Report 2 Plumbing industry analysis 2019 - iopsa.org analysis of the plum… · Industry analysis...

November 2018 – July 2019

Industry analysis of the plumbing industry

SKILLS DEVELOPMENT FOR

GREEN ECONOMY

Report2

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LYSI

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ABOUT THIS PUBLICATIONGIZ / SD4GE commissioned two studies aimed at deepening an understanding of the trends and dynamics of plumbers and electrical contractors in South Africa. The objectives of this study included the imperative to strengthen the range of institutions (public, private and not-for-profit) that impact these trades. An additional aim of the research was to provide an overview of current development in these trades, both at industry level and firm level. The findings are useful for better planning informed by greater awareness of the transformations and changes emerging in the specific contexts of industry.

The study produced three publicly available reports. This second report homes-in on the plumbing industry-level dynamics. It took the insights from the high-level study further and looked at the key institutions representing the private sector. A firm-level survey was designed to understand better the challenges confronting company owners, and what pressures they were facing in terms of productivity, market changes and staff. The results of the business owner survey for plumbing contractors are discussed in this report.

GIZ/SD4GE commissioned PEM Consulting and Mesopartner Africa to conduct the industry diagno-sis. Dr Shawn Cunningham and Annelien Cunningham from Mesopartner led and coordinated the industry diagnosis. A team of researchers from TIPS (Trade & Industrial Policy Strategies) conduct-ed research and statistical analysis. The TIPS team included Asanda Fotoyi, Sajid Sherif, Mbof-holowo Tsedu while Saul Levin provided policy insight and guidance.

The research would not have been possible without the help and support of the industry bodies and their members. The Institute of Plumbing (SA) (IOPSA) and Plumbing Industry Registration Board (PIRB) contributed and supported the plumbing analysis. Electrical Contractors Association of South Africa (ECASA) and the National Bargaining Council for the Electrical Industry (NBCEI) supported and contributed to the electrical analysis.

GIZ / SD4GE would like to thank all the stakeholders and industry members for their valuable contribution.

EditorSkills Development for a Green Economy (SD4GE) ProgrammeDeutsche Gesellschaft für InternationaleZusammenarbeit (GIZ) GmbHRegistered offi ces: Bonn and EschbornGIZ Offi ce PretoriaP.O. Box 13732, Hatfi eld 0028, Hatfi eld Gardens, Block C, 2nd Floor,333 Grosvenor StreetPretoria, South AfricaTel.: +27 (0) 12 423 5900www.giz.de

Responsible: Heike BuerskensPhotos: Ralf BäckerDesign/Layout: WARENFORM

Pretoria, September 2019

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Contents1 Introduction.....................................................................................................................4

2 Understandingtheperspectiveoftheplumbingandelectricalcontractingindustries...5

3 TheplumbingindustrylandscapeinSouthAfrica............................................................7

3.1 Formalorganisationoftheindustry..........................................................................8

3.2 PlumbersinSouthAfrica.........................................................................................10

4 Theplumbingbusinessownersurveyprocessandresults............................................13

4.1 Basicfactorsofproduction......................................................................................20

4.2 Advancedfactors:knowledge,technologyandinstitutionalsupport.....................27

4.3 Supportingorenablingindustries...........................................................................30

4.4 Demandconditions..................................................................................................31

4.5 GovernmentandNGOsupport................................................................................34

4.6 Cross-tabulationofplumbingbusinessowners’results..........................................35

5 Recommendationsfromtheplumbingownersurvey....................................................40

5.1 ToIOPSAandthePIRB.............................................................................................40

5.2 ToGIZ/SD4GE..........................................................................................................42

6 Conclusions....................................................................................................................42

7 Supportingupgradingandtransformation....................................................................45

7.1 Thechallengesfacinginformalenterprisesintownships........................................45

7.2 Transformationintheplumbingindustry................................................................47

7.3 Competitivepressuresondifferentarchetypesofplumbers..................................49

7.4 Recommendationstosupporttransformation........................................................56

8 Bibliography...................................................................................................................58TablesTable1:Differentfactorsofproduction..................................................................................6Table2:Competitivepressureoninformalplumbers............................................................50Table3:Competitivepressureonsmallwhiteplumbers.......................................................51Table4:Competitivepressureonsmallblackplumbers........................................................53Table5:Competitivepressureonmediumtolarge(corporate)plumbers...........................54

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FiguresFigure1:Porter'sDiamondofcompetitiveadvantage............................................................6Figure2:Provincialrepresentationintheplumbingfirm-levelsurvey....................................9Figure3:Plumbingbusinessownersbysector,2013-2017...................................................10Figure4:FormalandinformalplumbersintheLMDdata,2013-2017..................................11Figure5:Plumbingbusinessownersbybusinesssize,2017..................................................12Figure6:Plumbingbusinessownersbyrace,2017................................................................12Figure7:Plumbingbusinessownersbyage,2017.................................................................13Figure8:Plumbingsurveyresults,ownershipbyrace...........................................................14Figure9:Plumbingsurveyresults:Companysize..................................................................15Figure10:Responsetobusinesspressure.............................................................................16Figure11:Majorchallengesfacedbytheplumbingbusinessowner....................................16Figure12:Companysizebymajorchallenges........................................................................17Figure13:Otherchallengesfacedbytheplumbingbusinessowners...................................18Figure14:Preferredformoftraining.....................................................................................19Figure15:Companysizeandexternalchallengesexpressedbyplumbingbusinessowners21Figure16:Thecurrenttrainingpreferencesaccordingtocompanysize...............................23Figure17:Trainingprioritiesofrespondents.........................................................................24Figure18:Plumbersbyindustry,LMDdata2008-2017.........................................................25Figure19:HighestqualificationsofplumbingworkforceaccordingtotheLMD...................26Figure20:Majorchallengesbyfirmsize................................................................................27Figure21:Importanceofdifferentmarkets...........................................................................31Figure22:Typeofclientsnotapplicabletorespondents......................................................32Figure23:Demandsbyclienttype.........................................................................................33Figure24:Importanceofdomesticmaintenancebyfirmsize...............................................33Figure25:Importanceofgovernmentworkbyfirmsize.......................................................34Figure26:Comparisonofplumbingcompanysizebyownerage..........................................35Figure27:Prioritiesofdifferentsizedplumbingcompanies..................................................36Figure28:Plumbingcompanysizebyrace............................................................................37Figure29:Prioritiesofblack,Indianandcolouredplumbingbusinessowners.....................38Figure30:Prioritiesofwhiteplumbingbusinessowners......................................................38Figure31:Companypriorityandpasttrainingpreferences..................................................39Figure32:Black,Indianandcolouredprioritiesintheinsurancemarket..............................39Figure33:Whiteprioritiesintheinsurancemarket..............................................................40Figure34:TheDiamondoftheplumbingindustryinSouthAfrica........................................44Figure35:Competitivepressureoninformalplumbers........................................................51Figure36:Competitivepressureonsmallwhiteplumbers....................................................52Figure37:Competitivepressureonsmallblackplumbers....................................................53Figure38:Competitivepressureonmediumtolarge(corporate)plumbers........................55Figure39:Comparingthecompetitivepressureondifferentplumbingarchetypes.............56

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1 IntroductionThisprojectconcernstheunderstandingofthetrendsanddynamicsoftwotrades:plumbersandelectricalcontractors.Inthepast,muchofthefocusofGIZ/SD4GEwasonimprovingthesupply-sideissuesof(green)skillsdeliveryinSouthAfrica.Despitetheattentiontoimprovingthequalityofeducation,GIZ/SD4GEhasalwayshadastrongfocusoninvolvingtheprivatesectorinitswork,especiallywhenitcomestoworkplacelearning,whichiscentraltothedualsystemsapproach.This report provides an industryperspectiveof the trade, from the viewof theplumbingbusinessowner.Ourinterpretationoftheindustryanalysisisthatitismuchmorethanjustunderstandingthedemandfor,andshiftingpatternsof,theuptakeofskills.WeunderstandthatthepurposeofanindustrydiagnosisistoprovideGIZ/SD4GEanditsstakeholderswithinsightinto,andseveralperspectivesof,thepressuresfacedwithintheindustries,thefirmsthatcomprisetheindustriesandtheinstitutionsthatpromotethem.Thisanalysiswillmakeitpossibletostrengthentherangeofinstitutions(public,privateandnot-for-profit).ItwillalsoinformGIZ/SD4GEanditsstakeholderstobetterplanforthechangesthatareemerging.Itmayevenmakeitpossibletodetectshiftsthathavenotyetbeendiscoveredorarticulated.Thereportisstructuredaroundtheworkpackagesthatmadeupthecontract.Thefirstworkpackageconcernsahigh-leveloverviewoftheindustries,andtheresultsarecapturedinaseparate report, namely report 1.Our aimwas to scan the publicly available statistics tobetterunderstandwhatisknown,whatisbeingtrackedandwhatischanging.Thishigh-leveloverviewalsorevealedhowthetwotrades,plumbingandelectrical,arestructured,whichorganisationsareidentifiedwiththesectorsandwhatthehigh-leveldynamicsare.Thesecondworkpackagehomedinontheindustry-leveldynamics.Ittooktheinsightsfromthehigh-levelstudyfurtherandlookedatthekeyinstitutionsrepresentingtheprivatesector.Then a firm-level survey was designed to better understand the decisions confrontingcompany owners, and what pressures they were facing in terms of productivity, marketchanges and staff. This report describes the findings of the research into the plumbingbusinessownerandtheplumbingindustryanalysis.Thefindingsoftheelectricalcontractingstudyarecapturedinreport3.The thirdwork packagewas originally geographically focused on townships and informalenterprises.However,as theprojectunfolded,PEM/MesopartnerandGIZ/SD4GE realisedthatasthemainchallengewasabouttransformationandchangewithintheindustries,anexplicit focusontransformationwouldbemoreappropriate.ThefindingsofthisworkarecapturedinChapter7ofthisdocument.

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2 Understanding the perspective of the plumbing and electricalcontractingindustries

Companiesmakeoptimaldecisionsinalocalcontextinadecentralisedway.Thesedifferentexperiencesandperspectivesadduptoarichsetofarchetypesfromwhichwecanextractideas about problem pressures, appetite for expansion, interest in skills development ormarketpreferences.Anindustrydiagnosisprovidesmoredepththanthesimplerstereotypesofsmallvs.large,orwhitevs.black.Weapproachedtheindustrydiagnosisontwodistinctlevels:

• Thefirstwastodevelopanunderstandingoftheindustriesatamoreaggregatelevel,using a combination of interviews, desktop research and statistical analysis. Tostructure the findings Porters Diamond (Porter, 1998) was used as a guideline,althoughadditionaldimensionshadtobecapturedthatdidnotfeatureintheoriginalworkofProfessorMichaelPorter.

• Thesecondwasafirm-levelanalysisaimedatbusinessowners.Porter’s “Diamond” of competitiveness attempts to isolate the factors that influence thecompetitiveness of industries and nations (1998:71). An adapted illustration is shown inFigure1.Porter’s Diamond has four attributes that shape the environment in which local firmscompete,promoteorimpedethecreationofcompetitiveadvantage.Thesefourdimensionsall exert a force on each other, with the Diamonds of different contexts and countries’exertingdifferentkindsofforcesoneachother.Porter(1998:77)explainsthatforeacheconomicactivity,goodsandservicesareproducedwithacombinationoffactorsthatreflectthefactorendowmentsoftheentityinquestion.Thusgoodsandservicesthatcanbeproducedwitharelativelyhighproportionoflabourtocapital tend to bemanufactured in countrieswhere labour is relatively abundant. Arrow(1999:17)addsthatknowledgeisbecominganincreasinglyimportantfactorinproduction,whichisaffectingtheabilityoffirmstoremaincompetitive.Whilecapitalandlabourareconsideredprivategoods,growthisachievedthroughincreasesinknowledge.

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AdaptedfromPorter(1998:71)

Atalaterstage,Porteraddedthegovernmentandchanceastwoadditionalforces.Thisisarecognitionoftheroleofgovernmentsincreatinganenablingbusinessenvironment.Chanceaffectsnotonlytheindustrybeingstudied,butallthefactorsintheDiamondmodel.Table1showsthedifferentfactorsofproductionasoriginallydescribedbyPorter(1998:77).Table1:Differentfactorsofproduction

Factortype Description

FactorconditionsCovernaturalresources,climate,location,unskilledandsemi-skilledlabour,anddebtcapital

AdvancedfactorsIncludemoderncommunicationsinfrastructure,highlyeducatedpersonnelsuchasgraduateengineersandcomputerscientists,anduniversityresearchinstitutesinsophisticateddisciplines

GeneralisedfactorsIncludethetransportsystem,debtcapitalandwell-motivatedandqualifiedemployeeswhocanbeemployedinawiderangeofindustries

Figure1:Porter'sDiamondofcompetitiveadvantage

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SpecialisedfactorsInvolvenarrowlyskilledpersonnel,infrastructurewithspecificproperties,knowledgebasesinparticularfieldsandotherfactorsrelevanttoalimitedrangeorevenjusttoasingleindustry

Source:Porter(1998:77)To conduct the firm-level analysis,weengagedwith representativesof industrybodies inplumbing(IOPSA,PIRB)andelectricalcontracting(ECA)todeterminewhatcurrentdatatheyhad in theirpossessionandknowledgegaps. Theplumbingengagementwasdoneearlier(November2018),hence theplumbingresearch instrumentwasdesignedearlier than theelectricalsurvey.Thesurveysweredesignedinclosecooperationwiththeindustrybodiestoensurethattheyderivedvaluefromtheresearchapproachandresults,andtoenablethemtofurtherresearchquestionsandinterestingfindingsthatarose.Inbothcasestheindustrybodiestookresponsibilityfordisseminatingthesurveystotheirmembersandnon-members.The survey design process was treated by PEM/Mesopartner as an important capacitydevelopmentandindustryassociationstrengtheningprocess.The plumbing and electrical contracting industries were diagnosed during the periodNovember 2018 to May 2019, and the main results are discussed in the following twochapters.

3 TheplumbingindustrylandscapeinSouthAfricaThe plumbing industry is in a gradual process of improvement and professionalisation.Increasingly the industry isbeing regulated,withCertificatesofCompliance forhotwatersystems being introduced in the past few years. The industry business membershiporganisations have matured from voluntary management to full-time professionalmanagementwithspecialisedexecutivefunctionssuchastrainingandtechnicalmanagers.OvertheyearsthegovernmenthassupportedtheactivitiesofIOPSA.ProfessorKadarAsmal,inhisdifferentrolesinseveralministries,supportedtheworkoftheindustrybody,andovertheyearstheCSIRcompletedseveralstudiesontheindustryregardingstandards,regulationsandother topics. Important events, books anddocumentsproducedby IOPSAhavebeenendorsedbypoliticiansandseniorgovernmentofficialsovertheyearstodifferentextents.SincetheinceptionofProfessionalBodyrecognitionthroughtheSouthAfricanQualificationAuthority,inabout2012,thePIRBhasbeenawardedthisrecognition.BeingrecognisedbySAQA means that the plumbing industry (through the PIRB) is a recognised and trustedprofessionalbody(throughtheNQFAct).ThePIRBformspartofanetworkofprofessionalbodiesthatareworkingtoupholdhighstandardsandimprovecompetenceandethicsintheeconomy.Itmeansthattheplumbingindustrycanregisteritsownlearningprogrammesanddesignations aligned to formal qualifications, and that the industry as a whole can bebenchmarkedagainstothernationalandinternationalprofessionalstandards.Asignificantmind shift and change is sector as result of Professional Body status recognition is theintroductionofContinuousProfessionalDevelopment(CPD).

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Whileplumbingisoftenassociatedwithunblockingdrainsandrepairinggeysers(hotwatersystems), plumbers alsoworkon above- andbelow-grounddrainage, gutters, solarwaterheaters,gaswaterheaters,heatpumpsandirrigationsystems.Plumbersmaybeemployedincompaniesthatareclearlyidentifiedasplumbingbusinesses,buttheyarealsoemployedin the construction sector, commercial property management, alternative energy, homerenovation and hospitals, schools, universities and other facilities. Plumbersmay also beemployedintheretailorwholesalesectors,orbymanufacturersofplumbingequipmentandrawmaterials.A challenge faced by the plumbing industry is that it is seen by many public and socialupliftmentprogrammesas an industrywith lowaccessbarriers. Thismeans that formallyregistered (and competent) plumbershave to compete against informal andunregisteredplumbers, while at the same time consumers and the construction industry are underpressuretopaylowerandlowerfees.Thisunderminesinvestmentintheplumbingindustry,whichthendirectlyaffectsskillsdevelopmentandimprovedproductivityintheindustry.3.1 FormalorganisationoftheindustryTheofficiallyrecognisedplumbingindustrybodyisIOPSA(InstituteofPlumbingSouthAfrica,)which represents private sector employers. It is recognised by national governmentdepartmentsand institutionssuchastheSouthAfricanBureauofStandards(SABS)astheofficialrepresentativeoftheindustry.IOPSAwas formalised in 1989 and is affiliated to theWorld Plumbing Council, the SouthAfrican Institute of Occupational Health and Safety and the Federated EmployersMutual(FEM)AssuranceCompany(RF)ProprietaryLimited.Inthelast15yearsithaschangedfrom a voluntarily managed organisation to professional management organisation withspecialisedfunctionalareassuchastraining,technicalsupportandstandardsdevelopment.However,beforeformalisationtheplumbing industrywasalreadywellorganisedandpro-active.Forinstance,tocelebrateits21styearofexistencein2009,IOPSApublishedabookthatcontainsanhistoricaloversightoftheeffortsbytheindustryassociationanditsmemberstoimprovetheirtrade,industryandcontributiontotheeconomy.Thisbookexplainsindetailefforts to improve the quality of workmanship and materials, skills development andformalisationoftheindustry.Severalofthecurrentchampionswerealreadyfeaturedinthisbook.Theforewordtothebookwaswrittenbythethenministerofwateraffairs.Ataprovinciallevel,IOPSAisrepresentedbyvoluntarycommitteesconsistingofmembers.Ineachoftheprovincesmonthlytechnicalmeetingsareheld.Thefollowingsub-chaptersareactive:

• Gauteng• WesternCape• SouthernCape• EasternCape• FreeState• Border(greaterEastLondonarea)• KwazuluNatal

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Working committees do not exist inMpumalanga, NorthWest province and Limpopo. Achallenge inestablishingworking committees is that theactivities are voluntary and timeconsuming.Means of sustaining these committees in themore rural areas have not yetemerged.TherespondentsoftheplumbingbusinessownersurveymirrorthefunctionalityoftheIOPSAprovincialstructures(seeFigure2).Figure2:Provincialrepresentationintheplumbingfirm-levelsurvey

Source:PlumbingBusinessOwnersSurvey(TIPS,2019b)

All administration, eventorganisationand technical support areprovided from the IOPSAheadofficeinDowerglen,Johannesburg.IOPSAhasseveralpermanentfunctions,includingatechnicalmanager,atrainingmanagerwithsupportingstaff,amarketingandmembershipsupportfunction,andanactiveexecutive.IOPSAisactivelyinvolvedinseveralcollaborationprojectswithGIZ/SD4GE,DHETSSACI,theNBI,Harambee,Nedbankandalsoprivatetrainingproviders. They regularly meet with SETAS, the QCTO and other public organisations tofurthertheinterestsofplumbersandtoadvocateforbetterstandards,support,trainingandworkingconditionsforplumbers.ThePlumbingIndustryRegistrationBoard(PIRB)workstopromotegoodplumbingpracticesthatprotectthehealthandsafetyofthecommunity.Theystrivetoprotecttheintegrityofthewatersupplyandwastewatersystemsbyprovidingacomprehensiveregistrationsystemfor individual qualified plumbers. The performance of the plumbing trade is measuredthrough auditing processes and the issuing of certificates of compliance. The PIRB is aprofessionalbodythatisrecognisedbytheSouthAfricanQualificationsAuthoritytoupholdhighstandardsofcompetenceandethics.ThePIRBistaskedwithqualityassurancewithintheplumbingindustry,thedevelopmentofstandardsinthenationalqualificationframework(NQF),strengtheningtheaccountabilitywithintheplumbingprofession,andtopromotefairpoliciesandpractices.Also,thePIRBistaskedwithmaintainingandadministeringaliveandupdatedregistrationsystemanddatabaseofallregisteredplumbingpractitionersinSouthAfrica.PlumberswhoareregisteredwiththePIRBarerecognisedasprofessionaltradespeople.Theyreceivearegistrationcardandattendavarietyofevents,trainingcoursesandopportunitiestoearncontinuousprofessionaldevelopmentpoints(CPD).TheCPDsystemallowsthePIRB

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Gauteng Western Cape Kwa-ZuluNatal

Eastern Cape Free State Mpumalanga Limpopo North West NorthernCape

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toincentiviseknowledgeimprovement,participationinevents,awarenessraisingaboutnewdevelopments,standardsandpractices.TheCPDsystemissignificantinhowitstrengthensthe professional development of the system. It allows for differentiation, yet it also setsrecognisedpathwaysandpromotionopportunities.Thereareothersmallerformsofindustryorganisation,suchastheplumber’ssub-categoryintheMasterBuildersAssociation.TheNationalHomeBuildersRegistrationCouncilregulatesthestructuralelementsofahomeanddoesnotappeartohaveaprogrammefor,orspecificinterestin,developingtheplumbingtrade.3.2 PlumbersinSouthAfricaPlumbers are mainly tradespeople who operate as self-employed, informal or smallbusinessesinSouthAfrica.UsingStatisticsSouthAfricadata,TIPSestimatesthattherearemore than 125 000 self-identified plumbers in SouthAfrica. In this samedataset, 10 359employedoneormorepeopleand12860areown-accountworkers.Theplumbing industry ischaracterisedbyfarmore informalactivitythanformal,withthenumberof formal enterprisesdecliningevery year and thenumberof informaloperatorsincreasing(seeFigure3).Figure3:Plumbingbusinessownersbysector,2013-2017

Source:StatisticsSouthAfrica,LabourMarketDynamics,2013-2017.ElectronicDatabase

Theextentofthe informalactivitywasalsoasurpriseto IOPSAandthePIRB.Whilesomeinformalplumbingactivitycouldbeascribedtodo-it-yourselfactivity,andsometoworkinginareciprocalwayforfamily,friendsandneighbours,itishardtodeterminewherethemorethan100000unaccountedinformalplumbersareworking.Figure4showstheextentofthe informalityaccordingtotheLMDdata. Itshowsthatthemajorityofplumbingbusinessesareoperatingintheinformalsector.TheonlyexceptionistheWesternCapeprovince,wheretherearemoreformalthaninformalplumbingbusinesses.

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Figure4:FormalandinformalplumbersintheLMDdata,2013-2017

TheTIPSwasaskedto furtherunpackthesenumbers,andtheyfoundthat in2017,3586employersoperatedintheformalsector(employingoneormorepeople),while6773own-account businesseswere operating as informal enterprises. Thismeans that they did notemploy anybody formally except as casual or wage-based workers with no fixed-termemploymentcontracts,benefitsorsocialbenefits.Thehigh-leveldataanalysisbytheTIPSconfirmedthatmostplumbersaresmallwitheitheroneown-accountoperator,orbetween2to9workers(seeFigure5).

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Figure5:Plumbingbusinessownersbybusinesssize,2017

Source:StatisticsSouthAfrica,LabourMarketDynamics,2017.ElectronicDatabase

Ananalysisbyraceoftheownersshowsthatthereareincreasingnumbersofformalblack,Indianandcolouredplumbers.Figure6showsthattherearemoreformalblack,Indianandcoloured plumbing business owners than white owners. However, the great majority ofplumbingbusinesseswereintheinformalsectorbyalargemargin,withcolouredandwhiteinformalplumbersatmuchlowerlevels.Figure6:Plumbingbusinessownersbyrace,2017


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Regardinggender,mostplumbingbusiness,whetherformalorinformal,aredominatedbymen.Femalebusinessownersaremostlikelytobeoperatingintheinformalsector.TheageanalysisoftheStatisticsSouthAfricaLMDshowninFigure7revealsthatmorethanthree-quartersofplumbingbusinessownersarebetweentheagesof25and54.Thereisaverysmallproportionofveryyoungandveryoldplumbingbusinessowners.Figure7:Plumbingbusinessownersbyage,2017


4 TheplumbingbusinessownersurveyprocessandresultsThe firm-level research startedwith an analysis of the data that IOPSA and the PIRBhadalreadycollectedinafirstplumbingfirmsurveyconductedin2018.TheAugust2018IOPSAsurveywasacomprehensivesurveythatgaverisetomanyimportantinsights.Theirsurveyreceivedanastonishing779responsesduetoanincentivetoearnCPDpointsfromthePIRB.ItisthestatedintentionofIOPSAtorepeatthissurveyannually(atthetimeoffinalisingthisreportinAugust2019IOPSAhadjustsentouttheir2019annualsurvey).MeetingswereheldatthePIRBandIOPSApremisestoassesstheindustrydatathatIOPSAandthePIRBcollectandmaintain.DuringthesemeetingsitbecameapparentthatIOPSAandthePIRBstillhadmanyunansweredquestionsthatcouldbefurtherexploredinGIZ/SD4GE-supportedindustryanalysis.ThequestionnairewasdesignedincollaborationwithIOPSA,thePIRB,GIZ/SD4GEandTIPS(seeAnnexure2.1).Theaimwastobetterunderstandtheconstraintsandrealityofowners

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15 - 19 years old20 - 24 years old25 - 34 years old35 - 44 years old45 - 54 years old55 - 64 years oldOlder than 65 years old

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ofplumbingenterprises.ThequestionnairewasdesignedtosupplementthecurrentdatabaseofIOPSAandthePIRB,whileassistingGIZ/SD4GEtobetterunderstandfutureskillsdemandandtheoverallhealthofworkplaces.Itwastargetedspecificallyatplumbingbusinessowners.On28February,thefinalresearchinstrumentwashandedovertoIOPSAandthePIRBfordistributiontotheindustry.TheplumbingbusinessownersurveywasconductedinMarch2019andatotalof212responseswerereceived.TheresultsofthebusinessownerplumbingsurveyareincludedasAnnexure2.2intheformof a presentation prepared by TIPS. The first part of the TIPS presentation is a furtherstatisticaloverviewfromStatsSAoncompanyownerstogiveabetteroverviewofthesurveyresultsreceivedbasedondiscussionsbetweenIOPSA,thePIRBandtheresearchteam.Wewillprovideabriefoverviewoftheresearchfindingshere.Theresultsareintegratedintotherestofthischapter.Thebusinessownerssurveywasmostlycompletedbymen.Ofthe212responses,only11femaleresponseswerereceived.Interestingly,theratiooffemalerespondentsismuchhigherthanthatintheLMDdatafromStatisticsSouthAfrica(seeChapter3.2).Figure8showstheracialprofileofthefirm-levelrespondents.Figure8:Plumbingsurveyresults,ownershipbyrace


Thehigh-level statistical reviewshowed that theplumbing industry itself isdominatedbysmallerplumbingbusinesses (see Figure5). IOPSAestimates thatmore than90%of theirmembersemployfewerthanfivepermanentstaff.Thiswasalsoreflectedintheplumbingbusiness-levelsurvey.Ofthe212respondents,194indicatedthattheyoperatedfromoneofficeorbranch,withanadditional11indicatingthattheyoperatedfromtwosites.Figure9showsthecompanysizeoftherespondents.34%(72respondents)had2–4employees,while

Black African

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87%(188respondents)hadfewerthan20employees.Only2%oftherespondentshad50ormoreemployees.Figure9:Plumbingsurveyresults:Companysize


Aquestionwasformulatedtounderstandthestrategicresponseoftheplumbingbusinessowners to thepressure in thebusiness. Thebusinessowners could choosewhether theirprioritywasto:

• Increaseproductivityandperformanceofcurrentemployees• Expandthebusinesswithadequatelyskilledpeople• Reducestaff,doingmoreworkwithfewerpeople.

The results of this question are shown in Figure 10. The graph shows that increasing theproductivity and performance of current employees was the highest priority, whereasexpandingthebusinesswithadequatelyskilledpeoplewasaslightlyloweralbeitsignificantresponse.Thisquestionalsoprovidesaninterestingwaytosegmentalltherespondentsintothreedifferentstrategicprioritygroups.ThisdiscussionwillbeheldinChapter3ofthisreport.

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Figure10:Responsetobusinesspressure


Themajorityofthesurveyrespondentsweresmallbusinesses,andtheirchallengesmirrorthegeneralpatternsintheeconomy.FrominterviewswithIOPSAandselectedplumbers,weknowthatmanyplumbersdrawfamilymembersintoassistwithadministration,logisticsandpayroll duties. Figure 11 shows the extent of the burden of financial and administrativemanagementinthecompany.Figure11:Majorchallengesfacedbytheplumbingbusinessowner


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Expanding the business withadequately skilled people

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ThesamequestionisanalysedinFigure12,butfromacompany-sizeperspective.Theresultsshowthatascompaniesgrowinsize,thereisatendencyforaccesstofinancetobecomelessofachallenge.Infact,at50employeesthechallengesaremoreorlessequallyspreadoverthefourareas.Debtorsdemandingcreditaremoreofanissueforlargerfirmsasopposedtosmallerones,probablybecauseofthemorecorporateclientsinconstructionandcommercialmaintenance.Administrativeburdensseemtoincreaseascompaniesgrowfrom1employeeto10employees.Figure12:Companysizebymajorchallenges


Whenaskedabout“other”factorsthatwereaffectingtheirenterprises,accesstomarkets,baddebtandstaffcompetenciesaswellasregulatoryburdensweremostoftencited(seeFigure13).

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Figure13:Otherchallengesfacedbytheplumbingbusinessowners


Surprisingly,qualityofsuppliesandlabourrelations,healthandsafetyandcrimehadverylowfrequenciesinthesurvey.When asked about the external environment, most respondents complained about thecurrenteconomicclimateandthehighnumberofunlicensedplumberswhoareoperatingintheeconomy,followedbyalackofskilledpeopleandlastlyblackeconomicempowermentlegislation.Fromafinancialandprofitabilityperspective,itappearsthatmostplumbersarecharginglowrates,andalsopayinglowsalaries.MostplumbingbusinessownerschargebetweenR300-R600perhour.QualifiedplumbersaremostlypaidmorethanR10000permonth.UnqualifiedplumbersarepaidmorethanR4000permonth,withmorethan80respondentsindicatingthatunqualifiedplumberswerepaidmorethanR5000permonth.Learners,assistantsandapprenticesweregenerallypaidbetweenR2000tojustoverR5000permonth.Mostplumbingcompanieshadoneortwofull-timemanagersandonlyoneadministrativeperson.Theownersinmostcaseswerestillworkingasplumbers.Almost40%oftheplumbingowners reported paying their staff on aweekly basis, with 30% reporting that they paidmonthlysalaries.Afurther30%reportedthattheypaidsomeworkersmonthlywhiletheypaidothersweekly.Inthefirm-levelsurvey,mostplumbersdidnotuseanyformalrecruitmentmethodstofindnewstaff.Mostappointmentswerefromthecurb-sideorwalk-in.Referralsfromfamilyandfriendswerealsoimportantsources.

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Figure14showsthatmostplumbingownersprefertotraintheirstaffonthejob(in-house)orviatheIOPSAwebsiteorYouTubechannels.Figure14:Preferredformoftraining


Not surprisingly,manyowner respondents indicated that theydidnot send their staff ontraining (31),or that their staffwere sufficiently trained (21).Only8 reportedusingTVETcolleges,withprivate trainingproviders (15)or events arrangedby SETA/CETA (23)beingpreferred.ThedemandsonskillsdevelopmentandeducationwillbediscussedinmoredetailinSection4.1.1.Question34intheBusinessOwnerSurveyasked:‘DoyouhaveanysuggestionstoIOPSA?’.TheresponseswereveryvaluableandarecategorisedinsuggestionstoIOPSA;suggestionstothePIRB;Skills;RegulatoryandInsurance.SeeAnnexure2.4foralltheresponsestothesurveyquestion.Theimagebelowisawordcloudofthe‘SuggestionstoIOPSA’responses.

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4.1 BasicfactorsofproductionTheeconomic environment is strongly shapedby the cost andaccessibility of supply-sideinputs.Plumbersfindthemselvessqueezedbetweenthecostsandefficienciesofsupply-sidefactors,theabilityoflargerclientgroups(suchasconstructionandinsurance)tonegotiatetermsoftrade,andtheregulatoryenvironment.Beforewelookeddeeperintothesedifferentaspects,ourplumbingownersurveyprobedtoseehowtheexternalenvironmentshapedthestrategiesofthecompanies.Figure15showsthatsmallercompanies(below9employees)are strongly affected by the prevailing economic context, challengeswith securing skilledworkers,andcompetitionfromunlicensedplumbers.Thefigureshowsthatmostcompaniesemploying50ormoreworkersreportedtheexternaleconomicclimateasanimportantfactorconstrainingbusiness.Onbalance, skilledpeopleandunregisteredplumbersareanequalconcernacrossallcompanysizes.Blackeconomicempowerment(BEE)requirementsarelessofaproblemforsmallerfirms,probablybecausemoreblack,Indianandcolouredfirmsaresmaller.But this couldalsobebecause themarkets servedby smaller firmsaredomestichouseholdsforwhomBEEcredentialsarenotsoimportant.

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Figure15:Companysizeandexternalchallengesexpressedbyplumbingbusinessowners


ItisimportantforGIZ/SD4GEtoconsiderthatskillsuptakeisalsoaffectedbycostsoflandandcapital,andthattheabilityofplumberstofinanceavehiclemightaffecttheirwillingnesstoemployortakeonmorelearners.Thefollowingsub-sectionstakealookintothebasicfactorsofproduction:

• Skills• Labour• Finance,

Thereafterthemoreadvancedfactorsofproductionarediscussed.4.1.1 SkillsTheplumbingtradeisoneofthecriticalskillsareasidentifiedbytheDepartmentofHigherEducationandTraining.Over thepast fewyears theplumbing tradehas receiveda lotofsupport from GIZ/SD4GE, especially regarding solar water heaters, and also from otherinternationalanddomesticdevelopmentcooperationpartners.However, plumbers regularly express their frustration with the quality of graduates whocompletetheformaleducationatTVETcolleges.ThisdespitethehugeamountoffundsandsupportbeingpouredintotheeducationofplumbersatpublicTVETcolleges.IOPSArecognisesfivepublicTVETcolleges:

• NorthlinkCollege(Belhar,CapeTown)

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• CollegeofCapeTown(CapeTown)• FlaviusMareka(Sasolburg)• EkurhuleniEastCollege(Springs)• UmfoloziCollege(RichardsBay)

IOPSAalsorecognisesthefollowingfiveprivatecolleges:

• AfricaInternationalTrainingFacilities(Bredell,Gauteng)• TjekaTrainingMatters(Krugersdorp)• AfricaSkillsVillageTrainingandManagementServices(George,SouthernCape)• PCDCollege(Pretoria)• MAASA(EastLondon)

In interviewswith IOPSA, PIRB staff and industry representatives, wewere told that theindustryisfrustratedbythelackofresponsivenessoftheTVETsector.Complaintsaboutthelackofresponsivenessrangedfromlecturersnotshowingupforcourses(co-arrangedwithGIZ/SD4GE), to lecturers not being qualified plumbers. Expressions of doubt about thecommitmentoftheTVETsectoralsoincludedstatementsthatrangedfromthepoorcareeradvice and guidance given to young entrants into the system to the fact that training ofexistingstaffwasverydifficulttoarrangewithpublicTVETcolleges.Since2012,registeredandlicensedplumbersmust issuecertificatesofcomplianceforhotwatersystems(geysers,solargeysersandheatpumps)intermsoftherespectivemandatorystandards. Although these regulations and standards are not new,what is different is anemphasisonenforcementandcompliancethatisappliedwithinthecertificateofcompliance.Justhavingaqualificationofaplumberisnotenough,allplumbersmustberegisteredwiththe PIRB andmust pass an assessment before they are qualified as being licensed. Onlylicensesplumberscanissuecertificatesofcompliance.Thechallengeisthatmanyuntrainedstaffmembersappeartobestuckatlowlevelsofformalqualificationwithlittleopportunityforthemtoreceivefurtherformaltrainingduringworktime. Thismeans that plumbers have to dispatchmore senior and qualified plumbers tooverseeandsignoffontheworkoflessexperiencedandlowerqualifiedstaff,thusincreasingthecostsofthebusinessandmakingthelogisticsmorecomplicated.Whilesomeofthelargerplumbing companies have found ways of doing this, some of the smaller plumbers arestrugglingastheonlypersonthatisoftenthebusinessowner.Atthispointthefullcostsofissuingcertificatesofcompliancecannotyetbepassedontothemarket,becausetherearepeoplewillingtopayforandplumberswillingtodoworkthatisnotcertifiedascompliant.WhilethecostofissuingacertificateandcomplianceisonlyR160,manyplumbersarenotabletoabsorbthecostorpassonthiscosttotheirclients.Plumbersthatarelicensedarenotyetperceivedbythemarketasbeingmorevaluableandqualifiedthananunlicensedplumber.Forinstance,theinsurancemarketisnotyetwillingtoinsistoncertificatesofcomplianceforworkdonebyplumbers,despitetheregulations.Theinsurersdonotallowlicensedplumberstoclaimhigherrates(tocoverthecertificateofcompliance).However, the increased compliance and its enforcement is critical in strengthening theprofessionalisationoftheplumbingtrade.

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IOPSAreportsthatthemostsearched-fortermontheirwebsiteisskillsdevelopment.Itisnotclearwhether these searches are being done by individualswanting to further their owncareers,orbyfirmownersortrainingproviders.InFigure16,thetrainingpreferencesbydifferentsizedcompaniesareshown.Itisinterestingto see how, as companies grow, the importance of in-house training increases. IOPSAwebinarsarealsoanimportantsourceofknowledgecontent.Thebiggerthecompany,themorelikelytheSETA/CETAwillbetoplayanimportantrole.Ascompaniesgrowbeyond2employees,supplierdemonstrationsandproducttrainingalsogrowinimportance.Figure16:Thecurrenttrainingpreferencesaccordingtocompanysize


In thepastyear IOPSA introducedaservice toassist itsmemberswithskillsdevelopmentplans.ItwasreportedthatmanyIOPSAmemberswereunawareofskillsdevelopmentplans,leviesandformaltrainingoptions.IntheWesternCapethebargainingcouncilstillclaimsalevyfromemployers,andtheyarrangethetrainingprogrammesthatareimplementedbytheMBA.WeweretoldthatIOPSAwasincreasinglyworkingwithprivatetrainingcollegestoensureasufficientsupplyofgraduatesthatmeetsthetheoreticalandpracticalrequirementsoftheindustry.Generally,itwasfeltthatthegraduatesfromtheprivatetrainingcollegesexceededtheexpectationsofindustryandwereabletomeetthetradetestrequirementsmoreeasily.InFigure16theroleofprivatecolleges isshowingreen,andit isclearlyvisiblethatTVETstudentsareimportantmainlyforcompanieswith2to9employees.Interestinglyenough,forcompanieswith1staffmember,aprivatetrainingproviderispreferred.

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I don't send my staff on training In-house trainingIOPSA webinars My employees are sufficiently trainedPrivate training provider SETA/CETASupplier demonstrations or product training TVET (FET/Technical College)

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AlthoughIOPSAparticipatedinthecurriculumdevelopmentprocessatQCTO,theyarenotsatisfiedwiththequalityofthetradetestorthequalityofgraduatesfromtheTVETsector.ContrarytotheopinionofIOPSA,otherparticipantsinthecurriculumdevelopmentprocessfeelthattheindustryhadanopportunitytomakeinputs,andthatsomeofthedemandsoftheindustrywereunnecessaryanddidnotfitintothetimelinesorthespecificationsofthecurricula.Withregardtothedualsystemapproach,bothIOPSAandthePIRBstronglyexpressedtheopinionthatthedualsystemisexactlywhatSouthAfricaneeds.However, italsofeltthatmanyplumbersdidnotusetheword“apprentice”inthesamewayasGIZ/SD4GEorPIRB,andthatthereweredifferentopinionsbetweentheindustrybodies,GIZ/SD4GEandotherorganisationssuchasSSACIandtheDHETabouthowthedualsystemissupposedtowork.For instance,manyplumbers (andother trades ingeneral) refers toanapprenticeasanyyoungerpersonwhoisworkingtogainexperience,eveniftheyarenotonaformaleducationprogramme. There are also differences in how the dual system is described by differentstakeholders.Intermsofanticipatedtrainingpriorities,theownerswereaskedabouttheirfuturetrainingpriorities(seeFigure17).ThegraphinFigure23showstheimportanceofupskillingexistingstaff(113)andimprovingthequalificationsoftechnicalplumbingassistants(93).Thisshowsthatmostoftheimmediatetrainingdemandisforshortcourses.Figure17:Trainingprioritiesofrespondents


Productknowledge,occupationalhealthandsafety,businesstrainingandsoftskillstrainingwereallgivenmuchlowerpriority.Only20respondentsindicatedthatrecognitionofpriorlearningwasimportant.

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4.1.2 LabourThebargainingcouncilsarereportednottobeactive,exceptintheWesternCape.Thewagesintheplumbingindustryvaryaccordingtoprovincesandthemarketsegmentstheyserve.Thewagesareestimatedtobehalfofthosepaidintheelectricaltrade.Thehigh-levelstudyconductedbyTIPS(2019b)showedthatahugenumberofworkersareemployed in the sector in an informal capacity. The LMD data estimates that there are125000plumbersintheSouthAfricaneconomy.TIPS furtheranalysed theLMDdata todeterminewhere theplumbersareemployed.TheLMDaskedtherespondentsforthenameoftheorganisationwhichtheyworkedforandthemain typeofgoodsand servicesproduced.This information isused to classify individualsaccordingtotheStandardIndustrialClassification(SIC)codes.ThesecodesarethengroupedtogetheraccordingtothetypeofindustryasshowninFigure18forplumbers.Figure18:Plumbersbyindustry,LMDdata2008-2017

Source:TIPSinAnnex1.1,calculationsbasedonLMD2008-2017.

Figure18showsthatthemajorityofplumbersworkintheconstructionindustrywheretherehasbeenanincreaseintheirproportionovertheanalysisperiod(60%in2008and85%in2017). The construction industry consists of 5 SIC codes: site preparation; building ofcomplete constructions or parts thereof; building installation; building completion; andrentingofconstructionofdemolitionequipmentwithoperators.In2017,morethan99%ofplumbersintheconstructionindustrywerefoundtobeworkinginthe‘buildinginstallation’category.TheothersalientfeatureinFigure18isthedecliningproportionofplumbersworkinginthecommunity,socialandpersonalservicesindustry.In2008,whenthisindustryexhibitedthelargest proportion of plumbers,more than half of those individualsworked for the ‘localauthority’andapproximately15%workedfor‘centralgovernment’.Lateryears’resultsareconcerningforplumbersinthisindustryastherewasasharpdeclineinplumberspost-2012,

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where this trend continued such that in 2017 only 0.22% of plumbers worked in thecommunity,socialandpersonalservicesindustry.TIPSanalysedtheLMDdatatoassessthereportedqualificationsoftheplumbingworkforceasitwasrecordedinthelabourmarketdynamicsstatistics.TheresultsareshowninFigure19below.Figure19:HighestqualificationsofplumbingworkforceaccordingtotheLMD

Source:TIPSAnnexure1.1calculatedfromLMD2008-2017(TIPS,2019a).

Thestudyshowsalargenumberofworkersintheplumbingindustrywhodidnotcompletematric.Interestinglyenough,thenumberofworkerswithamatricqualificationhasincreasedtoseveraltimesthenumberofworkerswithvocationalqualifications.Ingeneral,Figure19shows very low levels of formal qualifications in the industry. It is not clear what theexperience levelsof theseworkersare,andwhethertheywouldqualify forrecognitionofpriorlearning(RPL)toensurethattheyareplacedonanupgradingpathway.4.1.3 FinanceandcapitalManysmallerplumbingbusinessesarefinancedthroughpersonalcollateraloftheowners.Thismeansthatolderwhite-ownedcompaniesmighthaveanadvantageoveryoungerblack-ownedcompanies.During the plumbing business owner survey, we investigated the major challengesconstrainingthegrowthandperformanceofthecompanies.TheresultsareshowninFigure20,anditisclearthatofthefourmajorchallenges,threearerelatedtofinance.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Incomplete matric 57507 58220 49060 59137 58452 70808 71292 81739 70580 66696Matric 14592 11574 12397 14206 24142 29807 31741 40953 39632 40358N1-N3 24595 19440 24258 23307 15380 1605 1041 1108 2259 2940N4-N6 1266 2315 3211 1359 1677 1083 1813 2703 1402 1676Certificate/Diploma without matric 2094 5448 5233 8697 4532 927 2496 0 1153 1708Certificate/Diploma with matric 404 680 0 484 1358 6164 7047 7572 4484 4731University qualification 946 1869 2107 1347 1711 4027 4299 4465 3985 7872

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Figure20:Majorchallengesbyfirmsize


Blackplumbersare reported to struggle togainaccess to funding for start-upcapital andvehiclepurchasing.Thisisespeciallysowhensmallerplumberswanttopurchaseasecond-handvehicleandtheydonotquality for finance,resulting invehiclesbeingpurchasedforcash.Thismostlikelyresultsbothincashflowproblemsaswellasinvestmentincheaperandlessreliablevehicles.4.2 Advancedfactors:knowledge,technologyandinstitutionalsupportAdvanced factorsmainly relate tospecialised infrastructure, technological institutionsandtheflowsofknowledgeinthesystem.Whileitiseasytoseehowknowledgecanflowintoasector (like plumbing) through the formal education system, a lot of tacit and advancedknowledge that ismore oriented towards problem solving is disseminated through othermeans.Duringourresearchwedetectedthefollowingenablersofadvancedfactorsofproduction:

• ThePlumbingAfricatradejournal• ThePLUMBDRAINAFRICAtradefair• Equipmentandmaterialsuppliershostingtechnicalbriefings• TheIOPSAwebinarsandactiveYouTubechannelwhichisopen• TheSABSandSAWatermarkstandards

4.2.1 ThePlumbingAfricatradejournalPlumbingAfricamagazineisanacknowledgedandwidelydistributedtradejournalwhichispublishedbyindependentpublishersonamonthlybasis.Itisburstingwithinformationabout

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standards,newmaterials,casestudies,newspecificationsandotherinformationofinteresttotheindustry.PlumbersandindustryexpertssaidthattheykeptPlumbingAfricamagazinebecauseof the valuable content. Theaudited circulationofPlumbingAfricawas3500 inFebruary2019.The publishers only allow those registered with IOPSA, or who are SABS and regulatorycompliant,toadvertiseinthemagazine.They have a very unique distributionmethodwhereby smaller or informal plumbers canregister with amerchant or a wholesaler to receive their copies at the front desks. Themagazinehasreportedgrowingsubscriptionsfrommerchantsbasedintownships.TheyhavealsofocusedonareassuchasDiepslootandAlexandriadueto largepublic investments inwaterinfrastructureandhousing.Due to the costsof procuring standards from the SABS,PlumbingAfricamagazine coversstandardsandregulatorychangesineveryissue.Theyalsohaveapopularname-and-shamecolumnwhereplumberscansubmitphotosofpoorworkmanship.4.2.2 ThePLUMBDRAINAFRICAtradefairThePLUMBDRAINAFRICAtradefair,co-locatedwith Interbuild, isheldeverysecondyear.ThiseventisseenasAfrica’slargestconstructionandbuildingservicesexhibition.Thefairhadits50thanniversaryin2018.ItisheldattheNasrecexpocentresouthofJohannesburg.Thefollowinginformationwastakenfromthehttps://plumbdrain.interbuild.co.zawebsite:

Providingexhibitorsanunrivalledmarketingplatformandatangiblereturnoninvestment,PLUMBDRAINAFRICAisoneofInterbuildAfrica'smostsuccessfulco-locatedshows.

ThePLUMBDRAINAFRICAfairhasareputationforshowcasingthelatestinnovationsin products and services that adopt eco-friendly technologies, which help createsustainablechangesintheindustry.Seminarsandworkshopseducatetheaudienceaboutnewproductsandsolutionsintheworldofplumbingandprovidesinsightintonewqualitystandardsintheindustryandrelevantupdatedlegislation.PLUMBDRAINAFRICAistheonlydedicatedplumbing,draining,sanitation,water,andsanitarywareexhibition inAfrica.Coveringall facetsofplumbing, fromcommercialandindustrialtostandarddomesticplumbingproductsandservices.

Livedemosandhands-ontraininggiveexhibitorsanedgetomarkettheirproductstotheindustryeffectively.Theorganisersencourageallexhibitorstocreateinteractivestands for theprofessionalsandtrades toexperienceandunderstandthematerialfittingsand technology thatareonoffer, coincidingwith themandatory standardsthat apply to plumbing and affording great plumbing practices the attention itdeserves.

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ExhibitorsatPLUMBDRAINAfricacoverabroadspectrumofproductsandservices,including:• Pumpsandpumptechnology• Geysersandhotwatersystems• Solarheatingandcooling• Pipes,fittingsandthermoplastics• Bathroomaccessories• Toilets,cisterns,urinalsandWCs,portabletoilets• Showers,baths,basins,tapsandmixers• Waterproofingandleakdetection• Valves,cylindersandgutters• Metersandmetering• Rainwaterharvestingandheatpumps

According to the PLUMBDRAIN organisers, visitors to PLUMBDRAIN AFRICA includeprominentdecisionmakersinallareasofbuildingandconstruction:

• Buyers• Builders’merchants• Contractorsanddraughtsmen• Fire/securityprofessionals• Governmentofficials• Interiordesignersandlandsurveyors• Propertydevelopers• Quantitysurveyorsandspecifiers• Townplanners• Buildingcontractors,subcontractors,inspectorsandsupervisors• Civilengineers,consultingengineersandelectricalengineers• Plumbers,plumbingmerchantsandplumbingcontractors

4.2.3 EquipmentandmaterialsuppliershostingtechnicalbriefingsApartfromthePLUMBDRAINAFRICAannualtradefair,thereisanimportanteventwhereallmajorequipmentandmaterialsuppliersexhibit.Beyond thisbigevent, suppliersandmerchants regularlyhostdemonstrationand trainingevents to demonstrate new equipment or to improveworkmanship. IOPSA and the PIRBsupport these events if they transfer knowledge, new standards and approaches to theindustry,but IOPSAandthePIRBarehesitanttoendorseeventsthataretoosalesdriven.Often, suppliers sponsoreventsandmeetings in theplumbing industryand then theyareallowed to display their products or demonstrate their technology before or after themeetings. However, concerns have been expressed about many vendors using events,meetingsandfairstopromoteproductsandmaterialsthatdonotcomplywithlocalstandardsandregulations.The importance of these events is shown in Figure 16,where the importance of supplierdemonstrations and product-specific events can be seen. Similarly, Figure 17 shows theimportanceofproductknowledgetraining.

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4.2.4 TheSABSandWatermarkstandardsStandards,regulationsandtechnicalperformancespecificationsarepowerfulmechanismstointroduce new knowledge into an industry, provided the content of these technicaldocuments is accessible to the users, equipment suppliers, clients and regulators. Theregulationsapplicabletotheplumbingindustryis increasinglyenforced.Theresultsisthatthe demand for knowledge regarding quality, compliance, standards and performance isincreasing,asallformalactorshavetoincreasetheirownstandardsandcompliance.It isalegalrequirementthatallplumbingproductsmustcomplywithamyriadofnationalstandards1.This increases thecosts tomanufacturersandmerchants,consumersandalsoplumbersastheyhavetonavigateawiderangeofstandards,regulationsandtechnicalnotes.Forexample,oneofthemostimportantupdatedstandardsisSANS10254fortheinstallation,replacementand repairofelectricalhotwater systems.Due to thecostof thisandotherstandards,IOPSA,thePIRBandPlumbingAfricamagazinehaveputinalotofefforttoraiseawarenessoftheupdatedstandards.TheplumbingindustryisveryactivelyinvolvedintechnicalworkingcommitteesattheSouthAfricanBureauofStandards(SABS).IntheDecember2018issueofPlumbingAfricamagazinethere is a four-page list of different standards and regulations relevant to the plumbingindustry.TheimportanceofoccupationalhealthandsafetyisshownintheplumbingownersurveyinFigure17.From our meetings with industry experts, it became apparent that many experts aredisillusionedwiththeSABSandtheNationalRegulatorofCompulsoryStandards.DuetothemistrustofhowSABSstampsofapprovalhavebeenawardedinthelasttenyears,theSAWatermarkinitiativewasstartedundertheauspicesofIOPSAtomakeitclearerwhichproductsandmaterialscompliedwithSouthAfricanregulations.SAWatermarkpromisestoofferplumbersasinglepointofreferencetocheckwhetherplumbingmaterialsarecompliantwiththevariousSANSstandards.Thisserviceisexpectedtoreducethecostsofplumberstoverify whether products are compliant, while also reducing the need for them to beacquaintedwithallthedifferentregulationsandstandards.4.3 SupportingorenablingindustriesThere isanactiveanddiversesupplierandmanufacturingnetwork inSouthAfrica.This isevident inadvertisements intheplumbingtrademagazinesandtheactiveparticipationofkeysuppliersinthepromotionofbetterplumbingtechnology,qualityandworkmanship.Itisalsoevidentinthewholesalers’andmerchants’stockthatoriginatesfromSouthAfrica.Themanufacturersarevisible,andseveralexporttodemandingandsophisticatedmarketsinEuropeandtheUSA.

1Acompletelistofallproductsthatarelegallyrequiredtocomplywiththeirrespectivenationalstandardsispublishedinthefollowingstandards:SANS10252-1,SANS10252-2&SANS10254.

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InternationalmanufacturersalsohaveagentsandofficialresellersinSouthAfrica.ManyofthemparticipateinthePLUMBDRAINAFRICAtradefairsandothereventsinsupportoftheindustry.The retail and wholesale markets are also well established both in the urban and ruralmarkets.Severalconstructionsuppliershavealsoopenedbranchesintownshipsandinfast-growingareas.Accordingtoindustryexperts,severalmerchants,wholesalersanddistributorstargetstudentsandnewentrants.The supporting industries are directly affected by the performance and investments inconstruction,commercialpropertydevelopmentandlargepublicinfrastructureprojects.Thissectorhasbeenunderpressureoverthelastfiveyears,resultinginretrenchmentsofformalemployment in the construction sector and even the closure of some large constructioncompanies. This means that some factories have cut back on their product lines, andincreasinglydependonimportantmaterialsandequipmentfromothercountries.Thegovernmenthastargetedthelocalisationofthemanufactureofsolarwatergeysers,anda small cluster of manufacturers exists. However, many of the manufacturers of PVC orplastic-basedmaterialsfacestrongcompetitionfromAsia,andseveralfactorieshaveclosed.4.4 DemandconditionsManyplumbingbusinesses,especiallythesmallercompanies,areinacycleofboomorbust.Theyareeitheroverloadedwithworkandunderpressuretodeliverworkatlowrates,ortheyaresittingintheofficewaitingforthephonetoring.Mostplumbersfindithardtosecureastable pipeline of work. In the survey (see Figure 13), plumbers reported that access tomarketswasakeychallengeforthem.During the plumbing business owner survey, the respondentswere asked how importantdifferent markets were for their enterprises (see Figure 21). Not surprisingly, domesticmaintenance,renovationsanddraincleaningwerethemostimportantmarkets.Interestinglyenough,almosthalfoftheplumbingbusinessownerstriedtoavoidgovernmentwork.Figure21:Importanceofdifferentmarkets


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Inthequestiontodeterminethemostimportantmarket,therewasanoptionalsotoselect“notapplicable”.TheresultsofthisoptionareshowninFigure22.Itcanbeseenthatthegovernment isbyfarthe leastapplicabletotherespondents, followedbyrenewablesandinsuranceclaims.Figure22:Typeofclientsnotapplicabletorespondents


Duringthesurveyweinvestigatedwhatkindofpressuredifferenttypesofclientplacedontheplumbers.Therespondentscouldchoosebetween:

• Fasterresponsetimes• Lowerprices• Higherqualityofworkmanship

Fromgenericstrategyformulationweknowthatcompaniescantypicallyfollowtwoofthesestrategiesattheexpenseofthethird.Forexample,ifclientswantfasterresponsetimesandhigherqualityofworkmanship,itwouldbeveryhardtodothisatlowerprices.Orifclientswantlowerpricesandhigherquality,itwouldbehardtoprovidethisfast.Toinvestigatedistributedskillsintheplumbingbusiness,weincludedafourthoption:on-sitedecisionmaking.Thisrelatestotheincreasedrequirementforplumberstoberegisteredorlicensed,tobeabletoprovideon-sitequotesandadvicetoclients,andtobeabletoissuecertificatesofcompliance.TheresultsofthisquestionareshowninFigure23below.Several interesting insights emerged from this question. Firstly, renewables appear to bemorepricesensitivethantheresearchersexpected.Secondly,thelowinterest inservicinggovernmentisvisibleinthegraph,buttooursurpriseconstructionplumbingwasalsoquitelow.Asexpected,draincleaningdemandsafasterresponseandthehigheston-sitedecisionmaking.Renovationsincreasinglyconcernlowerpricesandhigherqualityofworkmanship.Commercialmaintenanceisresponsesensitive,andsoareinsuranceclaims.

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Figure23:Demandsbyclienttype


Manyoftheplumbers,whetherformalorinformal,survivebyservingdomestichouseholds.Figure24showsthesizedistributionofplumbingbusinessownerswhoselecteddomesticmaintenanceasanimportantmarket.Itisclearthatsmallercompanies(below9employees)find this market very important, but as they grow this market becomes less important.Surprisingly,companieswith20-49employeesalsotargetthismarket.Figure24:Importanceofdomesticmaintenancebyfirmsize


Figure25showsthatacrossallfirmsizesthelargestproportiontrytoavoidthegovernmentasaclient.However,thereisanotableproportionofverysmallfirms(lessthan5employees)whoconsidergovernmentworktobeveryimportant.

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Figure25:Importanceofgovernmentworkbyfirmsize


4.5 GovernmentandNGOsupportFigure25showsthatgenerallyspeakingthegovernment(atalllevels)wasnotanimportantmarket formostplumbers.However, thegovernmentplays rolesother thanonlybeingaclient.Thegovernment,especiallyatlocallevel,isanimportantinvestorininfrastructure,aregulatorofby-lawsand trainerof learners.TheWaronLeaks in theWesternCape isanexample of local spheres of government working on improving water provision andcombattingleaks.Thisprogrammealsotrainstheyouthinwaterinfrastructuremaintenance.Different government departments have eitherworkedwith the plumbing industry, or insomecaseshavebypassed theplumbing industry. For instance, someof the initiatives toimprovewaterinfrastructurehavenotworkedwiththeofficialindustrybodiesbuthaveinmanycasesdirectlytargetedunemployedyouthasbeneficiaries.Duetothemyththattheentry levels intoplumbingare low,manypublicsectorprogrammestargetplumbingasaneasyentrypoint.However,bycrowdingmoreyoungpeopleintothemarket,informalityissimplysupportedastheformalsector isnotgrowingfastenoughtoabsorballthepeopletrainedinshortcoursesonselectedtopics.Beyond the government, there are a range of non-governmental organisations that aredirectlyandindirectlyworkingwiththeplumbingindustry.OrganisationssuchasHarambee,theNBIandJETeducationhavealltargetedplumbingasanimportantjobcreator.HarambeeandtheNBIarepartnersofGIZ/SD4GEinimprovingtheroleoftheprivatesectorinthedualsystem.ItisreportedthatstudentssupportedbyHarambeearemoresoughtafterduetotheworkplacepreparationthatHarambeedoes.In the past, Eskom and the Department of Energy targeted the beneficiation of locallyproducedsolargeysers.

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4.6 Cross-tabulationofplumbingbusinessowners’resultsBycross-tabulatingtheresponsestodifferentquestions,thedatabecomesmoregranular.Wecanshiftfromworkingwithaveragesandfrequenciestomoredifferentiatedarchetypes.These archetypes give GIZ/SD4GE, IOPSA, the PIRB and other industry-supportingorganisationsabetterideaofhowtocustomiseservices,skillsprogrammesandpartnerships.AspartofWorkPackage3ofGIZ/SD4GETermsofReference,opportunitiestosupportthetransformationoftheplumbingindustryshouldalsobeidentified.4.6.1 OwneragedoesnotmuchaffectcompanysizeThebusinessownersurveywasdoneforrespondentsaccordingtowageagegroup.ByusingtheSouthAfricaclassificationofadultsbeingolderthan34,andyouthasyoungerthan35,the size of companies was assessed based on the age of the owner. It shows thatmostcompanysizesdonotmattersomuchwhenitcomestoadultandyouth-ownedenterprises.Figure26showsthat2to4employeesisthemodalcompanysizeamongtherespondentswhethertheyarebeloworabove35yearsofage.Figure26:Comparisonofplumbingcompanysizebyownerage


4.6.2 DifferentsizedcompanieshavedivergingprioritiesFigure 27 shows the different priorities of the owners by the different size groups. Therecurring theme that emerges is that business owners with 2 to 4 employees prioritiseexpandingtheirbusinesseswithadequatelyskilledpeople,while inbusinesseswith5to9employeesandupwardstheprioritiesshifttoincreasingproductivity.However,eveninthe2to4employeesgrouptherearestillmanyemployerswhoarethinkingofreducingstaffanddoingmoreworkwithfewerpeople.

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In general, we found that the larger the companies become, themore likely they are toprioritiseimprovingproductivityofexistingstaff.Companiesinthe2to4sizerangearealsomorelikelytowanttoincreaseproductivitybyreducingstaff.Theimplicationcouldbethatastheyemploymoreskilledpeopletheymaybeinclinedtoreducethelesserskilledstaff.4.6.3 OwnershipraceaffectsprioritiesBylookingatthestrategiesofthedifferentsizesofcompaniesinFigure28,itcanbeseenthatamongblackandcolouredowners,thelargestproportionoffirmshave2to4employees.Thereisamoreequaldistributionofcompanysizesamongwhiteowners.Itisclearfromthisgraphthatnotallwhitecompanyownersarenecessarilytryingtobuildlargercompanies.Thetotalnumberof Indian/Asianrespondentswastoo lowacross thespectrum,but fromthesmall sample thatwehavewe can see that companieswith5 to9employees in size aresmaller.

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Figure28:Plumbingcompanysizebyrace


Byanalysingtheprioritiesofblack,Indianandcolouredcompanyownersbyfirm,wecanseeacleardifferenceinprioritiesoffirmownerswhencomparingcompanieswith2to4and5to9employees(Figure29).Itwouldappearthat4orfewerstaffmembersisacriticalsize,withaclearlydifferentpriorityfromthe5to9employeesgroup.Atastaffsizeof10andupwardsanother pattern can be distinguished from the 9 and below group. We see that withcompanieswithmorethan4employeestheirstrategiesaremainlyfocusedonincreasingtheproductivityandperformanceoftheirexistingworkforce.Itisnotunexpectedthatsmallercompanies aremore interested in expanding their business by adding adequately skilledpeople.

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When considering the priorities of white-owned companies (see Figure 30), we see thatthroughout all the company sizes the priority is more to increase the productivity andperformanceofexistingworkers.Thiscouldindicateastrongerpreferenceforshortcourses,onlineresourcesandon-the-jobtraining.Figure30:Prioritiesofwhiteplumbingbusinessowners


4.6.4 CompanyprioritiesarereflectedinpasttrainingpreferencesWetriedtodeterminewhethercompanypriorityhadaneffectontrainingpreferences.Therespondentswereaskedwhattheirpreferredformofskillsdevelopmentoftheirstaffwas.Figure31showsthatofalmostallthewidelyknownwaysofincreasingskillsintheindustry,thepreferencewas for increasing theproductivityofexistingworkers.Theexceptionwaswhereownersfelttheirstaffwerealreadysufficientlytrained,andthereforeoptedforaddingadditionallyskilledstafftotheircompanies.Thisgraphcouldalsobeinterpretedassayingthatemployeeswhoare sentas students to train (perhapsasapprentices)bya companywould also fit the strategyof the companybetter.However, under the current economicconditionsthiscouldalsobequestioned,asmanycompaniesstillwishtoreducetheirstaff.

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In-housetraininghadthehighestnumberofresponses,indicatingthatforallthreekindsofgenericstrategy,trainingemployeesonthejobhadahighpreference.Figure31:Companypriorityandpasttrainingpreferences


Itcanbeconcludedthatthereisamuchhigherpreferenceforon-the-joborin-housetrainingthantosendstafftoanyformallyaccreditedtrainingprogrammesirrespectiveofthetrainingproviderformat.Thisisespeciallyimportantascompaniesbecomelarger.4.6.5 DifferentmarketsshapebusinessprioritiesWewantedtoseehowmarketsorclienttypesaffectedbusinessstrategyandpriorities.Theinsurance industry’smuscling down the rates of plumbers is a bone of contention in theplumbingindustry,andweexpectedthistoshowintheresults.By lookingathowthedifferentracesrespondedtothepricepressure fromthe insurancesector,wefoundthatblack,Indianandcolouredcompaniesthatrankedthismarketasofhighimportancerespondedbyprioritisingtheexpansionofthebusinesswithadequatelyskilledpeople(Figure32).Figure32:Black,Indianandcolouredprioritiesintheinsurancemarket


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White-ownedcompanies that ranked insuranceasavery importantmarket respondedbyprioritisingproductivityimprovementofexistingstaff.Thosethatindicatedthatinsurancewas of medium importance indicated expanding with adequate staff and increasing theproductivityofexistingstaffasequallyimportantpriorities(Figure33).Figure33:Whiteprioritiesintheinsurancemarket


When considering other markets, such as domestic maintenance, we discovered that ingeneral theblack, Indianandcolouredcompanyownersalwaysprioritisedtheadditionofadequately skilled people, whereas white owners always prioritised an increase inproductivity.

5 RecommendationsfromtheplumbingownersurveyBased on our industry diagnosis, we developed recommendations based on the industrydiagnosiswhichweaddresstoIOPSAandthePIRB,andthereaftertoGIZ/SD4GE.5.1 ToIOPSAandthePIRBThepublicsectorisstillanimportantemployerofplumbers.TargetingplumbersemployedinthepublicsectorcouldbeagoodentrypointandcouldfurtherstrengthenthepositionofIOPSA.Ourestimationisthatasmanyas10%ofself-declaredplumbersinSouthAfricaareworkingingovernmentservice.Werecommendtargetinglargermetropolitanmunicipalitiesintheirdifferentcapacities:

• Asregulatorsandregistrarsofplumbers• Asemployersofplumbersandprovidersofopportunitiesforapprentices• Aspotentialhostsofregional IOPSAnetworkingactivitiesbeyondGautengandthe

WesternCape.Thesmallerplumbersneedsomesignpoststoorganisationsandnetworksthatcanprovidethemwithgenericandmorespecificbusiness,humanresourcesandlegalsupport.Thiscanbe negotiated with organisations such as the Small Enterprise Development Agency, orperhapsevenwithbanks.WefoundthattheMasterBuildersAssociationoffersamanualand

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limitedsupporttosmallandemergingcontractors2,andwonderedwhetherthiswouldbeanideaforIOPSAtopursue.Informality isahuge issue in theplumbing sector.Adistinction shouldbemadebetween“informal”as innotcompliantwithbasic laws,and informalityasnot formallypartof theactivitiesofIOPSAandPIRB.The currentestimated informalityofunregisteredandnon-taxpayingplumbingactivity isveryhighandnon-compliant.PathwaystoformalityareintheinterestofIOPSAandthePIRB,andmustbe carefully designed to crowd in actors in the industry.However, this supportwould have to go beyond the technicalities of a plumbing enterprise andwould have toincludesomeverybasicbusinesssupportaswell.Thesecondkindofinformalityisformallyregisteredcompaniesthatareprovidingservicesthatincludesplumbing,butthatarenotconnectedtoIOPSA,PIRBortheplumbingindustry.Thesecompaniesareabletoundercutfullycompliantplumbingenterprisesastheydonotcomply with standards and regulations. Their behaviour undermines attempts toprofessionalisetheindustryanditsubduesinvestmentbyexistingformal.TherearealargenumberofplumbingcompaniesintheformalsectorthatdonotyetbelongtoIOPSA.Perhapsaclassofmembershipthatrecognisesmemberships inotherrelated industryassociationscanbeusedtoboosttheindustryrepresentation.TheannualmembershipfeeofIOPSAmayalsobeanobstacleformanysmallerplumberstojoin.IOPSAshouldcontinuetoinvestinvideomaterialandwebinars,asthesearevaluedbythebusinessowners.Atthemoment,thedifferentlevelsinthedesignationsofthePIRBarestillmainlysequentialanduniform,providingaverynarrowpathwayforupgradinganddifferentiation.Whilethisisareallystraightforwardupgradingpathfortheprofession,wedoubtwhetherthiscreatesenough room for sub-categories of specialists to emerge.However, thePIRB is correct instatingthatdifferentiationmakessenseonceplumbershavereachedanacknowledgedandrecognisedformalqualification.Werecommendthatmoreindustry-recognised“signals”ofcompetencebedevelopedtoallowformorejobdifferentiationandtosupportspecialisationsonce thebasicqualifications are completed. This signallingof competencemustbemuchshorterandquickerthanaformalqualification.Ifatallpossible,thefurtherqualificationsorareasofspecialisationshouldnotbetoosequential.IOPSAandthePIRBhasalreadycommittedtoconductinganindustrysurveyeveryyear.Westrongly support this initiative and hope that IOPSA and the PIRB can use some of thequestionsthatwereusedinthissurvey.Buildingatime-baseddatabasewillbeveryimportantforstrategicdecisionsandservicedesigngoingforward.IOPSAcanalsoconsidersupportinginitiativessuchasabenchmarkingexercisetostimulatecompetitionandcross-firmlearning.2https://www.masterbuilders.org.za/our-services/support-to-emerging-contractors

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Several plumbing companies already have in-company trainers, and an importantway todisseminatelearningtotheindustrywouldbeforIOPSAandthePIRBtofindwaystosupportthedevelopmentofthesementors.5.2 ToGIZ/SD4GEMore focus isneededon shorter skillsprogrammesand trainingevents,onlineormedia-basededucation.Ifpossible,GIZ/SD4GEshouldfindawaytosupporttheeffortsofthePIRBandIOPSAtoprofessionalisetheindustrybeyondjusteducationsupport.GIZ/SD4GEiswellconnectedandabletoassisttheindustryorganisationswiththeirowntestingsystems,andtoworkbetterwiththepublicsectorbodiesinvolvedinthequalificationsframeworks,careerpaths,certificationschemesandaccreditationissues.Theplumbingbusinessownersurveyhighlightstheimportanceofvideos,webinarsandon-the-job training to equip existing employees to achieve higher levels of productivity andperformance. It is important to help employers to upgrade their workforce so that newentrantscanenteratthelowerranksofthesystem.Apriorityofplumbingbusinessownersatthispointintimeistofindwaystoimprovetheproductivityandperformanceofexistingstaff.Webelievethatasproductivity,performanceANDqualificationsimprove,thedemandforbetterqualifiedgraduateswillalsoincrease.ThemorePIRBregisteredplumberswhocanissuecertificatesofcompliance,themoreplumbersatlowerdesignationswillbeneeded.However, many plumbing businesses are also struggling to grow and absorb graduatesbecause they are undermanaged. There is an expressed need for more business, sitesupervision, costing and other management training programmes. Owners must besupportedtomanagethecompetingdemandsofbettertechnicalworkANDmoreproductivemanagementandadministration.Thedownturnintheconstructionsectorcombinedwithsubduedhouseholdexpenditureisweighingheavilyontheplumbingsector.Theresult is intensifiedcompetition, loweringofratesandanunder-investmentinskills.Buttheseareallshort-termresponses.Inthelongerterm,highlyqualifiedandcompetentplumbingartisanswillstillbeneeded.Findingwaystomakeiseasierforexistingstafftofurthertheirqualificationsisveryimportant.Yet,findingwaysofimprovingtheflowofyoungpeoplethroughtheeducationsystemintoemploymentisalsostillveryimportant.ThetrustandcooperationbetweenthepublicVETinstitutionsandthe private sector must be restored, and the pipeline must be carefully monitored andcuratedtomakesuretherightcandidatesenterandpassthroughthesystem.

6 ConclusionsTheindustryanalysisaddedvaluebylookingatindustry-levelissues,mainlybyengagingwiththe formal industry organisations and their supporters, and the perspective of plumbingbusinessownersthroughasurvey.Thesurveyinvestigatedmanyoftheopenquestionsraised

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byIOPSAandthePIRB,andalsoprobeddeeperintoquestionsthatarosefromthehigh-levelstatisticsthatTIPShadanalysed.The plumbing industry is in the process of professionalising.While training new entrantsadequately is important, the industry analysis shows that improving the productivity andperformance of existing staff is even more important. The pressure to improve thequalificationsandperformanceofexistingstaffisaresultofthechangesinlegislationandtheintroductionofcertificatesofcomplianceforhotwatersystems.However,therearemorethan100000self-identifiedplumbersintheinformalsector.Manyof these plumbers probably started their careers in the construction and building sector,whereworkersweretrainedonthejobtodobasicorperhapsevenmoreadvancedplumbingwork.Thehugenumberofinformalplumbersaffectstheabilityofincumbentplumberstoinvest in their companies and their staff, because their rates and investments are beingundermined.Veryfewplumbershavebeenabletointegratethecostsofmoreprofessionalconduct into their businessmodels.Most licensed plumbers cannot pass on the costs ofissuingcertificatesofcompliancetotheircustomers,largelybecausethemarketdoesnotyetvaluethequalitysignalofthecertificateofcompliance.Theinformalsectorandunregisteredplumbersaredrivingtheratesofplumbersdown,whilethecompetitioninthesectorisgoingup.Thatcreatesconditionsconducivetoplumbersagreeingtodojobsthattheyareeithernot licensed to do, or they do not issue the certificate of compliance as required by theregulations.Thehealthoftheconstructionsector,whichhingesontheoverall investmentclimateandhealthofthebroadereconomy,hasahugeeffectontheplumbingindustryandthedesireofplumbingbusinessownerstoexpandtheirstaffandinvestintraininginallforms.WehavesummarisedourassessmentoftheplumbingindustryinFigure34.Itshowsthattheindustryisbeingunderminedbyinformal,unregisteredanduntrainedentrants.Theindustryis further facingpressure createdby large clients, suchas the insurance industry,not yetsupportingtheeffortstoimprovetheregulationofthesector.

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Figure34:TheDiamondoftheplumbingindustryinSouthAfrica

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7 SupportingupgradingandtransformationOriginally,thescopeofthisresearchconcernedtownships.However,duringFebruary2019thisresearchscopewasreassessedandrevisedbyGIZ/SD4GE.Theresultssignalledtowardstopicsoninformality,transformationandupgradingoftheplumbingindustry.Thefirstsectionbrieflycoverssomeoftheinitialfindingsbeforetherevisionoftheresearchscope.Next,thetransformationoftheplumbingindustryisdiscussed.7.1 ThechallengesfacinginformalenterprisesintownshipsIn the original TOR, the focus was on township entrepreneurs in selected areas. ThechallengesofeconomicdevelopmentofSouthAfricantownshipsaremassiveandbinding.Inrecentyearsseverallarge,fundedprojectshavebeenimplementedtoidentifyenterprisesintownships and to find ways to strengthen entrepreneurship and township economicdevelopment.Despitethepoliticalsupportandtheavailabilityoffunding,theresultshavebeenmixed.TheSouthAfricanNationalTreasury’sCitySupportProgramme,supportedbytheWorldBank,hasdoneimportantresearchintothechallengesfacedintownshipeconomicdevelopment.Severalotherorganisationshavealsodoneimportantworkinthisfield.OneoftheleadingSouthAfricanexpertsonthistopic,KatePhilip,publishedabookonherresearchonthetopic.Thefollowingpassagedrawsfromherwork.KatePhilip(2018a)explainsthatalthoughinformalenterprisesformpartofthewidersmallenterprisesector,theyhavedifferent,oradditional,problemsandobstaclestoaddress.Philiparguesthatgenerally,analysesofconstraintsonsmallenterprisesfocusonaspectssuchasskills,regulatoryissues,crimeandalackofaccesstocapitalandcredit.Thefocusisoftenoninternalweaknessesofenterprisesand/oronthecharacteristicsoftheentrepreneurs.PhilippointstotheworkofEddieRakabe(2018),whoreportsthattownshipenterpriseownersseetheirmainproblemsasbeingexternaltothem,e.g.alackofgovernmentsupportorwaterconnections,financeandbusinessspace–ratherthantheirowncapabilities.TheworkofFourie(Fourie,2018),Philip(Philip,2018a)andRakabe(2018)pointstothehighlyconcentratednatureoftheSouthAfricaneconomy,whichresultsinmanyhouseholdshavingaccesstotheformaleconomy.Thispushesinformalactivityintownshipstowardsactivitiesthat are under-provided or hardly sustainable as it remains dependent on disposablehousehold income. Elsewhere Philip (2018b) reports that with formalmanufacturing andretailssectorsthataresoefficientbeingsoaccessible,theabilityofsmall-scalemanufacturingtoservethetownshipmarketsisundermined.Thatleavesmainlyretailing,whereproductsareboughtfromtheformalretailchainsandsoldoninconvenientlocationsatasmallmargin.Inareasoftenconsideredmarginaltotheeconomy,suchastownships,informalsettlementsandformerBantustanareas,communitiesarestill largelypoor.Thesearetheareaswhereunemploymentishighestandwheresmallenterpriseactivity–formalorinformal–isoftenenvisagedasofferinganopportunityforentrepreneurshipandemploymentgeneration.Yet

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insuchenvironmentstheimpactofcompetitivenessonmarketopportunitiescanbequiteharsh.Theprognosisfortheservicessectorissomewhatdifferent.Thepatternsofspatialinequalitythat characterise the urban landscape mean that there are often significant distancesbetweentownshipsandinformalsettlementsandthecommercialandbusinesscentres.Forinformalbusinesses thatprovidepersonal andother services, thedistance to commercialcentrescancreateacompetitiveadvantageforservicesthatareprovidedlocally–forreasonsofconvenienceaswellastravelcosts.Obstaclestoaccessinghigher-endmarketsandtheformalisationdilemma

To a large extent theopportunity to tap into higher levels of disposable income requiresaccesstomarketsthatareexternaltotownshipsandsimilarareas.

However, moving beyond local markets usually means a shift to business-to-businesstransactionswithaformalretailer,oraspartofavaluechain.Forproducers,thisshiftislikelytobeanecessaryconditionforvolumegrowthandpotentiallyjobcreation.Philiparguesthatbusiness-to-businesstransactionsalsointroduceacomplication.Transactionsundertakenatarm’slengthinvolvehigherrisksofexchange.

InSouthAfrica,breakingintomarketsoutsidethelocalareaoftenmeanstransactingnotonlyacross spatialdistances,butalsoacross the socialdistancesof classand race. Spatial andsocial distances also typically mean that networks, trust and relations of reciprocity areabsent,particularlyinthebeginning.Aclientconsideringatransactionwilllookforsignifiersthatthesupplierisa“real”business,abletodeliveragreedquantitiesontime,againstagreedspecificationsandtoagreedstandards.Often,asinthecaseofsupermarkets,thisinvolvescertificationofcompliancewithcomplexpublicandprivatestandards.Thislimitsthescopefor informalityandoften requiresahugestep-change inbothbusiness sophisticationandformalisationforasmalland/orinformalenterprise.

Thestatutoryaspectsofformalisationareasmallpartofawiderimperativetoadoptbusinesspracticesthatsignaltheabilitytoengagein–andhonour–business-to-businesstransactions.While formal registration as a business, registration for income tax and compliancewithlabourregulationsmaybenecessary,theselegalformalitiesarerarelysufficient.Toconvertanenterprisefrominformaltoformalrequiresmorethanjustregistration.Formalbusinessesmust be able to enter into transactions on a level playing field,which involves contracts,warranties,conformancetostandardsandlegalrecoursetoconsumersifexpectationsarenotmet.Formalcompaniesmustofferwarrantiesandensureeffectivedeliveryofservices,andtheymustbeabletomanagetheresourcesattheirdisposalefficiently.Employeesofformalenterprisesmustberegisteredwiththeappropriatetax,insuranceandotherboards.Tax and payrolls must be managed and basic laws regarding workers’ rights, safety andtransportmustbecompliedwith.Entrepreneurstypicallylearnaboutthesesofterissuesatwork before they start their own enterprise,whichmeans that younger personswithoutmuch work experience would find it hard to prosper except in instances where theirupbringingandsocialnetworksallowsthemtostartoutwithlessexperience.

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7.2 TransformationintheplumbingindustryTransformationisnotonlyaboutcompanyownership,althoughthisisanimportantmeasure.Transformation isalsoaboutgivingvoice,andnot toassumethateveryonehas thesameoptions,thesamepathwaysorthesamepriorities.7.2.1 ArchetypesofplumbingownerbusinessprofilesTheresultsoftheplumbingbusinessownersurveyandtheindustrydiagnosesarediscussedearlier in of this report. However, it was decided to conduct a deeper analysis to betterunderstandhowamorenuancedviewofissuesfacedbyplumberscouldbepresented.Ourresearchshowsthatthereareimportantdifferencesbetweenlargerandsmallerplumbers.Itrevealed that 4 employees is a critical point, and that company strategies change from5employeesupwardstowardsafocusontheproductivityofexistingstaff.Theanalysisalsoshowsthatmostplumbersavoidcertainclienttypes(governmentandrenewables)andhowimportanttheconstructionsectoris.In Section 4.6 of the report, several cross-tabulationswere done on the data to identifyopportunitiesfortransformationintheplumbingsector.Theaimofthisanalysiswastodrilldeeperthantheaveragestobetterunderstandtheprioritiesandneedsofdifferentracialgroups,demandsposedbydifferentmarkets,differentcompanysizesandmore.Theresultsshowthatblack, Indianandcolouredbusinessownershavedifferentprioritiesthanwhitecompanies.Theanalysisrevealsthatinsightbasedonaveragesisnotveryuseful,andthatdevelopingmorenuancedarchetypesispossible.Beforewediscussthearchetypesandtheresultsofthecross-tabulations,wegiveashortreportonthecurrentstatusofstructuralchangeintheplumbingindustry.7.2.2 StructuralchangeintheplumbingindustryThePIRBreportsthatofitsregisteredplumbers,26%areblack.Achallengetoimprovingthisnumber is that registration depends on a formal qualification. A key instrument is therecognitionofprior learning (RPL)andthePIRBqualifications frameworks toenablemoreblackpeopletoproceedtohigherlevelsofrecognitionintheplumbingindustry.ThePIRBandIOPSA are currently working on a project to improve the RPL system to address thisbottleneck.IOPSA has started to ask its existing and new applicants for their BEE certificates. IOPSAreportsthatthereareincreasingnumbersofcompaniesatthehighertiersofBEEcertification.IOPSAhasdraftedatransformationpolicyfortheplumbingindustry(seeAnnexure3.1).ThetransformationactivitiesareshownontheIOPSAwebsite(seeAnnexure3.2).However,thetransformation policy itself is not available from the IOPSA website. During 2018, IOPSAestablished a voluntary transformation committee to drive and coordinate thetransformationactivitiesof the industry.ThecommitteealreadyprovidedfeedbacktotheIOPSAboardinFebruary2019ontheirinitiativesandresults(seeAnnexure3.3).

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Oneoftherecommendationsfromthetransformationcommitteeistohostmoremeetingsinthetownships.Inthepast,mostIOPSAmeetingswereheldinformerlywhiteareas.IOPSAhasengagedwithplumbingcooperativesinsomepredominantlyblackareastotryandfigureouthowitcansupportthesestructures.However, IOPSA needs to findways to get structures towork in areas beyond the largemetropolitanareas.Whileitisunderstoodthatbeingavolunteerisabigburdenintermsofcommitment,especiallywhenacompanyisstillrelativelyyoung,IOPSAmustfindawaytogettheseprovincialstructuresgoingsomehow.7.2.3 InsightsfromthefieldworkFromourfieldworkwecouldsensethatthelackofactiveparticipationofblackplumbersoncommitteesandvoluntaryactivitieswasanobstacletoclosercollaborationwithgovernment.IOPSAandthePIRBareawareofthechallengeandarealreadyaddressingtransformationthroughtheircommitteesandintheirdailywork.IOPSAandthePIRBareproactiveintheirefforts to develop pathways for black, coloured and Indian plumbers to progress in theindustry.Itmustnotbeassumedthatblackplumberswillparticipateinthesestructuresinthesamewayasmoreestablishedwhiteplumbersparticipate.Theindustrybodiesneedassistancefromtherangeofdevelopmentprogrammesandmesoorganisationsthatareworkingwiththeindustry.Inthepast,developmentprojectshavealsonotpromotedorurgedstudentsandbeneficiariestojointhePIRBandIOPSA.IOPSAandthePIRBareoftenconsultedasstakeholdersandnottreatedasdevelopmentalpartners.Fromagenderperspective,theplumbingindustryisstillmainlydominatedbymen.Therearesomeidentifiedobstaclesforwomen,suchastoiletfacilitiesinmanyworkplaces.However,with materials and tools becoming lighter and easier to use, physical strength is not asimportantas itwas in thepast.Contracts in theconstructionsectoraremainlyofa fixedduration,andtherearereportsofpregnancybeingachallenge–thusyoungerwomenaremostlikelytobediscriminatedagainst.Many white-owned plumbing companies are small, family owned and financed throughpersonal collateral. There is little funding for the transformation of smaller white-ownedfamily businesses.We are also not so convinced that a family-owned plumbing businesswouldbeagoodinvestmentforablackpersonwithcapital.Formanyblack-ownedcompanies,thelackofcollateralremainsamajorobstacletogrowthand expansion. The lack of collateral means that the whole business and its equipment,vehiclesandmaterialsmustbefinancedthroughthecashflow.Thechallengeisthatmanyplumbingbusinesseshaveweekswheredemandislow,leadingtoaliquiditycrisis.When looking at the owner survey data, it is interesting to note that at a certain size ofcompany(from9employeesandupwards),blackandwhitebusinessesarehamperedbyverysimilarfactors.Althoughthesamplesizewastoosmallforblackcompanieswithmorethan49 staff, our results showed that they had the same priorities and perspectives aswhiteownedcompanies.However,itwasalsostrikingthatwhileblack-ownedcompaniesappearedwilling to employ more people with appropriate qualifications, white-owned companies

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throughout rather prioritised improving the productivity of existing staff over employingadditionalpeople.Therearefromwhatwecantellveryfewprogrammesaimedathelpingstart-upsintechnicaltrade businesses, nor are there acceleration programmes or micro-franchise optionsavailable.Theseinitiativeswillenablesmallerplumberstothrive,whiledependingontheirsupportstructurestohelpthemwith,forinstance,legaltemplates,administrativeguidance,marketingsupportandaccesstosuppliers.Theplumbingbusinessownersurveyshowedthatmanyplumbersarehamperedbyadministration,financialmanagementandmanybusinessmanagementissues.Thiscouldbeadamperongrowth,andthereforesupporttodevelopmaterials,standardtemplatesormorebusinessmanagementguidanceshouldbeaddressed.The industry is trying to transform itself with very little formal external assistance. Forinstance, the dti offers incentives and support to encourage and support industrytransformation.TIPSofferedtoconnectthePIRBandIOPSAwiththerelevantcontactpersonsatthedtisothatthisopportunitycouldbeexplored.With regard to business and training support for the plumbing industry, theBEE supplierdevelopmentspendoflargercompaniesandclients(suchasinsurancecompanies)couldbeusedtodevelopprogrammestoprovidebusinessandtechnicalsupporttoblack-ownedorstart-upplumbers.There are initiatives under way to extend certifications of compliance and regulations.GIZ/SD4GEcanworkwithIOPSAandthePIRBtodevelopandprioritiseworkforcepreparationorupskillingprogrammes.Thiswillhelptoaddressbottlenecksinthecurrentplumbingcareerpaths,andatthesametimeprovideopportunitiesfor informalworkersandbusinessestoformalise.7.3 CompetitivepressuresondifferentarchetypesofplumbersTheanalysisoftheplumbingownersurveyispresentedanddiscussedinthepreviouschapterofthisreport.Fromthetextitishardtodevelopapictureofthedifferentprofilesofdifferententrepreneurs.Porter’sfiveforcesisasimplewaytoassessthecompetitivepressureson,andadvantagestoan enterprise. This same framework forms the basis ofmost business plans. Porter’s fiveforcesassesstheabilityofenterprisesto:

• Dealwiththethreatofnewentrants• Tobargainandnegotiatefavourabletermswithsuppliersandcreditors• Tobargainandnegotiatefavourabletermswithcustomersandbuyers• Dealwiththethreatofsubstituteproductsorservicestodisrupttheenterprise• Recognisetheintensityandnatureofrivalryorcooperationbetweenenterprises.

Asthehigh-levelstudyrevealedtheextentofthechallengeofinformality,wedecidedtoaddanother factor, namely “Pressure to complywith regulations and laws”, asmany smaller(informal)plumbersarepricecompetitivebecausetheydonotcomplywithregulations.

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Byanalysingtheresultsofthesurveywiththeuseofpivottables,wewereabletoformulatethe following profiles. It should be noted that these archetypes are still using averagescombinedwiththesubjectiveassessmentsoftheresearchers.When assessing the competitive external forces on the cross-tabulation data, we weresurprisedtofindfourgroupsofverydistinctexternalpressureconstructsfromtheresponsesreceived.Thedatarevealsthatsmallblackandwhiteplumbersoftenchooseverydifferentmarketsandverydifferentbusinessstrategies.However,whenthecompanygrowstoabout9employees,black-ownedandwhite-ownedplumbingbusinesses start competingon thesame level against smaller and larger plumbers. These different archetypes are furtherreinforcedbyfactorssuchastheageofthecompany,thematurityofmanagementandthesystemsusedintheenterprise,aswellastheabilityofoldercompanyownerstoaccesscreditandtonegotiatefavourabletermswithclientsandsuppliers.Wedecidedtovisualisethefollowingfourdifferentarchetypes:

• Informalplumbers• Smallwhiteplumbers• Smallblackplumbers• Mediumtolarge(corporate)plumbers

7.3.1 InformalplumbersAs the business owner survey did not include any information on informal plumbers,weconstructedthisarchetypefromtheTIPSworkpackage1report.Theinformalplumbersarea mixed group of educated and uneducated, experienced and inexperienced, white andlargelyblackpeople.Theyhavedifferinglevelsofformalisation,withsomeevenemployingothers.ThecompetitivepressuresoninformalplumbersareshowninTable2andinaradargraph form in Figure 35. There is a good chance that many informal plumbers are alsoinformalpainters,electriciansandbuilders.Table2:Competitivepressureoninformalplumbers

Force Influence FactorsThreat of newentrants

Low Informal plumbers are not competing against otherinformalplumbers.

Bargainingpowerofsuppliers

Medium Mainly buy materials for cash or get clients to buymaterials.Dependentonclienttransport.Limitedtools.

Bargainingpowerofbuyers

Medium Clientscanchoosetodoworkthemselves.Paymentsincashorinkind.

Threat of substituteproductsorservices

Low Informal plumbers do the kind of manual work thatcannot be substituted by technology or alternatives.Theyarealsoabletoeasilyswitchtootherconstruction-relatedworkbasedondemand.

Intensityandnatureofrivalry

Low Informalplumbersdonotreallyhavestaff,andtheyexiteasilyiftheygetbetterwork.

Pressure to complywith laws andregulations

Low Althoughmeeting the requirements is veryhigh,mostinformalenterprisesare flyingbeneath the radar.Thisgivesthemacompetitiveadvantageastheircostsand

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commitments to their staff and clients are low.Enforcementisalmostimpossible.

Figure35:Competitivepressureoninformalplumbers

7.3.2 SmallwhiteplumbersSmall white-owned plumbing businesses face far more competitive pressure than theinformalplumbers.OurassessmentoftheircompetitivepressuresisshowninTable3andinaradargraphforminFigure36.Theyareunderconstantthreatfromnewentrantsandarealso increasingly losing bargaining power with their clients due to BEE compliancerequirements. Their strategic response is to specialise in certain domains, markets ortechnologies.Formanywhite-ownedplumbingbusinesses,theabilitytomeetprofessionalstandardsandtoissuecertificatesofcomplianceisacompetitiveadvantage.Theyhaveoftenbeeninbusinessforalongtimeandareabletoexpandtheirbusinessmoreeasily.Manysmallwhiteplumbersaresmallbychoice.Theyfocusonimprovingtheproductivityoftheirexistingstaffwhileatthesametimereducingtheirheadcountwherepossible.Table3:Competitivepressureonsmallwhiteplumbers


High ThreatofinformalplumbersandplumberswithhigherBEEscores.


Low Manywhite-ownedplumbershavecreditfacilitiesandaccountswithsuppliers.Theyareable toaddvehiclesandteamsdependingontheirworkload.

0

1

2

3

4

5

6

Threat of newentrants

Bargaining power ofsuppliers

Bargaining power ofbuyers

Threat of substituteproducts

Intensity and natureof rivalry

Pressure to complywith regulations,

standards and laws

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Medium Many white-owned plumbing businesses are avoidinggovernmenttendersandinsurancebusiness.Theyseemtobemainlyfocusedonbuildingcustomerrelationsandloyalty. Plumbers are specialising tomake themselvesmorevaluable.


High Price-sensitiveclientsdemandlowerpricesandshifttoplumberswhocanrespondfasterorcheaper.


Medium The main priority is to improve the productivity andperformance of existing staff. Regular cooperation inconstructionandindustrialwork(networkties).


High White-ownedplumbers areunder pressure to complywith BEE regulations andwith increasing professionalstandards,whichclientsarewillingtopayfor.Theabilityofwhiteplumberstoissuecertificatesofcomplianceisanadvantage.

Figure36:Competitivepressureonsmallwhiteplumbers

7.3.3 SmallblackplumbersTable4showstheincreasingcompetitivepressurethatsmallblackplumbersareunder.Thesame results are visualised in Figure 37. Firstly, black plumbers are under threat of newentrants,whoalsoincludetheirownstaff.Theyareofteninaweakpositiontonegotiatewithsuppliersandcreditors.EvenblackplumberswithhighBEEcredentialsareunderpressuretoofferlowerpricesasclientsandbuyersplaythemoffagainsteachother.Theblackplumbersareunderpressurefromsubstitutesiftheyarenotabletoexpandtheirvehiclesandteamstomeet demand, and the nature of the rivalry is also high. The administrative and legalbarriersonblackplumbersarealsohigh,especiallyforthoseblackplumberswhohavetobid

0123456







standards and laws

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inconsortia.Mostblackplumbingbusinessownersindicatedthattheypreferredtoaddmorequalifiedstafftotheirworkforcethantoupgradetheskillsoftheirexistingteams.Table4:Competitivepressureonsmallblackplumbers


High Informal plumbers operate freely. Black plumbers canstartabusinesseasily.


Medium Largesupplierscandecidewhotogivecreditto.


High Insuranceandconstructionclientsprescribe ratesandterms.Must respond fastorbusiness ismoved to thenext available plumber. Tendering for governmentbusinessiscut-throatandthereisnoloyalty.


High More established companies with more vehicles andbetterresponsetimesgetmorework.


High Marketisverypriceandspeedsensitive.Hardtorecruitstaffwithrightqualificationsthatenhancethebusiness.


High Withtheincreasednumberofblackplumbersenteringthemarketplace,theabilityto“prove”BEEcomplianceandtomeetprofessionalstandardsarehigh.

Figure37:Competitivepressureonsmallblackplumbers

7.3.4 Mediumtolarge(corporate)plumbersThemediumtolargeplumbersoperateatascalethatishardtocopy(seeTable5andtheradargraphinFigure38).Theirbusinesseswerebuiltupovertimeandtheyhavedevelopedinternalmanagementandfunctionalexpertisethatallowthemtomanagemultipleteams,

0123456







standards and laws

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often in multiple locations. They are able to negotiate credit with suppliers, and theirequipmentandmaterialsuppliersseekthemouttoencouragethemtotrynewtechnologies.Duetotheirdepthandreach,theyareabletonegotiatemorefavourabletermswiththeircorporateclients.While theycan losesomebusiness tocheaper (smaller)plumbers, theirclientsoftendependontheirprofessionalismandprojectmanagementcapabilities.Theyareabletonegotiatecontractswiththeirsuppliersandtheirclients,andtheyoftenhavein-houseskills development, project management, quality assurance, call-centre and marketingfunctions.Table5:Competitivepressureonmediumtolarge(corporate)plumbers


Medium Multiple branches, multiple teams, longer-termcontractswithcommercialclients.Internalcallcentre,costcontrol,assetmanagementandspecialists.


Medium Negotiatediscounts,delivery,stock. Internalordering,accounts with suppliers. Equipment and materialsupplierstrainstaff.


Medium Due to distribution and depth, they are able tonegotiateratesandtermswithclients.


Medium Whiletheycanlosebusinesstocheaperormorelocalfirms, their branding and professionalismmake themsecure.

Intensity and natureofrivalry

Medium They are able to form contractual relationships withclientsorsuppliers.


Medium These plumbers have administrative and operationalcapability that makes compliance and achievingstandardseasier.Infact,theregulationsandstandardscountintheirfavourastheycreateanobstaclefortheircompetitors.

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Figure38:Competitivepressureonmediumtolarge(corporate)plumbers

ThefourtablesforthedifferentarchetypescanbevisualisedusingaradargraphasshowninFigure39.Inthisgraphthelowcompetitivepressureontheinformalplumbersisvisibleinthecentreofthegraph,whilethecompetitivepressurefrommanydifferentanglesonsmallblack plumbers can also be seen. This graph shows thatmedium to large plumbers havereachedapointwheretheyareunderlesscompetitivepressurebecausetheyhavedevelopedin-housemanagementandspecialisedfunctionalcapacities,butitmustnotbeassumedthatthiswasaneasystatetoreach.

012

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standards and laws

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Figure39:Comparingthecompetitivepressureondifferentplumbingarchetypes

Wehavecollectedenoughdatatodevelopmoreandmoreof theseprofiles.However, todevelopmorearchetypesitwouldbeidealtohavemoreresponses.Itisriskytocreateanarchetypeof certain company sizesormarketorientationwhen thereare simply too fewresponses.7.4 RecommendationstosupporttransformationWebelievethattransformationoftheformalindustrywillalreadychangeifIOPSA/PIRBcandrawinmoreoftheinformal/un-registeredplumbers.Intheprevioussectionitwasshownthat the informal plumbers are undermining investment in skills and other areas of thebusinesses.Webelieve that informality is alsoundermining themore capable small blackplumbers.Theresultsofthecross-tabulationsshowthataveragescanbemisleading.Thearchetypesanddifferentiationofpathwaysandupgradingoptionsbetweendifferentkindsofplumbersareimportant.Forinstance,itshouldnotbeassumedthatallblackplumbersarea)informal,b) not so professional, c) struggling to raise finances. Our fieldwork revealed some verysuccessfulblackplumberswho,althoughbasedinblacktownships,operatedacrossGauteng.Atthesametime,itshouldnotbeassumedthatallwhiteplumbersaredoingjustfineandthattheyareabletolookafterthemselves.InSection7.3ofthisreportweattemptedtocreatecompetitivepressureprofilesbasedonaverages.Thechallengewiththeseprofilesisthatwhenthedatasetisbrokenupintosmaller

0

1

2

3

4

5

6

Threat of new entrants

Bargaining power of suppliers

Bargaining power of buyers

Threat of substitute products

Intensity and nature of rivalry

Pressure to comply with regulations,standards and laws

Informal plumbers Small white plumbers Small black plumbers Medium to large plumbers

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andsmallerarchetypes,thelownumberofresponsesforcertainfieldscouldbemisleading.However, the competitive force illustrated that informal plumbers are facing littlecompetitivepressure,probablywiththeexceptionofthepressureofstayingalive.Itisourassessmentthatsmallerblackplumbersarefacingfarmorecompetitivepressurethantheirwhite counterparts, while medium to large plumbing operations have their competitivethreatsundercontrol.Allofthiscouldchangeiftheeconomydoesnotpickupsoon.Theinformalityintheplumbingtradeisextensive.Whiletherewillalwaysbeoperatorswhochoosetoremaininformal,findingwaystoreduceinformalityandenableprofessionalismisimportant.Becomingaregisteredplumberdependsonformalqualificationsbutfindingwaysof recognising or promoting sub-specialisations and focus areas is also important. It ispreferable to findwaysof recognisingcompetentpeople.Perhaps itwouldbepossible tosupportthePIRBtodevelopabroaderandmorediverserangeofpathwaysthatwillallowcompetentpeople toberecognisedsothat theycanalsosignal theirspecialisationto themarket.Onewaytoovercomethebarriertotransformationistofocusontherecognitionofpriorlearning.Thiscanbesupportedbyshortcoursestomovepeoplethroughtheranks.Manyplumbingbusinessownersareinneedofbusiness,administration,financialandothernon-technical support. Short courses to help business owners improve productivity andbusiness performance should be introduced. The competitive pressure analysis revealspressurepointswhereIOPSAmightbeabletoassist.Forinstance,manysmallerplumbersarestrugglingwith creditwith suppliers.At the same time,many smallerplumbers arebeingbulliedbylargerclients.Perhapsbettercontractingtermscanbedevelopedandsharedwithsmallerplumbers.Webelievethatsmallplumbersneedsomebusinesssupporttoensurethattheystandachancetobecomemoreprofessionalandprofitableintheshortandthelongerterm.FindingwaystoincentiviseIOPSAtoreducetheirmembershipfeesforemergingcontractorsis important. However, reducing themembership fees would have to be offset by otherrevenueandfundingstreams.Lastly, the work of the IOPSA transformation committee and the executive of IOPSA insupportmustbecommendedandfurthersupported.Simplestepscouldinvolvepublishingthe transformationpolicyon the IOPSAwebsite.Further stepswouldhave tobe taken toensurethattransformationdoesnotdevelopintoaseparateissue,butthatitistreatedasacross-cuttingthemesuchasimprovingprofessionalstandardsandothertopics.

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SKILLS DEVELOPMENT FOR A GREEN ECONOMY (SD4GE)

The Skills Development for a Green Economy Programme (SD4GE) supports a structural change towards more employment-oriented dual TVET approaches in South Africa.It supports the:

The cooperation of private and public stakeholders to promote dual training approaches The implementation of dual training approaches – e.g. the dual system pilot project

(DSPP), the centres of specialization (CoS), and dual short courses The strengthening of the capability of personnel involved in the implementation of dual

training approaches: lecturers, in-company mentors and TVET college management.

On the German side it is implemented by the Deutsche Gesellschaft für InternationaleZusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for EconomicCooperation and Development (BMZ). GIZ collaborates with its national partner, the Department of Higher Education and Training (DHET).

Skills Development for a Green Economy (SD4GE) Programme

www.skills-green-economy.org

IND

UST

RY

AN

ALY

SIS

Skills Development for a Green Economy (SD4GE) Programme

www.skills-green-economy.org

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