CHAPTER 3: REPRESENTATION OF DATA
3.4. OPERATING ENVIRONMENT
3.4.1 Customers
mothballed stations such as Camden, Grootvlei and Camden. Interviews with some of the buying departments have also noted a cost advantage of utilising the services of Eskom enterprises for maintenance functions since they are a subsidiary of Eskom.
Eskom has outlined in its investment programme for new electricity capacity. It will cost the utility company in the region of R200 billion over the next 25 years (Jackson, 2005). The company has assured the South African people that there will be enough electricity for the countries growing economy. The government aims at offering foreign companies and utilities (Independent Power Producers, IPP) an investment opportunity in the local South African market. Eskom will offer 30% of the new capacity over the next five years to the IPP's, at a planned cost of R23 billion (Jackson, 2005). The possible expansion projects for Eskom include a combined gas cycle turbine to produce 1500MW of power, possibly near Coega in the Eastern Cape, adding three power units at the Matimba power station in Limpopo, and a new coal fired 400MW plant possibly to be built near coal reserves in Limpopo and Mpumalanga (Jackson, 2005).
Eskom is one of the lowest cost producers of electricity in the world. Eskom operates 20 power stations with a generating capacity of 35,200 MWe, about 91% of which is coal- fired. Nominal generating capacity for the company is 39,154 MWe (internet 16). The company's generation portfolio includes a nuclear power station, gas turbine facilities, and conventional and pumped-storage hydroelectric plants (internet 16).
Survey results on maintenance outsourcing have shown that the most common measures for contractor performance were price/costs, safety performance and work quality/rework (internet 14). The key performance indicator document of the Majuba power station has indicated the following requirements for AMS:
• production losses on the ash and coal plant cannot exceed 6396 megawatt hours;
• five authorized personnel on the Majuba power station low voltage regulations;
• AMS disabling injury rate must be zero;
• maintenance safety NOSA rating of 97%;
• productivity improvements of cost control within 2% of the forecasted budget;
• incident notification of non - conformances of a average greater than thirty days must be zero;
• full ReM attendance of employees;
• a minimum of 80 defects raised on the ash and coal plant;
• a call out response time of 45 minutes, a one and half hour train offloading times;
• a quality manual in place;
• incorrect quality control plans contributing to costs greater than five thousand rands or a production loss and rework incidents over a year period must not be more than 10.
Interviews with the ash plant maintenance supervisor indicate a lack of experience and knowledge on the control and instrumentation maintenance contract. The supervisors have also mentioned the enormous integration problems which occur among the operating, maintenance and engineering departments.
The Majuba power station conveyor belts are reaching their life cycles as stipulated by the manufacturers, and there has been an increase in the number of conveyor belt splices required in the past year. The supervisor has indicated that the splicing contractors are unable to provide a swift splicing and pulley lagging service because the splicing contractors are located in Secunda and Middleburg, which are roughly 150km to 250 km away from Majuba power station. The other issue is that these contractors are unable to take out permits for isolating the plant and rely on AMS. The splicing contractors also charge exorbitant prices for traveling to the Majuba site. The splicing contractors rely on AMS to prepare the belts for splicing, for which AMS is not compensated. The supervisor has indicated his support for AMS to enter this market. He has also advised that the geographical location within which AMS is situated is an advantage as most of the other splicing contractors are situated in Witbank. This creates an opportunity for AMS to target the surrounding areas for emergency splicing services.
The other maintenance companies such as Roshcon do not have the belt splicing capabilities.
Majuba power station currently has problems with its outside plant operating department. The operators lack technical and plant process knowledge. The department relies on AMS to assist with process problems. The C&I manager is also contemplating contracting the coal plant C&I Maintenance function in 2006 due to high turnover of staff. Cleaning contract on the ash and coal plant will become a maintenance function in 2006 due to the integration problems between maintenance and the cleaning contractor, which is currently an operating function, and this therefore creates an opportunity for AMS to tender for this contract.
3.4.2 Labour
Due to South Africa's severe skills shortage, Labour Minister Memmathisi Mdlaldlana has given Sasol permission to import 821 of 2000 welders, riggers, electricians and instrument technicians to work on its clean fuel project (Blaine, 2005). Finance Minister Trevor Manual has given the education department RI, 5 billion to recapitalise further education and training colleges. The education department lacks the information on the number of artisans who have been trained in recent years and the number that have been employed (Blaine, 2005)
Economist have been warning that South Africa's economy is fast becoming knowledge - based and recently there have been numerous job losses within the mining, construction and manufacturing sector where South Africa's unskilled labour finds jobs (Blaine, 2005). Tertiary education institutions faced many problems as they provided courses that were not accredited by the department (Blaine, 2005). On the other hand courses offered by the department were outdated and FET college graduates were not finding jobs (Blaine, 2005). Ac~ording to the department's 2002 survey 12% offulltime students were taking non approved courses, of which 70% of these full time equivalents were engineering (Blaine, 2005).
According to Daniel Kasmir (in Garun, 2005), HR Director of Manpower Europe, Middle East and Asia, there will be a world - wide shortage of skills in the years to come. The contributing factor to the world wide shortage is the aging population in the
developed countries (Blaine, 2005). South Africa on the other hand is not faced with the demographic problem of an aging population. Low population growth rates in Europe have led to a continuous shrinking of the pool of talent (Blaine, 2005). The skills shortage has provided opportunities for emerging countries such as China and India.
Kasmir (in Garun, 2005) has indicated in a conference held in South Africa that South Africans need to align themselves with this trend. He also believes that the jobs of the future will require higher levels of education, and massive training due to technological developments, and he believes that the curricula offered by tertiary institutions need to be more relevant to the new economy. He has praised South Africa's skill development strategy, but has informed that a culture of lifelong learning is needed. South Africa has proposed legislation to curb flexible staffmg which Kasmir feels would do more harm than good (Blaine, 2005). An article by the South African labour department, "State of skills in South Africa" (2005) has shown that experienced and qualified artisans are in short supply (internet 17).
There has been an increase in the turnover of staff in AMS due to the increase in demand for suitably qualified and experienced artisans by other small and large companies. The location of the firm makes it difficult to attract qualified artisans. The Eskom Majuba power station has also been experiencing difficulties in retaining and attracting suitably qualified artisans and technicians.