Johannesburg - A lack of trust between the formal construction sector, the government and the emerging construction sector was one of the issues delaying the start of the next construction cycle, according to Basil Read chief executive Neville Nicolau.
This had contributed towards a situation in South Africa where the construction sector was in distress and was reflected by deteriorating construction company results, rising costs, expensive financing if it was available at all, extremely competitive tendering and the prevalence of decreasing order books and many companies talking about a future outside South Africa, he said, speaking in an interview with Business Report last week.
However, Nicolau said in the same country there was a clear need for infrastructure, including housing, power, roads and rail, and water infrastructure.
“Why with the need on one hand and the capacity to deliver on the other is it so difficult to start the next construction cycle upturn? At least one of the issues is a lack of communication and trust between the formal construction sector, the government and the emerging construction sector,” he said.
Transformation
Nicolau does not believe there is a common understanding of what is meant by transformation, adding “accusations of fraud and dishonesty fly all ways”. He further believes the formal construction sector views transformation under the broad based black economic empowerment banner and it had done what was expected of it.
However, Nicolau said government did not believe the construction sector had met the spirit of the codes and transformation and there was an emerging sector that was telling the sector it was not transforming.
“All you have to do is to go and look at an industry conference. It’s all white males. So those are the sort of extremes in the points of view,” he said.
Nicolau believed that in terms of transformation, the construction sector needed to consider three things: the spirit of the BEE codes, gender and race transformation and properly addressing the concerns of the emerging construction sector. “The aim of that (transformation) process is not to continually strangle the industry more and more. It’s to move transformation forward. The sooner we embrace transformation and the spirit of transformation, the sooner we can get on and move forward,” he said.
Not occurred
Nicolau said gender and race transformation had not occurred in the construction sector, especially in the hard sciences such as civil engineering and until there was a major black-controlled company in the construction sector, as there was for instance in the financial sector, the sector would not be perceived as being transformed.
“All the public debate about ‘once empowered, always empowered’, the relevance of the codes and the levels of the codes has to be seen in the context of what society believes is happening in terms of transformation.”
“So digging your head into the sand and saying we have met the codes, I think is a superficial approach to transformation. These are my points of view and are not necessarily shared by my (construction) colleagues,” he said.
Nicolau stressed that in trying to develop Basil Read, they were focusing on three strategic thrusts, two of which were to sweat the assets and grow the company. He said the third was to modernise Basil Read’s corporate culture.
The company’s shares on the JSE fell by 4.6 percent to R4.15 yesterday.
BUSINESS REPORT