Master Builders calls for urgent government intervention to save the Construction industry

Master Builders calls for urgent government intervention to save the Construction industry

Master Builders South Africa is calling for urgent government intervention to prevent further destruction of the construction industry in the country. The call follows Group Five’s filing for bankruptcy protection last week, the fifth major construction company to do so in less than a year. Roy Mnisi, Executive Director of Master Builders expressed deep concern on the matter. “This is the fifth large firm to succumb in less than a year. In 2018 alone, NMC Construction went into voluntary liquidation while Basil Read, Esor Construction and Liviero Group applied for business rescue. We still have many other small-medium sized firms facing financial difficulties and yet, there has not been any government-industry engagement to develop a plan to halt the trend.”

Roy Mnisi, Executive Director: Master Builders South Africa

According to Mnisi, the industry has continually engaged government on the adverse impact of late/non-payment of contractors for work completed but the matter remains unresolved. “The decline has reached a very concerning level, so much that it is no longer a sectoral problem but a national crisis. We appeal to the government to open up to the industry and urgently find concomitant solutions to save it from a total collapse”.

He however, acknowledged that there were other factors instrumental to the demise of the industry. These include a sluggish economy, reduction in ‘actual’ infrastructure spending by the government, as well as illegal and often violent work-stoppages at construction sites by various illegal forums.

The adverse impact of these company closures were severe, he noted. “The short-term effect is that direct employees of these collapsed companies lose their jobs. When you consider that the construction industry employs more than 11% of the workforce in South Africa, the negative impact on the economy as a whole is dire. There is also a knock-on effect across the industry because subcontractors, suppliers and service providers are equally affected.”

“In the long-term, we will lose our capacity to develop infrastructure and will have to depend on foreign companies in the future. That is why we are appealing to the government for engagement” Mnisi concluded.

Master Builders South Africa (MBSA) is a Federation of registered employer Associations representing contractors and employers in the construction industry, and is regulated in terms of Section 107 of the Labour Relations Act 66 of 1995. The Federation’s nine Master Builders Associations, and three Affiliate Associations represent more than 4000 contractors and employers in the industry.

MBSA Executive Director’s Report – 2018

Executive Director’s Report – 2018

2017/18 remained a difficult year domestically despite some momentum gained when President Ramaphosa took over as the ruling party’s President in December last 2017 and when he took occupation of the Union Building early in 2018. As a sector relying on government’s ability to spend, business and consumers as well as the construction sector have been significantly affected by the country’s sluggish economic growth.

Roy Mnisi, Executive Director, Master Builders South Africa

According to the Bureau for Economic Research‘s quarterly analysis of building and construction activity second quarter report, building confidence, as measured by the FNB/BER Building Confidence Index, fell to 29 in 2018Q2. This is said to be largely due to significantly lower confidence among hardware retailers and manufacturers of building materials where confidence fell to 45 and 32 index points respectively. Lack of new construction demand has also been reported to be a concern, particularly in civil construction.

Other than economic challenges the industry has been bedevilled by site stoppages and intimidation, particularly in KwaZulu-Natal, some parts of Gauteng and Mpumalanga, as well as in other provinces. These acts manifests themselves as actions of fighting economic exclusion by concerned local business forums. Yes, acts of challenging the status quo and skewed and uncompetitive business practices are an important part of our democracy. Untransformed companies should not have place in any country that is still battling to heal from the effects of a non-inclusive economy.

However, criminal acts, including intimidation, should not be tolerated in a civilized society where the rule of law must be upheld in any given situation. As Master Builders South Africa, we are on record supporting all efforts and proposals that are developmental, transformative and necessary for our sector – and we remain consistent in our position regarding these matters.

Non-payment and late-payment of contractors by the state has been one of the major concerns in the construction industry. In January 2018, Master Builders South Africa engaged with National Treasury and we were encouraged by the government’s commitment to deal with the problem. We have since received positive feedback from some members who followed the agreed process to escalate issues of their long outstanding payment. The function has since been transferred to the Department of Planning, Monitoring and Evaluation and we are in the process of engaging with this Department on behalf of our members.

As a federation of employers in the building industry, we are extremely concerned about the ongoing collapse of construction companies. In 2017/18 the industry witnessed liquidations of a number of high capacity construction firm. We also witnessed some large construction firms applying for voluntary business rescue. This is certainly detrimental to our industry and the country as a whole. South Africa cannot afford to lose its infrastructure development capacity and skills that have taken so many years to build. Whilst we are finding ways of responding to all these challenges, small and medium sized firms must innovate and create space for themselves in these very challenging times in order to build capacity and survive.

During the 2017/18 financial year our interaction with government, industry regulatory bodies and other key industry stakeholders has been good. We committed to increase our interaction with all industry stakeholders in the ensuing year for greater impact and collaboration.

We would like to thank all firms and companies that continue to support us in all our endeavours. We thank all businesses and stakeholders for their unwavering support of our annual Congress which provides us with the opportunity to meet with all industry role players and most importantly, to share views and ideas necessary for the betterment of our industry and our nation.

Times are tougher, but we have to keep moving forward, not only for ourselves, but for the next generation who will in turn take custody of our beautiful country.

As we celebrate 100 years of Madiba, it would be remiss of me to conclude any speech or a report without quoting some of his most famous, wise and motivating words. The following sums it up well for me:

I am fundamentally an optimist. Whether that comes from nature or nurture, I cannot say. Part of being optimistic is keeping one’s head pointed toward the sun, one’s feet moving forward. There were many dark moments when my faith in humanity was sorely tested, but I would not and could not give myself up to despair. That way lays defeat and death.”

Roy Mnisi

Executive Director, Master Builders South Africa

Construction expo a resounding success

Construction expo a resounding success

Roy Mnisi and Mohau Mphomela – Executive Directors of Master Builders South Africa and of Master Builders Association North respectively, represented the building and construction sector in a panel discussion on infrastructure

The African Construction and Totally Concrete Expo 2018 staged at Gallagher Estate in Midrand in May was a resounding success.

The quality of exhibits and level of expertise on each was of the highest standard, as was the calibre of visitor attending the expo and its many workshops and panel discussions.

Geoffrey Green, Marketing Manager of Mapei told South African Builder that: “The number of strong and positive enquiries we’ve received on the first morning alone have far exceed that of the entire 2017 expo.”

Another well known product supplier to the constructions sector, A Shak, told us that increasing their floor space at this year’s Expo was more than justified by the level of enquiries received.

Roy Mnisi and Mohau Mphomela – Executive Directors of Master Builders South Africa and of Master Builders Association North respectively, represented the building and construction sector in a panel discussion on infrastructure, during which they pledged to engage closely with the NHBRC and the Gauteng MEC on Infrastructure to provide support and direction in the provision of qualified contractors from its membership base.

A detailed report on the Expo will be published in the June issue of South African Builder.