LOSS OF market share poses the biggest challenge to Spoornet.
Deregulation has created a situation where Spoornet is not competitive with road in terms of pricing. The issue of unequal playing fields is well documented - roads are built by government and cross-subsidised by the car-user while rail builds and maintains its own infrastructure - but Mkwanazi prefers not to dwell on it. My approach is to say what is Spoornet doing to win back that market share? First it is reshaping the organisation. It has moved away from the ten regions and introduced a process of centralisation. As part of that process we've increased the business managers from the previous six to around 25.
The fundamental reason for this change is that the organisation has become more customer-focused. The issue is not about trains but about income and making profit. The top structure has also been altered with this customer orientated approach in mind. Up to four people with a focus on sales and marketing are now reporting to the chief executive officer.
Previously there was one person in charge of marketing, operations and sales.
Three of these marketing positions have been filled. The strategic marketing manager who looks not only at short-term marketing but at long-term strategy in terms of where the future market will come from is Herman Evert. He is backed up by Lester Miller, from outside of Spoornet and Thys Rossouw, from within the organisation. A fourth appointment, which will be an affirmative action position from within Transnet, will be announced within six months.
Second challenge The second most pressing challenge is to reduce costs and streamline processes to reduce wastage of resources.
In some people's minds there is still the concept of Transnet as a government organisation where you just spend without thinking.
We are beginning to move away from that thought process so that people start to consider where the money is coming from before spending that rand. Mkwanazi was reluctant to put a figure to the level of savings anticipated in this belt-tightening exercise, but said that there were programmes in place to address the issue.
My objective is to ensure that what we don't make in turnover we save in costs because we are the type of business that makes 1% to 2% profit on turnover. Therefore if you lose on the top line you feel it immediately on the bottom line. That's why there must always be that balance in terms of non-performance and saving. Long-term issues In the long term privatisation is the most fundamental issue facing Transnet. It's not whether we will, it's the how.
We've already accepted that we'll go the privatisation route, Mkwanazi said.
The organisation will need to come up with various options on how to do it.
