Hi-Alloy Castings

HI-ALLOY CASTINGS

HI-ALLOY CASTINGS

Reshaping and Rejuvenating a

Foundry Mainstay

PRODUCTION: Timothy Reeder

Since 1979, East Rand-based Hi-Alloy Castings has been manufacturing castings for a range of industries and machining the components, serving clients across the pumping, milling and crushing, heavy-clay brick and shotblasting industries. Today, a change in ownership and significant IDC funding is helping restore former glories and propel Hi-Alloy to new heights.

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Hi-Alloy operates from a 4000 m2 covered space at its plant on Balfour avenue in Benoni, east of Johannesburg, where it is equipped with several top-hat furnaces and three continuous resin-moulding lines, and continues to add to this number. The company has a ten-tona-day melting capacity, ranging from 27% hi-chrome iron to nickel and ironmolybdenum-based alloys, and has grown to employ a staff compliment of 120.

“We are a ferrous foundry, and one which focuses primarily on high chrome and stainless castings,” Hi-Alloy Castings Managing Director Daryl Meyer tells us.

“Most of our products then enter into the pump manufacturing business, and specifically in making slurry pumps. If not used in this market, then the castings will likely end up being employed in brick manufacture, and so we focus specifically

on this area as our primary concern.

“We supply products exclusively into the original equipment manufacturer (OEM) market, so our main customers are big industry players like Weir Minerals. We will provide parts to them primarily for slurry pumps, or indeed the pump industry into the mining sector, and we focus quite heavily on the wear parts that make up these pumps. We sell them the component parts, then they assemble them and sell them under their brand and as such they enter the market.”

Slurry pumps are made for high wearing and heavy-duty applications, and as such are used in worldwide industries like mining, mineral processing, power generation and aggregate processing. This gives Hi-Alloy its global footprint, as Meyer explains. “Our customer base is primarily in South Africa, although we do also have one or two customers in Australia. Our product, however, is distributed throughout the

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INDUSTRY FOCUS: ENGINEERING

mining sector globally. This means that we see it used a huge amount in Africa and Australia; even into the Far East and Russia.

Our parts find their way all across the world through our customers’ brands which are themselves situated far and wide.”

Meyer details the lucrative rationale behind this far-reaching approach. “We do not limit ourselves to the South African mining industry. Our focus remains more on global mining - the African continent is still massively attractive to mining companies, and it is often without the numerous woes that we potentially face in South Africa. For most of our customers, more than 40-50% of their book is exported out of South Africa, to mines on the continent or in Australia, for example.

Mining stocks are looking increasingly healthy and we are seeing a huge push on our order books as a consequence.”

Hi-Alloy is undergoing something of a transformational period in its relatively long lifetime, which, as Meyer explains, is attributable to a number of important developments. “The business has been an entity since the mid-80s,” he says, “and

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my partner and I came in and took up shareholding two and a half years ago. So, despite its long operational lifetime, it is currently under fairly new management.

“Since that time, we have put two new one tonne induction furnaces into the business, but as well as this there is a lot of other investment being committed to HiAlloy Castings. As we speak right now, for example, we are in the throes of finalising some Industrial Development Corporation (IDC) funding, which is obviously exciting for us.

“We have earmarked this primarily to enable us to install a whole new sand reclamation plant as well as a brand-new compressor system. As we speak, there is a lot of investment going into this business and this will continue over the coming months.”The goal of the IDC is to make an impact across the country, whether this means helping develop new business, growing existing companies, boosting local economies or providing expertise wherever needed. The backing of such an important institution is invaluable, and Meyer tells us of the clear plans Hi-Alloy

already has for the resultant funding.

“As part of the IDC application process it is necessary to be very specific about the capital expenditure portion of it, which means that a lot of that work had already been done and wrapped up. It is very much hot off the press that the funding has now been approved, and so that will now start flowing through imminently. Now it is a question for us of putting together an engineering plan which will see us retain the maximum capacity possible as we implement these changes, and avoid downtime wherever possible.

“The sand plant has been specced and we know exactly where that will be coming from, as is the case with the compressors and various other small but important aspects. This plant as a whole really is a part of the old guard - it has been here for many years and simply needed a little TLC and sorting out, which we are now positioned to be able to do.”

It is not only the investment itself that will allow Hi-Alloy to achieve the growth that it desires, but the confirmation too that what it is doing is in line with even the most demanding expectations. “The IDC process is a very rigorous one to go through, and they are never going to put money into a business which they feel has no chance of showing growth and securing future jobs and so we found it a real show of confidence in our business to be awarded this backing. The saving and creation of jobs is what the IDC really centres its mandate around, so they were very specific about that.”

Also crucial to garnering the IDC’s support is a demonstration of a business’s commitment to Broad-based Black Economic Empowerment (BBBEE). This is another area in which Meyer feels Hi-Alloy is ahead of the game. “We came into the business and realised that one of the reasons that a lot of foundries have floundered in the last ten years has been a failure to take their BEE responsibility seriously; if you want to do business successfully in South Africa then this is not an option. We are Level Three on the new legislation, with 26% black female ownership in our business, and so from a BEE-rating perspective we know that we are

HI-ALLOY CASTINGS

one of the best foundries in South Africa.

“We possess a new, young management team who don’t necessarily come from the industry, per se, but which understands big business. When they looked at this and at what has happened over the last year and a half, it was not too much of a hard sell from our side: If they were looking to back a foundry, where the IDC has had their fingers burned somewhat over the last few years, it was fairly clear that we were onto something special here and hence the funding which has come through.”

The acquisition of Hi-Alloy came about following a forensic and careful consideration, Meyer explains. “Both my partner and I came out of very strong corporate backgrounds in South Africa, forged over many years, before deciding that it was time to buy our own business.

We picked this one for a number of very strategic reasons; for starters, we felt that the mining industry had probably gone through the worst slump that it had suffered in recent memory and were confident that it could emerge unscathed, and we are seeing exactly this happen now.

“Additionally, the South African foundry industry had been through a particularly tough time, with a lot of consolidation and closures during this period. This meant that those which were left standing were left to operate in a market which was significantly less competitive than had been the case previously. There were opportunities there, as a result, for a foundry that was run well to really flourish.

“The government had also started shifting a lot of its own focus toward the metals industry, in large part from a job saving perspective. This has resulted in a lot of protection, now, in terms of the threat of imported castings from the East for the local foundry industry, which the volatility of the Rand also made economically far less attractive. All of these various factors came together for us to conclude that a foundry would be the ideal place for us to invest, and so two and a half years ago we took up 40% of Hi-Alloy.

“Hi-Alloy has always had a reputation

for being a well-run, technical foundry,” he continues. “We have staff possessing hugely impressive competences, who have been in the industry for many years, who from a technical perspective are among the best in their field. Neither my partner nor I are metallurgists by trade, but alongside us we have one of the most highly respected foundry metallurgists on our executive team here, which serves to exemplify this.

“From any perspectives therefore Hi-Alloy was a very alluring proposition for us, but it just needed to have its strategy to be redefined and the business to be re-set up in terms of the cost base.”This is exactly what Meyer and the new management have set about doing, and to already good effect, as he concludes. “In these last few years we have gone through a lot of restructuring, adding much more capacity on the manufacturing side and embarked on a campaign specifically designed to attract the major blue-chip companies;

Weir Minerals, for example, was not even a customer before we arrived, and we have now picked up a massive chunk of their business.

“We wanted to focus on the big multinationals, because that is what we understand - not the small ‘mom and pop’ type shops which are also out there. As a consequence, our top line has gone from somewhere in the region of 60 million two years ago to a figure budget-wise that this year we are confident will surpass 100 million. In the middle of what has been an undeniably tough period, we have still managed to achieve growth.”

HI-ALLOY CASTINGS +27 11 421 5874 www.hialloycastings.co.za

INSTALLATIONS, REPAIRS, SALES SERVICES & AIR AUDITS

It is important for us to carry out all repairs and services in the least possible time. We maintain high standard work with the best equipment and parts to ensure a high quality end product.

All repairs and services will be carried out efficiently and accurately. A wide range of oem and imported spares are at our disposal to ensure speedy repair of the air compressor with minimum delay, which will minimise costly down time.

Before completion of the work all repaired and serviced air compressor are test run for final inspection. After completion of repairs the unit is stamped with one year warrantee, depending on the nature of repairs done.

+27 60 997 5262 JOHAN@MASTERCOMPRESSEDAIR.CO.ZA WWW.MASTERCOMPRESSEDAIR.CO.ZA

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Issue No.62

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G4S DEPOSITA:

When Cash

is King

ALSO IN THIS ISSUE:

Van Schaik Bookstore / Zoona / IPSS / Safire Insurance

A S F E AT U R E D I N

ENTERPRISE AFRICA

SEPTEMBER 2017