NUMSA is opposed to steel giant LNM takeover of ISCOR

The National Union Of Metalworkers Of South Africa ( NUMSA ) is opposed to the planned takeover of lSCOR by LNM group. The LNM group has filed a notice with the Competition Commission to takeover majority shareholding at lSCOR. The takeover has a number of serious problems and implications because it fails to look at the big picture.

Shamefully absent from this acquisition are the social needs of the workers and communities affected by these transactions. In far too many cases, the takeover is followed by the sale of unwanted assets, the closure of plants, major layoffs, the gutting of long- held wage and benefit entitlements, and the slashing of retiree pension and health insurance benefits. ISCOR’s rhetoric for orchestrating the takeover is centered on “creating shareholder value”. However, there is plenty of evidence that many takeovers do not result in an incremental benefit for the investors. Therefore tremendous of capital are wagered and lost on speculative takeovers that should instead have been invested in workforce training and development.

It is imperative to note that the acquisition of this nature may consequently lead to rationalisation of the primary company and cause job losses. For example currently, ISCOR wants to retrench 320 workers as a result of restructuring. The rationalisation will further shed jobs in the fastest possible time, irrespective of the cost. Therefore, NUMSA believes that these retrenchments are as result of this coming takeover. Employment had fallen from 44 000 in the 80’s to a marginal 13 500 in 2003.

Further more, new technology will be introduced, which will be capital intensive resulting in further alienating employment in South Africa . We believe that the company will make structural changes further leading to the decline of labour-intensive and closing opportunities for employment creation.

Moreover, local human resources will be compromised. This means that foreign expatriates will be preferred to run the company based on the strategic plans with fixed mandate. Sadly, procurement will be externalised forcing the primary company to use cheaper inputs in the production process. This will further undermine the local content and destroy companies in the downstream industries. There is too much emphasis on export growth, at the expense of the domestic market. The takeover will not achieve a balance between the needs of the upstream producers as well as strategic role in the industry and the employment creation potential of downstream sectors.

Lastly, the takeover will lead to intra-firm pricing of steel, whereby the company will set and determine their own prices because they will own the product and services in the market. There will be more centralisation and monopoly thus undermining the national interest of South Africa . We believe that the takeover is erroneous because it does not create new employment. NUMSA wants the Competition Commission to refuse the acquisition because it further undermines the government in its attempts to create jobs and new investments in the country. The timing of the proposed cut in employment is bad because employment, within the reasonable economic bounds, has to be South Africa ‘s priority. I n this regard, the takeover will harm the broader economy of South Africa .

For more information contact Dumisa Ntuli @ 689-1700 or cell 0829737282