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Support SA – Local products, labour and service

by Darren
Made in_SA_Jnl1.14

As anyone in the construction, design or architecture market will know – supporting local industry makes a lot of sense. Not only is it good for South Africa’s economy, but it’s also greener, it creates jobs, and locally manufactured materials will also reduce a project’s overall carbon footprint.

A paper by the Massachusetts Institute of Technology entitled Issues: Carrying It Out: Does The Project/Program support Local Initiatives in Construction? says that projects don’t simply need to “focus on local products and services” – they also need to act as wealth generators. There are six general objectives in order for a project to qualify as a wealth-generating project with a local development agenda as a priority:

  1. Increase and diversify the supply of building materials. Even if local materials are scarce, action is needed to increase the supply of organic materials and to widen the range of manufactured materials available.
  2. Disperse production. Many building materials use energy-intensive technologies. Construction professionals can experience problems relating to the technology employed and also in management, transportation and distribution. These issues can be minimised by use of small-scale, dispersed production close to the raw materials and fuels and the point of use.
  3. Create jobs. The production of building materials offers many opportunities to create jobs for local people. Creation of local employment has important multiplier effects for the local economy.
  4. Reduce imports. The level of imports of building materials needed is very high and hard to sustain, particularly in debtor economies. Actions are needed to reduce or avoid imports in many countries.
  5. Consider sustainability. As professionals in the construction industry, we need to make sure we’re minimising any environmental impact on the site. This includes everything from sourcing raw materials that have the least environmental impact at the point of extraction and sourcing local products (in order to reduce transport needs) to optimising waste management and considering the impact of the construction site itself (historically, culturally and environmentally).
  6. Promote respect for local building traditions. Some well-established traditional building technologies using earth and organic materials are falling out of use, partly because they lack the prestige value of modern materials. A resurgence of respect for these traditional ways would do much to stimulate better use of local materials.

Many companies are committed to sourcing local products for their projects, even if it means that they have to re-negotiate costs with their clients. The construction market is flooded with products from all four corners of the world, but many of these are of sub-par quality (or other issues – such as child labour practices – make the products unethical).

The catch-22 of local labour and securing local projects

South Africa has some of the most skilled, creative and experienced professionals – and we also have a wealth of productive semi-skilled workers – yet some jobs are still being outsourced overseas. This doesn’t make sense, considering government’s – and the private sector’s – commitment to trying to give back to the economy and local communities.

In August 2013, guarantee underwriting management agency Performance & Customs Bond Services (PCBS) said the most recent liquidations/insolvencies statistics from Statistics South Africa (released in October 2012) indicated that the total number of liquidations in the construction industry almost doubled from August to September of that year.

Tunga Changamire, Claims and Risk Management Executive at PCBS, explains that, while in European countries on-demand construction bonds are legislated, within the local construction sector it is left solely to employers to make a judgment as to when to make a call on a bond (http://www.fanews.co.za/).

“In many instances call-ups are orchestrated where employers withhold from contractors, forcing the contractors to call-up the guarantee. And as there are no conditions specified on the guarantee, the banks and insurers are forced to payout. These withholdings filter down from the main contractors to the sub-contractors and as a result the sub-contractors non-perform due to non-payment. So in effect the entire sector is impacted,” said Changamire.

In order to secure local work, on-demand guarantees are needed by most employers. “This leaves the smaller contractors, who are currently scrambling for jobs, in the slow and fiercely competitive sector, powerless to negotiate on the terms of the contract,” says Changamire. He adds that, ideally, all relevant stakeholders such as the Joint Building Contracts Committee, Master Builders South Africa and National Home Builders Registration Council, together with legislators, need to sit down and draw up legislation that allows insurers the opportunity to defend or avoid payout where it is deemed fraudulent, or when there is an element of illegality in the underlying contract.

Finding local products

As most specifiers and designers will know, finding suitable local products can be a challenge. One of the key things that can be done is browsing the popular Made in SA websites to find new listings that can be used. Two of these sites are detailed hereunder:

• www.madeinsouthafrica.com: This site offers a central point for all South African industry including manufacturers and service providers. While there are a number of categories and listings, sections such as Engineering and Manufacturing don’t offer much in terms of variety.

• www.proudlysa.co.za: This site is currently in its 11th year. This project was launched by government, organised business, organised labour and community organisations to boost pride in locally produced products as well as to boost job creation. The website offers a ‘Consumer Site’ as well as a ‘Business Site’ version of the website. “Members of Proudly South African share a commitment to an uplifting ethos that promotes social and economic change and progress. They make a meaningful contribution to building South Africa’s economy, alleviating unemployment and retaining existing employment opportunities” reads a statement on the business site version of Proudly SA. To qualify to become a Proudly SA member, at least 50% of the cost of production must be incurred in South Africa and there must be ‘substantial transformation’ of any imported materials; the product or service must be of a proven high quality and must be environment-friendly and acceptable; the company must comply with labour legislation and adhere to fair labour practices.

“If we don’t make an effort to buy local, our country will become nothing but a warehouse for foreign goods,” says Leslie Sedibe, Chief Executive Officer of Proudly SA.

In an article for the South African Government News Agency (http://www.sanews.gov.za), Sedibe explained that it’s not easy to market local products, considering the wide range of attractive international products that are on offer.

Sedibe said it was important that people understood Proudly SA’s ethos: “To ensure more South Africans buy local, the country produces quality products, campaigning for fair labour standards as well as protecting the environment.”

He also stated that a number of organisations (including companies, parastatals, government departments, universities, local communities and municipalities) are now giving preference to locally produced products as well as local service providers. He also said that more South Africans need to be brand advocates for our products:

“What we really need as South Africans [is] to speak well and positively about our country. There’s a very good reason for that. I think we need to be very careful as South Africans what we say about our country because you could be the only person that the world will interact with to know South Africa. If you say negative things about South Africa then people will have a negative view about South Africa,” said Sedibe.

Within the construction industry, we need to start marketing ourselves – including our products, services, skills and labour – with pride. We have a lot to offer – including numerous factories that produce construction materials to international quality standards. There’s no harm in reminding each other – as well as our international competitors – of this fact as often as needed.

For more information, visit web.mit.edu, www.fanews.co.za, www.proudlysa.co.za, www.madeinsouthafrica.com and www.sanews.gov.za, to which full thanks and acknowledgement are given.

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