SCEA pulls out of CASA to avoid betraying members

by Dr Ivor Blumenthal, SCEA Facilitator

The Surface Coatings Employer Association (SCEA) has withdrawn its membership from the newly-formed Construction Alliance of South Africa (CASA), which is managed by the Master Builders Association on-behalf of a multitude of associations in the construction sector.

SCEA’s membership of CASA has been very short-lived, but long enough to see that the level of strategic collusion between some CASA members has more to do with the exclusion of traditional players than what is right for the country. That collusion has quickly spilled over into like-minded government circles, in particular on matters of transformation, BBBEE targets and newly-formulated management targets on race and gender.

Clearly, the position of elements within CASA is directed to turning the screws unfairly on companies in the construction sector which are finding compliance with the Construction Charter Council Scorecard targets impossible. Employment equity targets managed by the Department of Employment and Labour are also biased against companies which are committed to managed transformation with a view to retaining quality and inclusivity as two critical priorities.

The SCEA’s primary objection to continuing as a member of CASA – and so become part of the establishment, which is taken into formal engagement with the Department of Employment and Labour – is that SCEA would be betraying the interests of SCEA and SAPMA Members in the process. In 2017, the Department of Labour adopted and gazetted Employment Equity Targets, which had no foundation in empirical member-based research and were a thumb suck of a few pro-transformation advocates who were deployed into the sector to lie, disrupt and capture. Participating in well-orchestrated ‘sweetheart engagements’ were associations and federations, which themselves had been captured and overrun with people who again had no history in the construction sector and whose sole purpose was to sacrifice the foundation of our world-class sector.

The reality is that those associations and federations, which were party to accepting the Transformation Targets adopted by the Departments of Trade and Industry and equally Labour, had little mandate from their actual feepaying members. Instead, together with State choreographers, a narrative of a baseline (that never existed infact), led to the adoption of targets which were at the time impossible for the majority of world-class companies to achieve.

Questions that should be asked is why a handful of large companies went along with these changes as meekly as they did? What pressure was placed on them and what threats exerted to buy their silence? Did this have anything to do with the post-2010 Soccer World Cup investigations into collusion by the Competition Commission? The problem is that now, in 2021, the Department of Employment and Labour has signalled its intention to move to the next phase of its Strategic Plan, which is ‘punishment and enforcement’ designed to decimate existing players in the sector which have consistently struggled with the 2017 targets. The strategy is to finalise the establishment of a construction sector which is wholly represented by BBBEE Level 1 & 2 members of the Black Business Council for the Built Environment, to the exclusion of all other players.

I say this because there are uncanny similarities between arguments made by some CASA members during the recent engagement process with the Department of Employment and Labour during the SCEA's last meeting with them. This was also reflected during internal discussions prior to the engagement, and how DE&L representatives articulated their dissatisfaction with the issues addressed by CASA during the engagement.

I refer to a mail received directly from the CEO of the Black Business Council for the Built Environment which is accurate and highlights a well devised and orchestrated strategy with government which is now bearing-fruit: “The position of the BBCBE remains unchanged with regards to the CSC targets of 2017. The industry has had three years to achieve these targets.

The few companies that haven’t managed to achieve the target can’t hold the industry to ransom. This is informed by the fact that the majority of the scorecards in the market indicate that an overwhelming number of companies have achieved BBBEE Level Status 2 and 1. This suggests that companies are now compliant and we shouldn’t be tempering with the set targets. On the other hand, if they have not met their EE Target, but have opted to focus on other elements of the scorecard, it’s their problem which shouldn’t be generalised.”

The BBCBE is the organised business structure which represents black business in South Africa. This statement is significantly disingenuous in-that the majority of players in the construction sector are already at BBBEE Levels 1 (100% black-owned) or 2 (51% black-owned). The reality is that these members are in those categories because that is the profile of the Black Business Council but they are by far the minority of companies active in the construction sector. The majority of construction companies have not achieved the targets.

Despite the fact that the BBCBE is factually incorrect and bases this supposition on bad research, the reality is that the BBCBE and government are entitled to say to those people now objecting to the 2017 Construction Charter Scorecard Targets and to adjusted targets now being proposed by the Department of Employment & Labour as new employment equity targets:

“You agreed to these targets in the engagement you were all part of, from 2013-2017. Those targets which we finally published – and which formed the basis of the targets cemented within the Construction Sector Scorecard – were agreed to by yourselves. You signed the agreement and pretended to have a mandate to do so from your members. You cannot now, some four years later, claim that they were unfair targets. The fact is that you didn't question the science and data provided from which those targets were initially proposed. That’s on you. You did not do your jobs as associations. You failed to exercise scrutiny or act responsibly on-behalf of your membership in any reasonable way.”

Associations and federations which are members of CASA elected to turn a blind eye to what was going on and were naïve to the strategy of those orchestrating the capture of the sector. They were prepared to throw their members to the wolves, in the hope that they, the personalities running the Associations and Federations, would be allowed to remain within the favoured circle.

Members of these associations which have contributed to the destruction of the construction sector should be booting out those who currently are leading those organised business associations. These people should be accused of ‘treason’ against their own members – companies paying their salaries.

Business should wrest control back of their own collective associations and should be collapsing the structure of the Construction Charter Council as well as the Construction Industry Development Board.

What caused our withdrawal from CASA, was when we discovered that the Department of Employment and Labour had signalled its intention to finalise those new Employment Equity Targets so that it, the DE&L, could then establish a certification scheme, devised to exclude Level 3 and upwards companies from being allowed in any way to work on projects funded by the Public Sector or to supply products or services to private sector construction companies, which were dependent on public sector tenders at local, provincial or national government levels.

The chain of Sectoral Capture was clear to the SCEA – the so-called ‘Boiling Frog’ strategy:

Establish a Construction Charter Scorecard with Targets which were unattainable by 2017 by getting Associations which themselves had been well-and-truly captured, to sign on the dotted line without first having done sufficient or empirical research amongst their members themselves, associations which had never obtained any kind of collective mandate from their members to sign their futures away.

Account for those few companies which were prepared to submit annual reports to the BBBEE Commission as the Sector upon which to justify the new Employment Equity Targets in 2021.

Implement New Employment Equity Targets making compliance absolutely impossible for companies which were not at least 51% Black Owned and Controlled.

Punish Level 3-8 companies by excluding them from being able to play in either the Private or Public Construction Sector.

What made matters worse for the SCEA was the request by a formal CASA representative to the Department of Employment and Labour, representing that whereas the certification system has been designed to apply to companies employing in excess of 50 people and only those operating in the capacity of servicing public sector needs, the same certification model should also be applied by the DE&L to companies in the private sector.

The SCEA has withdrawn from CASA, and with it disassociates SAPMA from CASA so that we are able to focus our time and attention on opposing any action by CASA Members acting in-concert with government to impose new Employment Equity Targets being proposed by the DE&L, and also to ensure that any certification system is contested socially and legally as constitutionally unjust and unfair.

This will be an uphill battle because the problem in this regard, as the BBCBE and the DE&L contest – quite correctly – that the horse has already bolted.

We intend to form a like-minded coalition of organisations not wishing to sacrifice the interests of their membership to the altar of state and association capture.

We will vigorously oppose plans by the BBBCBE and the DTIC to misuse Supply Side Funds managed by the Industrial Development Corporation, Business Partners and other DTIC Agencies and in-particular the Black Industrialist Fund to run our members businesses into the ground and then fund BBCBE Members to steal either their businesses at cents-to-the-rand or to steal their market share with new DTIC-funded companies.

To do this however requires the collective mandate from our SCEA and SAPMA Membership.

Make no mistake, however, the SCEA and SAPMA both stand for managed and coordinated transformation. We urgently want to facilitate managed changes relating to who owns the businesses in our sector, reflecting fair and equitable distribution amongst black owners and female black owners, in particular.

We want to facilitate fair transformation amongst all levels of management in our sector. Proper training, incubation and professional development amongst those who work in our sector and importantly the transformation of supply chains, which make sense in terms of who constitutes the economically active population of South Africa.

However, fairness implies establishing proper baselines of the actual, existing levels of penetration against the published targets and then engaging with Government on accepting a programme of transformation which makes sense to our collective membership who needs to mandate our approach.

We must not cow-tow to the politically correct impersonators in our sector collaborating with some in government to destroy and then replace our membership! c

The SCEA has withdrawn from CASA, and with it disassociates SAPMA from CASA so that they are able to focus time and attention on opposing any action by CASA Members acting in-concert with government.