BESAANS
Grey iron treatment - ready for the DISA
BESAANS
Fresh Investment
Heating Up Besaans PRODUCTION: David Napier
Built on foundations of quality and strength, Besaans is a business looking to bring manufacturing back to South Africa. After years of watching buyers head East for their cast iron products, Besaans is slowly clawing market share back. CEO Stefan du Toit talks to Enterprise Africa about strategy and upcoming investments that will position the company at the industry’s forefront.
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Localisation is one of the most important tools for driving industrial development in South Africa. It will contribute to growth of the economy and manufacturing sector and will undoubtedly create jobs. That is the message coming from Trade and Industry Minister, Rob Davies, and also Joanmariae Louise Fubbs, Chairperson
of the Portfolio Committee on Trade and Industry. Talking at the Proudly South African Buy Local Summit in Johannesburg last year, Davies said that government policy which ensures state-owned companies buy local is working. “If government decides to source products that are locally made, it will support the enterprises that
are producing those products in our own economy, while creating and supporting jobs,” he said. “The reconstruction of South Africa’s industrial capacity is essential, and manufacturing has been identified as the critical instrument to drive the industrial policy action plan,” said Fubbs following President Ramaphosa’s State of the Nation Address.
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INDUSTRY FOCUS: MANUFACTURING
“We are going to persuade the private sector that it is in their own interest to increase their profits and to actually pursue our own retailers and manufacturers and buy local,” she added. And the private sector is listening. Since 1946, Besaans has been manufacturing locally from its foundry in Pretoria. Founded by Henri Besaans and Charl du Plessis after the conclusion of World War II, the business has strong and deep South African roots. But, after successfully serving South African industry for decades, many customers were drawn to the East and basement pricing offered by China. Despite offering products, made to international quality standards, the business was losing out. It was the same for many foundry companies in South Africa. But Besaans decided to act. CEO Stefan du Toit tells Enterprise Africa that, by partnering with government and investing in process development and the
CNC Tool making in progress
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facilities at its foundry, Besaans is starting to bring business back to South Africa, championing locallyproduced components. “The things that we have been working on include actively targeting movement into the manufacture of components that have left the country and people are importing from China. We want to get some of that work back into the country and we have been reasonably successful,” explains du Toit. “For many years, these products were manufactured in South Africa but after the big push from China in 2008/09, a lot of customers moved the sourcing to the East because the products were so cheap. People are now realising that working capital is expensive, lead times are long, China’s inflation is creeping up; so we are working with various companies to find solutions that work for everyone so that products can be localised again. We’re not always successful but 85%
// THERE WILL BE BIG REDUCTIONS IN EMISSIONS, WATER USAGE AND A 30% REDUCTION IN ELECTRICITY USAGE // of the products and customers that we have targeted have been positive.” Importantly, Besaans was acquired from Saint-Gobain by the Kutana Group in 2017. A black woman-owned, Pan-African investment group focussed on building sustainable growth through responsible investments and a commitment to the communities we work with and support. Kutana’s portfolio spans various industries including media, property, resources, financial services and agriculture. The acquisition of Besaans from SaintGobain marked Kutana’s second move
BESAANS
into the steel and construction sector. “They recently started to look at investing in the metals and engineering space which is something new for them,” details du Toit. “Being a cyclical industry, and with South Africa not in a particularly good space with poor GDP growth and a struggling metals sector, they thought it was a good strategy to invest in that side of the business and ride out the cycle so when the economy turns it will stand as a good investment.” He explains that the Kutana model is to invest in companies and then allow them to be run by the existing management who understands the industry. This has allowed for the development of a new strategy that fits Besaans perfectly. “We developed the first-year strategy together which was focussed around consolidation of existing and new markets and analysis of investment for the future. We created the foundations for expansion of our markets. “We have also looked at how we should invest in the business, not in terms of capacity, but with manufacturing efficiencies in mind. We are currently working on obtaining funding to replace our melting furnaces as well as our metal pouring technology. These will be latest bestpractice, energy-efficient types of technology that will create a significant reduction in our energy costs and improve general manufacturing efficiencies; especially in quality. It will also help with improving our metal yields and we believe will position us with a better cost-base so that we can be more aggressive and localise more products from the East.” If the company is successful in gaining this investment, du Toit expects the new technology to be commissioned in 12 months’ time. “We are now starting to work on the second phase of the strategy which we will focus on the next three years. “The big energy user in a foundry is the melting unit so we are looking
// WE ARE CURRENTLY WORKING ON OBTAINING FUNDING TO REPLACE OUR MELTING FURNACES AS WELL AS OUR METAL POURING TECHNOLOGY // at replacing them and that will be a massive saving for cost, efficiency and energy. We will also change the way we pour our metal, opting for an automatic pouring machine. These systems use cameras and other technology to accurately control the pouring of metal into the moulds. Both of these investments will also have a positive impact on safety and the environment. We expect reductions in emissions, water usage and a 30% reduction in electricity usage.” Besaans has engaged government to ensure the investments it makes are sustainable and provide a return.
“We are working with the Department of Trade and Industry (DTI), the Industrial Development Corporation (IDC) and the Technology Localisation Implementation Unit (TLIU) which is a localisation initiative. There’s a very strong drive with regards to localising and job creation and we are using the vehicles that are available. There’s also private finance that the company will raise. It’s a team effort between industry and government,” says du Toit. He is positive about the future for the industry and the company and suggests that those that invest in modern
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INDUSTRY FOCUS: MANUFACTURING
technology are those that will thrive. “There has been a decline in the foundry industry. Although most of the foundries that have closed in the past 10 years have been more in the jobbing space, the pressure on production foundries like we are is very real as these foundries need consistent volumes and is where China has been very active,” du Toit explains. “We’ve seen a consolidation of capacity, so you would expect the foundries to be
Stefan du Toit - CEO
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in a better space than they were 10 years ago, but the whole industry is still in distress. To turn it around, foundries have to invest in technologies that make manufacturing more efficient and they have to use the programmes that the government makes available to ensure capacity is full. If we manage to convince the private sector to buy local, we will have a better prospect going forward. All the signs are there that China will become more expensive
and there is a strong desire for shorter lead times. Looking forward, there are still opportunities and the government is creating many more opportunities by designating certain components as local content so that state-owned enterprises have to buy from local manufacturers and not import.” For Besaans, this is most welcome. Its products are utilised across a range of industry sectors including mining, rail, automotive, construction, power generation, engineering and many more. “We are a component manufacturer for various OEMs,” details du Toit. “Typically, we produce components for rail rolling stock and railway infrastructure. In mining, we supply components that are used in roof support systems. In construction, we supply components that are used in scaffolding and reinforcing systems. We also have an extensive range of cookware including traditional 3-legged cast iron potjies as well as cast iron casseroles and pans which we sell both local and international under our Best Duty and Chef Supreme brands.” One arm of the manufacturing industry in South Africa where the prospect of losing business to the international supply chains is the automotive sector. South Africa is a major automotive manufacturer and the export of vehicles assembled in the country drives foreign exchange and investment. Besaans sees opportunities for expansion in this sector and du Toit says that the company is looking into components that could be manufactured at the foundry in Pretoria. “It’s something that we will be investigating but not quite yet. To supply into the automotive industry we need to have our investments in place. The requirements - in terms of manufacturing cost, quality and risk - mean we will have to ensure we have the latest manufacturing technology installed.”
BESAANS
Management Team
// FOUNDRIES HAVE TO INVEST IN TECHNOLOGIES THAT MAKE MANUFACTURING MORE EFFICIENT AND THEY HAVE TO USE THE PROGRAMMES THAT THE GOVERNMENT MAKES AVAILABLE TO ENSURE CAPACITY IS FULL // This is a business with an exciting path ahead of it. Solidly positioned to take advantage of the country’s drive for locally produced goods, cast against a 72-year history, and emblazoned with ISO quality certification, Besaans has growth in the pipeline. “People don’t like changing suppliers a lot and they tend to stick with companies that deliver on their expectations. If you give them good service and quality products, they will
stay with you. We have been around for more than 70 years and that heritage is very important in the market. “We have a number of apprenticeships running at the moment and we will expand that in the next year. We are hoping that as the volumes come back to our business, we will be able to create more permanent employment,” says du Toit. Asked to summate on the state of the industry and his feelings on the
challenges ahead, Stefan du Toit remains positive and shares his optimism. “Overall, we are definitely in a better space than we were three years ago. “There is a lot to do. I’ve been with the company for more than 12 years and I’ve been in the foundry industry since 1994. I am still quite excited as there is a lot to do in Besaans. We have a very good management team and a very strong and motivated employee base, and that makes it very easy to ask people to challenge themselves. I still wake up with a lot of energy for the things we are doing and the things we still have to do,” he concludes..
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AS FEAT UR ED IN
ENTERPRISE AFRICA
DECEMBER 2018