance and business dealings, we have to be seen as leaders and standard-bearers for excellence and integrity.

When it comes to contractual matters, we must adhere strictly to agreed conditions and demand that those conditions are met by our clients, staff and sub-contractors. Particularly in the payment for work done, we must hold debtors accountable on due dates even if it means pursuing them more vigorously than we find comfortable, to ensure that our creditors are able to be paid timeously. The consequences of non-payment are dire, especially to the smaller contractors who live from hand to mouth to survive in these difficult circumstances.

Just how vital this is comes home to us in the continued evidence that non-payment on contracts has sent too many of our colleagues in the building and allied industries to the wall.

If those around us shirk their obligations to good business practice, it is our responsibility, as honest tradesmen and professionals to take over, and re-set the course by impeccable example.

It is tough when the foundations that one relies on are rocking, and recovery is slow, but it just means that our efforts have to be redoubled in areas over which we maintain some control, rather than allow disorder to become the new normal.

John

WHAT HAPPENED TO THE SILVER LINING?

WHAT HAPPENED TO THE SILVER LINING?

The term ‘life can turn on a tickey’ was never more appropriate, as South Africans, in a matter of a week, saw what they believed was a bit of a silver lining in the dark economic clouds, become a load-shedding nightmare that once again threatens to plunge us into darkness.

In his State of the Nation address, on February 7, President Ramaphosa sketched some very positive prospects for South Africa, with a fresh look and apparently workable plans for implementing the obvious remedies towards economic improvement. Most optimists believed that the speech contained more than empty promises.

But when, within days, the core of the country’s growth potential – the vital power grid on which every enterprise depends – reached near collapse, well, the silver lining and the light at the end of the tunnel suddenly lost their lustre.

John Matthews, President, Master Builders South Africa

It wasn’t a bad plan that the President presented so we could not be blamed for feeling a bit more cheerful – I had actually penned a pretty positive Comment for this month’s SA Builder. But even while he was making plans to cut Eskom up into manageable bits, the President was apparently unaware of exactly what a mess the utility was in – and how close it was to the brink of disaster. ‘It came as a shock!’ he told bewildered South Africans.

When it comes to his basically 10-point economic rescue plan, if applied in full, or even in achievable stages, it addresses each of the core concerns of all thinking South Africans. Changes to each of the issues he prioritised can only mean improvements in the lives and the general outlook of South Africans – aside from the way the international community will view this country.

But we must keep in mind that this is an election year, and there are promises aplenty at a time like this. And not knowing your power utility is broken makes the President’s promises a little suspect.

So we, as corporate and private citizens of South Africa, have a massive and now increasing responsibility to monitor the progress of each of the reforms that he promised, and to keep him and his government accountable and responsible.

Keep an eye on government’s progress on the transformation of his headliners: Employment, Eskom, Education, Housing, Health Care, Gender-based violence, Substance abuse, Corruption, Freedoms and The Economy.

The reform of each of these issues is key to our progress and wellbeing as a national community.

So, to quote President Ramaphosa himself – watch this space.

 

John

BUILDING STRONG CHILDREN

BUILDING STRONG CHILDREN

If you’re looking for predictions about where South Africa is going in 2019, you’re spoilt for choice. Mainstream and social media, as well as informal opinion platforms are full of experts happy to offload their views – many of them negative. It’s a doomsday theorist’s delight, and it can be very destructive.

John Matthews, President – Master Builders South Africa

Many of the problems revolve around Government’s apparent reluctance to deal with the fallout from the country’s nearly decade-long economic calamity – and the inadequate retribution, if any, for offenders.

Frustration is not unwarranted, but there are glimmers of light that many of us either don’t trust, or fail to see. To move on from the major roadblock we have experienced is going to need a very positive attitude and some belief that what is being done right now, is as good as it can be for the time.

There is a strongly-held opinion that after the May elections some really effective changes will be made when Cyril Ramaphosa, and those in his Cabinet who support him, feel more secure in their position. There’s a hint of those changes in some of the President’s moves to repair historic damage during 2018. According to Media24, Citadel economist Maarten Ackerman believes that government will be enabled to concentrate on the business of governing when it “receives a solid mandate from voters”.

And on a positive note, the trade publication SA Commercial Prop News reports that SA’s REIT sector is expected to produce double-digit total returns for investors this year. Confidence that listed property will make a sharp recovery in 2019 is bolstered by the sector’s offshore exposure, “as well what looks like the start of a recovery of consumer confidence in SA.” So if we’re feeling bullish, we are not alone.

With education having been MBSA’s abiding theme in 2018, we must continue to focus on the successful training and teaching of South Africa’s young people, many of whom are still falling through the cracks, in spite of the national applause for the apparently high percentage of passes in the recent Matric results.

The statistics are hiding the fault-lines in our education system and we as an industry need to help set the real minimum standards for effective basic education, training and qualifications, even if only to ensure competent students wanting to enter our own industry. We cannot ignore the huge numbers of children who drop out of the education system and don’t make it through to the final grade. That is the statistic that should be of greatest concern to educators, government and big business if we really believe in redressing inequality.

And while on the subject, let statistics not be the only benchmark for success and achievement. We need to be sure that the basic education offering in South Africa is superb, the teaching both professional and nurturing and the schools well-equipped. That should be our yardstick for excellence, while at the same time recalling the philosophy of social reformer, abolitionist, statesman and a former slave, Frederick Douglass, who said: “It is easier to build strong children than to repair broken men”.

Good luck to us all this year

John

ACCOUNTABILITY

ACCOUNTABILITY

It’s little wonder that South Africans are inclined to duck below the parapet as daily new disclosures of this corruption or that deception fly around the media doing untold harm to our country’s reputation. Seemingly without there being any real punishment for the perpetrators.

John Matthews, President, Master Builders South Africa

But suddenly, somewhere in this endless inventory of misery we hear of someone having to pay the big price for practicing to deceive. The irony is, of course that former Finance Minister Nhlanhla Nene had been one of the good guys. But, after shocking the nation with a disclosure of meetings with the Guptas, he lost his job and apparently his political career.

For most South Africans, this was good news because for once someone was going to pay the price, and bad news, because in reality, a man who had previously turned down a R600 million bribe, should perhaps have been shown some leniency when he strayed. That’s a matter for discussion, but the Nene case awakened us to the almost non-existent concept of accountability on our political landscape.

We should be heartened by President Ramaphosa’s actions related to Nene, as it was clearly painful for him to lose one of his stalwarts. But if we are to believe in a South Africa capable of better governance, then we should be demanding a lot more of the same from our country’s leader.

And that is the further lesson for us all in our own daily lives and work. We are not dependent on political leadership to set our moral compass – in fact experience right now tells us that’s a remote possibility. As independent thinkers, and practitioners in an industry that has suffered badly from the fallout of misdeeds on a grand scale outside of our area of influence, we need to be even more morally accountable.

I would like us to end this tumultuous year on a note of regeneration and hope based on reasonable prospects of improved trading conditions in South Africa, backed by our own hard work to keep up the pressure for honesty and accountability. I wish President Ramaphosa the greatest success in the implementation of the investment strategy and the conversion of financial pledges into reality.

We are still only seeing a glimmer of the light we need to put South Africa back under the golden glow we enjoyed briefly after 1994. That glow may well have been based on illusion – but let’s now consolidate the good and embrace the necessary measures to ensure equality of opportunity for our entire nation. That’s the way forward.

Now, at the threshold of the holidays, thank you, all my colleagues, fellow-members and executive of MBSA for putting your confidence in me during 2018. I will do all in my power for the rest of my tenure as your President and onward, to further our cause and serve the association. I hope the coming Season proves to be what we all hope for – a time of peace, and family connections. Next year is probably going to be similar to 2018, but there’s no harm in making a few attainable resolutions that stand half a chance of lasting.

My very best wishes to you all.

John

 

South African Builder wishes all its readers a peaceful, safe and relaxing holiday season

Sink or swim – it’s your call

Sink or swim – it’s your call

Well, the headlines haven’t really changed – not enough to make us feel that the economic tide has actually turned. Donald Trump sent a ripple through global markets with a hell-bent withdrawal of his country from the multilateral nuclear non-proliferation accord with Iran, sending the rand, for one, into another, predictable, tailspin and his international allies into tooth-grinding frustration. And here at home a day after our new President held his second Q&A in Parliament, the biggest news for a country, hungry for plans to revive the economy, was his spat with the opposition chief whip, whom he told to shut up. And then had to retract what was deemed an ‘unparliamentary’ remark.

John Matthews, President – Master Builders South Africa

Not helpful, when BusinessReport, on May 9 said “South African business confidence has declined to levels last seen when Jacob Zuma was still the president.” They backed this up with news that the BCI had dropped to 96 in April from 97.6 the previous month, according to the South African Chamber of Commerce and Industry. That’s the lowest since November last year. Five of the 13 sub-indexes that make up the gauge declined from a month earlier, said BusinessReport.

For the building and construction industry, this uncertainty and downright pessimism means that there’s a continued hiatus in in the supply of contracts for large-scale projects, which extend beyond private or government big-scale building, to the largely State-driven hard infrastructural and essential requirements such as roads and bridges. This is notwithstanding a mooted R940 billion in government funding for big ticket items that remain as yet, to be fed into the industry.

Long periods of low energy in any industry are discouraging and in the building and construction industry, there are many highly-skilled operators with their lines in the same dwindling pond of opportunities. It’s a testing time for everyone and those with the longest experience and unwavering tenacity are the survivors.

But it must remain top of mind that the building and construction industry has proved itself to be relentlessly cyclical, over many fallow and boom seasons. Mostly one can ascribe conditions to influences from the overall economy, both domestic and foreign. And there is no doubt that currently we are under enormous pressure from almost every quarter.

However, the situation is never completely out of our hands and playing it smart can mean the difference between sinking or swimming. The same cycles that affect the entire industry also influence the sectors within it.

While the market for major retail and industrial projects flattens, opportunities can arise in the various niches of the residential market and commercial and industrial SME accommodation. The secret is in remaining flexible and capable across a wide spectrum of construction needs. Right now, analysts are recommending affordable housing as a focus that is offering the best ROI. Even if you don’t agree, be open to new opportunities to exploit your skills and those of your workforce.

It’s all about survival.

John

Not quite the “Glorious Summer” yet

Not quite the “Glorious Summer” yet

April 2018

The building and construction Industry in South Africa has entered a phase of cautious optimism. Things are looking up and projects are coming out of the ground. We have moved on from our desperate discontent to a season of hope, at least.

John Matthews, President – Master Builders South Africa

And it’s clear, amid some continued uncertainty, that a change of national leadership has been pivotally involved in the story of the country’s climb from all–pervasive gloom.

We’re tentatively betting on the new broom, President Cyril Ramaphosa, to do his bit towards helping return the country to somewhere near the glorious international status that followed the change of regime late in the 1900s. That was the closest we have come, as a nation, to a Shakespearean ‘glorious summer’ so far.

For the first time, as the leader of the majority party and the country, our new President is actively facing some of the issues thrown up so long ago, by the new dispensation that was cemented in the Constitution. And he’s got a tough gig.

How he and his colleagues negotiate their way through this, will influence our future economic health and social stability – factors that are vital to the construction sector in particular. But is it all up to the politicians?

What does emerge from a scan of the building and property gurus’ predictions for the rest of this year and the following few years, is the huge, almost exclusive, reliance that South African industry, of all kinds, is placing on political leadership.

John Loos, FNB’s strategist, for instance, reckons that house prices will rise, following the recent 0.25 drop in the repo rate, to near 5%. That’s a light breeze. Not the storm wind South Africa needs to speed up growth. Others are equally concerned that political decisions are key. And they are. But a society less easily influenced by the all-too available social media pronouncements of political figures promoting their own agendas, is equally capable of creating change, if only by questioning and holding those that represent us, to account.

As an industry, we are often subjected to conditions that don’t suit our carefully-factored efficiencies. But officialdom is inclined to have the last word. It is time that we, as an industry, insisted on making bigger decisions from our position of expertise and experience rather than from the dictates of a bureaucracy mired in throttling legislation that does less to regulate and more to strangle the fast progress of delivery.

What is needed is a resolution, not a revolution with no purpose.

John

Could discontent’s winter get any colder?

Could discontent’s winter get any colder?

As a first order of business I must pay respects to my predecessor, Bafikile Bonke Simelane, not only for the highly professional way in which he conducted his presidency of Master Builders South Africa, but also for his very erudite and informed monthly Comment in our magazine.

The building industry in South Africa is subject to influences from a welter of sources, perhaps more so than any other national business. Keeping an eye on those influences is a job all on its own. Bonke managed to do that and take in the bigger picture as well.

John Matthews, President – Master Builders South Africa

Whereas retail, tourism, banking and many other essential enterprises are driven predominantly by market forces, the building and construction industry has myriad other impacts, some obvious and others a great deal more subtle. Bonke had his finger firmly on the pulse and regularly told us just where the next threat may be waiting or opportunity to be exploited.

But he didn’t have to be an oracle to spot the elephant so evident on the climatic horizon – a hundred-year record drought.

The factors peculiar to the building industry are often intangible. Whereas supplies, raw materials and labour are common to all industry, builders are often sandbagged by the simplest of needs. The much-vaunted issue of water has never been more top of mind than in the past year in the Western Cape, and as the summer slips into early autumn, the denizens at the Cape scan the horizon for signs of a merciful cold front, and the upper slopes of Lion’s Head are scrutinised for a wisp of cloud that inevitably presages the winter rains.

So it’s water that preoccupies our industry right now on the southern tip and potentially throughout South Africa, and it’s a commodity in enraging short supply. Rarely has the fairest cape been less fair, less green, less juicy than over the past 18 months or so, and seldom has the building industry had to concern itself so desperately with what it had become to consider – rightly or wrongly – a reliable resource.

And if that’s not enough, there’s another essential that is under threat as we wait to hear exactly how the new South African President’s Zexit deals are working out. The other elephant in the room is land.

We don’t argue for a minute that the redistribution of land to those who lost theirs through unfair practices must be restored and, in a way that Cyril Ramaphosa proposes, must have no effect on the economy or the production of food. But as someone wisely said, there’s no nice way to take someone’s property without paying them for it.

So the building industry right across the nation, along with clients the developers watch to see how even-handed the solution will be. Farmers and, industrialists and those that hold development land, play a painful waiting game.

In both cases we can only say, this is no way to move forward as a nation. Water problems are by no means the sole preserve of the Western Cape. The rest of South Africa stands on the brink of equally crippling droughts as climate change establishes its reality. The uncertainty of who will own the land and when, stops development in its tracks.

Both are government issues right now, but it’s time for them to become issues driven by those at the coalface of the economy to exert their considerable influence and tackle the Augean task that is South Africa right now, on the ground.

John

MBSA appoints Cape property industry leader John Matthews as new national President

John Matthews appointed as President of master Builders South Africa

MBSA appoints Cape property industry leader John Matthews as new national President

John Matthews, Group CEO of the Cape’s oldest and largest suburban development company, Garden Cities, has been appointed President of the Master Builders South Africa (MBSA) to succeed the former President, Bafikile Bonke Simelane.

Previously Vice-President of MBSA, Matthews has also held office as President of the Master Builders Association Western Cape, and he brings a personal and professional life of dedicated service and experience in the building industry to his new position.

On his appointment, Matthews says he resolves to promote the MBSA’s long-term vision to be true to the building industry’s principles, and the philosophy of helping people, as a primary concern – an objective shared by Garden Cities, which celebrates its centenary in 2019.

Headquartered in Cape Town, the company provides homes and essential infrastructural elements that include medical, sporting and leisure facilities, retail centres, and schools. Twelve years ago it also established the Archway Foundation which provides halls for under-resourced schools in the Western Cape.

Speaking of the wider industry, and his company, he says: ‘the need for survival can sometimes take one’s focus from core objectives, but the drive to serve your stated goals – in our case, to make a better life for all – must never be abandoned.’

After joining Garden Cities as a 25-year-old UCT B.Com graduate he was appointed CEO in 2002 and eventually took the reins as Group CEO – encompassing both Garden Cities and its construction arm, Pinelands Development Company.

Like his predecessor Similane, Matthews is determined, as MBSA president, to help sharpen the body’s focus on transformation, and he shares a vision of a new, inclusive, just, and more equal dispensation, not only for the organisation but the entire country. Another mission close to Matthews’ heart is the association’s concentration on skills development to ensure the Industry’s transformation.

Born in Kensington, on the Cape Flats, in 1964, Matthews matriculated at Wittebome High School, Wynberg. He graduated from UCT with a B.Com degree in 1985 and began an accounting career at Pinelands Development Company, the sister company to Garden Cities.

He joined Garden Cities in 1990 and rose through the organization to the position of CEO, and subsequently Group CEO, in 2003.

His MBA from UCT, obtained in 1997, specialised in Strategic Management. His areas of interest include the provision of housing and other social services to uplift the people of South Africa in a sustainable manner.

Other positions he has held: CEO of the Archway Foundation, Council Member of the Building Industry Bargaining Council – Cape of Good Hope; and independent member of the Audit and Risk Committee of the University of the Western Cape.

He shares his life with Dr Brenda Matthews, who holds a Ph.D in Psychology, specialising in Bullying in Schools. They have two children aged 27 and 25.
For fun, he reads and loves to travel anywhere.