ATC130128: Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet, dated 20 November 2012

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Transnet, dated 20 November 2012

1. Introduction

The Portfolio Committee on Public Enterprises (the Committee) undertook an oversight visit to Transnet ( Port of Cape Town , Rail Engineering in Salt River and the Port of Saldanha ) from the 1 ^st to 2 ^nd August 2012.

The main purpose of the visit to Transnet was to assess the developmental impact of the infrastructure development and the operations on the immediate communities in terms job creation, skills development, promotion of local businesses and localisation.

1.1 Delegation

The committee delegation included the following members: Mr P Maluleka (Chairperson of the Committee, ANC), Dr GW Koornhof (ANC), Miss C September (ANC), Mr A Mokoena (ANC), Ms N Michael (DA), Mr E Marais (DA), Mr M Nhanha (Cope) and Mr J Dikobo ( Azapo ). The delegation was accompanied by the following parliamentary officials: Mr D Mocumi (Committee Secretary), Mr S Makeleni (Committee Assistant), Ms Y Landu (Communication Officer) and Mr E Boskati (Researcher).

2. Visit to Port of Cape Town

The Committee was welcomed by Captain Sabelo Mdlalose , the Harbour Master, who conveyed the apologies of the Port Manager. The Committee met with representatives of organised labour, the Mayoral Committee for City of Cape Town and employees of Transnet at the port.

2.1 Overview of the Port of Cape Town

The Cape Town port has two terminals with 12 berths, ranging between 9.8m and 15.5m. These draughts enable the terminal to handle new generation vessels of up to 338m. The agri-roro terminal handles dry bulk, break-bulk and automotive goods, and the container terminal handles containerised general cargo, reefers, empties and transhipments. The terminals are operated by a navis system which gives visibility and accessibility to the customers.

2.2 Interaction with stakeholders

The Committee interacted with representatives of organised labour and the City of Cape Town . Representatives of organised business were not present during the oversight visit. The delegation for the Port of Cape Town was led by the Harbour Master, and the Port Manager had apologised for the oversight visit. The Harbour Master led the presentation of the port, which comprised an overview of the port, job creation and skills development programmes, support to local businesses and the corporate social investment projects.

The main findings of the committee with regard to the visit to the port are as follows:

2.2.1 Job creation and skills development

The Transnet Port Terminal employs approximately 1 009 employees, and the number was expected to rise to 1 232 by 2016. Women make up 30% of the workforce, and there are two women who are being trained in operations as part of succession planning. The focus of the bursary programme was mainly aimed at up- skilling entry level employees to enable them to take up opportunities when they arise. A skills development initiative for the external youth has been in the form of learnerships , apprenticeships but no bursary programme for external youth. The port has a partnership with the Cape Peninsula University of Technology on relevant training and skills development programmes.

2.2.2 Promotion of local small and medium businesses

For the 2011/12 financial year, the port spent R52 million on small, medium and micro enterprises (SMMEs), of which R7 million was spent on women-owned businesses and R27 million on Black-owned businesses. There are 346 suppliers and only 35 are Black owned and 21 are women owned.

2.2.3 Community involvement and development

The Port of Cape Town supports the SOS Children’s Village Food Garden Project, which includes creating food gardens for the Children’s Village, training local community on sustainable use and on-going support. It has spent R328 401 on the project and R186 916 to renovate two laboratories for Langa High School as part of an effort to improve Maths and Science in schools. The port further installed and supplied four smart boards with supporting equipment and software to Manyano High School in Khayelitsha and Langa High School to the value of R242 751.

2.3 Observations

T he Committee made the following observations:

• Concern was raised at the lack of women representation in the top management of the port, further acknowledged that there was training taking place to up-skill women but noted that training two women was not enough and sustainable.
• Concern was raised with regard to the lack of development and support to local Black-owned and women-owned businesses.
• The Committee noted that a deliberate effort had to be made to attract and support local businesses.
• The Committee noted the projects undertaken through the corporate social investment programme, but was concerned that only two schools have benefited and that the programme needed to be expanded to benefit more disadvantaged communities in the Western Cape .
• Concern was raised that bursaries were only awarded to employees and that the port was not supporting poor students needing bursaries as part of its contribution to the skills development targets of Transnet. Furthermore, the number of beneficiaries of skills development initiatives was too low.
• Concern was raised that the Port had no partnerships with the community of Cape Town ; hence it did not have a positive impact on improving the socio-economic conditions of the people of Cape Town .
• The Committee noted the report of a Transnet employee who was raped and killed in a vessel, and raised concern regarding the safety of women in the Port.
• The unavailability of the Port Manager during the oversight visit by the Committee to the port was a concern.

2.4 Recommendations

The Committee made the following recommendations :

The Minister of Public Enterprises should ensure that:

• The Port establishes a stakeholder forum which should include representatives of organised labour, business and the City of Cape Town in order to address all the concerns that have been raised in this report.
• The Port sends a quarterly report to the Committee on progress made on addressing the issues raised in this report.
• The Port improves its developmental role through robust outreach programmes to communities and schools, and a deliberate effort should be made to visit, recruit and develop young people from rural and farm communities. Furthermore investments should be channelled towards developing disadvantaged and marginalised communities.
• The Port improves the safety of women in all port operations and the representation of women in all trades and levels of the organisation.

3. Visit to Rail Engineering in Salt River

The Committee was welcomed by Mr Collin Pillay, the Centre Manager, who was accompanied by the management of the plant. The Committee met with representatives of organised labour and civil society, and undertook and tour of all the business units in the plant.

3.1 Overview of the Engineering Plant

The Salt River plant is 150 years old and has been the heart of South Africa ’s transport network since 1862. It is central to the maintenance facilities that support the Sishen-Saldanha iron ore heavy haul export corridor and the general freight business in the Western Cape . Salt River supports the TRE locomotive and wagon business to maintain Transnet’s 4km long iron ore train, which is the longest in the world. The plant completed the construction of the Phelophepa II Healthcare Train and build trains for Metrorail .

3.2 Engineering Capabilities

The Salt River plant is one of the oldest mechanical engineering facilities in the country, which played a key role in the development and diverse activities of railway transport and technological development. Central to the success of the plant is its human resource capabilities: it has the finest draughtspersons best engineering brains, highly skilled technicians and a pool of dedicated unskilled workers.

The plant has the following engineering capabilities:

3.2.1 Coach Business (Mainline Interior Repair Workshop)

The business specialises in the refurbishment of old coaches and turning them into luxury coaches. It has built coaches for the 2010 soccer world cup and has a pool of experienced engineers who are central in transferring knowledge and skills to the young trainees. Transnet Rail Engineering is working towards becoming an Original Equipment Manufacturer of coaches for the Sub-Saharan region.

3.2.2 Rolling Stock Business

This business is responsible for the manufacturing of modern, technologically-advanced rolling stock components. Services include the manufacturing of parts and sub-assemblies for locomotives, coaches and wagons. It refurbishes and upgrades equipment components so that they will cost-effectively extend the lifespan of the rolling stock they serve.

3.2.3 Wheels Business

The business specialises in the refurbishment and assembly of all types of railway wheels for the Southern African region. The business has the capability and facilities to assemble and build up new wheels from components brought in from local and international suppliers . The plant produces 120 wheels per day. The wheels business has the skills and competency to refurbish old wheels and assemble new wheels.

3.2.4 Rotating Machines Business

The business focuses on electrical and mechanical repair, maintenance and assembly of rotating machines in the rail industry and port business . The business refurbishes and repairs AC and DC tractions for various diesel and electric locomotives and passenger motor coaches.

3.2.5 Auxiliary Business

The business focuses on upholstery for the mainline coaches, including Shosholoza Meyl Premier Class, Kei Rail and Phelophepa Health Train.  The business manufactures sitters, sleepers and repairs. Auxiliary business is responsible for the distribution, repairs and washing of tarpaulins that cover the carriages transporting maize and other foodstuff.  The business also manufactures gear case seals for the Rolling Stock Business, which they put into wheel craters to lubricate the wheel to prevent oil spillages. They manufacture what is called “gummies” for the Coach Business, which are the rubber diaphragms that prevent metal hitting against metal when two coaches come together.  For rotating machines they sometimes manufacture coil covers so that the coils they build for the locomotives are not exposed to dust.

3.3 Interaction with stakeholders

The Committee met with the management and representatives of organised labour. There is a harmonious and co-operative relationship between organised labour and management of the plant.

3.3.1 Job creation and skills development

The Salt River plant is one of Transnet’s rail engineering training academies. It is the main campus of the Western Cape and specialises in mechanical and electrical trades such as welding, sheet metal, fitter and turner machinist, diesel electrical fitters, electrical fitters, electricians etc. There are 209 students on training in the centre and the training curriculum is for three years. The plant has been accredited to do trade tests and started in 2012. There is a concerted effort to develop women in engineering and technical trades.

The Committee met one woman, Ms Florence Qwalana , who started the apprenticeship in 2006 and is now a qualified electrical fitter and a supervisor in the electrical workshop. The training centre has computer laboratories to develop computer skills, and recreational facilities for learners. The plant has created jobs for the immediate communities but there is a vacancy rate of 340 employees. The reason given was that it was due to the shortage of critical and scarce skills. There is a recognition of prior learning policy in place to assist experienced employees with low qualification levels.

3.3.2 Promotion of local small and medium businesses

The plant reported that it does support local business but there was no information presented on the demographics and of companies ( suppliers) that do business with the plant .

3.3.3 Community involvement and development

The plant has supplied three impoverished schools with fully kitted computer classrooms, namely Hopefield Primary in West Coast, Bardale Secondary School in Mfuleni , and Northway Primary.  For Northway Primary they also installed a playground for Grade R pupils and resurfaced the netball court for the older pupils. The students have built school desks for the impoverished schools in Cape Town and there is a plan to expand community service of the engineering school and the plant to benefit the broader community of Cape Town .

3.4 Observations

The Committee made the following observations:

· The Committee commended the management of the plant for the dedication and passion in developing engineering capabilities and contributing towards the developmental objectives of government in terms of job creation and skills development.

· The Committee noted with concern the high vacancy rate and urged the management to make an extra effort to fill the vacancies.

3.5 Recommendations

The Minister of Public Enterprises should ensure that:

· The management of the plant establish a stakeholder forum which should include representatives of organised labour and local business in order to develop strategies to develop and support local suppliers. The Port should send a quarterly report to the Committee on progress made regarding resolving the issues raised in this report.

· The 340 vacancies in the structure of the plant are filled by June 2013.

4. Visit to Port of Saldanha

The Committee visited the Port of Saldanha and was welcomed by Mr Willem Roux, Port Manager, who led the delegation of the port. The Committee received presentations from the leadership of the port which included the contribution of the port towards skills development, job creation and promotion and support of local business. The Committee was also briefed by the representatives of organised labour and local business on their relationship with the port.

4.1 Overview of the Port of Saldanha

The Port of Saldanha is situated 60 nautical miles from Cape Town and is the largest and deepest natural port in Southern Africa . The Bulk terminal’s finger-type iron ore jetty, which is 990m in length, facilitates the export of iron ore from the terminal. The world-class break-bulk handling facility has four berths, with a total length of 874m and handles commodities such as steel coils, iron ore and pellets, as well as heavy minerals that include chloride and titanium slags , and zircon. Saldanha’s bulk iron ore exports are currently at the 50mtpa mark and our break-bulk handling is at a record 2mtpa.

4.2 Interaction with stakeholders

The Committee interacted with the management of the Port, representatives of organised labour, local business owners and the representatives of the municipality of Saldanha .

4.2.1 Job creation and skills development

Saldanha Ports Terminal has a workforce of 471 and women accounted for 22% of the total workforce. There are three women in the “women in operations” training programme, two of whom have been appointed in supervisory positions. There were 12 apprenticeship trainees in 2011 and only 6 in 2012, and of the 18 only 5 were women. The training is mainly for employees and there is an internship programme for graduates to gain experience in the workplace. There are only seven employees who received part-time bursaries to address business needs. There are no bursaries and skills development initiatives for young people from the community. The challenge of the port was the lack of training facilities in the Saldanha Bay Municipality , which forced the port to send employees to Cape Town for training.

4.2.2 Community involvement and development

The Port of Saldanha did not have a comprehensive corporate social investment plan and the contributions to the community were done on an ad-hoc basis. The contributions related to donations to social events such as potjiekos functions and there was no contribution towards advancing the developmental objectives of government. However the port management vowed to improve its contribution through improving its investment on education and training, and had developed a plan for the coming years. The port has not improved the socio-economic conditions of the community of Saldanha Bay .

4.2.3 Promotion of small and medium local business

The port has approximately 327 suppliers, and only 27 are Black owned. Most of the suppliers are from Cape Town and there is lack of support and development for the local business community of Saldanha Bay . The business community has made several attempts to raise their frustration with the management of the port and had received no attention nor were their concerns taken to consideration. There is a lack of communication and a platform to engage between the port and the local business community. Out of an expenditure of R470 million, only R4.7 million was spent on the local business community. The Group CEO of Transnet and the Minister of Public Enterprises have visited the port and have met with the local business community and have promised to support and ensure the development of local communities.

4.3 Observations

The Committee made the following observations:

· Noted with concern that the port has not invested in skills development and education to improve the employability of young people in Saldanha Bay .

· Noted with concern that the port has failed to support and develop local suppliers and only spent 4% of its budget on local suppliers. It has also failed to engage with local businesses and promote a healthy relationship.

· Acknowledged that there was support for community projects, but was concerned that the projects did not contribute to the developmental objectives of government and were not improving the socio-economic conditions of the community.

4.4 Recommendations

The Committee made the following recommendations:

The Minister of Public Enterprises should ensure that:

· The contractors working at the Port of Saldanha use local suppliers as sub-contractors and pay them in time.

· A stakeholder forum is convened with representatives of local business, organised labour and the municipality to address the issues that have been raised in this report. The port should send a quarterly report to the Committee on progress made in resolving the issues raised in this report.

· The management of the port consults and communicates with civil society, local business and organised labour on a regular basis to improve a healthy relationship with the community.

· The management of the port develops a corporate social investment programme that will focus on advancing the developmental objectives of government, such as providing skills development and bursary opportunities for young people in the community and improve the socio-economic conditions of the adjacent communities.

Report to be considered.