FRESH TRACKS: Business backs Michelle Phillips as CEO of Transnet
|Published
Business has welcomed Michelle Phillips as the right person for the job as CEO of troubled Transnet.
Phillips was acting CEO.
The appointment was announced by the Department of Public Enterprises late on Wednesday.
Nosipho Maphumulo was appointed as group chief financial officer.
In an interview, Anthony Clark, an independent analyst with Smalltalkdaily Research, said: “I have spoken to many people on the business side of the equation as regards rail transportation in this country and they are unanimous. They believe Michelle Phillips has done an extraordinary job in the last 18 months in the varying roles she has had.”
“And as such, her move to the head job of Transnet is seen as a very positive move. And any CEO, that is far friendlier to the needs and problems that business has faced with Transnet, particularly under the tenure of (former CEO) Portia Derby, will be welcomed.
“I think it is a known fact that Derby and business did not see eye to eye and it is clear that Phillips realised that she needs to get business on board to get Transnet in some fashion back into a profitable entity. That will only come with PPPs (public private partnership) and being business friendly. I think that is the reason why a number of parties that I have spoken to across many industries have welcomed her appointment.
“Yes, she may be a tenured Transnet executive, with many years’ experience, perhaps in areas that have underperformed, but in the last 18 months, it is clear that her role within Transnet has excelled and, as such, that is what business is looking for. They are looking for someone they can partner with and work alongside with.That clearly was not the case with Portia Darby,” Clark said.
Vuslat Bayoglu, (@VuslatBayoglu), the co-founder and managing director of Menar, a mining investment company, tweeted on social media platform, X: “Minister Pravin Gordhan appointed Michelle Philips as the new Group CEO for Transnet. Thanks for this speedy appointment and good luck to Mrs Phillips. I am sure all stakeholders of Transnet are praying and hoping for her to be very successful in this challenging position.”
Owen Nkomo, the founder and CEO of the Inkunzi Wealth Group, Inkunz'Emnyama (@OwenNkomo) posted on X: “Michelle Phillips has a very good CV as the new CEO of Transnet! Great hire, and good luck to her!”
Who is Phillips?
Phillips is the longest-serving executive who remained at Transnet following an executive shake-up last year as the situation at ports and rail reached a tipping point.
Executive vacuum
Amid a wave of criticism by industry, and after the Durban Chamber of Commerce and industry called on Gordhan to remove Derby and other executives from their posts, Derby resigned in September last year
Leaving the firm was also chief financial officer Nonkululeko Dlamini, at the end of September, followed by Sizakele Mzimela, the head of Transnet Freight Rail (TFR), a week later. Transnet also lost its former chairperson, Popo Molefe.
Phillips has held several crucial posts at the logistics utility that has committed to a restructuring that includes allowing third-party interests to operate some of its facilities.
Minister of Public Enterprises Pravin Gordhan said in a statement on Wednesday that Phillips and Maphumulo were critical appointments that represented “our steadfast commitment as government to equip Transnet with a competent and experienced executive leadership team to drive the strategic interventions that the board has put in place as part of the Transnet recovery plan.”
Gordhan said there had been improvements in the performance of ports and rails while Phillips was acting CEO.
“She leads the entire business operations and the leadership team. Ms Phillips is well regarded by the market as a problem solver with good networks. She has a track record of being a team player and collaborator to achieve business objectives. Michelle has over 20 years of experience in Transnet in various roles and she knows what it takes to turn the business around,” said Gordhan.
Phillips previously held roles such as continuous improvement manager at Transnet National Ports Authority, regional legal and contracts manager at Transnet Port Terminals, and business unit executive at Pier 1 Container Terminal from 2001 to 2010.
From August 2019 to June 2020, she acted as chief executive for Transnet Port Terminals and had been CEO at Transnet Pipelines since August 2020.
Upon assuming the role of CEO at Transnet Pipelines, Phillips encountered a division grappling with issues such as poor governance, theft, spillage, and subpar performance, which she successfully transformed, according to Gordhan.
Over 18 months, she saved the business a substantial R1.5 billion. Furthermore, Phillips swiftly addressed long-standing challenges by completing the LNG terminals and Sapref tanks shortly after her appointment as CE of Transnet Pipelines.
Critical juncture
Her arrival coincides with a crucial moment for the revitalisation of the beleaguered logistics parastatal, which has faced significant scrutiny.
Aiding Phillips will be the Freight Logistics Roadmap, which in December 2023 was approved by the Cabinet to address the country’s increasingly unreliable logistics system.
The roadmap outlines immediate steps needed to improve port equipment, locomotive availability and network security. It also sets out a clear plan to enhance efficiencies, facilitate the introduction of competition and to leverage the financial and technical support of the private sector.
In this regard, Finance Minister Enoch Godongwana announced that third-party access to the freight rail network would be introduced by May 2024.
Earlier this month, Godongwana announced in the Budget speech that Transnet would be getting R47 billion to aid the entity its recovery plan.
Stakes are high
Phillips will be under immense pressure to put Transnet’s house in order as soon as possible.
For example, earlier this month, ArcelorMittal South Africa (Amsa) demanded action on Transnet and policy issues after deferring the closure of its Newcastle, Vereeniging steel mills by six months.
However, it said at the time, it would revert to its original decision to shut down the longs steel businesses if there was no progress in government commitments to fix Transnet, other infrastructure and policy framework bottlenecks.
This followed a series of meetings and engagements with the government, labour, suppliers and other key stakeholders.
The deferral of the wind-down of the longs business would enable the division to continue operating and allow the company and stakeholders, such as the government, to make “progress, conclude and secure benefits” arising from short, medium and long-term interventions to prevent the closure of the business units, it said at the time.
This as more than 1 500 workers and downstream customers rely on long-steel products from the factory.
Amsa CEO Kobus Verster said at the time that the company was prepared to revert back to its original decision to shut down the longs manufacturing division if commitments made by the government were not met.
Amsa is not alone. Across the board, business in South Africa is hamstrung by the absence of operational rail and ports, making it hard to satisfy shareholders and show a profit, along with other severe challenges such as power and water cuts.
The downturn in some commodity prices and constraints with electricity and rail, as well as port constraints, have left South African bulk commodity miners in the lurch.
Many of them, including Kumba, Anglo Platinum and ArcelorMittal South Africa, have started stream-lining operations and laying off staff after losing billions of rand in profit due to Transnet’s inefficiencies as well as a hike in costs.
BUSINESS REPORT