In conversation with
Mr. Keith Edmond
CEO | Aberdare Cables (Pty) Ltd
FDI Spotlight: What would you say are the goals and objectives you have to move Aberdare forward?
Keith Edmund: We have been around for 30 years now and fell into the Powertech group, although Aberdare is not really manufacturing. There has not been a lot of investment since 2008. The industry was quite badly affected again and I think it has never really recovered. Our major shareholder since July has been Hentong, and as a cable maker they has been a major advantage. They understand the business and in terms of technology, product range and future investment. Hentong has the technology that would allow us to diversify into other products. As a purely South African company, it is quite difficult to fully innovate into all sectors such as oil and gas, submarine, etc. It is difficult for us to invest and get the expertise of the cable. Thus the idea to grow Aberdare through our sales in factories Africa. They do not have quite a lot of representation and infrastructure on the continent – they have about 2 people in 14 different African countries looking for sales. Therefore the idea is to fill Aberdare’s factories.
We are very optimistic about volume growth in Africa, one of the reasons being that the Chinese community is a very close knit group and they tend to bond together. The number of Chinese people in Africa is quite large already.
Considering the recent $819 million investment into the automobile industry, do you think we are entering an era of Asian investment and do you think South Africa is ready for that?
Keith Edmund: Yes, considering that there has already been a lot of deals done with China in the manufacturing industry. South Africa’s manufacturing is quite good, so I do not think they can teach us anything new or how to do things. What they can bring is investment, opportunities and technology.
They do not understand that manufacturing closes in South Africa over Christmas. I have to do a special report for them to explain why. Perhaps this is a mind-set we have to adopt as well, because labour here is not cheap anymore due to the quality of it. Therefore you have to utilise what resources you have. Our cost of manufacturing will also go down significantly if we perhaps kept going 24/7.
Do you think there should be a change in the amount of volume that is put out there by them? Perhaps more in the medium space?
Keith Edmund: They are certainly more conscious of pumping out the volume and then looking for the market. South Africans have gone in and out of exports, however if you find the market and we fill our factories on a different working methodology, our cost will come down significantly. There is a big market in Africa.
Do you think South Africa is in an education crises and what do you think the leaders of the country’s industries can do?
Keith Edmund: If you look at the number of people going to school from Grade 1 and continuing on to the tertiary education system, you see we are definitely in a crises. Maths and science are very important things to focus on from Grade 10 so that kids get access to universities and start studying towards engineering in order to fill that need in South Africa. Career counselling should also be done early, and the private sector should do even more to help kids with maths and science. Aberdare is involved in doing this, because we really do believe in it.
How confident are you about South Africa’s ability to build a manufacturing base when you weigh up the positives and negatives?
Keith Edmund: I feel quite confident that we can do it. There are a lot of good things in the government, good organisations, in spite of all the problems we have. If you take manufacturing, cables is a designated industry. This means that state owned enterprises should buy locally. We have been working hard with the Department of Trade and Industry (DTI) and these enterprises to discuss plans for the future. We can ask businesses like Eskom, Transnet, etc. “What is happening in your industry in the next 10 years regarding development?” All of us can then work together and we as industry can invest now to supply. All we have to do is make sure we can do it from a manufacturing and industry point of view.
If the policy and plans are in place, the state owned business and people like us can work together and share information through the DTi to the manufacturers to develop what we need in the country.
If you were at a roundtable discussion with the public sector leaders, industry leaders, those developing sustainable development and you could bring the private sector in, what would you put on the agenda to enhance and improve relationships with the various entities?
Keith Edmund: The public sector is there to support the designation status of the various industries and to share and be transparent with them about what their plans are. The cable industry has an association (with them) that is very strong, and we do have these discussion with the DTI and with businesses like Eskom. The problem with the discussions is that they are not transparent enough.
Is there a problem with enforcement as well?
Keith Edmund: There is no penalty when it comes to enforcement. If you do not comply with designation status it will be mentioned in the auditors’ report. You will only get a finding in the report.
FDI Spotlight: In terms of cost of manufacturing, what needs to be done for a mind shift to take place and for it to take a strong hold, and is it in fact happening?
From a labour point of view, the big thing is the issue of multi-skilling and of equal pay for equal work. The problem we have with multi-skilling that instead of having 4 people looking after two machines, there is 1 person looking after all 4. This is a mammoth undertaking in terms of the actual work and in terms of training to do this. People do not want to multi-skill themselves, either. We had an Aberdare strike in 2015, which actually turned out to be quite helpful with regards to multi-skilling. Normally you would run machine A and when you ask someone to run machine B they will say that they are not qualified to do it. If you have a strike, they would run any machine with 1 or two people instead of 4. So we have been pushing that since then.
The Unions are the ones who are against multi-skilling and who drives equal pay for equal work. Historically, a lot of company’s wages are higher than the industry minimum. What we do is that if you are new, we keep it at the minimum at first. As an example, you have a new guy come in who has been driving a forklift for 10 years, who I have to pay less. He is happy, because he has a job and he is earning money. However the union then comes in and tell him he has to have equal pay for equal work, so he has to earn as much as a guy who has been at the company for 5 years. It just increases costs. If there was flexibility with these two, it would decrease major costs significantly.
Looking at these two concerns and the solutions to them, how confident are you across both about building this platform that can ensure confidence in outside investors about South Africa?
Keith Edmund: I am still confident about South Africa. These challenges have been around for a long time and every day they are improving. Luckily most people are quite understanding. The Unions also do not have 100% of the workforce anymore, so they have to be careful with what they offer and give to people.
However, I definitely think making the country a very desirable destination for investors and to be the base going into Africa is still achievable. If you look at the car market, you see that they have been very successful, and this is because of consistent volume through exports. I think a lot of manufacturing companies need volume. Therefore we need a mind-set change to become more competitive. I think with increased volume we can compete with anyone.
Why do you think South Africans do not attached the country’s flag to their companies as much as places like France or Germany?
Keith Edmund: Maybe to some extent there has been silos. Not all companies have been able to break through into the international market, maybe because they are small. There are giants in the world and you do not want them to steal your work. Our focus has always been Africa.
Do you think South Africans and South Africa has a natural advantage regarding culture when it comes to going into the rest of the continent and going into the African markets?
Keith Edmund: Each African market is different in itself, so I do not think it is a natural thing. I do, however, think that we have an advantage over the players coming from America or Europe. We have a better understanding of Africa than most places. If you look at some of the retail and banking sector, South Africa is doing a lot in Africa and we have transported a lot of expertise and skills. The understanding we have can be a big reason for being able to do that. There is a better chemistry between us and Africans.
A few years ago there was the issue of black South Africans being perceived as thinking they are better than those in Africa. Perhaps this was a lesson learnt and corrected so that people would not think that way.
If you think back to 1994 and the South Africa you imagined then, and then at 2016, what is the contrast?
Keith Edmund: In 1994 I was at a manufacturing plant that was part of a corporate company who was quite progressive in terms of the change that was coming. Chris Hani was actually on our board. If I think about where we are now, I would say the progress and how far we have come has been slow. I often wonder if the poorest of the poor back then is any better off today.
Violent crime has been an issue, and I think you need to look at the government. They have only enriched a few. We need to look at BBEEE as well; while it is a good thing, the practicality of it needs to be considered. For me it means at some point I need to lay off a bunch of white people, because statistically my company needs to live up to BBEEE codes. Unless there is enough growth to include everyone, and I believe that growth is the only thing that can speed up the change. It will fix a lot of other things as well.
What would be your main message of confidence to the readers of the New York Times and this report about South Africa as an investment destination and about the manufacturing industry?
Keith Edmund: Manufacturing is definitely an innovative sector, and that is how the industry is growing South Africa. “