FIFI PETERS: After a really long and hard struggle, Denel workers got their salaries starting from 2018. A total of about 318 million rand was paid to workers from additional money from [Denel] Employee Medical Benefits Trust.
Read: Denel grapples with salary arrears, eyes R12bn order book
We have Denel chair Gloria Serobe to find out more about the state of affairs at Denel.
Ms. Gloria, thank you very much for your time. I think it goes without saying that the workers should be relieved that they got their money. And I think even you as board members should be relieved to be able to make that payment. How would you describe the fighting spirit at Denel right now?
GLORIA SERABE: It must be very, very high morale at this point because as many as the staff knew we were [were] trying … at some stage they [might] give up hope if it takes so long. That way, when it finally happens, integrity will return to the system. There’s a motivation for people to come to work because people are really hurt, whether it’s their cars or their homes. So you can imagine when you’re a breadwinner and you finally get to work on your earnings, that’s a pretty big deal. And we can’t apologize to the staff, even though there was nothing we could do about it but try our best. It just took longer to get to where we are then. But there is a great relief [for] people.
FIFI PETERS: So I guess in this situation, as you say, you can’t apologize enough, and “I’m sorry” would go a long way, and “it will never happen again” would go even further. So let’s talk about it. Will workers find themselves in this position again?
GLORIA SERABE: Remember, even when we tried to get these surplus funds, at that time there [were] no problem with salary. So we have been trying to get that surplus to bring it into operational activities because Denel has been down for quite some time. I think since 2015 the business has gone down. So we had to put a lot of working capital into it to get it up and running again.
Then you had the liquidity crisis, then you had Covid, then you had underperformance in some areas. It just became so much different.
And all this theft now – whatever you want to call it – about crime, around fraud and stealing things and so on.
Read:
So the goal is to use the money to build the business again, to get back to what it was before.
And then that would mean that the working capital that we’ve set aside is to ensure that employees are never exposed to that again.
Keep in mind that there is a shareholder sitting next to us who is “unsympathetic” to this problem – as much as you can tell from the outside that they have no sympathy.
To be fair, the Department of Public Enterprises is working very closely with us to get it right and get it right by the employees. No board is proud of it. So between our working capital, operations and all that, we hope that Denel is now back on its feet. And if that’s the case, we can’t be in that situation again. Definitely not.
Read: Govt commits to rebuild arms maker Denel, says Gordhan
FIFI PETERS: So how would you describe the operations? Just your operational activities. How would you describe the cash flow coming into the business? Is he healthy at this stage, or is he still on the road to recovery?
GLORIA SERABE: Be aware that some Denel businesses require upfront payment from customers if you intend to build equipment. But in some cases, even our credibility with suppliers is deteriorating, and so we have to rebuild that integrity, that credibility.
Having said that, the technical stuff that comes from Denel is highly, highly regarded globally, not just in South Africa.
So Denel is still the organization that people want to do business with, despite our own problems. So having the cash flow to help the working capital into the business and the employees being paid better, that should get the business back on its feet and we’ll be producing again because the lack of employees was such that some things , which must be done, cannot be done. People are not at work because they are [hadn’t] they were paid their salaries.
FIFI PETERS: Do you expect them to go back to work now?
GLORIA SERABE: Undoubtedly. People actually want to come to work. People are still proud to be associated with Denel. Remember, Denel is a specialist company. This is the only place where you can learn about rockets, bombs, all of that. And so those engineers who always wanted to do these things, they can only do it at Denel, which is a specialized field in the country. So, in a sense, people want to be in Denelly, but people have houses; they are breadwinners and needy [a] salary.
So the focus on bringing back wages means we have our own employees back. And those who left […] we are comfortable that even those who left will return.
FIFI PETERS: Ms. Gloria, the world is scary right now. There’s a lot going on. We have wars in different parts of the world. We have tensions in different parts of the continent. I wonder if this is good for Denel’s business? Do you see any orders?
GLORIA SERABE: [It seems] now the business is in an even better position because, as you say, [there is] chaos in the world, and chaos in the world comes with equipment – and people want this and that, because people are at war and everything, remembering that this pressure in [the] The space of Ukraine and Russia creates some other demand somewhere in terms of our equipment – not necessarily for this. What I am saying is that the pressure in the system due to the lack of equipment is such that Denel is well positioned – for some of that equipment – ​​to be the provider. And the key issue is that we have the people, we have the cash, and we have the market. The market could not be better for Denel. What was missing was the working capital to actually work. And so this injection, that’s what it’s going to do. And people are very happy to come back.
FIFI PETERS: I would definitely be happy to get my money back. But Ms. Gloria, we’ll leave it there for now. Thank you very much for your time. Gloria Serobe is the chairman of Denel.
