If we thought the 2008 crisis was bad, it appears that 2016 is going to be worse. The metrics are scary. In summary, the normal net flow of resources is from the candidate market to the employer. The net current flow is the reverse of this with noticeable movement from the mining, EPCM, EPC, consultants, manufactures and many contractors and suppliers of goods and services. Official projections of GDP growth for this year now hover between 0,1 and 0,5%. It is evident that the bleeding is getting worse.

When one contemplates the growth rate targeted in the National Development Plan in 2012, it was to be 5% pa for the next few years -10 to 50 times the current rate! Much good was work done then by various groups to estimate the scarce skills that we would need to find to provide a basis for a development strategy. This motivated the implementation of training and mentoring models for new local feedstock and the seeking of specialists to supplement many of the specific roles. I however harboured deep suspicions that, ignoring the impact of the global recession here, SA would not get into implementing the NDP in any effective form and I have been proved right. It was naïve to have expected anything else from the ANC government. Action has never followed the reams of plans that have been hatched at great cost, only to lie fallow in the offices of incompetent bureaucracy. Now we have no money to invest. Much goes to bloated public service salaries and over inflated tender awards (corruption). The NDP would have at least triggered some velocity of money, confidence and employment.

This a time when many will take a hard look at the essentials of retirement planning or even, if that has been activated, the many strategies that have failed to keep up with the realities of changing demographics. How many of those early policies taken out at the time one started working are now worthless as a result of inflation and the influences of the broker who persuaded you it was in your interest to change to another policy more likely to broker advantage? Or with the trends of life, when work opportunities were abundant, one could shift jobs, get better remuneration, live it up more but fail to save or build an investment that actually grew in real terms? Retirement is in a crisis. Most funds are classic Ponzi schemes: new entrants needed to pay for those at the top end or the fund fails. Do we have enough young entrants for this structure?

How has the employed class been affected by the structure of the financial, and in particular, the fiat based central banking systems that have indulged in the promotion of debt based credit? This mechanism starts to explain the evident shift in political behavior: the emergence of the middle and lower-paid class in moving to the right, effectively giving the middle finger to the establishment: the rapid rise of what I believe will be called the Trump and Sanders movements in the USA in which Trump had the most primary phase votes in American history after he, as a new entrant to the field, defeated 16 of the established Washington politicians; and the Brexit action in Europe giving notice to the EU Commission that is unaccountable to the taxpayers and indulges in a command performance. It’s the gatvol syndrome at work.

The protests in SA are a similar notice by the electorate: they are fed up with watching the wealth rise to the political elites and big business at the expense of their own livelihoods. Mayors of poorly run municipalities earning R2 million-plus annual salaries (and no doubt some attractive kickbacks as well) is a blatantly overpaid politically motivated item. What qualifications do they have to oversee the expected built environment functions of the Councils? Unqualified cadres are employed in engineering roles, and the infrastructure collapses.

Engineering resources will always be needed to build the country. Perhaps we need an “Engineering Party” to make the right noises in Parliament. Until some real changes occur to the Mines and Minerals, Act, the Labour and BEE Acts for starters, SA is not going to grow to meet any semblance of wealth generation.

However, with the world of work changing so rapidly, the entrepreneur and small businesses are going to have to be supported with a reduced regulatory system. Economic freedom, but not the EFF way.

We have so much engineering talent in the retired age group that has the experience to train and mentor young entrants to the profession. With employment in reverse, it isn’t happening.

Studying the current state of the world economy following, amongst other effects, the end of the commodity cycle, there is a growing concern that the worlds’ currencies, which have since 1913 been effectively fiat based (ie no value backing such as gold), will eventually collapse. Historically currencies do this. The US Dollar as the world’s reserve currency might remain the strongest of the lot until there is the impact of deflation and hyper-inflation resulting from the quantitative easing with fiat currency.

Ultimately, it is all a result of the debt based currency systems which have been manipulated to create the biggest debt bubble in the history of money and currencies. Anyone interested in the impact this is having on world trade should look up the Baltic Dry Index records. It is a very interesting metric that measures the shipping movements between continents. It is at the lowest index level in its history.

Out of most misfortune one hopes for the glimmer of positivity. In the current economic saga is the possibility that there will be a replacement world reserve currency that would be based on a value backing, and the most obvious is gold. Silver may have its role as well.

Some protagonists of this are predicting a massive hike in the gold price. Two interesting issues are evident. China is buying large quantities of gold, and the USA banking system and Fed are doing their best to suppress the price. Gold is no longer following the commodities index and going its own way.

SA does not have any perceptible agenda on the table, let alone observable action, to get economic growth going to uplift the rate of wealth generation and make an impact on the rating agencies. Would the rise in the gold price to such an extent happen such that it provides acceptable margins above the cost of recovery in a stable manner and be an option to get our gold mines going as before so as to help a bit?

It is of concern that we are losing, and have lost, a significant number of our experienced resources including Mining Engineers who have in the past managed our gold mining industry. We see them leaving the industry: retiring, leaving the country or moving in to other careers. From our historic role as number one we are way down now, not sure where.

For one hundred years SA has effectively grown its economy based on mining and commodities. The investment into that has almost ceased. Have we learnt anything from history that should have prepared us for the end of that boom, and undertaken development of other industries?

The NDP has proven to be stillborn and the excitement created in 2012 on the need to train up skilled resources to enable us to build the SIPs has waned into a dilemma that we now have surplus skills and no projects. It appears we have no funding for them now.

When the economy recedes, there is a temptation to cut back on any activities that appear superfluous although in any business there should really not be any, unless they are intentionally provided to buffer the business constraint. I guess it becomes evident that when business is bad, the constraint is deemed to be in the market. That being the case, it makes strategic sense to subordinate other activities to that constraint by elevating the resource loading in marketing and sales.

Such subordination could include training up other line persons in the organization to find a supporting role in sales. Sales training should be an existing function in any organisation so the sales team could be extended to include these resources.

What about marketing, which is strictly the identification of opportunities, where sales is the exploitation of them? It is often said that everyone should be a sales person for one’s employer. Involving the rest of the team in the marketing and sales strategy can generate a lot of unexpected new options and get the spirit and drive going across the organisation.

A recent global survey, which included SA, revealed that in these slack economic times, the number of employees actively searching for a new job increases noticeably. In the case of sample SA, the results showed that more than 4 in 10 employees were seeking new positions, and our statistics indicate that this is higher than the global average by some 16%. The quarterly shift is particularly evident.

The expectation (following the big strikes and the commodity price collapse) for retrenchments in the industries affected by mining investments has been borne out dramatically. The impact on the value chain from capital investment in new mines all the way through EPCM, EPC, Consulting Engineers, main contractors, suppliers to the small business providing nuts and bolts, is a harsh reality. It becomes even more stark when we realise that SA was effectively built and developed on mining for the last 100 years.  Thus the need for radical strategy shift is urgent. A big, new marketing and sales challenge.

Essential to this is the need to define, locate and employ the human capital to operate the business. All business is doing it, but not well. My own research with many industries over some years on identifying the constraint in the business shows that there is an overwhelming belief that it exists in the lack of having the right people in the right place at the right time. This is almost a no-brainer. In my own, and in the opinion of many in the industry, is that the current process of recruitment is flawed and has been usurped by the role of HR. HR should focus and interact on the internal resources and keep them happy or at least find out what makes them tick. That might then reduce the frequency of the look-elsewhere-and-lose-staff syndrome. Recruitment is a different process requiring different skills, tools, databases, market knowledge and expertise, especially in engineering.

Until management addresses the human resource constraint with processes that protect and elevate the constraint, things will not change. It should be seen as a strategic issue at board level. It will simply be more of the same. Delays, lack of knowledge within the recruitment process, poor selection in terms of environmental/cultural fit into the organization will continue. In the days when the line spoke directly to the recruiter that understood their business, appointments were faster, better and more permanent. At least in engineering. I know, I have been on both sides. However, too much emphasis is placed on finding the perfect fit at below market value, and too little on the need for induction and mentoring in the new role. The metrics of selection are outdated and mostly inaccurate. A good start is so often messed up with poor internal conflict and dubious management skills. Hence the high turnover rate.

We are finding that matching by functional auditing is breaking the mold and needs to be seriously considered by management.

I have been watching with interest the nomination process that is happening in the USA particularly with the Republican Party bun fight for their nominee. The debates are prolific with typical political innuendo and the desire to try to convince the public to accept each partys’ policies or attempts to have any. A rather grey bunch of the inevitable professional political candidates all seeking to make a living off the taxpayer by being elected to a nice paid position without ever really having to get any action to meet the word.

One exception has emerged in the person of Donald Trump. This has caused a great deal of anxiety in the ranks of the republicans and it seems Democratic Party as well. A number of reasons have caught the voters notice; he is not a politician being sponsored and influenced by election funding from future lobbyists and superPACs, he is self-funding his campaign, he has proven he is a successful businessman, he employs thousands of people including legal status Hispanics, and he is the only candidate who has raised the matter of illegal immigrants and bringing jobs back to the USA.   He has adopted a campaign message stated as “Make America Great Again”. What is striking is that his policies do not align with the traditional republican mandates. He is clearly showing the value of leadership and how desperate the people are for it. He is creating a movement.

The press has displayed its traditional biases but are finding it a challenge to have to accept his domination in the poll results so far. As Trump keeps pointing out in his speeches, the USA has a debt load of nineteen trillion dollars and growing as its trading partners keep having trade deals loaded in their favour. This seems to have missed the notice of all the other candidates. 

What if any message does this have on SA? It is not a trivial indication that the voters are fed up with political inaction and ineptitude. The real concern voters have is lack of jobs. Not too different from our situation. What is striking is that in the recent ANC’s national gathering to review progress and future action, the economy and jobs did not even get onto the 7 item “action” list. 

Daily we watch SA business shrinking into losses, projecting an uncertain future and now retrenching the skilled resources (largely engineering) that formed a major part of the scarce skills lists published (again) following the tabling of the stillborn National Development Plan. The most obvious question is how does SA handle the collapse of the resources and commodities bubble? It really did not effectively participate in the commodities boom since 2008, hamstrung by policy uncertainty, labour strikes and power shortages, so there was little if any funding stored away for the present rainy day. Where is a replacement strategy?

If one follows the logic outlined in RW Johnson’s recent book on “Can South Africa survive?”, it is going to require a very concerted and effective policy and strategy change to get us out of the declining trend which may inevitably go the way of Greece, and possibly going cap in hand to the IMF.

Does SA have a Trump who can get up and take a bold stance against our over politically mandated economy and lead SA out of our mess and into a promised land?

An up and coming hot topic is the emergence of the reality of self-drive cars. The general reaction is to respond that they will and could not ever work as a norm. But we have seen many crazy ideas that were originally conceived in science fiction or futuristic insights that have become a reality. Take the wrist watch worn by James Bond or the communication between the car Kit in the Knightrider series. 

Some exuberant investment advisors are predicting that the technology behind self-drive cars will be the next big one in the order of the smart phone or even the internet. In their space they are trying to attract investors at the early incubation stage to invest before the technology matures. It will depend on very sophisticated processors interacting with sensors and then with the mechanical and electrical 
functions of the vehicle so the role of the engineer will remain crucial in this development. I particular it would seem that Mechatronics Engineering will have a massive future added to by the growing dependence on robotics and mechanized replacement of manual labour.

Fast forwarding to the future when the self-drive car becomes the norm does raise some interesting 
questions and issues. What does the driver actually do? I guess one sets the destination data up via the GPS and hits the start button and that’s it. Sit back and take it easy or would one distrust the system and sit back in a state of anxious stress that the car will not avoid another person-driven vehicle behaving like a normal Cape Town driver does when in a state of road rage or plain impatience. 

It would seem that the best situation would be when all cars are self-drive and no people are involved in the process. What then are the risks? What if the power system (battery) fails?  A low level warning should bring the car to a gentle stop in a safe parking area identified on the route map.  Some form of protection against manual override by a frustrated driver must be implemented who would otherwise create the necessary but irritating avoiding action by the smart self-drive cars nearby.

Let’s however consider all the advantages. On the assumption that going physically to the office is still a requirement i.e. virtual offices have not eliminated this need, then imagine settling into the car with 
one’s digital equipment (very smart phones and tablets) and working on some productive activity instead of getting impatient with the traffic or cursing the traffic cop that saw you using the phone at the wheel. And if the cop does stop the car or the camera records an over-speed, then should the ticket be made out to the processor for an error in judgment for not observing the speed sign via visual sign reading? Most likely there will not be any traffic cops as everything will be via electronic communication cameras and digital records. A fine notice comes up on your vehicle screen.

The real benefit will be for the pubs, nightclubs, house, parties etc where one will not have to worry about a sober driver or being caught by the breathalyzer. Simply jump in, grab one for the road and off you go safely into your garage where the gate and door all open in advance of your arrival through intelligent programming sent out by the car as it arrived. Booze industry, watch this space. Maybe another good investment would be shares in SAB. 

And of course all these smart self-drive cars will be electric powered with advanced battery technology 
where the batteries can double up as home energy storage on a swop out basis. And all charged by one’s own solar system, but still connected to the main grid in order to both draw from the system or feed back into it. I actually fancy this era. All made by Engineers.

I believe that the real crisis in our base load system has not yet been reached, and the inevitable worst case scenario is to come if the period over the next 10 years is analysed. If we make an assumption (as naive as this may be), and the economy grows over the next 10 years at an average of 3% per annum, then the demand on the installed base load system will grow by 34% by 2015. If the effective available base load now is 40GW, we will need to add some 14GW capacity but that is only on the assumption that the existing fleet of units does not suffer incremental attrition through ageing and hard running that stresses the system over its design limits. 

But let’s look at the equations on the assumption that in this period Medupi and Kusile actually come on line and add 9,6 GW,  and the oldest of the 6-packs now running meet their end of useful life. The net gain would be say 2,5GW capacity. The chances are, over the next 10 years, that more attrition is likely. 

In the event that say 12GW of new base load capacity is needed, this is equivalent to 2,5 new Medupis or 6 Koebergs. We know that SA cannot build Medupis very well – so far double the initial cost and 4 years late with just the first unit. So don’t let’s kid ourselves that we will just hurry up building some new six-pack fossil stations, and the likelihood of 6 Koebergs or the equivalent in nuclear would take a minimum of 12 years for the first unit to be ready. Add to this the dismal record of state planning and financial control, and we can envisage the scale of the challenge ahead. It simply is not possible to quickly correct 20 years of perpetual erroneous thinking and insufficient action. A necessary condition would be the affordability given that SA is currently near junk investment status.

With the commodities market in decline and on which SA has historically depended via foreign investment in mining, we have to realise that unless we jack up manufacturing and are competitive in world trading, we are heading for what could be national bankruptcy. 

The current climate makes us more risk averse than ever. How innovative can we be? Some ideas.

If any funding for another fossil station is ever available, rather re-direct it to providing solar water 
heating and PV panels for every home in SA. Invest in the best PV panel, solar water unit, battery and 
grid inter-connect device factories with the best technologies that can take all low-order water heating 
i.e. hot water geysers out of the base load system, enable the PV panels to work both on-line back-feed to the grid and charging of the batteries complete in a one-stop package with inverters, switching etc. 

Train up Engineer and Technician teams to be able to install, commission and maintain the complete 
system. Do it all on a massive scale with private sector skills and sufficient competitive organisations as was done with the wind and solar farms. The technology must have SABS certification to avoid the 
bandits in it for the quick kill. This will require constructing an attractive long term cost to the user with 
the capital cost being tied to the asset value of the home via a structured debt note that stays with the
home or building. 

The incentives can be seen as the horrific on-going cost of Eskom-provided electrical energy, the stability of the returns that are associated with the mortgage instruments, and a base charge that is offset by lower consumption of high price electricity for low order energy use. 

Who then knows when electric car fever will hit SA? Could we take a leaf out of Elon Musk’s USA initiatives – SolarCity and Tesla, and if possible, license their technology? Tesla has, and is developing, a battery based on their current market leading Lithium-ion  pack design, to be provided to homes together with the solar energy systems, and where the car batteries, once they lose their initial high energy density, can be used for home use. So material sustainability is also achieved.

If a smart South African can go to the USA, invent and build SpaceX, Tesla and SolarCity, then come on guys, what are we doing about solving our SA challenges? And ours are not even rocket science which SpaceX certainly is. We tend to spend too much time looking for reasons ideas won’t work and playing the blame game.

“The president again blamed the scheduled blackouts, in part, on the apartheid regime's failure to expand the electricity supplier's capacity. SA’s electricity woes are a "challenge", but not a crisis and the government knows how to address it”.

“We can’t affect the furnaces, but downstream, we have to shut the mills for the times when we are asked to cut back. He explained that the R1.5-million-an-hour loss was calculated based on the closure of Vanderbijlpark’s hot-strip mill and its downstream operations, as well as halting operations at Newcastle from “the rod mill and down”. A CEO statement.

The view below is from an ex-Eskom Engineer. (1977 – 2004 - Forced to take early pension due to Affirmative Action) 
Eskom (when it was the Electricity Supply Commission) was one of the best power utilities in the world. It was owned by all South Africans, and was a non-profit making organization. Money was always set aside, by selling electricity for more than it cost to produce, making surplus for replacement and expansion (No World bank or Government loans). It created its own sinking fund. In 1994 it was turned into a business with the government as sole shareholder. This was done to collect further tax from those who actually pay for electricity and to provide a vehicle for the implementation of government policies in the form of job creation and black empowerment. Profits, and the money set aside for replacement, expansion and maintenance, was paid to the government as dividends.

The sole 'shareholder' directly appointed most of the executive, and non-executive directors. These appointments came out of the ranks of the ANC, and were people with little managerial or power plant experience. Appointments were often based on nepotism. 

They couldn't do the work, but the people who could do the work were retrenched based on skin colour, and some were then re-employed as contractors. Although no real additional work was getting done, (due to lack of funds because of the increased work force of roughly 23%) this was considered acceptable because the government wanted to reduce unemployment. In order to bring relief to poverty stricken townships, Eskom directors were instructed to produce the cheapest electricity in the world. This plan did not work, because of all the extra wages, contractors, a management team that did not have a clue how to run a power utility and which resulted in Eskom running into huge losses for the first time in its history. To compensate for this, the incompetent management team cut the maintenance budget by 55%. These were the first “cracks” in the once stable, profit making power giant’s foundation. 

You will have to live with it and decide if “it’s not a crisis and the government knows how to address it”.

On January 1, 2011, the oldest of the Baby Boomer era turned 65. Every day for the next 19 years from that date, about 10,000 more (in the USA alone) will cross that threshold. This puts the starting date of the era at 1946 and the “end” date at 1965. The annual birth rate in the 50s was the highest ever in history.

We can ask what relevance this has to us here in South Africa where the population distribution is radically different from that in the USA. This however becomes apparent when we track the impact this era has had on the development of the built environment world-wide, which is largely engineering based. Post- war birth rate behavior was not much different in other countries recovering from the depression of the 1930s and the second-world war.

The baby boomer era was really the builder of our modern infrastructure as we know it. The rise of urbanization, consumerism, technology development and health care improvements among many changes took place rapidly, underscored by the focus on access to education and high levels of employment. 

If we reflect on SA, it is evident that the basic infrastructure of the country was developed in this period and well into the 80s. Multiple large projects were all happening in mining, power stations, roads, water storage and reticulation, industries, military developments, agriculture and travel facilities to name many. Urban development began with a vengeance and has continued unabated to accommodate the growth in the population. Urban development brings with it the need to provide power, sanitation, communications and general infrastructure and the services required by the citizens.

It is interesting to witness the trends that evolve with eras such as this. Aside from the social characteristics such the hippies, political protests, civil rights etc, there has been a decline in the building and replacement of infrastructure since. It leveled off by virtue of having met the required levels of need. Much of it has understandably worn out over the last 50 years and simply not either been maintained or replaced. It would appear that maintaining and refurbishing is not as glamorous as building from new. 

So we look at our own circumstances and in the domain of engineering it is evident that the same era built the bulk of our infrastructure, and much if it is ageing. More evident is that maintenance has been neglected in many cases and we are experiencing that on an increasing basis in our electrical power assets. Added to that is the “forced” reduction in skills and expertise which existed in that era of Engineers that built the power stations and distribution systems. Where we designed, constructed and commissioned many six pack stations, none of them ever displayed the horror that is being displayed by Medupi – 3 years late (so far) and getting on for double the capital cost, and add to this the cost of non-availability to the economy. It is thus worth noting: things are built by people. Better people build things better.

Of concern to the Americans is that the rate of exit of engineering talent is considerably greater than the rate of entry of new resources that have to be developed with the assistance of the outgoing skills. This is our own experience in SA where it must be understood that numbers entering the industry may be improving but the experiential training is certainly not sufficient. This applies to the trades as well. The average age of a qualified artisan in the USA is now mid- fifties, the same as ours.

This scenario then makes it very clear that unless we harness the ageing skills and experience of the baby boomer fraternity to mentor and upskill the young engineering resources entering the profession, where else will we get them?  They are not available in a box, a book, a video, a classroom or a memorychip. It is time on the ground with the human interaction, learning on the job.

Time waits for no one. The need is now. It’s time to start attracting the baby boomers to enter a paid mentoring profession.