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Deon von Benecke EMBA 15 Dissertation 1

Toward a new BUSINESS MODEL FOR MODERNISED

SILVICULTURE FORESTRY PRACTICES

IN SOUTH AFRICA: an abductive study

Deon von Benecke

VBNDEO001

Dissertation submitted in partial fulfillment of the requirements for the degree

Executive Masters in Business Administration

Graduate School of Business

University of Cape Town

Supervisor: Professor Kosheek Sewchurran 2 March 2015

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PLAGARISM DECLARATION

I know that plagiarism is wrong.

Plagiarism is to use another’s work and pretend that it is one’s own.

Allowing another to copy my work and use it as their own, is also plagiarism.

This assignment is my own work. I have not allowed and will not allow anyone to copy my

work with the intention of passing it off as his or her own work.

I acknowledge that working with someone on my assignment is allowed, but only if a mutual

effort is made and different examples, and where necessary wording, are used.

DK von Benecke

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ABSTRACT

The Thuthugani Contractors (Pty) Ltd (TTG) silviculture contracting business model that has

worked over the past 25 years is under threat and no longer serves the purpose of its

stakeholders. A 56% increase in wages for forestry workers in 2013 and the implementation

of Mondi’s modernisation strategy in that same year, require that we innovate and re-engineer

TTG’s business model from the ‘old school broad brush’ labour-intensive contracting

business model, to develop a new modernised and precision-driven contracting model,

focusing specifically on:

developing a modernised costing model that includes the new methodologies,

variables and inputs required of these practices;

changing our mindset to embrace the modernisation process, with particular reference

to planning;

developing our management structures and infrastructure to successfully implement,

manage and support the modernisation process;

developing the normative, strategic and operational skills of the stakeholders to create

a co-operative, innovative and sustainable business model; and

mitigating the financial risks to TTG during this transition period.

‘Modernisation’ (the application of learning and knowledge) is not the same thing as

‘mechanisation’ (working with machines), yet when considering both, the integration of

safety, productivity, quality, ergonomics and environment is necessary. By implication,

modernisation is to a large extent achieved through improvements in management and control

systems.

Action research methodology was used for this study. Action research is an orientation to

knowledge creation that arises in a context of practice and requires researchers to work with

practitioners. Unlike conventional social science, it is not primarily or solely used to

understand social arrangements, but also effects desired change as a path to generating

knowledge and empowering stakeholders.

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For 25 years, silviculture activities have been characterised by their historical reliance on

labour intensive practices. Abundant labour, low costs of wages and little unionisation

provided the forestry industry with an opportunity to maximize profits.

The silviculture modernisation strategy requires TTG to create viable alternate practices that

are efficient, safe, ergonomically acceptable, ethically justifiable, less reliant on labour and

cost effective. This new strategy will take time, commitment and ongoing innovation from all

stakeholders for the emergence of a new silviculture contracting business model.

Whilst modernisation aims to develop operational practices that enable the South African

forest industry to become globally more competitive within a context of international good

practice, it is also vitally important and relevant to the future sustainability of TTG, forest

industry stakeholders and South Africa as a whole. This paper therefore explores TTG’s

development of a viable, modernised silviculture contracting business model within the

context of the South African forestry contracting industry.

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TABLE OF CONTENTS

ABSTRACT ………………………………………………………………………………………………………………………………………………… 3

LIST OF FIGURES………………………………………………………………………………………………….7

GLOSSARY OF TERMS……………………………………………………………………………………………9

ACKNOWLEDGEMENTS…………………………………………………………………………………………10

CHAPTER 1: THE RESEARCH CONTEXT………………………………………………………………………11

1.1 Research design ............................................................................................................................................. 11

1.3 The research problem ..................................................................................................................................... 15

1.3.1 Sectoral wage determination for forestry workers from 1 April 2013 .................................................... 15

1.3.2 Mondi’s introduction of a modernisation strategy in silviculture operations ......................................... 17

1.3.3 Other factors driving modernisation in the South African forest industry .............................................. 19

1.4 The Research Challenge ................................................................................................................................ 21

1.5. The research goals......................................................................................................................................... 25

1.5.1 Personal goals ......................................................................................................................................... 25

1.5.2 Practical goals ......................................................................................................................................... 25

1.5.3 Intellectual goals ..................................................................................................................................... 26

1.5.3.1 Super goal ............................................................................................................................................ 26

1.5.3.2 Sub goals .............................................................................................................................................. 26

1.6 Expression of the researcher’s situation of concern ....................................................................................... 26

1.7 What will happen if TTG does not achieve these goals? ............................................................................... 30

1.8 The conceptual framework ............................................................................................................................ 30

1.9 The research question .................................................................................................................................... 37

CHAPTER 2: RESEARCH METHODOLOGY…………………………………………………………………….41

CHAPTER 3: THE INDICATIONS OF THREATS TO VALIDITY……………………………………………....49

CHAPTER 4: LITERATURE REVIEW……………………………………………………………………………51

4.1 Introduction: Core variables in context .......................................................................................................... 51

4.2 Level 1 – Parent Discipline Literature Context ............................................................................................. 53

4.3 Level 2 – Research Concern Literature Context ............................................................................................ 54

4.4 Level 3 – Core Variables / Research Results Literature Context ................................................................... 54

4.4.1 Modernisation costing model .................................................................................................................. 54

4.4.2 Health, safety and ergonomics ................................................................................................................ 58

4.4.4 Mindset ................................................................................................................................................... 64

4.4.5 Planning and monitoring of modernised operations ............................................................................... 64

4.4.6 Infrastructure ........................................................................................................................................... 66

4.4.7 Management structures: Planning officer/Functional vs. Regional responsibilities ............................... 66

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4.4.8 Management, supervision and labour skill set and the need for training ................................................ 67

4.4.9 Challenges with labour intensive operations........................................................................................... 69

4.4.10 Modernisation in other South African forestry operations ................................................................... 71

4.4.11 Modernisation in the South African agriculture sector ......................................................................... 74

4.4.12 Forestry modernisation in Brazil, Russia and Uruguay ........................................................................ 76

4.5 Limitations and conclusion ............................................................................................................................ 79

CHAPTER 5: THE EMERGENCE OF A NEW BUSINESS MODEL…………………………………………….82

5.1 Introduction .................................................................................................................................................... 82

5.2 Identification of the Two Models .................................................................................................................. 83

5.3 The Mystery ................................................................................................................................................... 86

5.4 Heuristics ....................................................................................................................................................... 86

5.5 Algorithm ....................................................................................................................................................... 87

5.6 Driving forward a solution ............................................................................................................................. 88

5.7 Conclusion ..................................................................................................................................................... 89

CHAPTER 6: SILVICULTURE BUSINESS MODEL INNOVATION……………………………………………92

6.1 A modernised silviculture costing model ....................................................................................................... 93

6.2 A Modernisation mindset change ................................................................................................................ 114

6.3 Developing a modernised management structure ........................................................................................ 122

CHAPTER 7: CONCLUSION AND EVALUATION OF THE RESEARCH……………………………………133

7.1 Introduction .................................................................................................................................................. 133

7.2 Implications and consequences of the research results ................................................................................ 133

7.3 RUVE evaluation ......................................................................................................................................... 134

The Research Problem ....................................................................................................................................... 134

Utility of the paper ............................................................................................................................................. 135

Validity of the paper .......................................................................................................................................... 137

Ethical implications ........................................................................................................................................... 140

7.3 Limitation of the results and the need for further work ............................................................................... 142

7.4 Conclusion ................................................................................................................................................... 144

REFERENCES ………………………………………………………………………………………………………………………………………………. 145

APPENDICES ………………………………………………………………………………………………………………………………………………. 148

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LIST OF FIGURES

Page no.

Figure 1: The research design…………………………………………………………….... 11

Figure 2: The Arbor-care Group of companies……………………………………………..12

Figure 3: The South African forest industry ownership and product output schematics….. 14

Figure 4: Forestry wage schedule from 1 April 2013……………………………………… 15

Figure 5: Forestry wage schedule from 1 April 2012……………………………………… 16

Figure 6: Forestry wage trends in South Africa……………………………………………. 17

Figure 7: TTG Paulpietersburg staff educational levels…………………………………… 21

Figure 8: Ergonomic risk per forestry job description…………………………………….. 22

Figure 9: A graphical representation of the challenge……………………………………... 24

Figure 10: The rich picture………………………………………………………………… 25

Figure 11: The declining number of forestry contractors in South Africa………………… 29

Figure 12: TTG Paulpietersburg absenteeism rates………………………………………... 33

Figure 13: CHAT - the basis of the conceptual framework……………………………….. 36

Figure 14: The conceptual framework area of focus is the Exchange Triangle…………… 36

Figure 15: Cooper-Rider’s Appreciative Inquiry…………………………………………... 42

Figure 16: The events for action research………………………………………………….. 45

Figure 17: Value links ethics to economics and both to management……………………... 48

Figure 18: Three level Literature Review………………………………………………….. 52

Figure 19: Literature Review framework………………………………………………….. 52

Figure 20: Summary of the labour intensive old school SAFCA silviculture unit rate

determination………………………………………………………………………………. 56

Figure 21: Annexure A which includes the unit rate and additional costs to determine the

activity costs………………………………………………………………………………...56

Figure 22: Mondi fatalities since 2000…………………………………………………….. 60

Figure 23: Mondi LTIFR since 2000………………………………………………………. 60

Figure 24: Mondi’s risk assessment of its forestry tasks…………………………………... 61

Figure 25: Mondi’s mechanised harvesting operation……………………………………... 71

Figure 26: Brazil’s modernised silviculture practices……………………………………... 77

Figure 27: The emergence of a new business model………………………………………. 84

Figure 28: The knowledge funnel………………………………………………………….. 85

Figure 29: Analysis of the old school and modernised stakeholders………………………. 86

Figure 30: The silviculture costing model and rates determination flow diagram………… 94

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Figure 31: Modernised flow diagram for activity scheduling, work orders and resource

management………………………………………………………………………………... 96

Figure 32: Work study information gathering template…………………………………… 97

Figure 33: COP and the variables identified that affect the costing of modernised

silviculture activities………………………………………………………….……………. 102

Figure 34: The impact of water usage and the stop / start nature of certain activities……...104

Figure 35: The ANCO workstudy calculations used to determine the land prep activity

categories…………………………………………………………………………………... 105

Figure 36: The modernised silviculture activity rates table……………………………...... 106

Figure 37: The modernised silviculture activity rates costing model……………………… 109

Figure 38: The TTG financial performance since July 2011………………………………. 110

Figure 39: LIDAR data, raw slope data for Nooitgedacht farm, Compartment F 35……… 116

Figure 40: Buffered slopes that are >15% for Nooitgedacht farm, Compartment F 35…… 116

Figure 41: Infield verification process for Nooitgedacht farm, Compartment F 35……….. 117

Figure 42: Infield verification process for Nooitgedacht farm, Compartment F 35 for the

mechanical activities……………………………………………………………………….. 118

Figure 43: Scheduling, category inputs, slope rates and works order planning

for Nooitgedacht farm, Compartment F 35…………………………………………......... 120

Figure 44: The TTG value creation domain……………………………………………….. 123

Figure 45: TTG Paupietersburg proposed new modernised and functionalised

management organogram…………………………………………..………………………. 125

Figure 46: TTG Paulpietersburg ‘Old School’ regionalised management organogram…… 126

Figure 47: VSM - TTG modernization…………………………………………………….. 127

Figure 48: Supervisor Development Programme (SDP)…………………………………... 131

Figure 49: Concept analysis of the main components of the modernised system…………. 135

Figure 50: The development of a modernised business model will improve business

viability…………………………………………………………………….………………. 137

Figure 51: Arguments for validity…………………………………………………………. 139

Figure 52: Toulmins arguments for validity……………………………………………….. 140

Figure 53: The Fairness and Justice Approach justification……………………………….. 142

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GLOSSARY OF TERMS

AC Arbor-care (Pty) Ltd

ABET Adult Basic Education and Training

APO Annual Plan of Operations

BBBEE Broad Based Black Economic Empowerment

CMO Concepts, Mechanism and Outputs

CIMO Concepts, Interventions, Mechanism and Outputs

COP Compartment Operational Plan

CTL Cut to length

FAO United Nation’s Food and Agriculture Organisation

FSC Forestry Stewardship Council

FT Full tree length

GDP Gross Domestic Product

GSA Grain South Africa

LiDAR Light Detection and Ranging

LTIFR Lost Time Injury Frequency Rate

NQF National Qualification Framework

NCT Natal Co-operative Timber Growers

NQF National Qualification Framework

NOSA National Occupational Safety Authority

QSE Qualifying Small Entities

SAFCA South African Forestry Contractors Association

SDL Skills Development Levy

SDP Supervisor Development Programme

SHEQ Safety Health Environment and Quality

SOPT Standard Operating Technology

TOPP Training Outside Public Practice

TTG Thuthugani Contractors (Pty) Ltd

UIF Unemployment Insurance Fund

VSM Viable Systems Model

WCA Workman’s compensation

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ACKNOWLEDGEMENTS

I would like to acknowledge and thank the following people for their support and input

during my two and a half years on the UCT EMBA 15 program:

To my fellow Arbor-care Directors Harold Moffatt and Hans Michel, for fully supporting my

request to join the UCT EMBA program, thank you.

To Harold Moffatt, who graciously came out of semi retirement once again, and who held the

Arbor-care Group of companies together through our toughest financial period yet whilst I

was away in either Cape Town or Ghana, thank you.

To Hans Michel and Willem Hattingh who have spent so many hours on the road working on

our Modernisation transition, thank you.

To Jennifer Renton for the final editing of my paper, thank you.

To Mom and Dad for your continued support and encouragement in everything I do, and for

supporting the girls while I was away, thank you.

To Roz, Hannah & Emma, thank you for your love and understanding during my travels and

studies these past two and a half years.

Lastly but by no means least, thank you Charline Miles for your amazing support and

encouragement to get us to the end!

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CHAPTER 1: THE RESEARCH CONTEXT

1.1 Research design

The research design for this dissertation is depicted in the five parts of the research design as

illustrated in Figure 1, namely the goals, conceptual framework, research questions, methods

and validity.

Figure 1: The research design

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1.2 The research purpose

I have been actively involved in the Arbor-care Group of companies over the past 20 years,

and am currently a Director and the major shareholder in the holding company, Arbor-care

(Pty) Ltd.

The silviculture modernisation process marks a significant change in approach to silviculture

work, and contracting in particular, within the South African forestry environment. This

research is therefore critically important to me, as currently and historically forestry

contracting has constituted the most significant portion of the Arbor-care Groups business.

Figure 2: The Arbor-care Group of companies

Since its inception in 1988, the Arbor-care Group of companies has focused primarily on

silvicultural and fire protection, contracting in the corporate forestry environment in South

Africa. Contract weed management was well received by the forestry industry in 1988 and

our operations expanded beyond our expectations. Due to the seasonal nature of weed

management in South African plantations, diversification into the allied activities of land

clearing, harvesting, transport, pruning, planting and noxious weed control were successfully

initiated.

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Since then, the Arbor-care Group of companies has diversified into the other activities,

namely:

Commercial and industrial landscaping;

Forestry consulting;

Project management;

Farming;

Indigenous tree propagation; and

Protective clothing.

The diversification of the Arbor-care Group of companies is in line with the Arbor-care

vision:

Arbor-care will be a respected specialist company providing professional Management

Support & Consulting services in the agricultural & forestry sectors in Sub Saharan Africa

In early 1999, Thuthugani Contractors (Pty) Limited (TTG) was created to meet the growing

need for Broad Based Black Economic Empowerment (BBBEE) in South Africa. In July of

the same year, Arbor-care (Pty) Limited (AC) ceded all its silvicultural and fire protection

contracts to TTG.

Initially all the shares in TTG were owned by AC, but black participation in TTG now stands

at 37% and we have exceeded the minimum requirements of the BBBEE challenge in South

Africa since its inception.

Figure 3 provides an overview of the South African plantation ownership and its uses of

forest products. The total land use under plantation is 1.3 million hectares, which is less than

1% of the total surface area of South Africa.

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Figure 3: The South African forest industry ownership and product output schematics

The forest industry contributes approximately R5bn to the South African GDP and employs

approximately 170 000 people, of which 66 000 are in the plantations. The industry produces

an annual sustainable production of 20 million tons and has 141 primary processing plants, of

which 76 are sawmills and 17 are pulp, paper and board mills.

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1.3 The research problem

Today TTG and forestry stakeholders are facing a number of new challenges, driven by

various changes in the South African forestry landscape:

The 56% increase in sectoral wage determination for forestry workers, which took

effect on the 1st April 2013;

The implementation of Mondi’s silvicultural modernisation strategy in 2013;

A number of other factors driving modernisation in the South African forest industry,

including but not limited to the reduction in availability of rural populations and the

low skill set of the current forestry workers.

1.3.1 Sectoral wage determination for forestry workers from 1 April 2013

In terms of section 56 (1) of the Basic Conditions of Employment Act no. 75 1997, the

amended Sectoral Determination 12: Forestry worker sector South Africa, published in

Government Gazette 34947 of 18 January 2012 in accordance with the schedule shown in

Figure 4, provided for a 56% increase in basic wage year-on-year from the published

Government Gazette 32060 of 27 March 2009 in accordance with the schedule shown in

Figure 5.

Figure 4: Forestry wage schedule from 1 April 2013

The website of the Department of labour http://www.labour.gov.za/DOL/legislation/sectoral-

determinations/sectoral-determination-12-forestry-sector provides useful information on all

aspects of sectoral wage determinations

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Figure 5: Forestry wage schedule from 1 April 2012

The website of the Department of labour http://www.labour.gov.za/DOL/legislation/sectoral-

determinations/sectoral-determination-12-forestry-sector provides useful information on all

aspects of sectoral wage determinations

The impact of this 56% increase in forestry wages and wage-related statutory costs, such as

the Unemployment Insurance Fund (UIF), Workman’s Compensation (WCA), Skills

Development Levy (SDL), annual leave, sick leave and compassionate leave, has resulted in

a direct increase in TTG’s silvicultural workers’ costs of 30.7%. Figure 6 provides an

indication of the increase in the sectoral wage determination for forestry workers since its

inception in 2006, with particular focus on the increase in April 2013.

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Figure 6: Forestry wage trend in South Africa

1.3.2 Mondi’s introduction of a modernisation strategy in silviculture operations

Firstly I will provide a definition for modernisation, and then clarify the difference between

modernisation and mechanisation.

Modernisation: Modernisation theory is used to explain the process of modernisation within

societies. Modernisation refers to a model of a progressive transition from a pre-modern or

traditional to a modern society. The theory looks at the internal factors of a country while

assuming that, with assistance, "traditional" countries can be brought to development in the

same manner more developed countries have. Modernisation theory attempts to identify the

social variables that contribute to social progress and the development of societies, and seeks

to explain the process of social evolution. Modernisation theory is subject to criticism

originating among socialist and free-market ideologies, world-systems theorists, globalisation

theorists and dependency theorists, among others. Modernisation theory not only stresses the

process of change, but also the responses to that change. It further looks at internal dynamics,

while referring to social and cultural structures and the adaptation of new technologies.

(Modernisation theory n.d.)

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http://en.wikipedia.org/wiki/Society

http://en.wikipedia.org/wiki/Social_progress

http://en.wikipedia.org/wiki/Social_evolution

http://en.wikipedia.org/wiki/World-systems_theory

http://en.wikipedia.org/wiki/Globalization

http://en.wikipedia.org/wiki/Dependency_theory


Modernisation versus mechanisation: ‘Modernisation’ (the application of learning and

knowledge) is not the same thing as ‘mechanisation’ (working with machines). Yet when

considering both, the integration of safety, productivity, quality, ergonomics and environment

is necessary. Modernisation, however, should be applicable to local conditions. A

fundamental reality of the modern forestry industry is found in a quote by renowned physicist

Albert Einstein, who stated that, “Insanity is doing the same thing over and over again and

expecting different results”. Whether it is modernisation or mechanisation, ongoing education

and training is crucial. Chapman (2012)

By implication, modernisation is to a large extent achieved through improvements in

management and control systems.

We have two tools available - mechanisation and its bigger brother, modernisation. In the

context of the pock-marked terrain that I have described, both of these approaches have to be

used with due care and consideration. The reasons that we would likely deploy these tools are

clear: e.g. safety of the workforce, unreliability of rural labour, poor health and nutrition,

challenging physical work, extremely restrictive labour legislation, and unionisation of

labour. In determining the application or not of these tools, forestry practitioners have to

determine the level and appropriateness of implementation, and of course stand accountable

for the decision and results. Thompson (2014)

Since its inception in the early 1980s in South Africa, traditional silvicultural contracting

operations have been characterised by labour-intensive practices, driven primarily by the

following factors:

The cheap cost of labour;

The availability of labour; and

The South African forestry terrain generally lends itself better to labour intensive

practices.

TTG has been providing forestry contracting services to Mondi since 1996, and today Mondi

is TTG’s main client. The concept of modernisation was introduced to Mondi’s silviculture

contractors late in 2012.

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Modernisation – Key Drivers

The introduction of modernisation in silviculture is influenced by:

the concept of decent work;

keeping abreast of best practices in international forestry;

improved ergonomic working conditions;

eliminating safety risks, especially sharp tools;

reduced exposure to harsh climatic conditions;

reducing exposure to monotonous work;

more stable and educated workforce; and

improved productivity and quality optimisation of silviculture operations (da Costa,

2013).

Over several years, Mondi has focused on developing operational practices that have enabled

them to become globally more competitive within the context of international good practice.

In this case study, I focus on operational excellence through the modernisation of our forestry

operations.

The website of Mondi http://www.mondigroup.com/desktopdefault.aspx/tabid-2397/524_on

page 390 reads...... Modernisation efforts have resulted in significant productivity gains, with

room for further improvement. This will be achieved by introducing a new wood supply

technology solution, ‘Wood master’, to optimise overall wood supply which in turn delivers

important cost savings. Mondi (2014)

1.3.3 Other factors driving modernisation in the South African forest industry

From the inception of forestry contracting, the major factors contributing to labour intensive

practices are now the very same factors that count against these historical practices, thus the

forest industry’s drive for modernisation. These include:

The availability of labour: Many rural dwellers are now seeing the city lights as their

salvation and are attracted to employment away from rural areas. Similarly, the State

grants for children, HIV/Aids and unemployment are also impacting heavily on labour

availability.

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http://www.mondigroup.com/desktopdefault.aspx/tabid-2397/524_on%20page%20390

http://www.mondigroup.com/desktopdefault.aspx/tabid-2397/524_on%20page%20390


An annual decline of 5% in the rural population: This has contributed to a decline

in the availability of labour for forestry operations. To put this into context, the

number of farm labourers has decreased by 46% in recent years, from 1.1 million in

2004 to just 624 000 in 2012. da Costa (2013)

High labour turnover: The TTG Paulpietersburg labour turnover rate was 61% in

2012.

High absenteeism rates: The TTG Paulpietersburg average absenteeism rate for

2012 was 17%.

An aging rural workforce

The South African forestry terrain: The terrain generally lends itself to labour

intensive practices. While the average forestry terrain in South Africa is seen as a

barrier to mechanisation (the TTG Paulpietersburg terrain is currently estimated to be

between 50% and 60% accessible to equipment), the industry is pursuing activity

methodologies that will mitigate the terrain factors affecting the implementation of

mechanisation practices.

The social obligation of industry: The industry attempts to employ as many people

as possible to reduce the unemployment rate, however there are high risks associated

with employing labour in South Africa. These risks include labour unrest which often

leads to plantation fire damage - the South African forest industry’s biggest concern.

Monitoring and production measurements: These measurements will be simplified

with the use of machines with on-board data recording and transmitting technology,

which is considered to be far more reliable than manual recording practices.

International competitiveness: The concept of modernisation aims for international

competitiveness through the adoption of good practice, sustainability and high

performance standards. Modernisation aims to lower operational costs, provide a safer

workplace, create decent work, increase the skill set of the labour and improve

activity ergonomics.

Labour intensive practices require a very low skill set: The dilemma for the

forestry industry, particularly with reference to modernisation and mechanisation

practices, is the low levels of education amongst the adult population. Of those who

are employed, 47% do not have a Grade 12. Neither do 59% of the unemployed and

78% of the discouraged work seekers. With technology advancing as it does,

chainsaw operators now need a Grade 12 to qualify for training.

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The low skill set amongst forestry workers stifles production, planning and the

supervision of operations, which contributes towards the need for mechanisation to

increase productivity whilst lowering the overall operating costs. Stone (2013)

The TTG Paulpietersburg current levels of education of our workers are depicted in

Figure 7, where 52% of the labour has an educational level lower than a grade 8.

Figure 7: TTG Paulpietersburg staff educational levels

1.4 The Research Challenge

1) Can TTG develop a new business model that effectively and sustainably reduces the

financial impact of this wage increase through the use of modernised silviculture

practices?

Mondi and TTG target: full implementation of the modernisation strategy by 2015.

Mondi target: an increase of less than 25% in overall plantation silvicultural costs

after the implementation of modernisation.

Mondi target: 75% of all forestry silviculture activities must be mechanised, with 25%

remaining labour intensive.

TTG target: can we mitigate the financial risk and survive during this transition

process from the traditional labour intensive silvicultural activities to the modernised

activities? Does TTG have the financial ability to purchases new equipment and

vehicles in excess of R5.8mil given its poor performance during the transition period

from 2011 to date?

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2) Can TTG reduce its reliability on labour?

Mondi target: to retain only three of every eight staff previously employed during

2011, and/or

Mondi target: the minimum number of staff required per plantation will be equal to

the staff requirements for fire protection activities. A minimum labour force is

required to prepare, monitor and fight forest fires. Each plantation, through experience

and best operating practices, has determined the minimum amount of labour required

for fire protection purposes, and the modernisation target for labour has therefore

been set at this number per plantation.

Mondi target: provide more ergonomically humane work for our staff. As Figure 8

below depicts, the majority of the current forestry job methodologies do not meet the

Mondi ergonomics cut-off value of 30%.

Figure 8: Ergonomic risk per forestry job description: Morkel (2013)

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3) Can TTG change its mindset?

TTG target: can we adapt to this required change in our business environment?

TTG target: do we want to adapt to this required change in our business environment?

Mondi target: safety first.

What are the primary changes in mindset required to move to modernisation in

forestry contracting?

4) Can TTG successfully change its infrastructure and management structures to adapt to

this challenge?

The modernisation of silviculture activities requires a fresh new approach to old

school labour intensive management structure and infrastructure. A different set of

management skills is required, as well as a need for additional management support

services and infrastructure.

Figure 9 provides a graphical illustration of the challenges identified above, and follows with

a rich picture of these challenges in Figure 10.

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Figure 9: A graphical representation of the challenge

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Figure 10: Rich picture

1.5. The research goals

The impact of the 56% increase in sectoral wage determination for forestry workers from 1

April 2013 is a significant increase in cost to TTG and therefore TTG’s clients. This increase

in forestry workers’ wages, together with Mondi’s mandated transition to modernisation

within the South African silvicultural contracting environment, requires TTG to re-engineer

its business from the ‘old school broad brush’ contracting business model to develop a new

‘modernised and precision-driven’ contracting model.

1.5.1 Personal goals

As the Managing Director and a shareholder in TTG, my personal goal is to develop

sustainable future value for the TTG shareholders in this changing business environment.

1.5.2 Practical goals

To sustainably and safely complete Mondi’s Annual Plan of Operations (APO) in 2015, and

during the remainder of our five year contract which expires in 2019.

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1.5.3 Intellectual goals

To understand how the TTG Paulpietersburg business unit will contribute to the strategic

change in our organisation.

1.5.3.1 Super goal

Understanding the innovative changes required to TTG’s current business model to ensure its

survival in this evolving business environment.

1.5.3.2 Sub goals

The current TTG business model that has worked over the past 20 years is under threat; we

need to innovate and transform TTG within a period of 12 months if we are to survive. This

transformation will include the following:

Developing a modernised silviculture contracting costing model.

Changing our mindset to embrace the modernisation process.

Developing our management structures and infrastructure to successfully implement

the modernisation requirements.

Developing the normative skills of the stakeholders to create a co-operative and

innovative business model.

Developing and adapting the current TTG business model to satisfy the needs of its

stakeholders, whilst mitigating the financial risks of survival during this transition

period.

Developing safe and ergonomically friendly practices.

1.6 Expression of the researcher’s situation of concern

Whilst this action research is driven in an effort to primarily emerge a new forestry

contracting business model to ensure TTG develops sustainable future value, it would be

remiss of me not to express my concerns with regards to the potential disharmony that the

modernisation strategy may create amongst some of the forestry industry stakeholders.

Mondi’s modernisation strategy is primarily driven in response to the 56% increase in

sectoral wages in April 2013. TTG Paulpietersburg’s productive labour reduced from 380 in

2011 to 220 in 2014, a reduction of 42%, whilst Mondi’s target is three productive labourers

for every eight employed in 2011. This is effectively a reduction of 238 labourers from 2011

to a total of 143 productive labourers after modernisation.

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Mondi Paulpietersburg’s fire protection requirements are 135 labourers per day, which is

slightly less than the modernisation targeted figure of 143.

The South African Institute on Race Relations 2012 stated that for every employed South

African, there are nearly three others who are dependent on them. While that number has

dropped it is still very high compared to the global average, and speaks to the country's

consistently high unemployment rate. In January 2015 it found that every employed South

African supports 2.8 people - using the ratio of those with jobs to the total population.

However these figures are not necessarily a true reflection of what the actual dependency

figures are. In the aftermath of the Marikana massacre (a shooting of striking miners in

2012), the men who were killed and some of the other men who were involved in the strike

had five or six dependents, not only children but also wives, parents and extended family

members, as is often the case in rural areas. By comparison, Zambia has a ratio of 1 to 1.9,

Liberia is at 2.5, Greece is at 1.9 and China is below one. It can thus be expected that

approximately 1,190 dependants will be affected by the loss of work on the TTG

Paulpietersburg silvicultural operation alone.

It must be noted that Mondi has not instituted any formal retrenchment practices to actively

reduce the labour force; natural attrition has been used thus far.

According to Mondi (2013) South Africa, a potential downside of mechanisation is a

decrease in employment opportunities. As a result of mechanisation, the number of

harvesting contractors employed on Mondi’s operations has reduced from 34 to 15 since

2008, with typically one mechanised and one motor-manual contractor per site. Employment

opportunities have reduced by approximately 1,300 jobs.

However the impact of mechanisation-based retrenchments has been minimal, when taking

into account natural attrition and labour turnover rates of 10 to 40%, planned contract

expirations and the fact that members of the workforce have been absorbed into other

operations. There may be further minimal job losses once contractors have become more

experienced in mechanised operations.

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Mitigation measures have been instituted by Mondi to offset the impact of retrenchments.

These measures include engaging with communities on a case-by-case basis through the Land

Department; organising Mondi Zimele (the company’s business development initiative)

business training programmes in Tygerskloof, Piet Retief and Greytown; and conducting

annual audits of contractors to ascertain their retrenchment compliance. Silviculture has

absorbed some 10% of employees due to the industry’s high labour turnover. Two Zimele

community hubs have been established in Piet Retief and Richards Bay to finance and

support a variety of community-related projects, which are expected to result in the creation

of some 2,000 jobs.

According to NCT Forestry (NCT) assistant manager Rob Thompson (2007), “Obviously

requiring fewer people overall, the concept of modernisation makes provision for retraining

and redeployment of those possibly retrenched, either back into the company or into outside

opportunities”.

The Mondi (2011) Group SD report for 2011 relates …….Safer working conditions and

improved efficiency are clear benefits of modernisation, but a potential downside is a

decrease in employment opportunities. It is important to note that modernisation is an

initiative that requires the involvement of many of our business units – it is not just a matter

of modernising machines; it goes hand-in-hand with training and development and job

creation. Retrenched employees at Syktyvkar are offered re-training at the Mondi Forest

Academy and are then able to be re-employed, at Mondi or elsewhere, in higher-skilled

positions.

Certain senior and experienced supervisors and managers of labour intensive operations may

not have the skill sets to be trained to perform in the modernised operations and are also

likely to lose their jobs. The impact of this could affect approximately four senior managers,

28 supervisors and 12 driver operators currently employed by TTG.

Whilst the modernisation strategy implemented by Mondi is creating a barrier to entry for

other contractors, there is a strong likelihood that certain large commercial plantation owners

and management companies will revert back to own operations, as has been seen by the likes

of SAPPI and Hans Merensky which will support the current trend in numbers of forestry

contractors in South Africa as per Figure 11.

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Figure 11: The declining number of forestry contractors in South Africa

Safety has been prioritised by Mondi and TTG fully supports this. I am, however, concerned

that the future safety statistics will be compared with historical figures, which have a

significantly higher base due to historically larger staff numbers. For example, a 50%

reduction in staff numbers will contribute to a 100% escalation in stats for every safety

incident that is recordable. Simply speaking, one recordable incident in a staff complement of

100 is 1%, but one recordable incident in a staff complement of 50 will be 2%. My concern is

that this may be overlooked when measuring safety performance, however it must be noted

that safer and ergonomically more efficient modernised practices should contribute to

reducing some of this statistical bias.

Therefore, it is my opinion that modernisation has been primarily driven in response to higher

labour costs. The modernisation strategy therefore focuses on reducing the risks associated

with large labour forces on plantations, but justifies these actions by focusing on creating a

safer work place for forestry workers at the expense of the negative social implications of

increasing South Africa’s already high unemployment rate.

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1.7 What will happen if TTG does not achieve these goals?

TTG will be in breach of its contract with Mondi if it is unable to sustainably and

economically complete Mondi Paulpietersburg’s APO, and the TTG contract will be

terminated.

Mondi and the South African forest industry would lose TTG as a stakeholder that has:

a proven track record of 25 years in forestry contracting;

successfully navigated and adapted to all previous challenges within the forestry

contracting business environment;

received Mondi’s regional Forestry Contractor of the Year award;

received Mondi’s regional Health & Safety of the Year award; and

a Broad Based Black Economic Empowerment status of a Level 3 on the generic

scorecard.

1.8 The conceptual framework

The conceptual framework of my study is the systems, concepts, assumptions, expectations,

beliefs and theories that support and inform my action research, which are based upon

‘Designing a Qualitative Study’ by Maxwell (2005), and will seek to find the answers to the

following questions as depicted in Figure 13 below:

1.8.1 What do you think is going on with the issues, settings, or people you plan to

study?

Issue 1: Since the inception of the sectoral wage determination for the forestry sector in 2006,

the indicators for the projected annual forestry sector wage increase have been based on the

Consumer Price Index (CPI) + 1%.

This changed in Government Gazette No. 32060 (Figure 4) of 29 March 2009, when the

projected annual increase in minimum wages for the forestry sector was amended to 98% of

the farm workers’ wage effective from 1 April 2013, and 100% of the farm workers’ wage

effective from 1 April 2014.

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The website of The Business Day Live

http://www.bdlive.co.za/national/labour/2013/02/04/minister-reveals-new-minimum-wage-

for-farm-workers provides the labour minister’s announcement following countrywide public

hearings on a new minimum wage for the agriculture sector, which was prompted by the

violent protests in parts of the Western Cape in 2012.

The impact of the violent 2012 Western Cape agricultural farm workers’ strikes and the

resultant substantial increase in farm workers’ wages the same year, created an unexpected

56% increase in forestry sector wages as a direct result thereof, due to their relationship to the

sectoral determination for farm workers.

The introduction of nationally-binding minimum wages in South Africa was relatively recent,

coming 105 years after the first minimum wage legislation in New Zealand. Historically,

labour relations in South Africa were partly governed by the Master and Servants Act (1896)

and the Industrial Conciliation Act (1924) - later to become the Labour Relations Act (1956)

– or, in specific cases, by Bargaining Councils. Yet it was not until 1999 that the first

minimum wage legislation was introduced, for workers in the contract cleaning sector. Since

1999 a detailed minimum wage schedule has been developed – now covering eleven sectors

of the economy – and labour market institutions have been created to enforce the new laws.

Unlike many other countries in South Africa the minimum wage is different for each sector,

i.e. there is no single minimum wage. Even within a particular sector the mandated wage can

vary by occupation type, number of hours worked, or geographic location. This is specified in

a ‘Sectoral Determination’, which includes regulations on working hours, overtime pay, and

written contracts. The Sectoral Determination for farm workers became effective in March

2003 (Stanwix, 2013).

In 2012, TTG’s wages and wage-related costs made up 56% of the basic South African

Contractors Association unit rate (SAFCA), which is an accepted basis for cost determination

in the South African forestry contracting environment. The sectoral minimum wage

determination for forestry workers increased from R1,428.70 (Government Gazette No.

32060) to R2,229.32 (Government Gazette No. 34947), which directly resulted in a 30.7%

increase in TTG’s SAFCA costs at the time.

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Issue 2: The concept of modernisation aims towards international competitiveness through

the adoption of good practice, sustainability and high performance standards. Modernisation

further aims at lower operational costs, providing a safer workplace together with decent

work, a higher skill set and improved ergonomics in all its operations. One of the unintended

consequences of the increase in wages for forestry workers in 2013 has been the need for the

forestry sector to revise its silviculture practices in order that they become safer, more

efficient, and less reliant on labour intensive practices.

The South African forestry sector’s historical reliance on labour intensive practices and the

current challenges associated with large labour forces include:

A 5% annual decline in rural population which reduces the availability of workers

who are willing to work in the plantations;

High labour turnover (estimated 20-50%);

The forestry sector has been characterised by having the lowest level of wages. When

any temporary work such as road construction projects are started in the vicinity of

the plantations (which pays a 65.97% (R18.97/hr from 1/9/2011 to 31/8/2012) higher

sectoral determined minimum basic wage), staff tend to migrate to these activities,

even temporarily;

Sectoral determined minimum basic wage for civils workers, Published under

Government Notice R204 in Government Gazette 22103, dated 2 March 2001.

Commencement date: 12 March 2001

High absenteeism rates. The TTG Paulpietersburg absenteeism rates decreased from a

total of 6,856 in 2012, to 4,949 in 2013 and 3,937 in 2014, as depicted in Figure 12.

This is mainly due to the increase in sectoral wage determination for forestry workers

which brings it in line with the wages of other industries, as well as the lower

requirements of labour as a result of the modernisation process. Furthermore, the

increase in unemployment rate around the plantations has inspired labour to become

more diligent and attend work regularly.

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Figure 12: TTG Paulpietersburg absenteeism rates

The aging rural workforce;

Problematic health conditions such as the impact of HIV/Aids, where HIV infection is

currently >30%;

Productivity and quality challenges of unskilled labour;

Safety challenges with chainsaws and sharp tools;

Poor working standards;

Poor ergonomic practices; and

The high risks associated with labour unrest and damage to plantations by fire.

TTG was awarded the Mondi Paulpietersburg Silviculture and Fire Protection contract from 1

January 2011, which was re-awarded in 2014 for an additional five years The

Paulpietersburg area is one of Mondi’s largest business units with 22000ha of plantations,

and this contract is of significant importance to TTG as it has annual turnover of >R25mil.

The TTG relationship with Mondi is particularly good in this region. For this reason I have

chosen this setting as my area of focus for this assignment, as I am sufficiently confident that

we can successfully transition to modernisation here.

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People I have studied

The lists of people I plan to study include:

The TTG and Mondi Paulpietersburg operational management who have input into

the tactical and operational planning of activities.

The Mondi regional management who have input into the strategic planning of

activities – block felling/FSC etc.

The TTG Directors and TTG Paulpietersburg management who need to inculcate a

shift in mindset from the traditional labour intensive forestry operations management

practices to the modernised operational requirements.

Mondi SA – which says that Modernisation will not happen at the expense of the

contractors.

1.8.2 What theories, beliefs and prior research findings will guide or inform the

research?

Theories

The mechanisation processes that have been successful in silviculture activities around the

world will need to be adapted to African conditions; there cannot be any assumption that a

given process, vehicle, plant or piece of equipment that works elsewhere in the world will

simply work in our environment.

In the international forestry environment, Brazil has been identified by Mondi as the

modernisation benchmark. Our project in Ghana has started with partial mechanisation

processes, and South Africa has already made great strides in forestry harvesting

modernisation practices; these processes will guide my research. Modernisation has worked

in Mondi’s forestry harvesting operations since 2008, and to date more than 80% of Mondi’s

harvesting operations have been modernised, therefore it should work in the silviculture

environment.

Beliefs

These are interesting, exciting but scary times in the forestry industry. If we as contractors

fail to transition to modernisation, there may be a move back to Mondi’s own operations,

which has been seen in other forestry Corporates such as Merensky and SAPPI over the past

few years. If Mondi do not financially assist us through this process, we will go out of

business.

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Prior research findings

The prior research findings will focus on Modernised Harvesting practices which started in

the South African forestry industry in 2008, as well as Silviculture Modernisation practices

currently being used in Brazil, Russia and Uruguay.

1.8.3 The literature, preliminary studies, and personal experiences I will draw on for

understanding the people or issues I am studying

My theories will provide a simplified model for why the world is the way it is, and tell the

story of why and what I think is happening, and what I can do change it.

I have chosen Activity Theory as the basis for my conceptual framework, as per Figure 13.

The exchange triangle within the Activity Theory will form the focus of attention where the

interaction is between the following:

The TTG business model (the subject), which provides the process for the re-

engineering of the ‘old school broad brush’ contracting business model to develop a

‘new modernised and precision-driven’ contracting model.

The rules governing the stakeholders involved include, but are not limited to, the

following:

o Five year contract between Mondi and TTG effective 1 April 2014

o TTG shareholders agreement

o Mondi’s mandated silviculture modernisation process

o The sectoral wage determination for the forestry sector

o BBBEE

The stakeholders involved in this process include, but are not limited to, the

following:

o Mondi

o TTG

o Mondi Zimele

o Standard Bank South Africa

o Suppliers of new technologies for modernisation

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Figure 13: CHAT - the basis of the conceptual framework

Figure 14: The conceptual framework area of focus is the Exchange Triangle

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1.9 The research question

How will the TTG business model adapt to satisfy the needs of Mondi, whilst mitigating the

risks of this transition and ensuring the future survival of TTG?

The research questions will focus on three significant areas:

The development of a new costing model that is aligned with the modernisation

process;

The required shift in mindset by the shareholders and decision makers in TTG to

actively embrace and adapt to the modernisation process; and

The restructuring of management and supervisory personal from the old school labour

intensive and labour orientated management to planning, precision and mechanically

orientated managers who will use new world technologies, all whilst adapting and

acquiring new infrastructure.

Given the significant increase in costs brought on by the impact of South Africa’s sectoral

wage determination for forestry workers from 1 April 2013 and Mondi’s mandated

modernisation strategy, how would TTG have to re-engineer its ‘old school broad brush’

contracting model to develop a ‘new modernised and precision-driven’ contracting model

that satisfies these needs, ensures the future survival of TTG, and sustainably completes

Mondi’s Paulpietersburg Annual Plan of Operations using safe and humane practices?

Following Maxwell’s (2005) approach, the following questions will be answered, and the

research question must be referring to an intellectual goal that will give direction to the study.

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What, specifically, do I want to understand by doing this study?

The innovative changes that are required to re-engineer TTG’s current business model

to ensure its survival in this evolving business environment.

The effects of Modernisation practices and more specifically the use of new

technologies on social and economic growth. The essential precondition for overall

social and economic growth in Africa is a dynamic agricultural and forestry sector

brought about by a steady increase in productivity resulting from technological

change. These first world technologies will need to be desirable, feasible (including

but not limited to cultural and financial attributes), transferable and systemistic.

Whether the modernisation process can effectively address the high costs and

historical reliance of labour.

The risks associated with modernisation and whether TTG and Mondi can effectively

counter these risks.

Whether I can increase TTG’s normative, strategic, operational planning and

implementation skills, such that the stakeholders can create a co-operative and

innovative business model.

What could blindside the modernisation process that the stakeholders have not yet

considered, e.g. Mondi’s role in the land reform process or the impact of the reduction

of forestry workers on the plantations. Can the modernisation and land reform process

work hand-in-hand, as land is being handed over to the new owners?

As per the final point, in South Africa today, a portion of Mondi’s landholdings are

subject to land claims under the Restitution of Land Rights Act (No.22 of 1994). This Act

provides for the restitution of rights in land to persons or communities dispossessed of

such rights after 19 June 1913 as a result of previous racially discriminatory laws or

practices. Restitution of a right in land can take the form of restoration (the return of a

right in land) or equitable redress (which includes the granting of an appropriate right in

alternative state-owned land and payment of compensation).

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The Mondi website relates ….www.Mondiforests.com/landreform that currently Mondi

has a total of 73 land claims involving some 122,000 hectares of their total of 307,000

hectares of land (40%). To date, some 36,000 hectares of Mondi’s land under forestry has

already been transferred to community beneficiaries, bringing the percentage of land

transferred to claimant communities to 26% of the total area of 139,000 hectares under

claim, and the percentage of settled claims to 23% of the total number of recorded claims.

The issue is clearly a significant one for Mondi in South Africa, but Mondi is committed

to restoring land to community ownership in South Africa. Following a successful land

claims process, communities gain ownership of the land and derive a sustainable income

from it, while at the same time progressively developing their own businesses to operate

within the forestry value chain. It is critical to Mondi’s approach that land claim

beneficiaries receive meaningful and sustainable benefits, that sources of fibre are both

assured and sustainably managed into the future, and that the company retains their Forest

Stewardship Council™ certification

What do I not know about the phenomena you are studying that you want to learn?

Whether the modernisation process can sufficiently increase our productivity to such

an extent that our overall operating costs are reduced, all whilst providing a safer

workplace for our employees by moving away from practices that are high-risk,

ergonomically unacceptable and labour intensive.

Whether TTG can make a reasonable and sustainable return for its shareholders

during and after the implementation of the modernisation process.

Whether new world technologies can be adapted to African conditions.

Can we successfully adapt and implement new world technologies into these African

systems, without the blind adoption of technologies that are inappropriate for the African

production environment? The match or mismatch between new world designs and local user

reality is a risk that affects the successful implementation in developing countries such as

South Africa. Common challenges and risks associated with new world technologies in

African systems include, but are not limited to, the following:

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http://www.mondiforests.com/landreform


o Inadequate infrastructure for new technologies

o Investor confidence

o High costs of doing business in Africa

o Currency volatility

o Corruption

o Lack of common standards

o Lack of reliable and up to date information

o Skills and services shortages

o Social and cultural nuances

o Fragility of the tropical African soils

o High costs of fuel

What questions will my research attempt to answer, and how are these questions related

to one another?

The current TTG business model that has worked over the past 20 years is under

threat. Can we innovate sufficiently to transform TTG within the period of 12

months by developing a new modernised silviculture contracting costing model?

Changing our old school labour intensive mindset to embrace the modernisation

process?

Developing our management structures and infrastructure to successfully

implement the modernisation requirements?

Developing the normative skills of the stakeholders to create a co-operative and

innovative business model?

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CHAPTER 2: RESEARCH METHODOLOGY

The articulation of the research methodology will be as follows:

This is a case study research.

The action research methodology will be used, focusing on appreciative enquiry.

The Activity Theory diagram will be used as the basis for my conceptual framework,

focusing on the stakeholders, tools and rules governing the silviculture transition

process to develop an innovative and viable modernised forestry contracting business

model.

Business model innovation and integrated thinking will be used to develop a

modernised silviculture business model for contractors in South Africa.

Events and ideas will be collected from the researcher’s direct experiences, as well as

indirect experiences in the form of propositions from key stakeholders, to develop a

Grounded Theory related to silviculture modernisation in the South African forestry

environment.

Grounded theory is a method well suited to enhancing the development of a new

business model for modernised Silvicultural forestry practices in South Africa.

Grounded theory uses qualitative research methods with the aim of generating theory

which is grounded in the data, rather than testing existing theories. The importance of

the grounded theory approach in the present study was that it incorporated the

complexities of the business under investigation without discarding, ignoring, or

assuming away relevant variables.

Therefore, the richness of the data ensured that the resulting theory was able to

provide a holistic understanding to the Modernisation process for participants and

fellow researchers alike.

Engestrom’s Expansive Learning Cycle will be used as a basis for modeling and

implementing the new solutions in the form of models, then reflecting and

generalising the new practices.

The action learning and research cycle will be used to ensure we achieve the intended

outcomes to satisfy the needs of the stakeholders involved in the silviculture

contracting operations.

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Action research was chosen as my research methodology as it is an orientation to knowledge

creation that arises in a context of practice and requires researchers to work with

practitioners. Unlike conventional social science, its purpose is not primarily or solely to

understand social arrangements, but also to effect desired change as a path to generating

knowledge and empowering stakeholders.

Action researchers do not readily separate understanding and action; rather it is argued that

only through action is legitimate understanding possible. Theory without practice is not

theory, but speculation. Cooper-Rider’s (2001) more gentle engagement (‘appreciative

inquiry’) illustrated in Figure 15

Figure 15: Cooper-Rider’s (2001) Appreciative Inquiry

Action research does bear a resemblance to, and frequently draws from the methods of,

qualitative research, in that both are richly contextualised in the local knowledge of

practitioners. However, qualitative research is research about practice. This crucial difference

often leaves the work ‘inactionable’, that is, it is not something that practitioners can or even

wish to make practical use of. Ultimately, the relationship with quantitative work depends on

what is relevant to a particular project. Similarly, in its organisational manifestation action

research bears a resemblance to business consulting, which is work done for practitioners

who are usually the elites who can pay to have their concerns addressed.

To reiterate, action research with practitioners always includes practitioners as partners in the

work of knowledge creation.

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Action research work is fundamental to the revitalisation of social research, which generally

lies in its orientation towards taking action, its reflexivity, the significance of its impacts and

that it evolves from partnership and participation.

In sum, the core features of action research are that the work happens in the context of action,

thus we have to get into an organisational setting and be engaged with the practitioners there.

It operates in partnership with practitioners, so the researcher had to discuss and shape his

research question and design with the practitioners.

Action researchers plan for cycles of action and reflection and thereby must be reflexive

about how change efforts are unfolding, and the impact that our presence (the intervention) is

having. Working in partnership with practitioners virtually ensures the practical aims will be

met – otherwise they will not waste their time.

The action researcher must develop the ability to communicate with two audiences, who are:

The ‘local’ practitioners; and

The ‘cosmopolitan’ community of scholars.

The latter is motivated by the question of what, if anything can be contributed to what

scholars already know.

In combination, the following seven criteria, often called ‘choice points’ for quality, represent

the elements of an action research project/paper:

Articulation of the extent to which authors explicitly address the objectives they

believe are relevant to their work and the choices they have made in meeting those.

The extent of participatory consultation with stakeholders.

Action research contributes to a wider body of practice knowledge and/or theory,

The methods and extent to which the action research methods and process are

articulated and clarified. The written products of all the efforts (journal articles and

a dissertation, respectively) clearly articulate what was done to whom so that the

reader can see the choices that were made to enhance quality.

Actionability is the extent to which the project provides new ideas that guide action

in response to need. In all efforts the work engaged change agents, rather than merely

informing them. In effect action is an intrinsic part of the participation of change

agents.

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Reflexivity is the extent to which the authors explicitly locate themselves as change

agents.

Significance is the extent to which the insights in the manuscript are significant in

content and process. By significant it means having meaning and relevance beyond

their immediate context in support of the flourishing of persons, communities, and the

wider ecology. All work effected positive local change. The reach of the work is

largest when the action research agenda is taken to be a central focus for those

involved.

Figure 16 provides a diagrammatic view of the events of this action research paper and a

focus group will be used through each of the three action research cycles to collect data,

collaborate, review, redesign and ultimately propose a viable modernised forestry contracting

business model. This focus group includes:

Harold Moffatt - AC and TTG Director

Hans Michel - AC Director

Raymond Sibiya - TTG Director

Mark Prigge - Mondi Paulpietersburg Area Manager

Nicky Gwende - TTG Paulpietersburg Contracts Manager

Willem Hattingh - AC Planning Manager

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//……………Uncertainty/Patterns/Insight………//……Clarity & focus……………//

Figure 16: The events for action research

What approaches and techniques will I use to collect and analyse the data?

I have linked the research questions and methods to each other in order to get the data to

answer the questions.

The four parts of this component of my design are:

The research relationship with those I studied;

Sampling: what times, settings or individuals I selected to interview (purposeful

sampling);

Research Concept/Prototype Innovation & focus

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Data collection – how I gathered the information; and

Data analysis – what I did with the data to make sense of it. Data analysis was

conducted simultaneously with data collection, in order to focus on interviews, adapt

my study, and test my emerging views and conclusions).

Within the design, collection and analysis of the data, the three areas of focus for the research

are the:

Context (C) – A new silviculture business model is required for modernisation

Mechanism (M) – Business model innovation using action research

Output (O) - The development of a practical, efficient, costing model for modernised

silviculture contractors using methodologies that are safe and ergonomically appropriate.

Data was primarily collected over a 3 month period from October 2013 to December 2013

and in three cycles presented in Appendices 1 – 3. The range of data sources included

nonparticipant observation, informal/unstructured and semi-structured interviews, stakeholder

meetings, focus group discussions and document analysis. Data triangulation within the

grounded theory method is a major contribution of this study. Throughout this time, several

change incidents were investigated through the use of theoretical sampling, a technique in

which the selection of respondents is guided by the themes/categories emerging from the

data.

Eight categories emerged from the data, as follows:

o Modernised costing model

o Management restructure

o Mindset change

o Business viability

o Modernised methodologies

o Use of technology

o Planning

o Safety and ergonomics

Theoretical sampling was conducted concurrently with data analysis. This meant that I would

theorize and write up ideas about the categories as they emerged. Theoretical categories

emerged from the conceptualization of substantive categories and their relationships to each

other as hypotheses to be integrated into a theory. The analysis of the qualitative data was

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conducted concurrently, and in several iterations. The interrelationship diagram in Appendix

4 represents the relationships between the proposition categories and appendix 5 the CMO of

these categories which highlights the proposition category drivers and affects.

EMBA 15.5 Microeconomics and Ethics class notes relate …For us to attempt to solve the

problems that affect us on a personal, organisational or environmental level, as well as to

develop a viable business model, we need to synthesise traditional ethics with modern ethics,

create shared value on all three levels, and apply the principle of an unbounded organisation

in addressing the central business concerning the relationship between ethics and profit (see

figure 17).

TTG has an opportunity to make a difference across all three levels:

Value at the social level: People (Personal)

EMBA 15.5 Microeconomics and Ethics class notes relate …Inequality is not only

unjust and inefficient, but it is also dangerous and produces economic instability.

Because accumulated profits are not spent on consumption and have no profitable

investment outlets, they can be taken out of the country at any moment.

Capitalism and democracy have dominated and proved successful, but capitalism

drives inequality. There will always be the “haves” and the “have nots”, but it is

important that we provide better livelihoods to our society; this can only be achieved

if the haves spend their profits, which in turn generates jobs and income.

In the context of this, TTG has the opportunity to provide a safer work place for our

employees, activities that are ergonomically more efficient, a staff complement with

better skills, an improved level of basic education through training, and staff that can

enjoy the benefits of better pay.

Value at the financial level: Profit (Organisational)

By creating a group of companies that meet the BBBEE requirements and encompass

the spirit of the new South Africa, TTG has the greatest opportunity to deliver goods

and services, while generating profits. Value to the TTG stakeholders is achieved

where ethics, economics and management meet.

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Management

Ethics Economics

Figure 17: Value links ethics to economics, and both to management

If the shareholders and directors of TTG make sound economic and management decisions,

the TTG stakeholders will benefit.

By applying the Utilitarian Ethical Approach to this proposed intervention, one seeks to

identify the ethicalness of the chosen courses of action that will identify:

o Who will be affected by each action?

o What benefits or harms will be derived from each action?

o The equal application of benefits and burdens to all.

The Utilitarian Approach requires a choice of actions with the least harm, i.e. those that

provide the greatest good for the greatest number of the TTG stakeholders.

Value at the ecological level: Planet (Environmental)

Our forestry operations provide us the oppertinity to constructively contribute to creating

sustainable practices in the environments within which we operate. This takes place under the

guidance of the following national and international certifications that we abide by, including

the Forestry Stewardship Council (FSC) and the National Occupational Safety Authority

(NOSA).

Environmentally friendly forestry practices will include activities such as mulching, which

will positively contribute to reducing the potential negative impacts of mechanised activities

on fragile soils. Mulching will enhance the state of the soil by conserving moisture, reducing

erosion and increasing the organic content of the soil.

Creating shared value is a role in which we, as managers of businesses, are challenged with

upholding in today’s society.

VALUE

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CHAPTER 3: THE INDICATIONS OF THREATS TO VALIDITY

In this chapter I assess how my results and conclusions might be wrong. I also examine what

the plausible alternative interpretations and validity threats to these are, and how can I deal

with them.

In my strategy to improve the validity of this study, I attempted to mitigate as many of the

validity threats as possible during my research. As I followed the qualitative method of

research design, I did not have the benefit of formal comparisons and sampling strategies, nor

was I able to use statistical manipulations that control for the effect of particular variables.

For this reason I used evidence collected during the research to make these alternative

hypotheses implausible.

There are two broad types of threats to validity in qualitative studies:

Researcher’s Bias - this refers to the way in which the collection or analysis of data is

distorted by the researcher given their own theories, experience, values and

preconceptions. It was important to understand how I might influence the conduct and

conclusions of the study in order to mitigate that.

Reactivity - this is the control for the effect of the researcher. Eliminating the

influence of the researcher is impossible, thus my goal was to understand and use it

productively.

Validity test: checklist

Intensive long term involvement

I have been involved in the business for 20 years and have developed a sound and

trustworthy relationship with the people I interviewed. My involvement in the

collection and utilisation of the data over this period also proved useful.

Rich data

The collection of data from interviews, informal discussions and from my own

personal experiences provided for a rich collection of data to analyse.

Respondent validation

All data used was agreed upon by the respondents in advance.

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Searching for discrepancies in evidence and negative cases

This is a key part of the logic of validity testing, thus I attempted not to ignore data

that did not fit my conclusion.

Triangulation

Respondents were asked similar questions in order to saturate the data collected and to

ensure bias was reduced to a minimum.

Quasi-statistics

These are simple numerical results that were derived from the data, which were used

to test and support claims.

Comparison

Comparison was used to identify how disruptive events affect staff during different

activities.

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CHAPTER 4: LITERATURE REVIEW

4.1 Introduction: Core variables in context

The purpose of a literature review is to develop a body of knowledge based on the literature,

and to evaluate this with regards to the research. This evaluation will identify connections,

contradictions and gaps in the literature and expose opportunities for developing and

expressing my own opinions whilst contributing to the body of knowledge.



modernisation strategy, how would TTG have to re-engineer its ‘old school broad-brush’

contracting model to develop a ‘new modernised and precision-driven’ one that satisfies these

needs, ensures the future survival of TTG, and sustainably completes Mondi’s

Paulpietersburg Annual Plan of Operations using safe and humane practices?

The literature review will focus on the following significant areas of research:

Modernisation in the South African forest industry and other parts of the world

Forestry costing models that are aligned with modernisation

The required shift in mindset to actively embrace and adapt to the modernisation

process

The requirements for the restructuring of management and supervisory personal

from the “old school labour intensive and labour-orientated management” to

“planning, precision and mechanically-orientated managers”, who will use new world

technologies all whilst adapting to the new infrastructures required.

Using the three level literature review process, the core variables identified through the

research will be analysed through the literature review in terms of the parent discipline,

which is the over-arching subject of the study; the research problem, which is the concern

variable; and the core variables, which are the factors that impact the concern variable.

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Figure 18 displays the three level literature review to be conducted, while Figure 19

highlights the literature review framework. The concern variable of this study is impacted by

all the core variables uncovered through the research. These then ultimately have

consequences for the parent discipline.

Figure 18: 3 Level Literature Review

Figure 19: Literature Review Framework

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4.2 Level 1 – Parent Discipline Literature Context

Since TTG’s inception in 1999, the focus of its silvicultural forestry contracting work has

been on creating labour intensive activities predominantly driven by the relatively cheap cost

of labour and the abundant availability of unskilled labour in close proximity to the

plantations. The impact of the 56% increase in sectoral wage determination for forestry

workers from 1 April 2013 has created an increase in costs to TTG which are unsustainable

for its client, Mondi. This significant increase in wage costs, together with Mondi’s mandated

transition to modernisation within the South African silvicultural contracting environment,

requires TTG to re-engineer its business from the ‘old school broad brush’ contracting

business model to develop a ‘new modernised and precision-driven’ contracting model.

The parent discipline context, being a Modernised Silvicultural Forestry Contracting

Business Model, needs to be created in order for TTG to remain viable and sustainably

provide future value to the majority of its stakeholders. A change from the ‘old school broad

brush’ labour-intensive business model will destroy certain value, namely:

The modernised business model will reduce the need for large unskilled labour forces,

which will contribute to an increase in the unemployment rates of the communities

living in close proximity to the plantation. This could have negative consequences for

the forestry regions.

The managerial staff will require different skill sets to manage the modernised

operations, and whilst training will assist some management staff in this transition,

some of the current management staff may not have the ability to adapt to these new

managerial requirements.

Infrastructure requirements will change with the need for more equipment and

therefore the need to manage, store and maintain these additional pieces of equipment.

Resource input requirements will change which will affect some of the current

stakeholders, for example:

o Personal protective clothing requirements will reduce by >50%

o Fuel requirements will increase

o Equipment maintenance costs will increase

o Management inputs and skill sets will be required to change

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The modernisation of TTG’s business model has the potential to improve its efficiency and

therefore its value to its stakeholders.

4.3 Level 2 – Research Concern Literature Context

What needs to change? The “Old School Broad brush” contracting business model needs to

be changed into a “New Modernized and Precision driven” contracting model which is line

with the Research question below:

4.4 Level 3 – Core Variables / Research Results Literature Context

Why change the behaviour of the concern variable? Unless the behaviour of the core

variables is changed, the likely success of TTG’s successful transition to modernisation in

silviculture forestry contracting in South Africa will be low. The following core variables

have been identified and researched in the context of modernisation of forestry operations in

South Africa and Brazil from propositions gathered in Appendices 1 to 3, from which the

core variables have been identified and depicted in an interrelationship diagram in Appendix

4.

4.4.1 Modernisation costing model

The development of the South African Forestry Contractors Association (SAFCA) / Nelson

Mandela Metropolitan University (NMMU) costing model started in 1995 and was developed

continuously until it reached its current format. It is specifically designed to determine the

cost of production for a business or business unit on a volumetric harvesting operations rate

or shift rate basis for silviculture operations.

It is still the most comprehensive and accurate model in the forestry industry, which is very

user friendly, easy to understand and free to every person who wants to use it. The model

consists of a harvesting, a silviculture and a machine costing section (SAFCA Costing Model

V2.0.0 - Release Date 2013), with a page of useful contacts in the SA forest industry. It is

unlike the industrial type of costing where lots of time study information is required; rather,

inputs (in question form) are based on experience in the forest industry and on industry-

relevant accepted norms.

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The SAFCA website http://www.safca.co.za/index.php/costing-model provides the model is

MS Excel-based and the row and column indications repeated in the spread sheet facilitate

easy referencing and assistance with any problems. The model is also an excellent planning

and budgeting tool as all outputs are expressed on a per annum, per month, per day and per

ton or shift basis. This configuration makes it easy to transfer the outputs to a cash flow

budget

The current SAFCA has served the traditional labour-intensive silviculture contracting

industry well over the past few years in determining labour unit rate costs, which encompass

all costs as per the example in figure 20. Traditionally the unit rate is used as the basis for

determining all silviculture activity costs, requiring only the additional costs of herbicides

and materials to determine the actual cost per activity on a per hectare basis (see Figure 21).

However the current silviculture and harvesting SAFCA costing models do not adequately

serve the required purposes of a modernised costing model. The SAFCA silviculture costing

model does not adequately provides an all encompassing shift rate with limited input for

productive equipment as will be required by the modernisation activities. The existing

SAFCA harvesting costing model provides the cost of a specific volumetric harvesting

operations rate. Neither of these existing SAFCA costing models will adequately provide a

costing model for the numerous silviculture modernisation activities that include a number of

unique pieces of equipment for each activity, for example:

Labour unit rate for activities that are not machine dependant

Labour rate for machine dependent labour, e.g. modernised planting operations

Machine operator unit rates

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http://www.safca.co.za/index.php/costing-model


Figure 20: Summary of the labour intensive old school

SAFCA silviculture unit rate determination

Figure 21: TTG Activity rates which includes the unit rate and additional costs to

determine the activity costs

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According to Laengin (2013), “We needed to introduce mechanisation while remaining as

cost-effective as possible. Mechanisation has led to a modest cost reduction of around 3%

from stump to mill harvesting extraction and transport costs of the timber. We did this by

managing our value chain more smartly, reducing double handling and focusing on improved

road investments”.

Major factors that drive the costs of mechanised harvesting are the species of tree (the tree

type influences harvesting techniques and ensuing costs), the size of the tree, the

compartment conditions - whether growing on slopes, in coppices etc., and extraction

distances. The biggest cost item in mechanised CTL harvesting is machine fixed costs at

some 30% of total costs, while machine variable costs stand at some 25%, wages at 24%, fuel

at 13% and overhead costs at 5%.

Research into the costing model of Pablo Santini of Process Optimization, a private

silviculture contractor from the Paysandú region of Uruguay, provided some interesting

insight into how their rates are determined. Most of the Uruguayan silviculture activities are

mechanised, which is primarily driven by the low availability of people, the high level of

education and literacy of the Uruguayan people, and the terrain which is slightly undulating

and easily mechanised.

Points taken from this costing model include:

Block silviculture work is undertaken in an effort to reduce costs, minimise logistical

influences, and improve management and activity efficiencies.

Work is planned and costed on a block basis for a particular period and therefore not

lumped together to get average prices for an entire region or regions.

There is no resource balancing in the costing model, just a manual input of resource

requirements which assumes that resource allocations are based on experience rather

than a resource balancing model.

Given that most of the establishment and maintenance work is in newly afforested

areas in Uruguay, there are no variables such as stumps, slope and brushwood to

hinder methodology selection and rate determination. Given this, the number of

methodologies and rates per methodology will be substantially reduced in number for

our South African costing model.

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Having spent some time assessing the Uruguayan costing model, it became clear that there is

very little here that could assist me in my research into a new modernised costing model.

A gap exists in the literature and in our current modernisation process to develop a

modernised silviculture costing model that is applicable to the environmental and labour

constraints applicable in South Africa.

4.4.2 Health, safety and ergonomics

In an article in the SA forestry magazine on forestry mechanisation and jobs, Chapman

(2013) stated that “Safety is at the top of the list”, and it is always the first thing mentioned

by forestry companies when you ask them why they are mechanising. There is no doubt that

manual felling of trees using chainsaws is the most dangerous of forestry work, and this is

exacerbated when there are a lot of people working in a plantation at the same time as felling

is taking place. The reasons for the drive to mechanise are varied and include the following:

Safety

Poor health and nutrition of forestry labour

Forest work is excessively tough on the human body

This was echoed by SAPPI’s Rootman in his 2014 article on integrated mechanisation, where

safety and ergonomics were identified as two of SAPPI’s major drivers for modernisation.

Similarly, Mondi’s da Costa gave a presentation on modernisation and the effect on

silviculture in 2013, in which he identified the concept of decent work; keeping abreast of

best practices in international forestry; improved ergonomic working conditions; the

elimination of safety risks, especially sharp tools; a reduced exposure to harsh climatic

conditions; and reducing the exposure to monotonous work as being key health and safety

drivers for modernisation in the South African forest industry .

da Costa (2013) went further, saying that silviculture operations that have been labour

intensive have had very few interventions over last 20 years. Specifically:

Work is physically demanding, repetitive and poorly paid.

There is international recognition of the excessive physical demands placed on

forestry workers globally.

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These demands have been demonstrated in both the high energy expenditures and

biomechanical stresses experienced by workers conducting tasks within the forestry

industry

Environmental conditions and exposure can be harsh.

Working outdoors exposes forestry employees to environmental stresses, such as heat,

cold, humidity, wind and rain.

These can have a significant impact on work methods, performance, occupational

safety and perceived stresses, particularly when exceeding ambient levels

Working conditions can be hazardous under the best safety practices.

The future forestry working environment in Mondi should be associated with:

decent working conditions;

world-class ergonomic practices;

world class safety standards;

decent living conditions; and

high productivity and quality work standards.

Mondi’s Eggers (2014) was frank regarding the need for modernising chainsaw operations.

“People are injured, and even killed, by chainsaws. This made the necessity of training an

absolute imperative, especially when considering the advancements in technology and the

capabilities of that technology”.

Mondi’s drivers for providing a safer working environment for its workers are strongly

actioned by its employees and the company as a whole, and the results of their drive for ‘Zero

Harm’ is supported by its reduction in fatalities and its significant improvement in reducing

its Lost Time Injury Frequency Rate (LTIFR).

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Figure 22: Mondi fatalities since 2000

Figure 23: Mondi LTIFR since 2000

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Figure 24: Mondi’s risk assessment of its forestry tasks

The CEO of SAPPI, in the company’s 2011 Sustainability Report page no. 2, commented that

the one area where they did not meet their target was in terms of safety. Performance in terms

of both the Lost Time Injury Frequency Rate (LTIFR) and injury rate for their employees and

contractors deteriorated, with three contractor fatalities in their forestry operations. “We have

taken steps to redress this going forward, including moving towards increased levels of

mechanised harvesting and further inculcating a culture of safety throughout all operations.

We continued to focus on developing our employees’ skills and abilities through a number of

training programmes by providing in excess of 82 hours training per employee in 2011. The

training programmes range from Adult Basic Education and Training (ABET), to leadership

programmes. The health and safety of our people is directly linked to productivity. There

were ongoing wellness programmes at all operations throughout the year, in which

employees participated enthusiastically. We are making strides in terms of HIV/AIDS.

Mortality rates of known HIV/AIDS infected employees in South Africa have declined

steadily over the last five years and compare well with the national mortality rate of 2%.

Our target for 2011 was to provide training and development opportunities at an average of

48 hours, which we exceeded significantly by providing 82.3 hours.”

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This was made up as follows:

Basic life skills: Adult Basic Education and Training (ABET), HIV/AIDS awareness

– 1.9 hours

Sappi world of work: Safety Health Environment and Quality (SHEQ) related

training, induction – 10 hours

Individual development, learnerships and skills programmes: Study assistance,

apprenticeships, pulp and paper learnerships, Training Outside Public Practice(TOPP)

– 46.9 hours

Knowledge and capacity building: Improving skills on current job – 21.5 hours

Management and leadership: Improving managerial skills – 2 hours

There is no doubt that Mondi’s and SAPPI’s modernisation strategies support their target of

Zero Harm to the employees, however whether modernisation reduces the risk of fatalities

and LTIFR remains to be seen. New and untested equipment and operations will require the

health and safety departments to amend their practices and the reduction of staff on the

plantations may not necessarily translate into a reduction in fatalities and LTIFR, as can be

seen by the one fatality in SAPPI’s modernised harvesting operations.

Mondi explicitly states that “Safety comes first”, and to date I have no reason to believe that

is not the case. Currently each TTG employ at Mondi’s Paulpietersburg operation receives a

minimum of three days annual training, a minimum of one induction and one annual medical,

depending on the activity the person is involved in. This training is undertaken according to

the Mondi training matrix.

4.4.3 Productivity

According to Stone (2013),“In the global village we now live in, competition is becoming all

the more challenging. Increasing productivity is critical. Comparatively speaking, Japan,

ranked 4 in the world in terms of GDP, has a productivity rating of 6, 7 to our one. This is

due largely to their higher education levels. At the same time, it is a business imperative to

keep costs to a minimum. If not, buyers will get their products elsewhere, as is already

happening with wood imports, e.g. medium density fibreboard, to this country. Profit creates

jobs. Without productivity, consistency and reliability there will be no business sustainability.

It’s a dilemma. Public, including trade unions, and private sector collaboration is critical if

we are to find a win-win solution.”

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Chris Gengan of Sappi (2013) also had a message regarding the challenges of productivity

and skilling in a forestry environment, which taken at the bottom line are quite simple and

very telling. Mechanisation, as far as the results of their measured observations and analysis

were concerned, had increased productivity and reduced dependence on an inconsistent and

less productive unskilled and semi-skilled labour force; mechanisation offered more positives

than negatives for the profit-minded private sector, which is this sector’s ideal.

“There is an urgent call to revisit the concept of mechanisation in the timber industry to combat

low productivity”, stated NCT Forestry (NCT) assistant manager Rob Thompson (2013). This

urgency, he believed, is based on the severe shortage of skills and labour, increased production

costs and unreliable timber supply for markets in the industry. The mechanisation process that

has been adopted by NCT is the process of stripping bark from felled eucalyptus trees

amounting to a ‘motor manual’ process, i.e. a labourer would normally conduct bark stripping

manually. Manual bark stripping, according to Thompson, is costly, time-consuming and very

unreliable given the high incidence of absenteeism.

It was noted that an awareness of the need to reduce the impact of mechanisation on the

environment would prevent compaction from the weight of the machines, soil disturbance and

loss through erosion on sensitive sites, poor distribution of brush and bark rutting due to tree

lengths being dragged, and stump damage by machines and log skidding. Continual assessment

of productivity's sustainability and the question of whether mechanisation is always the correct

option were stressed.

A focus on modern farming technologies and the implementation of such technologies will

reap benefits for entire communities, which stand to benefit from an increase in skills,

knowledge and productivity if they are suitably trained and supported.

It is clear that together with our unreliable, unskilled and often unionised labour forces, where

employers participate in an excessive and restrictive South African labour legislation

environment, we find sustainable productivity a major challenge. Current labour intensive

productivity norms have hardly been challenged in the last number of years, largely due to

the difficulties associated with managing labour-intensive operations and the relatively cheap

cost of labour.

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The dramatic increase in labour costs has essentially challenged the forest industry to find

alternatives to labour intensive practices where possible in the form of modernisation. The

concept of modernisation aims towards international competitiveness through the adoption of

good practice, sustainability and high performance standards. It aims to lower operational

costs, provide a safer workplace and decent work, create higher skill sets and improve

ergonomics.

It is still unclear whether modernised silviculture operations will necessarily lead to higher

productivity outputs; however it is clear that labour intensive operations are far more

expensive where mechanised alternatives are available. This will be clearly demonstrated

during my presentation of the modernised silviculture activity forestry costing model.

Within the global context I have highlighted how economic productivity is a critical factor in

ensuring societies’ wellbeing in the future, and how it is important for business to promote

overall productivity and to educate, attract and retain its future workforce.

4.4.4 Mindset

Can we adapt to this required change in our business environment?

TTG target: Do we want to adapt to this required change in our business environment?

The literature is silent on the need for a change in mindset with the exception of the need for

preplanning and knowledge of the site sensitivities, which are important when mechanisation is

required. Stakeholders will require a major shift in mindset to adjust from the traditional labour

intensive practices to the modernised practices, where the scope of inputs and resources at hand

are impacted by the relative lack of flexibility associated with mechanised operations.

4.4.5 Planning and monitoring of modernised operations

NCT Forestry (NCT) assistant manager Rob Thompson (2013) commented that “Critical lessons

highlighted at the demonstration indicated that mechanisation is only part of the productivity

improvement solution and is not a singular productivity elixir. Pre-planning and knowledge of

the site sensitivities is essential and mechanisation is expensive and has high overheads with

economy of scale required to affect a break-even point”.

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Preplanning and knowledge of site sensitivities are important. Thompson (2013) explained that

machines are heavy and can impact on the ground structure causing compaction. Mechanisation,

he says, is a more time effective operation and reduces labour requirements. Monitoring and

production measurements are also simplified owing to machines being used rather than multiple

labourers.

Other advantages of modernisation include the flexibility and mobility of operations and the

remote monitoring of machinery

The Forestry website http://www.forestry.co.za/bell-forges-ahead-with-mechanised-forestry-

solutions refers to: Timber Office software accurately captures daily and lifetime information

for effective production and equipment management. Furthermore these production accuracy

levels will be acceptable to paying the contractor on machine output as is done in many First

World countries.

Light detection and ranging (LiDAR) technology, generating precise and directly

georeferenced spatial information, is currently being introduced by Mondi in its harvesting

and silviculture operations, which will support the modernisation process by providing more

accurate and comprehensive maps and site data.

There is no doubt that production accuracy levels will be improved with the use of GPS

tracking devices on the machines, however I do not agree that there will be greater flexibility

and mobility of operations; in fact I believe that there will be far less flexibility and mobility

due to the mechanisation of operations. Careful planning is required to ensure that machines

and equipment are adequately utilised, that Mondi’s APO is carefully prepared to ensure that

minimum area sizes are adhered to maximise production, and that the minimum levels of

machine availability through organised and well supported maintenance structures are

attained consistently. Areas will need to be thoroughly inspected to determine the best and

most efficient use of resources. Labour-intensive operations are far more mobile and far more

flexible where they are required to be increased or reduced, whereas mechanised operations

tend to be far more capital intensive and less mobile when covering large areas of operation,

as is the case at the Mondi Paulpietersburg Plantations which stretches some 120km from one

end to the other.

Modernisation calls for a specific focus on planning, to such an extent that the management

structure will be required to allow for a planning and logistics specialist.

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http://www.forestry.co.za/bell-forges-ahead-with-mechanised-forestry-solutions



4.4.6 Infrastructure

Specific challenges in the forestry industry include poorly-developed infrastructure. The

infrastructure currently available is inadequate and will require substantial capital investment

if it is to fulfill the needs of modernisation. This infrastructure includes accommodation for

staff, workshop facilities, upgraded office and office equipment and access to good reliable

internet connectivity

4.4.7 Management structures: Planning officer/Functional vs. Regional responsibilities

The literature makes reference to the need for a specific focus on planning, as referred to in

the planning and monitoring tool core variable in item 4.4.5 above (sources). The literature is

silent on the need for specialist versus generalist operations managers, and whether a

functional or regional structure is more beneficial in the silviculture modernised operations

management make-up.

Traditionally and in general, plantation owners manage their fire protection duties on a

regional basis. The literature makes no mention of fire protection duties and consideration

must be given as to how these duties will be fulfilled in light of the possible restructuring of

silviculture duties, which mirror the fire protection regionalised responsibility management

structure. The added responsibilities of fire protection to the modernised silviculture duties

include:

The preparation of fire tracer belts which provide the boundaries to the fire breaks and

which are prepared before the onset of winter and the first frosts

The preparation of fire breaks which include a combination of manual hoeing, tractor

discing and burning of the belts

Fire standby duties 24/7 and generally from 1 May to 31 October

Fire tower lookout duties

Fire fighting duties

There is little doubt that the old school labour-intensive management structure no longer

applies given the change in approach. A gap thus exists to explore the most efficient

management structure for the modernised silviculture and fire protection activities.

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4.4.8 Management, supervision and labour skill set and the need for training

Stone (2014) mentioned that “The Department of Agriculture, Forestry and Fisheries wish to

use aforestation as a means of creating thousands of jobs in line with government’s job

creation strategy. Given the high levels of unemployment in South Africa, this is needed.

However, the dilemma for forestry, particularly with modernisation and mechanisation is the

low levels of education among the adult population. Of the employed, 47, 7% do not have a

Grade 12. Neither do 59, 7% of the unemployed and 77, 7% of the discouraged work seekers.

With technology advancing as it does, would be chainsaw operators now need a Grade 12 to

qualify. While it is the forestry industries desire to work with government in creating decent

jobs, the industry is not able to provide basic education to thousands of workers who need it.

The industry can and does provide quality training in applicable vocations”.

Dr Jaap Steenkamp (year, page) the South African Forestry Contractors Association

(SAFCA) stated that “The shift from labour to capital (increased mechanisation) and its more

advanced technology requires a greater need for high-level skills. This training should be

carefully considered from a content and level of training perspective. It should also be

directed towards the grower as well as the contractor, and the interface between the two –

with an appropriate degree of sensitivity, e.g. in moving towards or in a capital intensive

environment”.

Thompson (2013) argued that the lack of skills, which contributes towards the need for

mechanisation, is because there is a migration away from the agricultural and forestry arena for

work opportunities. To combat the shortage of skills in the industry, NCT is involved with the

Forest Industries Education Training Authority and other organisations to encourage individuals

towards forestry as an employment choice. NCT also supports college students for practical

internship where they are exposed to the forestry-working environment. In terms of labour skills,

Thompson says that there are adequate higher level technical skills encompassed by tertiary-

qualified individuals who enter the industry through many portals. However he added that

“Labour shortages have resulted in more intense industry focus on mechanisation to replace

labour. The forest harvesting and bark stripping operations lend themselves to mechanised

processes but it is not inconceivable that this will lead to many silvicultural and nursery

operations also becoming mechanised.

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This is an unfortunate situation as the forest industry has the capacity to provide significant work

opportunities to reliable and efficient people”. Although there is urgency for the process of

mechanisation, the process does not come cheaply. Thompson (2013)

Thompson (2013) explained that machines are still expensive and many are imported at great

cost. “Mechanisation does not cut out the labour component completely. Over time, operations

will become cheaper particularly if the concept of ‘owner operator’, as is widely practiced in

Europe is introduced”.

The motor manual trials have highlighted that mechanisation requires skilled operators, which is

a challenge to industry as the use of contractors’ own equipment and labour is still required.

Training is a critical link in the operation; break-even verses capital expenditure is the best initial

target measure and cost option, but is not easily obtainable in the first phase.

Operations may damage remaining stumps in the field, which reduces the coppice quality of

follow-up rotations. “Many areas are site-sensitive such as wetlands or sponges, which heavy

machines have to avoid. All these factors require adequate and accurate preoperational

planning.” Challenges facing this process include attempting to retain trained operators of the

machines. “There are many mechanised operations coming into the market and trained operators

are scarce. It is possible that individuals will end up training an operator for another company,”

explains Thompson (2013).

Mondi’s re-engineering manager, Dirk Längin (2013) concluded in February 2013 that

Mondi’s future modernised operations will be characterised by:

a move to multi-skilled and trained ‘operator’ type employees;

focus and attention to detail and planning;

equipment that is purpose built for forestry conditions in South Africa;

new roles and responsibilities for supervisors; and

higher levels of training and experience will be required for roles with greater

responsibility.

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Mondi’s training for modernised operations will focus on:

formal training for all employees;

productivity of modernised operations;

technical understanding and abilities of employees;

highest ergonomic standard and appreciation thereof; and

highest safety standards and significant reduced safety risks.

It is clear and apparent that the current skill set and educational levels of forestry workers,

supervisors and managers are geared towards the traditional labour-intensive forestry

activities. A significant increase in training on modernised methods, time and motion studies

and health and safety requirements is required to ensure that the modernised forestry practices

in the South African forest industry remain internationally competitive, through the adoption

of good practice, sustainability and high performance standards. Modernised training must

provide a safer workplace, with decent work and a higher skill set with improved ergonomic

conditions for the workers.

In order that training is directed at those workers who will most benefit themselves and our

business and the industry, new selection criteria will be required to identify those workers

best suited for the job. It is thus not inconceivable that some of the incumbent managers,

supervisors and machine operators may not necessarily be selected for modernised training.

4.4.9 Challenges with labour intensive operations

In his article ‘Modernisation/mechanisation and the effect on silviculture operations’, da

Costa (2013) outlined the challenges for forestry silviculture. These include an ageing rural

workforce exacerbated by a 5% annual decline in rural population, increasing labour costs,

high labour turnover (estimated 20 to 50%) and absenteeism (estimated 10 to 20%), and

problematic health conditions, for example the impacts of HIV/Aids (infection rate >30%).

Dr Steenkamp (2013) stated that change is a constant, it is happening now, and will continue

to do so going forward. He claimed that people believe that manual or blue collar work is less

decent than white collar work; they see it as carrying lower wages and, as a result, it provides

a lower level of self-esteem which leads to labour instability.

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The South African government is quite right about the need to create jobs, however the

hurdles to achieving this are a poorly educated adult population and organised labour trade

unions, which are driven by an incongruent idealism and one-sided perspective that is causing

mayhem and disruption. Instead of working with industry in a sincere manner to find

mutually acceptable solutions for sustaining and creating new jobs, they resort to militancy,

burning and destroying. This of course simply forces industry to look at modernisation and

mechanisation as a solution to its “labour problem”, which, in the end, has the effect of

reducing the number of jobs. However the knife cuts both ways and industry needs to be

equally sincere, perhaps in trying to balance both its private and public strategic interests in

an equitable solution – especially now as we rebuild South Africa. Education and training is

an imperative, but where it begins, if government wishes to solve the problem, is the need to

reign in labour unions. It is the many, and not the few, who need to benefit, and you will

never find a struggling, starving trade union boss. Collaboration, where both sides win, is the

name of the game, not compromise, where one side wins and the other side loses.

The Deputy Minister of Agriculture, Forestry and Fisheries, Dr Pieter Mulder (2014) is

quoted as saying, “The fact is that labour unrest has accelerated the drive to mechanisation in

agriculture because labour costs far outweigh the cost of mechanisation, recently urged

farmers to restrict their dependence on farm workers. It is clear that together with our

unreliable, unskilled and often unionised labour forces, where the South African labour

legislation creates a restrictive environment largely unsupportive of employers, we find

sustainable productivity a major challenge and therefore a move to modernisation is largely

welcomed by those employers of large labour forces”.

Characteristically high labour turnover and high absenteeism rates incur huge financial waste

for employers who have to employ, train and outfit staff with the required Personal Protective

Clothing (PPE), as well as administer additional staff to offset the current large staff turnover

(62% in 2012) and absenteeism (17% in 2012) rates.

Given the high cost of labour; the poor health, high turnover and absenteeism of workers; and

the restrictive labour legislation in South Africa, modernisation provides the ideal tool to

reduce practices that are labour-intensive.

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4.4.10 Modernisation in other South African forestry operations

Längin (2011) commented that modernisation is not a new concept to Mondi in South Africa,

and that Mondi’s modernisation process, which began in 2008, included a change in forestry

management systems and processes, optimisation of the forestry road network, the

introduction of mechanised harvesting systems (Figure 25), an upgrade of information

technology infrastructure, and the replacement of vehicles with larger, more efficient ones. It

also involved the restructuring of contractor businesses, supported by training and business

development through Mondi Zimele.

Figure 25: Mondi’s mechanised harvesting operation

Mondi South Africa is transforming the local forestry industry through mechanisation of the

harvesting process and has already reached its target of 80% mechanisation by 2013, with

over 90% of core harvesting operations having been mechanised. This has resulted in

increased harvesting productivity and greatly reduced reliance on manual felling, debarking,

cross-cutting and stacking of timber, delivering the many safety and ergonomic advantages

associated with the ‘no hands on timber’ approach.

When mechanisation began some years ago, forest harvesting was regarded as desperation

employment. Labour turnover stood at 20 to 50% and absenteeism ranged from 10 to 20%.

The mechanisation process began with the implementation of pilot systems and resulted in

different harvesting systems - mainly “cut-to-length” (CTL) and “full-tree” (FT) - being

implemented across the company. The process was implemented with the full cooperation of

Mondi area management and harvesting contractors.

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http://sd-report.mondigroup.com/2013/our-actions/forests/focus-on-people#mondi-zimele


The level of mechanisation across Mondi South Africa currently stands at 82%. The

Umfolozi area is fully mechanised using both the CTL and FT systems, Piet Retief area has

reached 99% semi-mechanisation with a FT harvesting system, and most other sites operate

at between 70% and 90% mechanisation. The focus in 2012 was on Greytown, where Mondi

planned to increase mechanisation levels from zero to 50%, and on Piet Retief, where

mechanisation levels aimed to reach 100% during this period.

The mechanisation process has enabled Mondi to stop some 75% of manual debarking and

stacking and some 60% of chainsaw operations. “As a result of the changes, we can provide

decent, higher-skilled jobs with increased salaries. Over time, we also expect our safety

performance to improve, as well as productivity rates” Längin, (2013)

Mondi aims to further optimise harvesting systems; continue to learn from international best

practice; focus on productivity increases to further reduce costs; maintain fair partnerships

with contractors to encourage research and development; secure equipment suppliers’

improved technical support, spares availability and reduced purchase prices; and reduce fuel

consumption.

Various challenges remain, including the typically smaller size of Mondi trees with their

greater harvesting costs. The mechanised harvesting effect on timber quality delivered to

markets is also an issue that needs to be addressed, with adjustments required at mills to meet

different standards. Alternative markets need to be found for expensive timber, which

includes wood from steep areas where harvesting is up to 50% slower.

To further promote good ergonomic practice and safety, Mondi will focus on the

implementation of mechanised harvesting in steep areas and on further reducing motor-

manual felling with chainsaws to reduce risks. The remaining manual labour force will

require ongoing health attention. This will address nutritional, rest and hydration deficiencies

as well as focus on diseases such as TB and HIV/AIDS, which continue to have a severe

impact on the workforce. Längin, (2013)

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Silviculture

The modernisation of silviculture operations has been fast-tracked over the past year. These

modernisation efforts include:

Upgrading of nurseries;

Modernisation and refurbishment of fire-fighting operations;

Ergonomic and productivity improvements of all silvicultural operations including

pitting operations; and

Improved planting, watering and fertiliser operations techniques.

According to SAPPI’s 2011 Sustainability Report, the bulk of their silvicultural and

harvesting activities are outsourced to contractors. One of the fatalities in 2011 occurred

during harvesting. Currently, we have achieved around 65% mechanisation of our

silvicultural and harvesting activities and our target is to increase this to 75%, which is

expected to have a positive impact on safety performance.

According to Rootman (2014), SAPPI’s Drivers of Mechanisation for SAPPI are:

Safety

Ergonomics

Cost-effectiveness

Efficiency

Flexibility

Productivity

Competitive fixed and variable costs

Minimal waste - non-destructive –erosion/spill control

Fuel efficiency, even renewable energy driven

Access to and cost of technology

Labour availability and demographics

Social environment

Political environment

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Whilst SAPPI appears to be less proactive about the modernisation of its silviculture

operations, both Mondi and SAPPI have forged ahead with the mechanisation of their

harvesting operations, driven primarily by the reduction in costs, albeit there was only a slim

reduction in harvesting costs to date of 3% by Mondi Längin (2013). Both companies cite

safety as one of the key drivers, however it is clear that mechanisation will not necessarily

reduce the fatalities and the LTIFR given the latest safety statistics provided by both Mondi

and SAPPI, but the severe reduction in staff complements as a result of the modernisation

process, together with the renewed focus on safety, ergonomics and the concept of providing

decent work, should contribute positively.

4.4.11 Modernisation in the South African agriculture sector

Despite being plagued by droughts, poor crop yields, substandard seeds, wage disputes and

labour strikes, the agricultural sector is under enormous pressure to contribute to the

country’s Gross Domestic Product (GDP), social welfare and the creation of jobs. Increased

labour and production costs have meant that the profitability of the sector has come under

threat, so much so that there is a drive towards mechanisation that has stirred mixed reactions

from all stakeholders in the industry.

It is a fact that the South Africa’s population is growing by 2% per year and that the

population of 49 million in 2009 is estimated to increase to 82 million by 2035. This increase

means that food production or food imports have to double to meet food requirements, in

spite of dwindling natural resources. Yet water scarcity, coupled with a heightened demand

for water, has left South Africa with less than two-thirds of the number of farms it had in the

early 1990s.

The number of farm labourers also decreased by 46% in recent years, from 1.1 million in

2004 to just 624 000 in 2012. Strikes by farm workers demanding a minimum wage increase

from R71 to R150 per day are expected to continue after the Labour Minister Mildred

Oliphant announced in February 2013 that the minimum wage would be pegged at R105 per

day.

The Transvaal Agricultural Union (TAUSA), a commercial farmers’ union, has spoken out

against the new minimum wage for labourers, stating that it would have a devastating effect

on the sector at large. In particular, the increase could result in over 2,000 job losses.

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The government responded to the outcry by allocating R6.2 billion to the Department of

Agriculture, Forestry and Fisheries to support newly established and emerging farmers who

will struggle to survive the wage increases. Labour unrest has accelerated the drive to

mechanisation in agriculture because labour costs far outweigh the cost of mechanisation. In

fact, Dr Mulder (2014) recently urged farmers to restrict their dependence on farm workers

(reference).

In the face of land reform and increased costs of electricity, water and fuel, the majority of

farmers are unable to afford the increase in labour costs. Research conducted by the Bureau

for Food and Agricultural Policy (BFAP), a think-tank for the universities of Stellenbosch

and Pretoria, said that it is difficult to estimate the job losses due to the increase, but that it

signaled a move away from using ‘cheap, unskilled labour’ to a more efficient production

system that requires the services of skilled labour, but less of it.

The same report by the BFAP also stated that mechanisation should not be feared.

"Mechanisation should not necessarily be seen as a threat against manual labour; it should

rather be thought of as an opportunity to increase the output delivered per worker and

stimulate the agri-economic sector under a favourable economic and political environment".

According to the United Nation’s Food and Agriculture Organisation (FAO), a combination

of human, animal and engine driven power sources are crucial in the agricultural production

process for farms to be truly productive. On the other hand, mechanisation in developing

countries has been blamed for exacerbating rural unemployment and contributing to other

social issues, including poverty.

The Grain SA (GSA) website http://www.harvestsa.co.za/articles/man-or-machine-5634.html

refers that GSA is an organisation that offers commodity support and services to South

African grain producers to foster sustainability. The GSA runs a farm development training

programme "to develop capacitated, sustainable, black commercial farmers". They have

openly empathised with farm labourers and the unemployed and have advised grain

producers to focus on training and increasing productivity rather than retrenching or

mechanising farms. However, due to the fact that the grain industry is less labour intensive

than the fruit and vegetable industries, the move to mechanisation will not have the same

impact on the grain industry as other farming industries.

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While the work that the GSA and other organisations undertake is necessary for the

agricultural industry overall, the move to mechanisation cannot be ignored, nor can the

productivity and profitability of farms be increased simply by increasing labour or creating

jobs.

The general consensus is that while mechanisation will not solve unemployment, it will

encourage skilled labour and thereby create jobs of a higher caliber, while still increasing the

profitability and sustainability of the farm itself. A focus on modern farming technologies and

the implementation of such technologies will reap benefits for entire communities, which

stand to benefit from an increase in skills, knowledge and productivity if they are suitably

trained and supported

Forestry appears to be simply following the trend set by agriculture to find alternative

methodologies that are more cost effective, safer and far more reliable than traditional labour

intensive practices.

4.4.12 Forestry modernisation in Brazil, Russia and Uruguay

Following a trip to Brazil in 2013, Mondi identified Brazil as the silviculture modernisation

benchmark in world forestry. Drivers of modernisation practices in Brazil are characterised

by the following:

Impressive operations across the value chain from stump to mill;

A safe and ergonomic way of life;

A variety of silviculture systems are applied. Choices are based on ergonomics,

simplicity and high productivity standards;

Silviculture systems range from manual with excellent ergonomic standards, to semi-

mechanised and fully mechanised planting machines;

Silviculture operations outsourced and in-house;

Detailed planning across silviculture operations; and

Attention to detail and focus on production.

Certain operations have been earmarked by Mondi as being applicable to the conditions in

South Africa, as shown in Figure 26.

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Figure 26: Brazil’s modernised silviculture practices

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Modernisation in the Russian forests

Modernised harvesting has been fully implemented at our Russian operations in

Syktyvkar for a number of years. The modernisation process included replacing largely

motor manual logging processes with the more flexible and fully mechanised forwarder,

improving living conditions at the logging camps and an upgrade of the road

infrastructure to optimise access to the harvesting operations. More recently, as part of

the drive to optimise transport operations and reduce transport costs, some 117km of new

roads were constructed by contractors in 2012 and 2013.

Another important aspect of the modernisation process was the establishment of silviculture

operations. This was part of an effort to ensure that the re-establishment practices in our

forests meet the requirements of the new Russian Forest Code, thus ensuring that future

forests are well stocked.

Modernisation in the Uruguayan forests

The commercial forest industry in Uruguay is relatively new. It was only in 1975 that the

Uruguayan government offered incentives to promote the development of its forest industry,

however it was not until the establishment of Forest Law 15.939 in 1987 that a significant

expansion of the forest base occurred. Today these plantations cover approximately 413,000

hectares in total.

The world forestry website

http://wfi.worldforestry.org/media/publications/marketbriefs/Uruguay_brief.PDF refers that

The Rio Negro, Paysandú and Rivera regions contain the most and oldest plantations, while

the newest areas of plantation development are located in the central and eastern regions of

the country. Only since 1994 has there been a significant increase in the number of

plantations in Uruguay.

Mechanisation in Uruguay has been driven by necessity due to the poor availability of people

and the high costs of labour. This lends itself to mechanisation due to:

the high levels of education and literacy amongst the Uruguayan people;

the terrain which is slightly undulating;

most of the establishment operations are newly planted areas, previously grassland;

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http://wfi.worldforestry.org/media/publications/marketbriefs/Uruguay_brief.PDF


the predominantly agriculture experience, livelihood and knowledge of the rural

people.

4.5 Limitations and conclusion

Whilst the literature provides little factual evidence of an adequately applicable modernised

silviculture costing model both locally and internationally, there is sufficient guidance on the

factors that should be considered when developing our costing model. These factors would

include block felling, resource allocation and balancing, which will improve efficiencies and

drive down costs. Sufficient progress has been made in mechanised harvesting operations in

South Africa over the past six years to provide a basic foundation for the successful transition

to modernised silviculture operations and the development of a viable costing model for

silviculture. It is apparent that labour-intensive operations in harvesting and agriculture and

now silviculture are more expensive, less productive and generally less reliable than

mechanised operations. Whilst modernisation in South African harvesting operations has

only had a moderate reduction in costs of 3%, it is expected that improved efficiencies, new

technology and experience over time will continue to keep the pressure on contractors to

reduce modernisation costs, however the same cannot be said for labour-intensive operations.

The industry has little control over the sectoral wage determination, and the unreliability,

reduction in availability, high risks and the low skill set of labour in the South African labour

market will continue to drive costs up.

Evidence of a required shift in mindset for modernised silviculture operations appears not to

be applicable to the Brazilian, Russian and Uruguayan forest industries, as they are well

experienced in mechanisation and their forestry terrain and environments lend themselves to

these practices more so than the average forestry land in South Africa. Given the number of

variables affecting the infield conditions that we require to derive the methodologies selection

and rates determination, precision driven planning and the allocation of resources is essential

due to the lack of flexibility of mechanised operations versus labour intensive operations.

Whilst mechanised silviculture operations in Brazil, Russia and Uruguay have been working

for many years, the environmental conditions, levels of education of staff and their

development of equipment to suit local conditions can be considered, but not simply

transferred to or found in the South African environment.

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More research and work studies are required to adequately develop equipment and plants as

well as develop the skill sets of managers, supervisors and operators to sustainably deliver

modernised silviculture activities in the South African environment. However, it is clear that

productivity cannot be improved if the basic level of education of forestry workers is not

improved in South Africa. A focus on modern technologies and the implementation of such

technologies will reap benefits for entire communities, which stand to benefit from an

increase in skills, knowledge and productivity if they are suitably trained and supported.

The safety and ergonomics of forestry workers requires continued careful scrutiny, and

methodologies need to be developed to meet these needs. Ongoing research and work studies

are required to develop methodologies that are safe, ergonomically acceptable, productive

and cost efficient. The drive for zero harm to forestry workers is echoed by all stakeholders.

The restructuring and up skilling of management and supervision of modernised practices

also require attention. Basic skill requirements need to be determined for management and

applicable training needs to be sought, together with a re-evaluation of the functional versus

traditional regional responsibility structures.

Careful preplanning, compartment inspections and the use of modern technologies for both

the implementation and monitoring of operations will be required. This new approach to

silviculture operations implies the need for the development of our normative, strategic and

operational planning skills to create a more co-operative and innovative approach to

modernisation by all the stakeholders. Furthermore, additional research is required to

determine whether a functional or regional management structure approach is better suited to

modernisation, or whether a seasonal integration of both management approaches is

necessary when considering our fire protection responsibilities that generally occur outside of

the main silviculture season.

Whilst research from international journals is under-represented in this literature review,

there has been a sincere effort to explore and research all relevant information, however

nothing more exists.

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Gaps therefore exist to develop a viable modernised silviculture costing model for contractors

which will address the change in mindset towards modernisation, whilst continually

developing the required infrastructure and management structures to sustainably complete

Mondi’s APO. Unless these modernisation needs are successfully addressed, the TTG

concern will not be dealt with and will therefore persist.

This concern reiterates our need to research and develop a new business model for

modernised silviculture forestry contracting practices in South Africa.

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CHAPTER 5: THE EMERGENCE OF A NEW BUSINESS MODEL

5.1 Introduction

The new approach to silviculture forestry contracting in South Africa requires a revision of

the old business model and the emergence of a new, modernised one. I wish to seek and

leverage an alternative approach to the old school labour-intensive business model - one that

integrates and improves the management, systems and costing model and strives for a

precision-driven modernised business model. The conventional choices no longer enable me

to arrive at the solutions I strive for, however through the Integrative Thinking Theory I hope

to provide the best solution.

Through a process of reflecting on this challenge, I propose to develop my Normative

Management capabilities to provide a strategy to move this problem forward that is both

desirable and feasible. Normative Management by my definition is a management principle

serving members of a group or organization to prescribe and regulate its longer, intermediate

and shorter term future in an effort to create sustainable value, wealth and learning for all

stakeholders and it is essential to the development of the best solution in this research.

Normative Management is one of the three domains of management. Normative

Management focuses on shaping the longer term future of an organization, generally with a

horizon of five years or more by creating an Identity for an organization. Normative

Management creates favorable conditions for the second domain of management, Strategic

management (a horizon of 1 -5 years) which is characterized by innovation. The Strategic

Management domain plans for the future by continually and proactively making changes to

respond to the ever changing business environment, through a process of creating sustainable

value, wealth and learning for all stakeholders and ensuring that any changes are desirable,

feasible, transferable and systemic.

The Strategic Management domain in turn creates conditions for the Operational

Management domain responsible for managing the present value creation that focuses on the

elements of volume, price, quality and timing to meet the shorter term (1-2 years) value add

domain of business to its customers as depicted in Figure 28.

In the sections to follow, I hope to develop an integrative stance with a possible new model

for TTG that will emerge for us to implement. I have identified the most important

stakeholders involved in this process, and I will focus on the shareholders, management, staff

and Mondi as the major stakeholders of this process.

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5.2 Identification of the Two Models

The ‘Old School Labour-Intensive

Business Model’

The Modernised Business Model

• TTG Shareholders

High risk, lower returns. High labour-

related risks, less capital intensive.

• Management and Supervisors

Productivity controls – reliance on human

factor. Little technology use. Low

mechanical and technology skills

requirements. “Jack” of all trades. Little

training. Reliance on age, gender and status

for control. Minimum 20 staff per

supervisor.

• Staff

Large labour force. Minimum wages, poor

ergonomics, inhumane work, few skills,

minimal training, unsafe work practices.

Poor attendance – food, grants,

urbanisation, alternate work. Forestry work

as last resort. Low costs of labour. Staff

commitment to work is poor. High risk.

• Mondi

Dictatorial, poor planning, low levels of

interaction with contractors.

• Capital:

Relatively low capital investment

requirements.

• TTG Shareholders

High risk, higher returns, better margins.

Lower labour-related risks, capital

intensive.

• Management and Supervisors

Productivity controls – use of machines

and technology improves planning and

productivity monitoring. Greater use of

technology. Better skills set. Specialists

rather than generalists. Better training,

reliance on skills for control.

Supervisor/staff average ratio of 10:1

• Staff

Smaller labour force. Minimum wages,

Improved ergonomics, no inhumane work,

better skills, more training and safe work

practices. Improved work attendance as

forestry work is no longer seen as the last

resort. High costs of labour. Increased staff

commitment to work. Lower risk.

• Mondi

Inclusiveness, precision planning, high

levels of interaction with contractors.

• Capital:

Large capital investment requirements.

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• Innovation:

Low levels of innovation. No incentive to

innovate.

• Productivity:

Low levels of productivity and reducing.

• Business Costing Model:

Old school single unit rate + other inputs

with methodologies and few variables

affecting the methodology selection and

productivity output.

• Innovation:

High levels of innovation with a big

incentive to innovate.

• Productivity:

High levels of productivity and increasing.

• Business Costing Model:

Multiple unit rates, number of

methodologies and high number of

variables affecting the methodology

selection and productivity output.

Figure 27: The emergence of a new business model

Figure 28 provides the framework through which the integrative thinking process will move

to emerge this new, modernised business model from a mystery (problem identification)

through to the algorithmic level (implementation of new option level).

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Figure 28: The knowledge funnel

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5.3 The Mystery







5.4 Heuristics

The heuristics level within the knowledge funnel explores the tensions and relationships

between the stakeholders that I have identified within the two models. The key aspects from

each of the stakeholders are identified in Figure 29 and provide the mechanisms and create

the foundation for providing insight into the possible solution that will be proposed.

Figure 29: Analysis of the old school and modernised stakeholders

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The key aspects of each model that were found particularly valuable from Figure 29 include:

Shareholders: A higher profit margin, less labour risk, higher capital investments,

better use of technology to drive the business, better skilled staff, improved

productivity, more interaction wuth the client and better planning.

Management: Better job security, higher skill sets due to more training, development

of specialist skills, better and more sustainable productivity outputs.

Staff: Higher skill sets and wages, more training, better jobs, safer jobs, improved

productivity.

5.5 Algorithm

By analysing the key positive aspects identified from the stakeholders of the two models, an

original opportunity exists to determine a solution that encompasses the best aspects from

each of the models that will reflect the ideology of the major stakeholders of TTG.

This solution will:

Develop a financially viable business model of international standards.

Offer fewer risks due to lower staff numbers. This includes less staff unrest, less risk

to the plantations and a better management/staff ratio.

Develop a working environment with activities that are safe and ergonomically

acceptable for the staff, providing humane work.

Develop the staff skills and pay a higher than minimum wage due to higher

productivity levels.

Develop specialist skills rather than generalist.

Integrative thinking is the metaskill of facing more than one opposing idea or model to

generate a creative resolution of the tension in the form of a better model. The better model

contains elements of each model but is superior to all the individual opposing models, and

promotes shared value on a personal, organisational or environmental level and across the

normative, strategic and operational management levels within the business. Integrative

thinking therefore requires a balance of mastery and originality.

The stance of an integrative thinker is that he/she always investigates and challenges the

developers of seemingly opposing options, seeking to leverage and exploit the best aspects of

each option to create a reliable solution.

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5.6 Driving forward a solution

An original new business model solution is required for the silviculture contracting industry,

which will provide the framework for building a brighter future by possibly bringing together

key elements from both models and exploring the possibilities on the basis of three

approaches, namely the ‘double-down’, ‘decomposition’ and ‘hidden gem’ approaches.

5.6.1 Double down: How could you extend the model you have to actually produce the

desired benefit of the other model?

Reduce the business risk – smaller labour forces, increase the profit margin.

More use of technology for planning, monitoring, productivity reconciliations and

invoicing.

Improve safety and ergonomic working environment for staff.

Plan better, be less flexible.

Co-ordinate and communicate better with the client.

5.6.2 Decomposition: How could the two models happily co-exist if applied to separate parts

of the problem?

Certain plantation terrain does not lend itself to mechanisation, so labour-intensive

activities will still need to be used in these instances. A combination of mechanical

and manual activities will need to be used to complete an activity on a compartment.

5.6.3 Hidden Gem: The small but essential aspect of each model that can be brought

together form the foundation of a new model.

Better use of technology (LIDAR, GPS, GIS, live tracking) will improve planning and

increase the communication levels between the client and the contractor. This will

result in a more efficient and effective utilisation and deployment of resources, which

will reduce the overall silviculture costs

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5.7 Conclusion

The role of the integrative thinker is to investigate and challenge the developers of seemingly

opposing options by seeking to leverage and exploit the best aspects of each option to create a

reliable alternate solution, all whilst leveraging the tensions between the stakeholders. In this

scenario we are faced with developing a new, viable, precision-driven silviculture business

model that transcends the traditional old school labour-intensive business model, which is

less productive, more risky and delivers lower returns.

The following core aspects, from the point of view of the key stakeholders, have been

identified as the most valuable for the new modernised business model:

Shareholders

A higher profit margin is required in the business model given the reduction in

flexibility of operations due to the seasonal nature and high capital investment into

property, plant and equipment.

The use of technology to plan, manage and measure operations will provide more

reliable and accurate feedback to the shareholders.

The upskilling of the current staff and introduction of new, better skilled staff will

provide an opportunity to deliver a sustainable service to the client with better returns

to the shareholders.

The business risk will be reduced due to smaller labour forces for both Mondi and

TTG.

Given the poor financial performance of TTG over the past four years in Paulpietersburg

(Figure 38), there is tension amongst the shareholders from three aspects: the required high

capital investment for modernisation; the lack of dividends over the past four years; and the

eroding nature of the company share value due to TTG’s poor performances.

Unless TTG’s financial peformance improves drastically during this transition phase, it is

unlikely that the shareholders or banks will want to further invest monies into TTG.

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Management

Modernised planning requires a better co-ordinated approach between the Mondi and

TTG management team in Paulpietersburg, which will increase the interaction and

potentially develop better team work. Certain plantation terrain does not lend itself to

mechanisation, thus labour intensive activities will still need to be used in these

instances. A combination of mechanical and manual activities will need to be used to

complete an activity on a compartment, which will require intensive planning.

The development of specialist managers as opposed to generalist should provide more

focus and better results.

Job security could be enhanced as the managers are upskilled.

The more effective use of technology (LIDAR, GPS, GIS, live tracking) will improve

planning and increase the communication levels between the client and the contractor.

This will result in more efficient and effective utilisation and deployment of

resources, which will reduce the overall silviculture costs.

Ultimately the TTG management team in Paulpietersburg is responsible for the planning,

pricing and delivery of the silviculture services to Mondi. Leveraging the tensions between

the Mondi and TTG staff will require a pre-agreed structured approach for planning,

management, methodology selection, rate determination, quality control and payment. The

current master / servant type relationship with Mondi provides much tension and discomfort

for the TTG team. This is further enhanced by Mondi’s frustrations associated with the low

skill set of the TTG management team. Leveraging these tensions is imperative for both

Mondi and TTG. Currently a structured weekly meeting is attended by both TTG’s regional

and head office staff to provide support and comfort to both the local Mondi and TTG

management teams.

Staff

Both modernisation and new BBBEE Qualifying Small Entities (QSE) (which are

effective from 1 April 2015) require companies to focus on ABET to uplift the

general education levels of staff. This ensures that the training focus for companies

does not fall on sector specfic skills training only.

Better wages: as the staff are upskilled this will drive wages beyond the sectoral wage

determination as set by the Department of Labour.

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Health, safety and ergonomic improvements will ensure a better work place for all

staff members.

Given that wages have increased substantially, one would assume the livelihoods of the

society at large have also improved. Health, safety and training are also receiving attention,

all of which contributes to improving the working environment for the general staff in

forestry operations, yet finding the required and acceptable balance between productivity and

safety at the workplace remains a challenge.

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CHAPTER 6: SILVICULTURE BUSINESS MODEL INNOVATION

The Activity Theory diagram was used as the basis for my conceptual framework, as per

Figure 14 above. The exchange triangle within the Activity Theory will form the focus of

attention where the interaction between the subject, the rules and the community within this

exchange triangle meet.

The subject: The TTG business model, which provides the process for the re-engineering of

the ‘old school broad brush’ contracting business model to develop a ‘new modernised and

precision-driven’ contracting model.

The rules and regulations: The rules and regulations governing forestry contracting in South

Africa include the following:

Adherence to the Basic Conditions of Employment Act

Occupational Health and Safety Act

Companies Act

Mondi’s conditions of contract: Five year contract between Mondi and TTG effective

1 April 2014

Mondi’s modernisation strategy

TTG shareholders agreement

Broad Based Black Economic Empowerment Act (BBBEE)

Stakeholders: The stakeholders involved in this process include, but are not limited to:

Mondi, the client

TTG

Mondi Zimele: A business development initiative of Mondi focusing on employment

initiatives for the communities around the Mondi-owned and managed plantations.

Standard Bank South Africa, TTG’s banker which is required to finance the transition

to modernisation and the purchase of the modern equipment

Suppliers of new technologies for modernisation

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To create an innovative new business model, the following focus areas will be explored:

The development of a modernised silviculture costing model

The required shift in mindset to actively embrace and adapt to the modernisation

process focusing primarily on the aspect of planning.

The creation of a viable systems model: The requirements for the restructuring of

management and supervisory personnel from the ‘old school labour-intensive and

labour-orientated management’ to ‘planning, precision and mechanically-orientated

managers’ who will use new world technologies

6.1 A modernised silviculture costing model

The silviculture modernisation strategy and its need to create viable alternate practices that

are efficient, safe, ergonomically acceptable and cost effective is far more complex than

simply creating a new desk top costing model. Figure 30 provides an overview of the process

required to produce a modernised silviculture costing model. This model requires various

elements which are essential to its development, including the normative, strategic and

operational skills to sufficiently plan in advance, work study information gathering of the

new modernised activities, compartment-related information, a COP which will be used to

determine and balance the resources required, as well as a rates schedule of all the activities

required for the APO.

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Figure 30: The silviculture costing model and rates determination flow diagram

Certain assumptions must be made in the silviculture costing model to determine the

silviculture rates per activity. The assumptions include the following:

Agreed mark-up on direct and indirect costs

Agreed margin

Total working days available in a calendar year which would be generated on the

following basis.

52 weeks per annum x 5 days per week = 260 days

available excluding weekends

Less public holidays - 12 days

Less training days - 3 days

Less statutory leave - 15 days

Less an allowance for sick, maternity and family responsibility - 5 days

Total estimated productive working days available per annum = 225 days

Seasonal activities such as:

Pitting August to March

Planting and blanking September to March

Herbicide application September to April

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The cost of diesel fuel

The cost of agrochemicals

Total machine hours per day on a single shift is seven hours

Allowances for travelling - one hour per day

The total productive hours per day are six hours.

From the various additional modernisation inputs, a rates schedule is prepared which requires

more input and far more preparation and is therefore more complex than the old school

labour-intensive silviculture costing model.

Once this process has been completed, the gathered information also provides the following

input required for the detailed planning of activities:

The activity type – manual/motor-manual or mechanised or a combination of these

activity types;

The required compartment scheduling of these activities;

A check on the recipe of activities required per compartment;

The resource requirements and allocation;

The basis of an annual budget; and

Works orders per month.

The modernisation process creates the need for a number of additional variables, resources

and materials to be considered when determining the silvicultural contracting rates for a

particular plantation and for a particular APO, as depicted in the flow diagram in Figure 31.

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Figure 31: Modernised flow diagram for activity scheduling, works orders and resource

management

It must be noted that all silviculture activities are currently priced on a per hectare basis.

The following was not considered in the research aspect of this dissertation:

The determination and creation of new modernised activities. This is ongoing and the

emphasis in this research paper is rather on how these operations will be categorised

and costed rather than their actual development; and

The determination of the health, safety and ergonomic ratings for each activity, which

are researched, measured and tested by Mondi.

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Work study results

Currently TTG staff is tasked with the responsibility of capturing the work study information

that is necessary and relevant to the various pieces of new equipment used in the

modernisation process. In an effort to nullify bias, an independent work study group was

approached to undertake a work study exercise for TTG. A basic work study information

gathering template is provided in Figure 32. The work study information provides

methodology options, as well as safety, ergonomic and productivity information. This

information forms the basis of the rates schedule, which includes the various methodologies

per activity as well as the various categories per activity. For the sake of this dissertation, the

work study process was excluded from the exercise.

Figure 32: Work study information gathering template

Compartment-related information

Basic compartment information is required before field inspections are undertaken, which

include:

A map of the compartment with a slope analysis from light detection and ranging

(LIDAR) data, which generates precise and directly georeferenced spatial

information;

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Compartment boundaries;

Soil and terrain data;

Compartment information, including compartment number, the age of the crop of

trees if not harvested, the species of trees planted and the espacement of the trees;

The average line distances per compartment;

The possible location of obstacles in each compartment; and

Harvesting plans in newly felled compartments should be assessed for relevant

information that could be applicable to the silviculture COP, e.g. extraction routes,

wet lands and compartment boundaries.

Generally this basic compartment information was available from Mondi and a desk top

exercise sufficed in the collection and processing of this.

The need for formal and intense infield evaluations for modernised operations:

Compartment Operations Plan (COP)

Infield conditions for labour-intensive activities in the old school labour-intensive costing

model were analysed purely as a means of:

identifying and communicating safety concerns to the labourers on a daily basis, in

what is called a Toolbox talk;

determining the productivities, and by extension the cost, of labour-intensive

activities. Given the flexibility of labour-intensive operations to varying infield

conditions, the impact of these variables could be relatively easily dealt with by

simply adjusting the output requirements of the labour. An example of the variables

considered for a weed control operation that affects the cost would be, for example,

weed infestation, categorised as light, medium or heavy, which has a direct impact on

the speed of the operation, the required labour input, as well as the amount of water

and herbicide applied to each hectare, and as a result the costs of each of these

activities.

Infield conditions in modernised activities have far reaching consequences for mechanical

operations, and to date 11 variables have been identified that will have a significant impact on

the choice of methodology for each activity.

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The impact of each variable is then rated in a score of 0 to 4, and the weighting according to

the assumed impact each variable will have on the operation as depicted in Figure 33.

The 11 variables have been identified as having the greatest impact on the applicability and

ultimately the cost of each activity. These 11 variables are further broken up into three areas,

which focus on the affects of speed, turning time and the condition of the soil as follows:

Variables affecting the speed of operations

Converging plant lines provide a practical restriction to working with equipment as

they impact productivity through physical damage to existing trees, unproductive time

increases due to lost time when equipment must back up along the lines that have

converged, and the creation of accessibility problems in the compartments.

The direction of plant lines in relation to the slope above 10 degrees; a 15 degree

slope is the accepted cutoff for any equipment used on Mondi’s property. Equipment

approaching the slope at an angle increases the chances of tipping, as well as the

chances of sliding when underfoot conditions are wet or rough. The approach angle to

the slope therefore affects the safety and productivity of each operation. Working on

the contour is considered to be the maximum angle of approach for mechanised

equipment working on a slope.

Ground roughness directly impacts the accessibility and speed of operations; it is

influenced by the size and quantities of rock, harvest residue and other factors such as

erosion gullies, which create a physical barrier to optimally operate mechanised

equipment.

Planting ridges were created when historical forestry practices called for trees to be

planted on ridges. These old planting ridges have a direct impact on the speed and

safety aspects of mechanised operations.

Visual obstacles include, but are not limited to, the pruning height of trees, which

impact the accessibility and therefore the speed of operations when working in

established compartments.

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The current interrow espacement for Mondi’s forestry operations is three metres,

however some compartments either intentionally or unintentionally have a wider or

narrower espacement. A narrow espacement restricts access for equipment whilst a

wide espacement impacts the reach of certain equipment which is required to cover

more than one interrow simultaneously in a single swath.

Stump height and size has a direct impact on the accessibility and safety aspects of

certain operations, as certain pieces of equipment are required to straddle the stumps.

A very broad stump will affect the interrow accessibility of equipment due to these

stumps narrowing the interrow width.

Variables affecting the turning time of each operations

The turning time is of particular importance as this directly impacts the amount of lost

time per compartment when equipment is required to turn at the end of each

compartment. The turning time is therefore directly affected by the average line

distance in each compartment which drives the number of turns required. Variables

affecting the turning time include the following:

Road banks create a physical barrier to the entry and exiting of compartments. Road

banks often damage trailing pieces of equipment and/or create safety issues for

equipment, staff and machine operators.

Turning area conditions affect speed, directly impacting the productivity of

operations. Factors affecting turning speed include stumps, road conditions, wetlands

and conservation areas, as well as big trees in adjacent compartments.

Turning circle width is important as the wider a piece of equipment, the longer it will

take to turn. In certain cases the equipment will be required to be folded during

turning, which directly impacts the time taken to turn. Poor turning circles also affect

the ability of the equipment to enter tree lines which are at an awkward angle to the

entry angle of the equipment. Often poor turning widths of equipment cause physical

damage to the trees at the compartment edge.

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Soil conditions

Soil conditions affect certain operations which require ground engaging tools, for

example pitting and planting activities. Wet soils, dry hard soils, rocks, rocky

outcrops and harvest residue will impact the accessibility of the ground engaging tools

and therefore the quality and productivity of these operations.

An additional and important variable to consider when determining the infield conditions and

the subsequent activities to follow is whether the compartments have been mulched.

Mulching physically converts the old tree stumps, weed growth and harvest residue into a

mulch to create the ideal accessibility for all equipment, reducing some of the most

influential variables affecting speed, safety and production. Mulching is the most expensive

of the mechanical operations, thus Mondi only mulches where it is absolutely necessary, i.e.

they mulch approximately 15% (every sixth line) of those compartments requiring mulching

in an attempt to minimise their costs. Mulching includes not only the access lines infield, but

also includes mulching at the ends of compartments to reduce the impact of the stumps on the

turning circle and turning widths to reduce lost time and increase productivity.

The COP will provide for the determination of the following:

The ideal methodology selection per activity for that compartment, be it manual

(labour-intensive), motor manual and/or pure mechanical, or a combination of

methodology types.

The productivity category selection per methodology. Once the methodology has been

determined, the impact of the variables will determine the category of difficulty for

this methodology.

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Figure 33: COP and the variables identified that affect the costing of modernised

silviculture activities

Once the infield evaluation is completed, each activity is given a score. Figure 33 is an

example of the infield evaluation for compartment F35 on the farm Nooitgedacht in

Paulpietersburg. Using the planting activity as an example, the score for ANCO, which is the

mechanised planting operation, is four, and the area has been mulched.

Additional variables affecting the determination of the best methodology per activity and its

category rating are split into activities using water and activity operations that are of a

“stop/start” nature.

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The stop start nature of certain activities: These activities include pitting, planting and

discing (Mulcher/Pitmeister/Pitbull/Imvukuzane/Disc). The stop/start nature means that the

activity is not free flowing or continuous, but requires the piece of equipment to come to a

standstill when engaging the soil. The stop/start nature of these operations has a direct impact

on the average speed of operations and therefore the productivity and costs, as depicted in

Figure 34.

Activities requiring the use of water: These activities will include the application of

herbicides, planting, blanking and watering (Dribble bar/Boom spray and Anco planting

machine). The size of the water tank will directly impact the activity’s productivity, therefore

tank size optimisation is required as part of the efficiency improvement process.

Tank size - the larger the tank the less time is wasted on refilling, but some of these

gains can be offset by the impact the tank size has on speed and turning. Smaller tanks

require additional resources to replenish the water at the end of each cycle.

Cycle time - each tank is a cycle, thus the smaller the tank the more cycles are

required, and therefore the greater the negative impact it has on productivity.

For the sake of this exercise, we will continue with the category and rates calculation for the

Anco planting operation. The ANCO planting activity requires the use of water. In Figure 34

the field evaluation score is used to determine the speed of the operation (Km/hr), which is

then fed back into the calculation that ultimately determines the machine hrs per hectare.

A number of other inputs are required from the infield evaluation and from the specifications

of the ANCO planter itself, for example:

Line distance;

Row width;

In the line espacement of the tree;

Seconds per turn, which comes from the compartment edge and road banks category

in Figure 33; and

Refilling time of the water tank on the Anco planter.

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Figure 34: The impact of water usage and the stop/start nature of certain activities

Figure 35 provides the work study information for the ANCO planter. To determine the rates

category the machine hours per hectare searched for from the categories in Figure 35.

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Figure 35: The ANCO workstudy calculations used to determine the land prep activity

categories

From the machine hour calculations in Figure 34, the category is determined from the ANCO

work study guide in Figure 35, which is Category 2. Our current work study investigations

are improving the accuracy and will continue until such time as we are satisfied with the

machine outputs.

The ANCO planting activity, with a category 2 productivity guide, is then used for the

planning and costing of the work.

For the cost of this activity the category 2 for planting with the Anco is then selected from the

rates schedule below in Figure 36.

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Figure 36: The modernised silviculture activity rates table

The work study, the compartment information and the COP provide input into the rates

determinations. The formulation of the rates requires a deviation from the old school SAFCA

costing model, which is limited in its ability to generate modernised rates.

The reasons for my deviation from the generally accepted SAFCA costing model for

silviculture rate determination are as follows:

The SAFCA costing model produces a single unit rate that includes all TTG’s costs as

shown in Figure 20. The modernised rates will require additional categories for unit

rate determinations which will include, but not be limited to,:

o Drivers and supervisors. Not all modernised activities will require these

inputs thus they need to be calculated separately, as opposed to the SAFCA

costing model which is all inclusive.

o Tractor dependent labour. These are required where motor-manual

operations require the use of a machine for labour to be productive, e.g. pitting

operations where the Pitbull require three labourers plus a driver.

o Manual labour applying herbicides. Labourers applying herbicides are

highly trained, require better skills and are higher paid wage earners than

manual “unskilled” labourers.

o Manual labour. These labourers are not required to be as highly skilled as the

manual labourers applying herbicides, thus they earn a lower wage.

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The vehicles included in the SAFCA costing model are management and transport

vehicles, which are not deemed to be productive units. The costs of these vehicles are

therefore spread evenly over the production units in the SAFCA costing model.

Modernisation introduces vehicles and equipment that are specific to certain

operations and are required to work independently. Furthermore, most of the

modernised equipment only has seasonal applicability and the costs for the “off

season” are required to be recovered from the specific activities, e.g. planting

generally takes place from October to April of each year. These vehicles and

equipment are required to be priced specifically to the applicable modernised

operation.

Similar to the vehicles, equipment specific to certain operations also have seasonal

applicability. The direct and “off season” costs are thus required to be recovered from

the specific activities.

Referring back to the research challenge in 1.4 I will determine whether the initial targets set

are achievable:

Can TTG develop a new business model that effectively and sustainably reduces the impact

of the sectoral wage increase through the use of more efficient modernisation practices?

Mondi and TTG target: Full implementation of the modernisation strategy by

2015

Full implementation of the strategy target by April 2015 is likely to be partially met.

The seasonal nature of many of the silviculture activities reduces the productive time

available to prepare trial, produce work studies and test that the safety and

ergonomically requirements are acceptable. Further, many of the modernised

activities require extensive staff training and the equipment requires rigorous testing

to ensure they can sustainably produce an acceptable output.

A huge amount of trial work is still being undertaken that includes testing, improving

and retesting of new equipment. There are certainly some activities that are well on

their way to meeting the modernisation objectives, such as planting, blanking and

watering.

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Manual herbicide activities are showing good promise, however the mechanised and

motor manual herbicide operations are producing inconsistent results from a quality

and production point of view.

Mondi target: an increase of less than 25% in overall plantation silvicultural

costs after the implementation of modernisation

It appears from the initial work study, compartment planning, and COP and the rates

generated from these inputs, that TTG appears to be well on track to stay within

Mondi’s modernised budget for 2015. However the trend in costs in Figure 37 clearly

shows that since the inception of modernisation and the 56% increase in sectoral wage

determination in 2013, the silviculture costs for 2015 have risen 54% from 2012 and

28% since the 2013 introduction of modernisation and the 56% increase in forestry

worker wages, which exceeds Mondi’s initial targeted increase in silviculture costs.

Given that the work volumes have not changed significantly since 2012, it appears

that Mondi has budgeted sufficiently to allow for the increases in costs, yet many of

the new methodologies involve equipment that is untested in forestry conditions in

South Africa, and only time will tell whether these methodologies are sustainable. If

these methodologies are sustainable, costs should reduce over time.

It is apparent that Mondi does expect their silviculture costs to increase in the short

term and during the transition, however prices should then stabilise and reduce

relatively over time.

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Figure 37: The modernised silviculture activity rates costing model

The actual silviculture costs during 2014 show a reduction versus the budget. This is

simply due to a reduction in productive labour and a lag in developing alternate

modernised practices to combat the reduction in labour, therefore the APO was not

completed.

Modernisation improvements are likely to reduce the current costs of the silviculture

activities, however this will probably take time. In the forseeable future it is highly

unlikely that modernisation costs will reduce to such a degree that silviculture rates

fall to within 25% of the costs before the implementation of the modernisation

strategy.

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Mondi target: 75% of all forestry silviculture activities must be mechanised

operations, with the remaining 25% staying labour-intensive

From the current rates table and based on our assumptions for 2015, 38% of current

activities are fully mechanised and 62% require only labour. There is still scope to

improve this situation, but the current target of 75% may not be achieved in 2015.

TTG target: can we mitigate the financial risk and survive during this transition

process from the traditional labour-intensive silvicultural activities to the

modernised activities?

TTG has only achieved an accumulated profit of 0.06% (R 364 587 actual vs. R 5 238

392 budget) since July 2011 (Figure 38). The transition from traditional labour-

intensive practices to modernised practices has placed a severe financial strain on

TTG, its shareholders and its stakeholders, and it is clear that TTG did not make a

return during the labour-intensive years of 2011 -2012. The biggest risk we as

contractors face right now is the need for further financing of modernised equipment,

as it is going to be very difficult convincing any financial institution to loan us

contractor money given our recent poor performances. However we remain optimistic

that with the assistance of Mondi and our improved performance in late 2014, that we

can survive the transition.

Figure 38: The TTG financial performance since July 2011

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Can TTG reduce its reliability on labour?

Mondi target: to retain only three for every eight staff previously employed

during 2011, and/or meet the minimum fire rotection labour requirements

When TTG was appointed in January 2011, the total average number of productive

labour required each day was 380. For 2015 the budgeted figure is 192, a reduction of

188 labourers per day which is a reduction of 49.5%. Mondi requires a reduction of

62.5% or a minimum of number of labour in line with the daily fire protection

requirements (April to October each year); their target is 143 productive staff which is

not likely to be met in 2015.

Mondi target: meet the requirements of the minimum number of staff required

per plantation for fire protection activities

A minimum labour force is required to prepare, monitor and fight forest fires. Each

plantation, through experience and best operating practices, has determined the

minimum number of labourers required for fire protection purposes. The minimum

modernisation target for labour has therefore been set at this number per plantation.

Currently Mondi requires a total of 101 staff actively available to fight fires and

monitor lookouts; their modernisation target is 143 productive staff which is still 34%

higher than the minimum labour requirements for fire protection activities. Currently

the minimum number of staff required per plantation for fire protection activities is

being met.

Mondi target: provide more ergonomically humane work for our staff. As Figure

7 below depicts, the majority of the current forestry job methodologies do not

meet the Mondi ergonomics cut off value of 30%

Each forestry activity is currently being intensely scrutinised for its impact and levels

of health, safety and ergonomics. With the adoption of each new modernised forestry

practice, there will be a reduction in the practices that do not meet Mondi’s

ergonomics cutoff of 30%.

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Conclusion

The development of a practical, viable and efficient costing model for modernised

silviculture rates determination is far more complex than the old school SAFCA costing

model. The use of certain key aspects of the mechanised SAFCA harvesting costing model

for machine and equipment rates determination is useful, however the seasonal nature of

many of the silviculture activities, together with the varied productive staff inputs, produce a

complex model that is likely to still evolve and simplify with time as we become more

accustomed and experienced with the new modernised silviculture practices.

Similarly, the expectations of reductions in labour requirements, improvements in health

safety and ergonomics, and ultimately the reduction in silviculture costs, are likely to only be

seen over time. Annual silviculture costs have risen 54% from 2011 since the onset of

modernisation, driven largely by the 56% increase in forestry wages, and it is expected that

costs may continue to rise in the short term before the longer term cost benefits of

modernisation are realised.

The following shortcomings in the proposed new modernised costing model that warrant

further investigation include:

Partial fixed cost allocation for machine dependent labour when equipment breaks

down during the day, or when the equipment is travelling;

The time taken to collect the first infield is excessive; 1800 compartments require a

COP in 2015. Infield data collection time could possibly be reduced with the use of

drones;

Further development and research is required into the 11 variables and their respective

ratings (0-4) and weightings in the determination of the ideal methodology and rates;

Shortcomings of the COP document:

The current proposed TTG COP document focuses on the infield variables affecting

the methodology and rate determination, and does not include the logistical planning

to and from the compartment and its influence of the methodology selection.

The current Mondi COP document comprises seven areas of focus, namely:

1. Compartment details including basic compartment information, maps,

terrain classification, risk identification, re-establishment requirements,

environmental and infrastructure details

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2. Compartment risk assessment

3. Harvesting plan

4. Harvesting plan legend

5. Post harvest agreement

6. Silviculture plan focusing on document control and methodology

confirmation

7. Silviculture map legend

The Mondi COP requires the input from the TTG COP and vice-versa. The Mondi

COP focuses primarily on providing the basic compartment information, including the

identification of environmentally sensitive areas, infrastructure identification of items

such as power-lines, and a risk assessment. The Mondi COP primarily provides a link

between the harvesting and silviculture operations.

In their current form, the COP documents are inadequate and cumbersome. The two

COP documents should be integrated to reduce duplication and expanded to include

the impact of logistics to ensure it provides a simple solution to planning, a

methodology selection, and addresses safety and environmental concerns.

Where Mondi is primarily focused on the infield variables affecting methodology and rates

selection, we as TTG are required to focus on the broader aspects affecting production. We

need to identify the logistical factors that will also impact the methodology and rates

selection by virtue of their direct impact on normal daily productive time, as a result of

unproductive travel time wasted travelling to and from an area of operation.

Infield work studies will ultimately determine whether the 11 variables are reasonable in

nature and number. Currently both Mondi and TTG are running independent work study

research to determine, verify and measure the impact that these variables will have on each of

the activity methodologies.

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6.2 A Modernisation mindset change

Can TTG adapt to this required change in our business environment?

Ultimately the choice lies with the shareholders of TTG as to the future of the business, and if

our future business is to remain in forestry contracting, then modernisation will be a part of

that future.

The literature is silent on the need for a change in mindset. Taken from the standpoint that the

new modernised forestry environment requires it and it is therefore accepted by TTG.

Stakeholders will require a major shift in mindset to adjust from the traditional labour-intensive

practices to the modernised practices, where the scope of inputs and resources at hand are

impacted by the relative lack of flexibility associated with mechanised operations.

Preplanning and knowledge of the site sensitivities are highlighted in the literature as being

important when mechanisation is required. The use of technology for planning and

productivity management far outstrips any labour productivity management systems available

at present.

Light detection and ranging (LiDAR) technology, generating precise and directly

georeferenced spatial information, is currently being introduced by Mondi in its

harvesting and silviculture operations, which will support the modernisation process

by providing more accurate and comprehensive maps and site data.

Software is available that accurately captures daily and lifetime information for

effective production and equipment management. This software can produce accuracy

levels acceptable to paying the contractor on machine output as is done in many First

World countries.

GPS tracking devices on the machines can monitor travel, production, stoppages and

lost time.

Compartments need to be thoroughly inspected (COP) to determine the best and most

efficient use of resources.

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Modernised silviculture planning requires far more precision than labour-intensive

operations. A more interactive, co-ordinated, team work orientated approach is required

between client and contractor to ensure planning remains at the forefront of all activities.

Planning on a normative, strategic and operational level must be ongoing and requires a

dedicated resource to ensure our input resources are utilised efficiently and where they are

most effective.

A modernised planning tool for silviculture activities:

There is a need for a planning tool to simplify the management and allocation of the various

resources, given that there are currently:

eleven infield variables required to be considered in the COP;

twenty-nine silviculture activities excluding fire protection;

up to five different methods applicable to each activity;

up to four different categories per activity method;

one hundred and ninety-five categories in total;

one thousand and eight hundred compartments required to be worked in 2015, and all

require a COP;

Thirty-two labour carriers;

twenty-eight tractors pulling either trailers or implements;

thirteen water carts;

three seedling trailers;

one hundred and ninety-five pieces of small equipment;

twenty drivers;

thirty tractor-dependent labourers;

seven machine operators;

a maximum of 126 manual labourers applying herbicides; and

a maximum of 122 manual labourers.

Our proposed approach to modernised planning for silviculture activities is as follows:

A desk top exercise to determine and record the following:

GIS compartment information including location, size, specie, espacement and age;

LIDAR data to determine areas of slope >15 degrees within the compartments;

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Ten metre buffering of slopes >15 degrees with a minimum size of 75m2; and

Identification of drainage lines, rivers, riparian and other “no go” zones within the

compartments from the LIDAR and contour lines

Figure 39: LIDAR data, raw slope data for Nooitgedacht farm, Compartment F

35

Figure 40: Buffered slopes that are >15% for Nooitgedacht farm, Compartment

F 35

Plant line direction

Buffered slopes >15%

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Infield verification visit:

Identify plant/stump line direction as depicted in Figure 40;

Measure the average plant line distance for the mechanical activities;

Identify practical areas to be worked with manual and mechanical methods by

walking the compartment and verifying the desk top data gathered as depicted in

Figure 41; and

Complete the evaluation of 11 variables that impact on mechanical methodology.

Figure 41: Infield verification process for Nooitgedacht farm, Compartment F 35

Infield verification tracks

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Figure 42: Infield verification process for Nooitgedacht farm, Compartment F 35

for the mechanical activities

The infield verification process provides the breakdown of mechanical and manual activity

types per compartment, as well as the line distances per mechanised area as depicted in

Figure 42.

Other factors affecting the activity methodology selection:

The available working hours on a single shift has unscientifically been assumed to be an

average of six machine hours per day, given the spread of 120km from end-to-end of the

Paulpietersburg plantations. Work study feedback and GIS will provide a more accurate

account of the available working hours per day.

Currently in single shift working day of 9 hrs

Refueling and labour breaks 1 hrs

Average travel to and from work 2 hrs

Average productive working time 6 hrs

Manual activity areas

Mechanised activity areas

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Mitigating practices to reduce travel time include:

Block felling: Where previously age and timber volumes per compartment directed

the harvesting schedule, the modernisation of silviculture activities requires forestry

harvest planners to adopt a block felling approach. Block felling will increase

silviculture productivities whilst simplifying the co-ordination and planning of

activities;

The agreed minimum compartment sizes for mechanised activities goes hand-in-hand

with block felling, however in the case that a compartment falls outside of a block,

currently a minimum compartment size of 15 hectares is deemed to be the minimum

economic size for a mechanised operation. Practically the minimum mechanised

compartment size is a function of line distance and compartment shape rather than

size, therefore the 15 hectare minimum size is only a guideline. The current average

compartment size at Paulpietersburg is 11.5 hectares;

Plantation accommodation for staff. Most forestry companies in South Africa have

been destroying staff accommodation on plantations due to the many problems and

risks associated with housing staff on site. On site staff accommodation is now a pre-

requisite for modernisation, which will reduce the travel time to and from work,

increase productivity and reduce costs;

Mobile workshops reduce the need for vehicles and equipment to travel to workshops,

which reduces time wastage; and

Mobile fuel deliveries similarly reduce the time taken to refuel vehicles and

equipment off site daily.

Once the data has been collected and verified infield, the following compartment information

is available for planning purposes:

The manual/mechanised split of operations per compartment;

The most suited methodology or combination of methodologies for the specific

activity in the specific compartment;

The category rating for the methodology from the machine speed based on the COP

evaluation and other inputs for mechanisation operations; and

The rates categories for manual operations.

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From this information the following can be undertaken as shown in Figure 43:

Preparation of the annual planning of activities required per month per compartment

from the infield verification data;

Determination of the annual resource requirements;

Determination of the annual budget rates from the annual inputs required;

Determination of the costs per activity category from the rates table;

Determination of the monthly work orders and costs; and

Determination of the monthly resource requirements.

Figure 43: Scheduling, category inputs, slope rates and works order planning for

Nooitgedacht farm, Compartment F 35

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Referring back to the research challenge in 1.4, the question is: Can TTG change its mindset?

TTG target: Can we adapt to this required change in our business environment? Yes.

TTG target: Do we want to adapt to this required change in our business

environment? Yes.

What are the primary changes in mindset required to move to modernisation in

forestry contracting? Planning requires the biggest change in approach and

mindset, but the employment of a dedicated planning officer and the

development of a planning tool for modernised silviculture activities will go a

long way to addressing this need.

Conclusion

A well co-ordinated and interactive approach between client and contractor is required to

ensure resources are adequately and efficiently planned for and utilised. The lack of

flexibility of mechanised operations, together with the seasonal nature of silviculture

activities, calls for a major shift in mindset, particularly with regards to planning. The use of

technology to assist with planning and productivity monitoring will reduce waste, improve

control, and streamline processes such as invoicing for contractors and the plantation owners

alike.

Planning (COP), rates determination and a formally signed work plan is required before TTG

can commence any single activity. Planning requires time, effort and a major mindset

adjustment from both management teams. Too often time constraints create challenges that

lead to desk top exercises being undertaken rather than infield verification visits, which

deviate from the planning requirements. Strict adherence to the planning requirements is

required to ensure that the activities are sufficiently planned to be as productive, economical,

safe, and environmentally friendly as possible. Deviations from these basic planning

requirements will create unnecessary tensions between the two management teams and flaunt

Mondi’s corporate governance rules.

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6.3 Developing a modernised management structure

The creation of a viable management systems model for a modernised silviculture contracting

business is imperative to transcend the ‘old school labour-intensive and labour-orientated

management’ structure, and to develop a model where ‘planning, precision and mechanically

orientated managers’ can effectively, efficiently and competently manage the modernisation

practices.

In order to determine the most viable management system for modernisation, I will use the

Viable Systems Model (VSM) as a guide. The VSM considers an organisation as a number of

operational units, and systems are needed to ensure they cohere or work together as an

integrated harmonious whole.

The Viable Systems Model is generally made up of three basic elements which are in

continuous interaction:

1. The Operation (value chain) - the primary activities.

2. The Metasystem (management system) that ensures the various operational units work

in an integrated and harmonious fashion, holding the organisation together.

3. The Environment, which are all those parts of the outside world that are of direct

relevance to the system in focus.

The Operation is called System 1 (S1). This is the value chain, which carries out the

organisation’s primary activities. Using Viable System Models, three levels of management

are identified on Process Levels 1, 2 and 3 within the value chain in Figure 39. Here we

identify those activities that directly transform the input into the outputs; these activities have

to do with what the organisation does.

Those activities that provide services to and support the value chain so that it can do its job

efficiently and effectively (transforming inputs into outputs for the customer and creating

customer value) are called service activities.

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Figure 44: The TTG value creation domain

The Metasystem is composed of Systems 2, 3, 4 and 5.

System 2 (S2) - These are services that coordinate the value chain activities, providing

conflict resolution and stability.

System 3 (S3) – These are service activities that control the activities that make up the

value chain, providing internal regulation, optimisation and synergy.

System 4 (S4) – These are service activities that plan and strategise for the value chain,

dealing with a changing environment and forward planning.

System 5 (S5) - These are the service activities that create the policies that manage and

govern the value chain, providing ultimate authority, policy, ground rules and

organisational identity.

This model is recursive, which means that the same principle of organisation recurs at all

organisational levels, regardless of scale. This means that any Viable System is composed of

smaller Viable Systems, which are embedded in a larger Viable System. The VSM argues

that for an organisation to be healthy and viable, all five of these systems have to be present

and healthy.

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The first principle of an organisation is for the managerial, operational and environmental

systems to create sufficient varieties, diffusing through the institutional system. The

directional channels carrying information between the management unit, the operation, and

the environment must each have a higher capacity to transmit a given amount of information

relevant to that which the originating subsystem has to generate in that time.

In order to produce a viable management structure, I will discuss the various changes

required from the traditional management structure for labour-intensive operations.

In item 4.4.5 the literature makes reference to the need for a specific focus on planning. It is

our belief at TTG that the modernised management structure as depicted in Figure 45 will

require a planning and logistics specialist in our operations. Figure 30 provides a modernised

flow diagram for activity scheduling, works orders and resource management. One of the

biggest areas of need that has arisen through the modernisation process is the need to have

adequate planning, given the lack of flexibility that a smaller labour force and mechanised

activities brings, which is further impacted by the seasonal nature of silviculture activities.

The planning function has been discussed in the previous chapter; given that modernised

activities require detailed, ongoing and precision planning, it is essential that a competent

logistical manager is employed to undertake the duties of managing and planning the

resources, providing works schedules, efficiently allocating resources and monitoring

productivity.

The literature is silent on the need for specialist versus generalist operations managers, and

whether a functional or regional structure is more beneficial in the modernised operations

management make-up. It is certainly our belief at TTG that mechanised activity specialists

(Figure 45) will be required, who will become masters of an activity. In this way the

management structure will become functionalised rather than regionalised, where traditional

labour-intensive generalists are responsible for all activities in their region of responsibility.

Given the need for a number of additional machines and equipment for the modernised

operations, the outsourcing of mechanical maintenance operations will be ceased in favour of

an in-house mobile workshop. This will ensure the availability targets of machinery and

equipment is met.

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However it would appear that fire protection responsibilities will be required to revert back to

regionalised management structures during the winter periods of May to October, when most

of the other modernised establishment and maintenance activities have ceased. Therefore the

management structure model presented will be required to fulfill both the needs of regional

and functional management structure, due to the practical and seasonal applicability of the

silviculture and fire protection activities. Fundamental to this management restructuring is the

need for both Mondi as the client and TTG as the contractor to align the revised management

structures.

Figure 45: TTG Paulpietersburg proposed new modernised and functionalised

management organogram

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Figure 46: TTG Paulpietersburg ‘old school’ regionalised management organogram

Using the VSM model, Figure 47 provides a VSM for TTG.

Recursion level 0 (RO) - is the head office

Recursion level 1 (R1) - is the Paulpietersburg Contract

Recursion Level 2 (R2) – are the land preparation activities

R2 recurs within R1 which recurs in R0.

The VSM provides sufficient levels of control, co-ordination, planning, strategy and policy

making to ensure stability, optimisation and continued strategic planning, which ensures

adaptation to a changing environment.

The parts of the Metasystem interact, balancing the data coming in from the external

environment (into S4) with the information coming from the internal environment (into S3),

and plans accordingly. System 5 oversees the whole process and only steps in if policy

guidelines are flaunted. The VSM works with balances and closed information loops and is

not a hierarchical, command and control model, which works with one way communications.

The Metasystem is there to provide a service to the operational parts, not to command and

control them (see Figure 47).

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Figure 47: VSM - TTG modernisation

Management, supervision, operators and labour require skill sets and training

Given the low levels of education amongst the forestry management, supervisors and

machine operators, there is a dire need for government and the forest industry intervention to

provide basic education. Training is and has been taking place in the industry, however this

training has only been applicable to certain vocations, focusing on those activities that require

the highest skill levels and that provide the greatest risk to the health and safety of the

employees. This operational type training has generally focused heavily on the following

activities:

Chainsaw operators

Drivers of labour carriers

Firefighting crews

Herbicide applicators

First aiders

Health and safety representatives

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Whilst this sectoral specific operational training still requires ongoing attention, in light of the

new modernised operations new training will be required, as insufficient focus has been

placed on improving the competencies of the management, supervisors and machine

operators in the past.

Modernisation provides an opportune time for us as an industry to re-evaluate the

requirements of our managers, supervisors and driver operators. In order that training is

directed at those workers who will most benefit themselves and our business, new selection

criteria are required to identify those workers best suited for the job. It is thus not

inconceivable that some of the incumbent managers, supervisors and machine operators may

not necessarily meet the minimum requirements for modernised activities.

In conjunction with Kwamahlati Training Services CC, we have designed the following

which are intended to serve as the minimum criteria for the future selection of candidates:

Forester/Manager:

Min. Std. 10/ Grade 12

Agric/ Forestry Degree or Diploma

Comprehensive Medical Exam (Base-line and Annual)

Psychometric Test (Tram 2/CPA)

Structured Interview (+ In-basket simulation?)

Basic Financial Skills (Finance for Non Financial Managers)

Harvesting and Silviculture Technical Knowledge

Mentorship period of three years (new foresters)

Valid Driver’s License (Code 08/ EB)

NOSA SAMTRAC

First Aid (Level 3)

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Supervisor:

Min Std. 8 / Grade 10

SDP Pre-assessment (fair-good English/Maths literacy)

Comprehensive Medical Exam (Base-line and Annual)

Psychometric Test: LP Cat / Tram 2 (Cognitive Ability/ Learning Potential)

Structured Interview

Supervisor Development Programme (SDP)

Harvesting or Silviculture Technical Knowledge

Mentorship period of two years (new supervisors)

Valid Driver’s License (Code 8/ EB)

First Aid (Level 2)

Machine Operator:

Min Std. 8/ Grade 10 (basic English/Maths - literate)

Comprehensive Medical Exam/ Fitness Test (Base-line and Annual)

Aptitude Test: Dover (or Vienna) - Dexterity/ hand-eye co-ordination

Structured Interview

Training: Harvesting/ Silviculture Learnerships

Mentorship period of one year (new operators)

Valid Driver’s License (Code10/C1)

First Aid (Level 1)

In an effort to ensure there is no discrimination against the incumbent management,

supervisors and machine operators, each incumbent will be given the opportunity to retain

their current positions and further develop their careers should they meet these minimum

requirements. These incumbents will be subjected to the following selection evaluation

process:

Psychometric assessment (Tram 1 or 2)

Literacy assessment

Numeracy assessment

A structured interview

A report will be submitted on each candidate, detailing his/her suitability for the

relevant positions of manager, supervisor or machine operator

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Should any of the incumbent managers, supervisors or machine operators not meet the

requirements, alternative work will be offered to them at a lower level and in line with their

abilities.

Längin (2013) stated that Mondi’s training for modernised operations will focus on:

Formal training for all employees

Productivity of modernised operations

Technical understanding and abilities of employees

Highest ergonomic standard and appreciation thereof

Highest safety standard and significant reduced safety risks

Currently the only formal qualifications available in South Africa, which are ideally required

of managers and foresters, can be obtained from either Saasveld or the University of

Stellenbosch. Supervisor training is currently underway, with certain TTG supervisors

currently undergoing the SDP as described in Figure 48 below.

Machine operators are a relatively new concept in silviculture and programmes will need to

be developed. Currently manufacturers of equipment are providing competency training to

these operators.

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Figure 48 Supervisor Development Programme (SDP)

Referring back to the research challenge in 1.4, Can TTG successfully change its

infrastructure and management structures to adapt to this challenge?

The modernisation of silviculture activities requires a fresh new approach to the old

school labour-intensive management structure and infrastructure. A different set of

management skills is required, as well as a need for additional management support

services and infrastructure. From the initial evaluation of seven members of the

management team, the results are as follows:

English literacy 100% pass

Basic numeracy 29% pass

Cognitive ability 57% pass

Of the seven members evaluated, two members exceeded all the requirements, two members

met the requirements, two only partially met the requirements, and one member did not meet

the requirements at all.

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This initial evaluation confirms our need for a higher level of manager than that required for

labour-intensive operations. This is also expected to be the case once evaluations have been

concluded on the supervisors and machine operators. This confirms TTG’s need for a better

management skill set than we currently have.

Conclusion

With current supervisors and manager skill sets geared towards traditional labour-intensive

forestry activities and the low educational levels of forestry workers, a significant increase in

training of management, supervisors and machine operators in modernised methods is

required. Furthermore, time and motion studies as well as health and safety training is

required to ensure that the modernised forestry practices in the South African forest industry

remain internationally competitive, through the adoption of good practice, sustainability and

high performance standards. Training must provide a safer workplace with a higher skill set

for the workers.

Currently an average of three days per annum per person is set aside for training, which

appears very inadequate (the SDP requires 66 days of training over two years). This will need

to be reviewed in light of the need to improve the low skills base of our forestry workers. An

aggressive and active approach to improving the selection process and an increase in training

will improve TTG’s chances of a successful transition to modernisation.

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CHAPTER 7: CONCLUSION AND EVALUATION OF THE

RESEARCH

7.1 Introduction

In order that forestry practices in the South African forest industry remain internationally

competitive, the adoption of good sustainable practices and high performance standards are a

minimum requirement. Modernisation provides just this opportunity.

7.2 Implications and consequences of the research results

The implications of the research are complex, time consuming and expensive, however the

consequences for both contractors and forest owners are undeniably important for each one’s

future sustainability.

Focusing on the three-stage action research process proposed for developing a new

Silviculture business model for contractors:

Stage 1: A modernised business model needs to:

develop a financially viable business model of international standards;

has fewer risks due to lower staff numbers, including less staff unrest, less risk to the

plantations and better management/staff ratios;

develops a working environment with activities that are safe and ergonomically

acceptable for the staff, whilst providing work that is humane;

makes the South African forest industry internationally competitive;

reduces labour-intensive activities to a minimum; and

increases productivity and decreases costs.

Stage 2: Mindset

The stakeholders’ mindset require a change;

Planning must be improved; and

Technology must be used to improve monitoring, planning and reporting.

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Stage 3: Infrastructure and management structure:

Develop specialist skills rather than generalist skills;

Address the basic educational and sector specific modernised skills shortages in the

South African forest industry.

7.3 RUVE evaluation

Argument for relevance

Over the past 20 years I have been actively involved in the Arbor-care Group of companies,

and I am currently a Director and the major shareholder in the holding company, Arbor-care

(Pty) Ltd. Thuthugani Contractors (Pty) Limited (TTG) was born in 1999 to meet the

growing need for Broad Based Black Economic Empowerment (BBBEE) in the South

African forestry contracting industry, providing silvicultural and fire protection services to

the corporate plantation owners.

For 25 years these contracting activities have been characterised by their historical reliance

on labour-intensive practices. Abundant labour, low costs of wages and little unionisation

provided the forest industry with an opportunity to maximise profits.

Today TTG and other forestry stakeholders are facing a number of new challenges, driven by

a number of changes in the South African forestry landscape. For the South African industry

to remain internationally competitive and sustainably viable into the future it will be required

to quickly adapt to these significant changes, which threaten their very existence.

The Research Problem

In 2013 the sectoral wage determination for the forestry workers increased wages by 56%,

and the ever increasing unionisation of staff, poor health, a decline in rural population, high

levels of labour unrest and government grants, to name but a few, have all contributed to the

South African forest industry implementing a modernisation strategy that primarily reduces

its reliance on labour-intensive forestry practices.

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The concept of modernisation aims towards international competitiveness through the

adoption of good practice, sustainability and high performance standards. Modernisation aims

for lower operational costs, providing a safer workplace together with decent work, a higher

skill set and improved ergonomics in all its operations.

Figure 49: Concept analysis of the main components of the modernised system

Figure 49 provides a concept analysis of the main components of the modernised system. The

consequences of addressing the concern make the concern relevant to the situation and the

purpose of the project.

Utility of the paper

Utility argument: how the answers answer the questions and deal with the concern variable

by changing its behaviour C>>Q>>A link

Action research is an orientation to knowledge creation that arises in a context of practice and

requires researchers to work with practitioners. Unlike conventional social science, its

purpose is not primarily or solely to understand social arrangements, but also to effect desired

change as a path to generating knowledge and empowering stakeholders.

By following grounded theory, this included the following:

Data collection from various sources, namely:

Engaging stakeholders and collecting propositions from formal interviews;

Engaging stakeholders and collecting propositions from informal chats;

Reviewing my performance from the point of view of my subordinates; and

Reviewing my performance from the point of view of my business colleagues.

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I followed the EMBA 15.3 class notes (Ryan, 2013) and use the Grounded Theory Approach

as my proposed methodology.

Establishing utility

How the answers answer the question and deal with the concern variable by changing its

behaviour C>>Q>>A link?

Concern

The impact of the 56% increase in sectoral wage determination for forestry workers from 1

April 2013 has directly increased TTG’s costs by 30%. This increase in forestry workers’

wages, together with Mondi’s mandated transition to modernisation within the South African

silvicultural contracting environment, requires TTG to re-engineer its business from the ‘old

school broad brush’ contracting business model, to develop a ‘new modernised and precision-

driven’ contracting model that is socially responsible, economically viable and

environmentally friendly.

Question







Answer

By developing a precision-driven modernised forestry contracting model, the cornerstones of

which will be the development of a new silviculture contracting business model focusing on

three parts:

Developing a viable modernised costing model;

Identifying and applying a desired change in stakeholder mindset, with

particular reference to normative, strategic and operational planning;

Developing a viable systems model for management.

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Each of these parts will contribute to developing a viable business model that creates

shared value on a personal, organisational and environmental level.

Figure 50 shows a moderate improvement in business viability. Although early, these signs

are encouraging for the TTG stakeholders

Figure 50: The development of a modernised business model will improve business

viability

The answer answers the question and addresses the concern, thereby establishing utility:

the C>>Q>>A link.

Validity of the paper

Validity requires that the research and data collected and provided by myself must be

trustworthy, by proving the following:

Data credibility (internal validity)

Data credibility can be provided by proving the following:

Looking for multiple influences (triangulation)

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Data were gathered from various sources, ensuring multiple influences and interpretations

from various stakeholders. The stakeholders were identified in the Activity Theory Diagram,

and included stakeholders on various levels of recursion of the activity from R0, R1 and R2

during the collection and saturation of the collection of data. The stakeholders included the

TTG, Arbor-care and Mondi staff, as seen in Appendices 1, 2 and 3.

Transferability (external validity)

This is the extent to which the findings can be applied in other contexts or with other

respondents. The naturalistic researcher does not maintain that knowledge gained from one

context will have relevance for other contexts or for the same context in another time frame.

In a traditional study it is the obligation of the researcher to ensure that findings can be

generalised to the population, however in a naturalistic study the obligation for demonstrating

transferability belongs to those who would apply it to the receiving context (the reader of the

study).

Given that the purposive sampling was used to collect and analyse data, in contrast to random

sampling that is usually done in a traditional study, the transferability of the findings will be

limited to S1’s activities in TTG.

It is thus reasonable to expect that the findings from this research will be transferable to the

other silviculture contractors that provide a similar service to TTG.

Dependability (reliability)

Since there can be no validity without reliability and thus no credibility without

dependability, a demonstration of the former is sufficient to establish the latter.

Confirmability (objectivity)

This is the degree to which the findings are the product of the focus of the inquiry, and not of

the biases of the researcher. An adequate audit trail has been left to enable the auditor to

define if the conclusions, interpretations, and recommendations can be traced to their sources

and if they are supported by the inquiry. A number of classes of raw data should be reviewed

to determine confirmability.

Raw data – collection of propositions from stakeholders

Data reduction and analysis products

Data reconstruction – development of core variables

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Arguments for validity

As both the end user and service provider, the researcher had no reason but to honestly and

objectively collect and utilise the data from the stakeholders in a manner that ensured the

findings of the inquiry are free of research bias. The benefit of the interventions is primary to

the researcher’s personal and business sustainability, thus providing sufficient evidence of

confirmability (see Figure 51).

Figure 51: Arguments for validity

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Figure 52: Toulmins arguments for validity (San Diego State University, 2013)

Conclusion

Having collected the raw data from various sources and stakeholders within both Mondi (the

customer) and TTG (the entity providing the service), the sampling ensured a pure

measurement of the effects of specified variables as they appear in a natural way.

Given that the raw data and findings of the research are the product of inquiry and not the

biases of the researcher, and that feedback was freely and equally used from all the

stakeholders in a safe environment free of criticism, the trustworthiness and thus validity

could be established as it is formulated in Toulmins argument in Figure 52.

Ethical implications

Ethical decision making is required to ensure that all human beings are treated equally, or if

treated unequally, then fairly based and is defendable. As the researcher, identifying a

concern within a specific situation and finding interventions to correct the concern requires

interventions and innovations that are ethically correct. All actions taken by the researcher to

develop a modernised precision-driven silviculture contracting model are required to be

scrutinised to ensure ethicality.

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Fairness and Justice Ethical Approach

The ethical test for fairness and justice asks the following questions for each design

proposition proposed. How fair are the proposed actions? Do they treat everyone in the same

way?

The application of the justification of the fairness and justification approach when applied to

the design propositions treats all stakeholders fairly, with the exception of when a person

does not have the basic skill set to warrant training in order that they may fulfill a modernised

role in the management restructuring intervention. In this instance alternate work will be

offered in line with their trainability as determined by the psychometric analysis, as discussed

in section 6.2.

Does it show favouritism? Meaning - does it benefit some people and not others without a

justifiable reason for singling them out?

Does it show discrimination? Meaning – does it impose burdens on people who are no

different from those upon whom no burdens are imposed?

Both favouritism and discrimination are unjust and wrong, and if the interventions and

innovations required to modernise TTG’s business model and bring the financial viability and

service delivery costs back into an envelope of acceptance prove there is favouritism and

discrimination, then the proposals and unethical.

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Ethical Decision Making

Figure 53: The Fairness and Justice Approach Justification

The interventions, innovations and actions chosen to bring the service back into an envelope

of acceptance meet the requirements of the Fairness and Justice Ethical Approach, as

depicted in Figure 53.

Conclusion

Having tested the Fairness and Justice ethical Approach, it has been proven that the proposed

interventions and innovations in developing a new, modernised and precision-driven business

model for silviculture contractors treats the stakeholders in a fair and non-discriminatory

way, whilst ensuring these interventions provide the least harm and the most benefits to all

stakeholders involved.

In developing a viable business model, we need to synthesise traditional ethics with modern

ethics, to create shared value on a personal, organisational and environmental level.

7.3 Limitation of the results and the need for further work

The transition to a modernised silviculture contracting business model is very much still in its

infancy. Although communication between the client and contractor has improved

immensely, the process still has a long way to go. The high costs associated with the

modernisation process currently being carried out by both Mondi and TTG are not

sustainable. This modernisation transition affects all stakeholders and naturally creates a

feeling of vulnerability. The process needs to continue to move at the fastest possible pace,

but we as researchers and change managers are aware of the negative impacts it may have on

the various stakeholders.

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With this in mind, there are still a number of shortcomings and limitations in the proposed

new modernised approach that warrant further investigation, which include:

Continued development of new methodologies that are safe, flexible and cost

effective;

Better use of technology to monitor, plan and give feedback to the stakeholders;

Partial fixed cost allocation for machine dependent labour when equipment breaks

down during the day or when the equipment is travelling needs to be quantified and

dealt with appropriately in the costing model;

The time taken to collect the first infield COP is excessive; 1800 compartments

require a COP in 2015 alone. Infield data collection time could possibly be reduced

with the use of drones. It may be a consideration to employ a team of experts to

undertake the full COP exercise once-off;

Further development and research is required into the 11 variables and their respective

ratings (0-4) and weightings in the determination of the ideal methodology and rates;

We need to determine the impact of higher unemployment levels in the communities

around the plantations. Could this destabilise the area?

Availability and utilisation figures for equipment and machinery require ongoing

work study;

Most of the equipment being used is untested, thus a reasonable amount of time will

need to pass to ensure that sufficient reliable data is collected for costing and

productivity determinations;

The impact of a management restructure could destabilise the transition process,

which will need to be undertaken in a tactful, sensitive and sensible manner to ensure

disruptions are kept to a minimum;

We have assumed the banks will lend TTG the necessary capital for modernisation.

Should this not be the case, it will have a serious limitation on the process; and

A system thinking approach is required to continually look at the impact of our

interventions.

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7.4 Conclusion

The silviculture modernisation strategy and its need to create viable alternate practices that

are efficient, safe, ergonomically acceptable, ethically justifiable, less reliant on labour-

intensive operations and cost effective will take time, commitment and ongoing innovation.

Modernisation aims to develop operational practices that will enable the South African forest

industry to become globally more competitive within a context of international good practice,

thus it is important and relevant to the future sustainability of our industry that we succeed in

developing this business model for silviculture contractors.

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REFERENCES

Chapman, C. (2012). Forestry SA magazine, Editors Blogback. Retrieved on 15 December

2014 from http://www.saforestrymagazine.co.za, published August 2012

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APPENDICES

Appendix 1: Proposition gathering cycle 1


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Appendix 4: Inter-relationship diagram from proposition categories

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Appendix 5: CMO

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