SWARTLAND
SWARTLAND
Opening the Door of
Opportunity PRODUCTION: Manelesi Dumasi
Swartland has repositioned itself, becoming South Africa’s building materials supplier of choice. The business, which started out as a single DIY store in the Western Cape, is now investing heavily into people and product range development in order to prepare for further growth. Third generation family leaders talk to Enterprise Africa about the success of the company.
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The Hanekom family has been inextricably involved with the 67-year old Swartland business since its inception. Founded by Oupa Hanekom in the small town of Moorreesburg in the Western Cape, this family-run business has been through many changes and challenges. Oupa started his small building
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materials, electrical and DIY store in 1951 before passing the business to his son, Oom Jurgens, when a new lease of life was bought to business, transforming to become a wooden products business focussed on windows and doors. Swartland grew, becoming known for quality and reliability. But following years were tough for South African businesses
and the company stumbled, eventually falling into the hands of the third generation. This was when the growth story kicked into top gear. Today, Swartland is run by Hanekom brothers Jurie (Chairman), Hans (CEO) and James (CFO). When Jurie got involved in 1988, things changed for the better. “When Jurie
Clockwise from top left: CFO - James Hannekom / Chairman - Jurie Hannekom/ 2nd Generation leader - Oom Jurgens Hannekom / CEO - Hans Hannekom
INDUSTRY FOCUS: MANUFACTURING
took the business, it was on the brink of bankruptcy and he has turned it into a billion Rand company,” says Hans. “He turned it to what it is today – a window and door business that supplies other building related products. We only supply to builders merchants. Jurie took the business mainstream, taking products into the main builders merchants and starting the export division which reaches into the UK and US.” The business is no longer isolated, a long way from the country’s urban centres; Swartland is a sought-after manufacturer and supplier, vital to the South African building industry. Today, operations are widespread but directed from Atlantis, Western Cape. Atlantis was officially granted Special Economic Zone (SEZ) status in June which means it will become a technology hub, specifically for green tech, and is expected to receive R1.8bn of investment by 2022. Now that Swartland is established and recognised as an industry leader, new opportunities are being explored so that the growth of this specialist, highlyskilled business can continue to flourish. “Our theory is quite a simple one. If our truck is stopping at a builders merchant, whatever that warehouse takes, we could put on the truck and sell to them. We took that decision and since then, we have moved into the polystyrene business, insulation boards, garage doors, showers, awnings, and the PVC window and door market. We are looking at multiple market segments to get into,” says Jurie. “We’re currently looking at the insulation market,” adds Hans. “We like the idea of the roofing sector. That’s things like insulation, roofing boards, PVC ceiling boards, and polystyrene ceiling boards. We are not yet active in that sector and that will be a leap on our side. “Our entry to that market will likely be a combination of import, acquisition and manufacturing ourselves. It fits our distribution model. Swartland is known
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within the industry as a company that delivers a quality product and has a good delivery rate, always delivering on time and in full. We’re known for our service model and that’s all over South Africa. Even the smallest, most remote town in South Africa can expect a Swartland vehicle within seven days – and that is unusual for our industry. We feel that there is a need in that segment for that type of service and it fits our distribution model.” If Swartland’s move into the insulation market proves successful, a builder could almost put together an entire house, sourcing materials from Swartland alone. Successful expansion would come as welcome news for the communities in which Swartland operates (Atlantis is a good example, where unemployment remains high). “Entering new segments with new products and new product categories, we would need to open more factories and employ more people. We will definitely be bringing on board more employees, it’s just a question of how many and where,” says Hans. BUILDING PEOPLE As well as manufacturing superb products, Swartland has manufactured a culture of excellence within the business. 1500 employees strong, the company invests in people to secure its future.
“There is a legacy here with the family,” admits Jurie. “We’ve had opportunities to sell the business, but we have a commitment to the people. Concern about what a new owner would do with the people is perhaps the reason why we have not sold. Profit is of course key, but Swartland has around 1500 people across the country and there’s a sense of duty to those people,” he adds. Investment into people is also an investment into products – the more your staff know about the portfolio, the easier it will be for them to assist customers. This mantra, combined with something of an obligation to the areas that it calls home, has ensured Swartland commits heavily to upskilling. “With Swartland, because of where we are based, we feel that we have
// EVEN THE SMALLEST, MOST REMOTE TOWN IN SOUTH AFRICA CAN EXPECT A SWARTLAND VEHICLE WITHIN SEVEN DAYS – AND THAT IS UNUSUAL FOR OUR INDUSTRY //
SWARTLAND
// WHERE ARE ABLE TO, AND WHERE IT MAKES COMMERCIAL SENSE, WE TRY AND MAKE SURE WE OPEN MORE DOORS THAN CLOSE // a responsibility to train and upskill. Atlantis is an example – it’s not in a good place from a people point of view. We have a responsibility to ensure our factory there does well so that we can create employment for the town and surrounding area. Our investment there has paid off. Our workforce there is stable, and we think it is a highly skilled and productive group. We are trying to curb the skills gap by creating as many opportunities as possible for these towns,” says James. “If that wasn’t the case, we might have closed these manufacturing plants years ago. Where we are able to, and where it makes commercial sense, we try and make sure we open more doors than close,” he adds. Can anyone within the company climb the ladder and create a long-lasting career for themselves? “Absolutely,” says Hans. “A big thing at Swartland is that we operate a simple model. If you’re willing to learn, we will provide all of the opportunities for you. We tend to look for people who want to learn more. We also like to promote from within and create opportunities for our own people.” The skill and knowledge of Swartland’s national workforce has helped it achieve success that others could only dream of, proving that investing in people yields results. “Getting into the export markets of the USA and UK, and doing that successfully for so many years, is definitely a flagship moment for a South African business,” says Hans. “We started exporting in 1992. We probably
have the largest distribution centres in South Africa from a window and door perspective. We opened two 13,000 m2 distribution centres in 2008 and those were big moments for us. We launched our aluminium business in 2015 and that was very important. “In 2015, we took the decision to move from a wooden window and door business to be simply a window and door business. In 2017, the decision was taken to no longer be a window and door business and become a supplier of buildings goods.” CONSTRUCTING AFRICAN BUSINESS Swartland has reached the fortunate position of being able to export from South Africa to other international markets. Many SA-born players only dream of getting to this position. “We play in most of the SADC
countries,” details James. “We have a branch in Namibia, we want to do more in Zimbabwe and Botswana, and we are active in Mozambique. We think Zimbabwe is going to be a good growth business within the next two to five years, and we want to be a part of that.” African business combined with exports to the USA and UK make for an extremely positive future outlook. “Currently our exports are up and down. When the US economy does well, we do well. When the economy is suppressed, that impacts us too. Even though that market is 60% of what it used to be, it’s still a nice market for us to be in,” says James. Currently, the company will not consider expansion further north into Africa, and other obvious international markets are too easily served by South Africa’s rivals. But, “we will always look
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INDUSTRY FOCUS: MANUFACTURING
at global opportunities, but only pursue where we know we can be competitive,” says Hans. Growing outside of South Africa has its challenges. Exchange rates are an ongoing concern for any import/ export business, and South Africa’s Rand pricing has long been a worry for companies like Swartland. Since 2010, the Rand has been unpredictable. “In the world market, South Africa remains a small player,” says Jurie. “South Africa doesn’t compete very well.” Big consumers are easily attracted by basement prices from competitors in other regions. “The US is a good example, specifically for wooden products,” says Jurie. “We compete with South America and they are much closer and have their own resources. In Australia, China is much closer and difficult to compete with. We have a very good workforce here and our cost of production is negated by currency.” But Swartland is also an importer. So, if the currency swings and exports are disturbed, imports can grow.
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The company imports some of its products and simply brands them inhouse. This is an essential part of the company’s growth strategy, along with acquisitive activity. “It’s either an import programme that we would follow, where we source the product from elsewhere and import on mass to our warehouses, and then distribute it under our own brand. Or we would acquire a business and bring the knowledge to our business, eventually manufacturing ourselves and selling through our distribution system,” says Hans. Is the growth strategy working? According to the Hanekom brothers, things are working out well. “The last four years have been good if you compare us to others,” says Hans. “But that is only because of our willingness to change and our ability to have different products in different market segments. Had we not done that, we would have ended up exactly like everyone else. Our commitment to people in the past and their
commitment now, and our expansion into new products, definitely helped us be more robust to the market dynamics.” DISTRIBUTION FUTURE? With Swartland’s past and present positioning the organisation strongly for future growth, the bothers in charge hint at a shifting in structure for the business. “We believe that we are turning into a distribution company more than a manufacturing company,” explains Jurie. “We believe that will help our longevity. In order to stay ahead means that we must improve all the time.” Hans agrees: “It will help us to be more robust and be able to handle various economic situations without too much reliance on one sector or one market. Let’s say windows and doors has a dip, we want the other segments to carry it. The future of our business is to be more diverse and we think that we have a very good model to sustain us into the future.”
SWARTLAND
// WE ARE FIRM BELIEVERS IN THE NEW GOVERNMENT AND THE NEW FOCUS IN TERMS OF JOB CREATION AND SETTING SOUTH AFRICA IN A POSITIVE LIGHT // Not yet challenged by a serious competitor, and not fazed by smaller players in individual markets, Swartland has the luxury of being far out in front of the chasing pack. Its focus on quality service and being able to maximise its distribution capabilities will keep it ahead says James. “The biggest challenge to any organisation is your ability to service that market effectively, on a national
scale. It’s not easy to service this market – there’s a lot of roads and can be thousands of kilometres between each destination. That is a big barrier to entry. We have invested a lot of money into making sure we can service the entire country effectively across the board. Sooner or later, competitors will get into our space but it takes a lot of time and money to get to where we are – not a lot of people are in the business of making profits that can sustain a distribution model like ours,” he says. Remarkably, the growth and positivity realised by the business in recent years has come through a difficult time for South Africa. The economy has struggled from a GDP growth perspective, international credit agencies have downgraded the country, the currency has struggled, but positive sentiment has returned since a change in political leadership. With business and investor confidence seemingly returning to the country, now is a promising time for South Africa, and
Swartland is very much behind the development of the country. “We are firm believers in the new government and the new focus in terms of job creation and setting South Africa in a positive light. We are not pro-individuals, but we are pro-South Africa. We are entrenched behind anyone that creates jobs and puts South Africa first,” says Jurie. This is a company that follows a ‘Think Long Term’ vision. Whether it’s longevity of products, sustainability of raw materials, length of relationships, or commitment to South Africa – Swartland is thinking long term. This is a company that started small but is now thinking big. And it remains in the committed hands of the Hanekom family, as it has for almost seven decades.
WWW.SWARTLAND.CO.ZA
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July 2018
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