Roger Enrico’s book, The other guy blinked: How Pepsi won the cola wars, tells the story of the titanic marketing war in the early 1980s, when the two cola behemoths, Pepsi Co and Coke, went eyeball-to-eyeball over American cola market share.
The book details the strategies and tactics – marketing, advertising and diversification – that the two combatants deployed in pursuit of dominance in the massively lucrative market, culminating in the admittedly contested conclusion, that Coke blinked and Pepsi Co won.
Watching SAA and the unions – National Union of Metalworkers SA and South African Cabin Crew Association – standing eyeball-to-eyeball, is eerily reminiscent of that time.
The blustering and hyperbole emerging from the unions as the strike continues – SAA has been positively subdued by comparison – suggests that they are on the back foot, and they know it.
Uncharacteristically, the ANC has remained largely silent, as has President Cyril Ramaphosa, with Public Enterprises Minister, Pravin Gordhan, the shareholder representative, saying little other than SAA needs to sort itself out.
The ailing national carrier has been a constant drain on the fiscus, with Treasury repeatedly granting massive bailouts that are funded by a vanishingly small tax base. In the period 1999 to 2018, the carrier burned through a whopping R38.5 billion, and in January of this year, against Finance Minister Tito Mboweni’s express wishes, a further R3.5 billion was poured into the massive black hole which SAA has become.
In September, another R5.5 billion went down the toilet, and during his medium-term budget policy statement, Mr Mboweni grudgingly allocated a further R9.2 billion to accommodate maturing debt repayments.
The airline is burning through a staggering R450 odd million each month, with seemingly no end in sight.
Against this backdrop, the unions are demanding an 8% increase, guaranteed job security for three years, and in-sourcing of all existing supply contracts.
The strike started on Friday, and chaos reigned at airports here and overseas, as stranded passengers struggled to secure alternative flights, often at exorbitant ticket prices.
By Sunday, the unions’s rhetoric became even more strident, when all of a sudden, the industrial action became “the mother of all strikes”, strangely reminiscent of Saddam Hussein’s designation of the 1991 Persian Gulf War as the “mother of all battles”, which, of course, did not go terribly well for him, or Iraq, for that matter.
As things stand, SAA has yet to blink, and the unions are desperately attempting to stay in the game by vowing on Sunday, to “shut down the aviation sector”, a ridiculously unrealistic goal, by comparison with the original, and probably more attainable goal, to “shut down SAA.”
The adjusted goal is ridiculous because the unions do not have the critical mass to bring out the entire aviation sector on an extended strike, but hey, as they say, “talk is cheap, money buys the whiskey”, and as the strike drags on and union members don’t earn (but the union leadership does), such rhetoric is vital “pour encourager les autres.”
Pyrrhic victory that it might be, the original goal, to “shut down SAA”, resonates with a significant segment of our society, because it is one way to plug the gaping wound in the fiscus, through which cash pours into the SAA black hole.
As the DA’s Geordin Hill-Lewis said last Wednesday of the unions’s threat, when SAA appeared before Scopa: “Thank you and please go ahead, shut down SAAWe’ve been wanting this to happen. If you are volunteering to do this for us, maybe we should join you on the picket line.”
The escalating union threat level aside, the floating of the white monopoly capital bogey-man by Numsa spokesperson, Phakamile Hlubi-Majola, as being at the heart of the ills that bedevil SAA, borders on the lunatic.
Unless, of course, she is referring to the alleged services rendered in return for the alleged R300 000 paid monthly by Bosasa bag-man, Angelo Agrizzi, to then SAA board chairperson, Dudu Myeni.
The accusations levelled at the SAA board suggest that it is corrupt beyond measure, and has plundered the carrier for personal gain.
The unions insist that they have repeatedly called for the board’s replacement, but it’s difficult to determine which boards, or when, considering the frequency with which then president Jacob Zuma, through the likes of Faith Muthambi and Malusi Gigaba, rearranged those particular deck chairs on the Titanic.
Suffice to say, in those years, when the plundering of the SAA share of the public purse was at its zenith, we heard not a peep from the unions about any kind of industrial action.
Which brings us to the matter that precipitated this whole fight: pursuing a strategy designed to stem the endless haemorrhaging of cash, the SAA board announced plans to retrench 944 of the carrier’s 11 000 employees.
Whereas the assertion that SAA employs 55 000 is just so much nonsense, that the average annual cost to company of those 11 000 employees is a staggering R540 000, explains why the board deems the cuts necessary.
The unions’ disingenuous bleat that two days of losses that SAA incurred during the strike – R100 million – would have paid for its demanded 8% increase is a very smelly red herring. Losing those 944 staff members would carve around R500 million off the carrier’s operating costs each year.
By international standards, there is room to prune. SAA employs 190 people per aircraft, 23% more than BA (154) and 47% more than Quantas (129).
The unions’ assertion that the retrenchments will simply worsen our already crippling unemployment rate is true, but literally shutting down SAA, will be even more catastrophic.
It’s high time that labour plays its part in President Ramaphosa’s much-lauded government-business-labour social compact and SAA is a good place to start.
Agreeing to a general wage cut, instead of an increase, would save those 944 jobs.
Blinking first doesn’t have to mean that you lose.