Ketso Gordhan: Much more Mr Nice Guy

2014-04-20 15:00

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Ketso Gordhan thinks he may have solved the conflict between capital and labour, reports Helene Cilliers

For Ketso Gordhan, CEO of cement manufacturer PPC, it is ironic that the poorest people always pay the most for commodities.

This is especially true in the Democratic Republic of Congo (DRC), where PPC is now building a cement factory. In the DRC, a bag of cement costs R200.

You pay R70 for the same bag in South Africa.

The DRC needs 3?million tons of cement a year, but it only manufactures half a million tons itself. The rest is imported at a huge cost.

From time to time, buildings collapse in Africa and the cement manufacturers are blamed for the poor quality of the cement used in the construction.

But quality is not to blame, Gordhan says.

“The cement is just too expensive and people dilute it too much,” he adds.

Gordhan believes PPC will be able to halve cement prices in these countries as the company plans new investments in several other African economies.

He regularly visits all 15 PPC plants and factories in South Africa, Botswana, Zimbabwe and Rwanda to interact with the employees.

This Pan-African itinerary is about to grow, with PPC building new factories in Rwanda and Ethiopia. This will be followed by factories in Zimbabwe and Algeria.

It takes about two and a half years to establish a plant at a cost of about $300?million (R3?billion).

When Gordhan joined PPC, the company already had a reputation for healthy labour relations?–?and he has taken this a step further.

By the end of last year, his salary was reduced by R1?million and senior managers’ salaries were frozen to reduce the gap between the highest- and lowest-paid employees. Gordhan will not get an increase this year.

PPC is probably the only company in the country that is not at the mercy of a trade union, Gordhan says. The reason for this is that the workers’ needs are met.

In February, their bonuses were double their salaries and the minimum salary is now about R11?000, including benefits.

According to Gordhan, this has made a huge difference in the attitudes of employees.

While settling its debt, PPC has included its 3?000 employees in a share ownership plan with pay dividends.

It has also set aside R25?million for the next few years to be invested in innovative ideas – and for compensating employees who come up with them.

“There is greater loyalty and productivity. People work longer and do not expect compensation for it. They use a lot more initiative. You know you’re a good CEO if people look forward to coming to work.”

Infrastructure development is progressing much faster in the rest of Africa than in South Africa, he says.

“Ethiopia has economic growth of 11% and in Rwanda, it is 7%. Wherever you go in Ethiopia, all you see are cranes, while there’s not much happening in South Africa at the moment.”

At home, PPC really just aims to retain its current level of performance and will be happy if this grows by 1% or 2%, Gordhan says.

“But we expect to make more money outside South Africa in the next four or five years.”

That’s why he played a key role in forming an “infrastructure Codesa”.

This is a group of private businessmen negotiating with the National Treasury, the water affairs department and the Development Bank of Southern Africa.

“We’re not trying to expand our own businesses; it’s a patriotic gesture. But if it succeeds, we will also benefit in the long term. We are saying, let’s sit around a table and solve problems, see how we can improve things so the government can also get value for the money it must spend.”

Gordhan says there are three examples of projects that were good drivers of development (leaving aside the problems associated with them): Sanral, the 2010 World Cup soccer stadiums and green-energy projects.

“What these projects had in common was a small group of highly competent people,” he says.

“We urgently need 34 sewage treatment plants built nationwide. Instead of following the normal tender processes and getting input from different authorities, it will be much better to get 10 competent people to manage the project, choose a single design, perhaps use the health department’s budget and choose a supplier.

“The government here is too limited. There are not enough skilled people, or the right institutional structures. There is great mistrust between the private and the public sectors.

“But pointing fingers will not help,” Gordhan says.

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