Nothing like a crisis to foster common purpose

30 August 2015 - 02:00 By Ann Crotty

When business bangs on about the government not supporting it, precisely what part of business is it referring to? No sooner had the departments of trade and industry and economic development undertaken to try to bail ArcelorMittal South Africa out of the huge hole it dug itself into, with considerable help from China, than up pops Gerhard Papenfus of the National Employers' Association of South Africa, sounding indignant.He asks a pertinent question: why are the big steel producers being given protection that will deny downstream manufacturers the benefit of cheaper global steel? Benefits they richly deserve after ArcelorMittal's price gouging.story_article_left1If ArcelorMittal gets the protection it seeks, it will be effusive about how business-friendly the government is, but the downstream manufacturers might be more inclined to talk about how susceptible the government is to lobbying by powerful special interest groups.ArcelorMittal has said around 200000 jobs are at stake if the economy cannot be protected from the steel being dumped on the global market by China.Does this mean the employers' association will have to come up with at least 200001 potential job losses if it is to get government's ear?If this sounds familiar, it's because it is. It's pretty much a replay of what happened when the Department of Trade and Industry responded to pleas from local chicken producers. For months, until early this year, there was heated debate between chicken producers and importers.Both sides talked, not of their own special interests (which was what they were most concerned about) but rather of what would be good for the economy, for consumers and for jobs. And of course there's always reference to the potential impact on international investor sentiment.Whatever the government did, it would be slammed.The potentially good news for the government, as it tentatively proceeds with moves to bail out local steel producers, is that it does have previous experience to draw on. The issue now is what, if anything, has it learnt over the past 12 years about dealing with Lakshmi Mittal, ArcelorMittal's controlling shareholder?In 2004, Alec Erwin, the then trade and industry minister, made a costly mistake. He assumed the friendly overtures emanating from the Mittal camp - during talks to get control of Iscor and access to favourably priced iron ore - indicated support for the rather vague concept of "developmental pricing".story_article_right2Presumably the government will want something more vigorous than an undertaking that ArcelorMittal will not raise steel prices to "unaffordable levels".But "unaffordable levels" conjures up chilling images of prolonged Competition Tribunal hearings trying to define exactly what that means, and whether it is in any way related to "excessive pricing", which has been debated at length and without resolution.Adding to the complexity of business engaging with government is that the government does not speak with one voice. It says business needs to invest and create jobs, but introduces regulatory hurdles and uncertainty.Former MP Ben Turok is right when he says the problem with our economic performance has little to do with technical issues and much more with governance and the lack of a common will and co-ordination.Perhaps battling through a crisis - the effects of which few will escape - might help create a greater sense of common purpose.annc@sundaytimes.co.za..

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