THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
AFRICA
ENTERPRISE November 2015
www.enterprise-africa.net
ABB SOUTH AFRICA:
Energy, Rail, Mining
ABB Powers All
ALSO IN THIS ISSUE:
Cross Fire Management / Standard Electrical / Marsh / IPSS
EDITOR’S LETTER
Joe Forshaw EDITOR joe@enterprise-africa.net Timothy Reeder SUB EDITOR tim@enterprise-africa.net Hal Hutchison SALES MANAGER hal@enterprise-africa.net Sophie Bolderstone SENIOR PROJECT MANAGER sophie@enterprise-africa.net Sam Hendricks SENIOR PROJECT MANAGER sam@enterprise-africa.net Nathan Murphy PROJECT MANAGER nathan@enterprise-africa.net Shannon James PROJECT MANAGER shannon@enterprise-africa.net John Mulley FINANCIAL DIRECTOR john@enterprise-africa.net Jane Larkman ACCOUNTS MANAGER jane@enterprise-africa.net Design by Naked Marketing +44 (0) 1953 850211 www.nakedmarketing.co.uk Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@enterprise-africa.net Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU, T. +44 (0) 20 8123 7859 E. info@enterprise-africa.net www.enterprise-africa.net CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2015
Welcome to our latest edition…
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This month, I’ve had the pleasure of interviewing some true industry leaders, figures that are helping to shape the markets in which they operate and grow South Africa’s economy in a really positive way. One remarkable story comes from Cross Fire Management and Founder John Cross who has managed to build one of the country’s most trusted fire protection companies despite significant personal challenges. Then there’s Chris Boone of Bafotech who started his business with one desk and a computer that had been won in a raffle. Today it is one of the country’s leading scraper winch providers, giving a hugely valuable service to the mining industry. I also speak to Volker von Widdern from Marsh Risk Consulting. He seems to be in an enviable position, not being effected too badly by the slowing economy and still managing to expand into Africa. Colin Logan, Project Director at Gibb Engineering & Science tells us that the much-anticipated Ingula Pumped Storage Scheme is almost ready to start working, bringing extra capacity to the electricity grid. Stephen Pell of Standard Electrical and Barney Isralls of Vegtech 2000 both told me that balancing the risk of only operating in South Africa by building a stronger presence on the continent is now a priority with both companies looking to grow across the borders. Our lead story comes from ABB SA and CEO Leon Viljoen who told me about international partnerships, renewable energy and growing in rail and mining. This rare interview with Leon gives an insight into the work of the international power and automation conglomerate.
Joe Forshaw EDITOR
GET IN TOUCH +44 (0) 20 8123 7859 joe@enterprise-africa.net
www.enterprise-africa.net / November 2015 / 3
06/NEWS: The Month that was...
12/ABB: Energy, Rail, Mining ABB Powers All
A round up of some of the latest news stories in the industry
08/FEATURE: Should You Be Moving To Konza? As one of Africa’s largest and most important construction projects, Konza Techno City in Kenya is proving that the continent has much to offer when it comes to ICT and BPO services.
78/EXHIBITION CALENDAR: Key Upcoming Events Across the Country Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors.
12/
4 / November 2015 / www.enterprise-africa.net
In South Africa, ABB is a dominant force in the power and automation business. With huge contracts underway in energy, rail, mining and many other industries, the future looks bright for this innovative organisation, despite the bleak economic outlook. Managing Director, Leon Viljoen tells us more‌
CONTENTS 22/
38/
64/
22/INGULA PUMPED STORAGE SCHEME: Ingula Supply to Start Soon
58/BAFOTECH: Growing in South America
The Ingula Pumped Storage Scheme is set to supply 1332 MW of peaking energy to South Africa’s grid when it is fully commissioned next year.
As the mining industry in South Africa faces decline, Bafotech has been forced to look further afield for growth opportunities.
28/CROSS FIRE MANAGEMENT : 25 Years and Still Saving Lives and Protecting Property Cross Fire Management is facing an exciting future. As it continues to expand into Africa, with big contracts from prominent developers.
38/MARSH AFRICA: Upbeat About Continental Insurance Industry Global insurance giant, Marsh, is continuing its push across the continent and is eyeing up opportunities in many African nations.
46/VEGTECH 2000: Growing in Great Greenhouses While expanding into Africa, this innovative agricultural specialist is also undertaking massive projects in South Africa. MD, Barney Isralls tells us more…
52/STANDARD ELECTRICAL: Providing the Spark for Growth Standard Electrical Co-owners, Stephen Pell and José Snyders have started to shape the business for profitable and sustainable growth.
64/UNILEVER FOOD SOLUTIONS : Healthy, Nutritional & Full of Flavour and Flair South Africa’s premier foodservice provider, Unilever Food Solutions, is ready for new demand for more and more information about the food we are eating.
68/SA MANUFACTURING: SA Tooling Desperate for Corporate & Government Support Why is it that manufacturing seems to be doing well while toolmaking has been having problems for the past few years?
70/MEDIA24: Leading the Way in a Constantly Evolving Industry This is a company that recently celebrated its 100th year anniversary; a company that is certainly embracing the digitalisation of the publishing industry.
74/FOSKOR: ‘Foskorites’ Are the Key to Success Foskor has once again been named one of the best employers in the country. It offers unrivalled development schemes in both the professional and personal space and its ‘Foskorites’ are its most important asset.
www.enterprise-africa.net / November 2015 / 5
SA, CONGO TO COLLABORATE ON ECONOMY PROJECTS DENEL SECURES R900 M CONTRACT Denel Vehicle Systems (DVS) has concluded a contract of more than R900 million with NIMR in the United Arab Emirates for the development and supply of advanced mineprotected vehicles. The contract is one of the largest received by Denel Vehicle Systems (DVS) in recent years and will provide work for two of the company’s major divisions for the next 24 months. Zwelakhe Ntshepe, Group Executive Business Development at Denel, says the new contract confirms Denel’s leadership role in landward mobility and mineprotected vehicles. It is one of several contracts awarded to DVS since it joined the Denel Group earlier this year. “We are delighted to work with NIMR, one of world’s leading manufacturers of wheeled armoured vehicles. “There is a strong synergy between our companies and products and we are confident that we can, together, develop and improve the N35 to be among the best in its class,” Ntshepe said. The N35, formerly known as the RG-35, is an armoured vehicle with superior mine protection and combat capabilities and can be used in command, ambulance and recovery roles. Ntshepe said the contract with NIMR follows on the awarding of several other contracts to Denel’s landward defence business in recent months. – SAnews.gov.za
South Africa and the Democratic Republic of Congo (DRC) will in the next 10 years focus on working together in economic projects. “We have decided that the next decade of our Bi-National Commission (BNC) should intensify the implementation of joint economic projects, in particular the Grand Inga Hydropower Project, whose founding Treaty was signed on 30 October 2013,” President Jacob Zuma said. He made the statement after he returned from a successful working visit to the DRC. “We have urged the responsible ministries/departments to finalise all outstanding issues in order to pave the way for the construction of this PanAfrican flagship project,” he said. Last month, President Zuma cochaired the 9th session of the BNC with his counterpart President Joseph Kabila Kabange of the DRC. During the summit, the two Heads of State reviewed progress made on bilateral programmes during the first decade of the Bi-National Commission. These included cooperation projects in the fields of politics and governance; defence and security;
economy, finance and infrastructure as well as social and humanitarian affairs. “In the next 10 years, economic relations in the areas of trade, industrialisation and infrastructure development will be more prominent than they are now,” President Zuma said. The two Heads of State witnessed the signing of the Bilateral Air Services Agreement by the ministers responsible for transport. The agreement will enable the two countries to facilitate movement of people and expand aviation cooperation. South Africa and the DRC maintain good diplomatic and political relations. South Africa is the DRC’s biggest supplier of foreign goods and services, providing more than 20 percent of the country’s total imports. Bilateral trade increased from R11billion in 2012 to R 13billion in 2014 . – SAnews.gov.za
SA BLUE MOON DIAMOND SETS RECORD The rare and flawless “Blue Moon Diamond” sold for $48.4m (R686m) to a Hong Kong buyer this month, setting a world record for a gemstone at auction, Sotheby’s said. The blue diamond stone was found in
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South Africa’s famed Cullinan mine in January 2014. The seller was New Yorkbased jeweller Cora International, according to Sotheby’s. The distinctive blue colour in diamonds is attributed to trace
amounts of the element boron in the crystal structure. The cushion-shaped diamond, mounted on a ring, has the top grading of fancy vivid blue and weighs 12.03 carats. It had a pre-sale estimate of $35m to $55m.
NEWS ROUNDUP CHINA PLEDGES $50 BILLION FOR INDUSTRIALISATION China has reiterated its commitment to support industrialisation in South Africa and the rest of the African continent by pledging $50 billion towards industrialisation projects, said the Department of Trade and Industry (dti). In a statement, the dti said the pledge was announced during a courtesy visit by the Vice Minister of Commerce of China, Zhang Xiangchen, to the Director-General of the dti, Lionel October, in Pretoria on Monday. The courtesy visit by Vice Minister Xiangchen also focused on the upcoming Forum on China-Africa Cooperation (FOCAC) that will be hosted in Johannesburg from 4 – 5 December 2015. Vice Minister Xiangchen said there were several new measures that the Chinese government is finalising to further promote industrialisation and development of the African continent as a whole. “China-Africa industrialisation partnerships will be at the forefront of any development in the continent followed by agricultural activities. China will also increase investments in Africa especially in the Special Economic Zones and provide training in those sectors,” said Xiangchen.
Xiangchen also said his government would provide 50 technical experts in building and upgrading of industrial parks, building of new power plants, 40 000 training opportunities in different sectors and 200 000 industrial managers to train and develop local industrial managers. The Director General welcomed the pledge and praised China for its efforts in continuously supporting the African cause. October said China remained an inspiration to most developing countries especially Africa. He said even though the continent remained underdeveloped, summits such as FOCAC can bring about progress on industrialisation. The first ministerial conference of FOCAC was held in Beijing in October 2000. After the conference, China cancelled RMB10.9 billion of debts for 31 heavily indebted poor countries or least developed countries in Africa. – SAnews.gov.za
CAPITAL HOTEL GROUP EXPANDING TO CAPE TOWN
R5M FUNDING BOOST FOR YOUNG ENTREPRENEURS The Awethu Project is calling all young, ambitious and tenacious entrepreneurs who have an established innovative business with the potential for growth to apply for up to R5m in equity funding. “We are looking for entrepreneurs with businesses that need to reach the next level,” said Yusuf Randera Rees, cofounder and CEO of the Awethu Project. “This is for those who are seeking financial and operational support to grow their business, without giving up control. The Awethu Project will partner with them.” The Project is a progressive and innovative entrepreneurship development company that was started by Randera Rees, a Harvard and Oxford graduate from South Africa in 2009.
The Capital Hotel Group is making a first foray outside Gauteng with the 65-room Capital Mirage hotel set to open in Cape Town’s De Waterkant this month. The entrepreneurial hotel group started with two small leased properties in 2008 and today owns six properties across Sandton, including The Capital Empire, Moloko, 20 West, Villa, Hydro and Esprit. Another five properties are at various stages of development, including The Capital on Bath in Rosebank. The Capital Mirage in Cape Town will include apartments, retail, residential and hotel components.
www.enterprise-africa.net / November 2015 / 7
FEATURE
SHOULD YOU BE MOVING TO KONZA? EDITORIAL BY: Joe Forshaw
As one of Africa’s largest and most important construction projects, Konza Techno City in Kenya is proving that the continent has much to offer when it comes to ICT and BPO services.
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Kenya has been clear about its dream for the future: to transform into a ‘newly industrialising’, middle-income (income exceeding world’s average currently at US$10,000) country providing a high quality of life to all its citizens by 2030 in a clean and secure environment. This ambition is highlighted in the country’s 2030 Vision, a plan for the time period 2008-2030 which hopes to change the country’s outlook for the better by utilising all aspects of the developing economy. The Vision 2030 development process was launched by President Mwai Kibaki on 30 October 2006 when he instructed the National Vision Steering Committee to produce a medium-term plan with full details on the development programmes that would be implemented in the first five years. The vision has economic, social and political pillars and is supported by Vision Delivery Secretariat, installed by the Kenyan government. One of the major developments that will catalyse Vision 2030 is the much-hyped Konza Techno City development – one of Africa’s largest
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planned construction projects and a strategic, exciting project that will attract investment into the Kenyan economy. According to the government, ‘Konza will be a sustainable, world class technology hub and major economic driver for Kenya’. Industry commentators are calling the project ‘Africa’s Silicon Savannah’. In 2009, The Konza Technology City project was initiated with the procurement of a 5,000 acre parcel of land at Malili Ranch, 60km south east of Nairobi along Mombasa-Nairobi A109 road. Construction of Konza City is set to be split into five phases with the first taking five years to complete and creating 20,000 jobs. Early estimates suggest that the project will cost Kshs 1.2 trillion (US$14.5b). WHAT IS IT? Konza Techno City will be a mixed use, sustainable, world-class city and technology hub that will serve as an economic driver for Kenya. The city is planned with a focus creating a vibrant, walkable, green urban environment that will integrate a broad range of inhabitants.
Konza will be a ‘smart city’ and will be intertwined with high-tech ideas aimed at capturing the growing global Business Processing Outsourcing and Information Technology Enabled Services (BPO/ITES) sectors in Kenya. Reports suggest that BPO/ITES business produced US$110 billion in revenues in 2010 and revenues from this industry have reportedly increased three-fold in 2015. Currently, Africa only attracts about 1% of the total revenues from this growing industry and subsequently only a few African nations, including South Africa, Egypt, Morocco, Ghana and Mauritius, have made an effort to develop their BPO/ ITES industries. The development of Konza is being overseen by the Konza Technopolis Development Authority (KOTDA). KOTDA is headed by CEO, Eng. John Tanui who was appointed in February this year; a man who brings extensive commercial experience to the project having joined from Huawei Technology where he served as Vice President – Delivery and Service. “He brings with him a wealth of experience in project management, including PPP and Turnkey projects. He is well acquainted with business management in a global environment, a key asset for Konza’s future progress. He comes imbued with the qualities that are needed for the development
KONZA TECHNO CITY KENYA
FEATURE
of a smart city: youth, passion, ICT professional, experience, and an ability to understand the business and build relationships across the age and digital divide,” the organisation said. Rare for Kenya, the Konza development has so far received the backing of all political parties and at the ceremony to launch the construction in 2013, President Kibaki called on domestic and foreign investors to take advantage of Konza’s ‘tremendous opportunities’. REACHING MILESTONES With a project of this size, progress often seems to be slow but in truth, much has already been achieved. In May 2014, groundwork for the Cadastral
Survey was completed. In June 2014, KOTDA signed a US$25m contract with American firm Tetra Tech Inc. who will oversee the development of Phase 1. In July 2014, Kenya Power completed provision of power to seven boreholes for initial infrastructural development, construction of the verticals and greening of the city. October 2014 saw Kenya Urban Roads Authority (KURA) initiate construction of Phase 1 access roads that will help to delineate the parcels for construction of the residential and commercial vertical towers by private investors. In December 2014, Deputy President Hon. William Ruto commissioned access roads and basic infrastructure at the Konza site that will open up
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Konza to infrastructure investment. April this year saw the start of the new CEO and other members of the KOTDA management team and in in September, the government announced that it had started a number of offsite projects that will bolster development. One of the most important developments to date was realised in September when KOTDA signed a partnership with an American business lobby that will position Kenyan SMEs to better compete in regional and international markets. The agreement between The National Business League (NBL) and KOTDA will allow for small local businesses to benchmark and learn best practices. Dr Malcolm Beech, Vice President NLB said: “Through the establishment of Small and Medium enterprises Development Programme, we shall assist Small and Medium Enterprises (SMEs) across Kenya and the US in accessing and obtaining business
KONZA TECHNO CITY KENYA
development opportunities through export promotion, joint ventures, strategy alliance and direct investment.” Tanui said: “We have received more than 200 expressions of interest from investors both local and international, who are expected to form the bulk of the pioneer investors and partners in Konza city. We have registered good interest by the private sector, particularly the telecom operators and leading banks, who want to locate their data centres and other ICT investments in Konza.” OH SO SMART Some of the ideas suggested for Konza have had many techies licking their lips – this is going to be a game changer for Kenya when complete. Originally, the idea was to only use innovative cloud technology and city-wide connectivity to make the city tick but now the concept has moved to a whole new level. KOTDA says that its smart city framework will integrate the following
//WE HAVE REGISTERED GOOD INTEREST BY THE PRIVATE SECTOR, PARTICULARLY THE TELECOM OPERATORS AND LEADING BANKS, WHO WANT TO LOCATE THEIR DATA CENTRES AND OTHER ICT INVESTMENTS IN KONZA//
four key city services: Infrastructure services (transportation, utilities, public safety, environment), Citizen services (access and participation), City services (city information, planning and development) and Business services (supportive services for local commerce). One of the coolest features planned for the city will see data gathered from smart devices and sensors embedded in the urban environment, such as roadways, buildings, and other assets. Collected data will be shared via a smart communications system and be analysed by software that delivers valuable information and digitally enhanced services to Konza’s population. For example,
roadway sensors will be able to monitor pedestrian and automobile traffic, and adjust traffic light timing accordingly to optimise traffic flows. KOTDA has already made it clear that it intends to aim for international best practice and learn from global cities that have successfully incorporated smart city frameworks, including Santander, Barcelona, Singapore, Amsterdam, and Rio de Janeiro. When complete, Konza will boast office, university, research, medical, technology, science and retail facilities. It will be home to more than a quarter of a million people and will be powered by a thriving IT sector so it’s probably time to consider, should you be moving to or investing in Konza?
www.enterprise-africa.net / November 2015 / 11
ABB SOUTH AFRICA
Energy, Rail, Mining -
ABB Powers All PRODUCTION: Karl Pietersen
In South Africa, ABB is a dominant player in the power and automation business. With huge contracts underway in energy, rail, mining and many other industries, the future looks bright for this innovative organisation, despite the bleak economic outlook. Managing Director, Leon Viljoen tells us more‌
www.enterprise-africa.net / November 2015 / 13
BUSINESS PROFILE
//THE MARKET IS TOUGH BUT THERE ARE STILL HUGE OPPORTUNITIES. IT’S NOT A DECLINING MARKET//
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ABB South Africa needs no introduction. The local entity of the global power and automation engineering company is involved with several important projects across the SADC region and further afield. In SA, the group has a strong local manufacturing capability with three manufacturing sites in Gauteng. Having operated in SA since 1988 with the Swiss BBC (1891) and Swedish ASEA (1883), ABB SA now employs up to 1200 people. When we talk to businesses around Southern Africa, especially those of a similar size to ABB, there is always talk of the current economic climate and how it is making business very difficult. Yes, it is true that unemployment is high, GDP growth is low and confidence is waning because of low commodity prices, but shouldn’t businesses of significant size and importance be prepared for fluctuations in the market?
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Well, simply put, yes they should and ABB SA is a perfect example. In 2012, when the global economic slowdown was at its worst in many cases, ABB SA increased its order book by 36%, increased revenue by 2% and improved productivity at its facilities in Longmeadow. In 2013, revenue and orders significantly increased again and 2014 saw a strong order backlog and the realisation that the African growth strategy was on course. ABB Southern Africa Managing Director, Leon Viljoen, tells Enterprise Africa: “The market is tough but there are still huge opportunities. It’s not a declining market. There’s also a few large orders that we have landed, including the projects with Kusile Power Station and Venetia Mine and all of this assists us in reaching our targets. “The South African operation is responsible for what we call ‘Southern
ABB SOUTH AFRICA
//I THINK THE REALITY IS THAT IT’S GOING TO BE A TOUGH MARKET FOR THE NEXT 12 TO 24 MONTHS// Africa’ and that’s anything south of the equator – everything up to Angola, DRC, Kenya, and Tanzania. In these countries there is much larger growth, sometimes up to 7% GDP growth, and there is a lot of focus on infrastructure spend. We are working in an interesting, dynamic region compared to Europe or other regions. “We’ve got 11 offices in our region outside of SA and most of these are sales and service offices. We are well positioned in the region and growing our market share, so from that perspective we are better positioned to leverage our business. “I think the reality is that it’s going to be a turbulent market for
the next 12 to 24 months. From the customer perspective, there is a lot of change in the sense that the mining and oil companies are not spending on Capex. However, this means that there are opportunities in OPEX spend because they need to keep equipment running for longer and there’s a lot of focus and pressure, specifically on the mining companies, to get their productivity up and you can do that by making sure that the equipment is reliable. So for us it’s a change in focus from new capital spend to maintenance, service and refurbishment spend. Call me an eternal optimist but I believe there’s a lot of work.”
MICROGRIDS, MACRO OPPORTUNITIES One growth area for ABB, both internationally and especially in Africa, is with Microgrids. Microgrid solutions enable very high levels of wind and solar power penetration in dieselpowered grids, reducing dependency on fossil fuel supplies and curtailing CO2 emissions. ABB’s comprehensive Microgrid offering includes a range of technologies for off-grid applications like islands, isolated grids, remote communities as well as commercial and industrial facilities, ensuring utilitygrade power quality and grid stability. ABB is a global leader in Microgrid technologies with a proven track record of more than 30 installations. Recently, the company announced two new micro grid projects, one in Kenya and one at its own headquarters in Longmeadow, Gauteng, South Africa.
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BUSINESS PROFILE
“Microgrids is one of the areas that ABB internationally is focussing on. It’s one of four growth projects in the 2020 strategy for ABB and very applicable to the African continent,” explains Viljoen. “With Microgrids, we take solar, wind and other renewable types of generation, and also diesel, and we make sure that it works effectively. It’s easy to install renewables but it is extremely important to control the mix and within ABB we have excellent products for this.” In September, ABB SA announced that it had received an order from Socabelec East Africa Ltd to design, supply and install a PowerStore™ flywheel-based Microgrid stabilization solution for the Marsabit wind farm in northern Kenya. Currently relying on diesel generators and two 275 kW wind turbines for all of its power, Marsabit is an oasis at the edge of
the desert in a windy area, 530 km north of Nairobi. The city has a population of 5,000 and is not connected to any national grid for its power needs. “What we’re doing in Kenya,” says Viljoen, “is installing the flywheel for stabilization where the wind turbines are coupled to the weak grid. If you look at a traditional grid, the amount of harmonics is small and do not impact on the quality of supply. With wind that is intermittent and brings a lot of harmonics into the system, you can destabilise a system that is not very robust and this was the case in Kenya. ABB is putting in a system to stabilise that - with a flywheel that
produces energy and feeds it into the grid when needed and absorbs energy as it is needed to stabilise what the wind turbine is causing within the grid. There is huge potential for this in Africa because many of the networks are weak and they can’t handle high penetration of renewables, specifically wind, because of the nature of its generation.” A Microgrid will also be erected at ABB’s Longmeadow facility in SA which boasts 96,000 m2 of warehousing, factory, office space and manufacturing facilities. Announced in September, this project includes a rooftop solar photovoltaic (PV) field and a
//IN MICRO GRIDS, WHAT WE DO IS TAKE SOLAR, WIND AND OTHER RENEWABLE TYPES OF GENERATION, AND ALSO DIESEL, AND WE MAKE SURE THAT IT WORKS EFFECTIVELY//
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ABB SOUTH AFRICA
//IN LONGMEADOW, WE’RE BUILDING A MICRO GRID AT OUR HEAD OFFICE. THAT’S BASICALLY COMBINING ROOFTOP PV SOLAR WITH A BATTERY STORAGE SYSTEM, TOGETHER WITH A DIESEL GENERATOR AND THE MICRO GRID PLUS SYSTEM THAT CONTROLS THE SOURCES, SO ITS LOOKS AT WHAT IS NEEDED// PowerStore™ grid stabilizer, that will help to maximize the use of clean solar energy and ensure uninterrupted power supply to keep the lights on and the factories running even in the event of a power outage on the main grid supply. “In Longmeadow, we’re building a Microgrid at our head office. That’s basically combining rooftop PV solar with a battery storage system, together with diesel generator and the Microgrid
Plus™ system that controls the sources, so its looks at what is needed. It’s also grid connected, so we’re not taking Longmeadow off the grid, we will be connected to the grid and use whatever source is available and cheapest to run our building. In the day, if the sun is shining we’ll use the solar, at night we’ll use the energy stored in the batteries and if we need to we’ll use the grid,” says Viljoen. “This project should be
completed around May 2016. These projects can be turned around quickly and that’s the beauty of the Microgrid. We talking about 750 kW of solar and 1 MVA of battery storage so it’s quite a lot of power needed for a building but we do a lot of manufacturing here – it’s more than just an office,” he explains. RENEWABLE FUTURE The Longmeadow headquarters is an energy efficiency hallmark in the industry. Renewable energy is becoming a major component of ABB’s strategy, both globally and in SA. The government has put plans in place to fundamentally change the way the country sources its power and renewable energy is a key factor in this policy. “Renewables if not a new concept for ABB,” says Viljoen. “We’ve been using these technologies for over 25 years. In South Africa, we’ve been part of five
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BUSINESS PROFILE
//THIS INDUSTRY WILL DEFINITELY GROW, NOT ONLY IN SA BUT ALSO IN THE REST OF AFRICA, WHERE THE COUNTRIES ARE TRYING TO FAST-TRACK THE START OF RENEWABLE INDUSTRIES// solar farms – two in Polokwane and three in the Northern Cape. That was from an EPC perspective and we also have maintenance contracts for two of them, namely Witkop and Soutpan. Globally, ABB are moving away from the EPC concept and are working more on the Electrical Balance of Plant (EBoP). Our systems and products are used in EBoP so we will focus our attention in this area.” One of the main drivers behind the growth of the renewable energy industry in Africa, apart from the obvious reduction in CO2 emissions, is the speed in which infrastructure can be developed. “There’s a huge shortage of power all over Africa, including SA currently, so it’s very difficult to get an economy
to grow, especially at the rates that African countries want to grow, if there’s no power available. The quickest way to increase the power supply that you do have is with renewables because a coal-fired or nuclear or hydro system takes many years to build but you can build a 50-75MW renewable plant in just one year. “This industry will definitely grow, not only in SA but also in the rest of Africa, where the countries are trying to fast-track the start of renewable industries. There’s plenty of sun available in Africa so I think it’s a natural way to go. “The products we have are wellresearched and developed for the renewable market. It is a difficult market
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to penetrate if players do not have the relevant products but there are areas where new entrants can play such as rooftop PV for houses,” explains Viljoen. BUSINESS DEVELOPMENT Currently, the biggest contract that ABB SA is working on is in a more ‘traditional’ area of energy – coal. The organisation was awarded a contract from Eskom back in March 2015 for Control and Instrumentation (C&I) work at Kusile power station. “ABB SA was awarded the contract after Eskom had cancelled their contract with their previous supplier,” explains Viljoen. “The Balance of Plant (BoP) and the first unit will be completed in 2016. This is a five year contract for all six units and the BoP – it’s the C&I work for the whole of Kusile. “At the moment, this is by far our biggest contract. Over 30% of the engineers working on this contract are South African. For us, it’s a major breakthrough as we will have the ability to support Eskom when the project is finished. We will be able to
ABB SOUTH AFRICA
support and maintain anything we have commissioned directly from South Africa going forward. For me, and for ABB, this is very important. We don’t want to do parachute types of contract where we fly people in and fly them out and then the customer needs to battle from distance to get things done. We have the expertise and the people that have been intimately involved, all located in South Africa.” Another South African highlight for 2015 was winning a contract with De Beers for work at its Venetia mine. The Venetia mine is being converted from an open-pit mine to an underground mine and the conversion is expected to extend production at the site to 2043, with reports suggesting that the diamond site has potential to deliver an estimated 96 million carats. The project is the biggest capital investment in SA in the company’s history.
ROAD TRANSPORT SPECIALISTS We offer our clients an extensive network of transport services across South Africa and across borders from 1 tonners to superlinks, as well as crane trucks and lowbeds for abnormal loads. All our vehicles and drivers comply with industry standards and safety requirements. Crane trucks, their associated equipment and drivers are certified and the necessary documents are available for inspection upon offloading where required. Our office liaises extensively with the loading and offloading points to ensure that any special requirements are met. With more than twenty years’ experience in the transport business, we are able to provide cost effective solutions from day to day deliveries to planning transport budgets for tenders. We pride ourselves on maintaining the highest level of service and our dedicated attention and innovative planning helps to ensure the safe and timeous delivery of every load.
(011) 452-8292 | 082 892 7027/8 info@tswelo-pele.co.za
www.enterprise-africa.net / November 2015 / 19
BUSINESS PROFILE
//RAIL IS DEFINITELY A FOCUS AREA FOR US
BECAUSE WE’VE GOT PRODUCTS LIKE TRACTION MOTORS AND TRACTION TRANSFORMERS AND WE’VE GOT A VERY NICE ORDER FROM BOMBADIER AND TRANSNET// “ABB won scope related to the mine winders at the Venetia mine. Out of that, although the contract is signed between Venetia and ABB SA, we will produce around 50% of the contract and 50% will be done from Sweden. The design work will be done in 2015/16, manufacturing in 2017/18, and installation and commissioning will happen in 2019/20. “For us, it’s part of our area of expertise and things that we focus on; we look at process control and electrification, and mine winders on existing mines so we are very happy to have received this contract,” explains Viljoen. Philippe Mellier, De Beers CEO, said in a press release: “We’re proud to have been part of the country’s past
– and, through this, our largest ever investment, we’re ensuring that we’ll be part of its future too.” Away from Africa, ABB SA has also picked up work in Russia, something which Viljoen refers to as “a major breakthrough” as this was the first time the company had received a really large international contract for mine winders. “ABB SA bought a company called Coilmech in March 2011 and they focus on mechanical mine winding equipment. We won a contract just over two years ago for Uralkali in Russia together with ABB Sweden and will produce the mechanical hoists for 12 shafts,” he says. Partnering with other regionaldivisions of ABB is not uncommon
20 / November 2015 / www.enterprise-africa.net
and Viljoen says that teaming with international colleagues can often have huge benefits for business. “ABB SA is a centre of excellence for double and single drum winders, whilst Sweden is a centre of excellence for friction winders. This skills combination greatly benefits customers with a range of shaft depths and applications. At Kusile, we are working with ABB Italy and ABB Germany and we won the contract as one team.” RIDING THE RAILS Another opportunity that has the Managing Director excited is in the transportation business and specifically Africa’s rail industry. In March 2014, Transnet announced the R50bn contract with four manufacturers to build a 1,064-strong locomotive suite. This investment is part of a wider strategy from Transnet designed to turn the country into a key player in the global freight industry. “Rail is definitely a focus area for us because we’ve got products like traction motors and traction transformers and
ABB SOUTH AFRICA
we’ve got a large order from Bombadier. We are building traction transformers in Switzerland and then localising the production by setting up a factory in SA,” says Viljoen. “When that factory is set up, we will have the ability to supply other OEMs with traction transformers from SA. We’re doing something similar with traction motors where we will localise manufacturing. We’ve also got an order from Transnet for a prototype that they’re building where we are handling the propulsion system for them. From all of this, we see that rail is definitely growing; there’s the Gautrain expansion project, PRASA is expanding, Transnet is expanding and they’re also looking at the rest of Africa. There’s possible projects in Zambia and Mozambique and all over the continent so we are positioning ourselves as a local South African supplier so that we can capture quite a bit of that market through the product range that we sell,” he adds. Earlier this year, Mike Asefovitz, Senior Media Relations Manager at Transnet told rail-technology.com of the organisations ambitions, saying: “We are looking at growing a business, we are looking at becoming the fifth-largest railway in the world, and we are on track to do that.” This is good news for ABB SA who look set to become a supplier of choice in this growing rail business. The scale of all of these opportunities means that ABB will have a strong order book for the foreseeable future and where others might struggle due to economic pressure, ABB has set itself up well to ride the wave and maintain its position as a leader in power and automation technologies within Africa and further afield.
ABB SOUTH AFRICA CEO, LEON VILJOEN
ABB SOUTH AFRICA +27 10 202-6995 contact.center@za.abb.com new.abb.com/southern-africa
www.enterprise-africa.net / November 2015 / 21
INGULA PUMPED STORAGE SCHEME
Ingula Supply
to Start Soon PRODUCTION: Karl Pietersen
The Ingula Pumped Storage Scheme is set to supply 1332 MW of peaking energy to South Africa’s grid when it is fully commissioned next year. This supply is going to be absolutely vital when controlling the demand for electricity in peak times. Gibb Projects Director, Colin Logan tells us about the current state of the project and also more about the country’s development of a sound green energy industry.
22 / November 2015 / www.enterprise-africa.net
//
In October, Eskom announced that the country was on track for a summer without load shedding – two words that have become the bane of most people’s lives. While reminding that ‘the system is constrained but stable’, Eskom spokesperson, Khulu Phasiwe said recently that the parastatal would be investing in maintenance on the grid over the coming months with the aim of reducing plant breakdowns. “We are currently implementing our summer maintenance programme aimed at increasing the reliability and resultant availability of our power plants. “In terms of our existing Generation Sustainability Strategy, Eskom aims to achieve 80% plant availability, 10% planned maintenance and 10% unplanned maintenance over the medium term. We are implementing appropriate levels of planned maintenance in line with the Generation Sustainability Strategy, a move that has resulted in the reduction of plant breakdowns over the past few weeks,” Phasiwe said in October. But even with the risk of load shedding said to be relatively low, the threat always hangs overhead and the facts are disturbing: Electricity generated by South Africa dropped by 3.3% for July year-on-year, while the country’s GDP contracted by 1.3% in the second quarter of 2015, a statistic economists suggest was directly linked to load shedding. The problem we have is that our coal fired power stations heat water to create steam to turn the turbines – that’s all good, but we can’t turn the fossil-fired furnaces on and off at the flick of a switch, so we create huge amounts of heat — even in off-peak times when we don’t need it. If our scientists could find a way to store the large amounts of wasted electricity in a battery, energy prices would drop, reliability would be improved and availability would be constant. With demand for power always on the rise and additions to the grid,
namely Medupi and Kusile, seeming to be eternally delayed, something big is needed to provide stability during peak times of demand. Fortunately, one solution that has been years in the making is approaching its finish line and will soon be able to weigh in with a much needed 1332 MW of reliable, peak electricity. The Ingula Pumped Storage Scheme is an Eskom-led project and is South Africa’s largest hydro power project to date. It involved the construction of two large dams, and a network of ancillary infrastructure in the Drakensberg range, on the border between the Free State and KZN. In order to function, pumped storage schemes require two dams or reservoirs. At Ingula, the upper Bedford and lower Bramhoek dams are located 4.6 km apart and connected by underground waterways. During times of peak energy consumption, water will be released from the upper dam and flow through four 333 MW turbines to generate the 1332 MW of electricity. At times of low energy demand, the pump turbines will drive water 470m from the lower to the upper dam where it will be stored in readiness for the next peak event. APPROACHING COMMISSIONING According to Colin Logan, Projects Director Dams, Hydropower and THIS IS AofCAPTION, THIS Underground IS A CAPTION Works at Gibb Engineering
and Science and a lead Eskom consultant, the project is now reaching its final stages and will soon begin generating that such valuable power. “The project has entered what is primarily a mechanical and electrical phase. We are actually approaching the commissioning stages of the job and we certainly hope that early in 2016 we should be close to full commissioning and commercial operations. The idea is to have at least two units running commercially in the first half of next year if not more,” he says. “The first unit should be ready for commissioning by the end of this year or early in January. There are different stages of development and we’ve had some setbacks but we are now certainly in the critical stages of the job. “On the civils side, we are over the critical stage and we only have one or two things left to deal with to ensure watering up and we are addressing those at the moment. “Everyone is waiting with anticipation for the project to come online and hopefully deal with some of the problems we are having with electricity shortage. It’s certainly, like many Eskom projects, got some
negative public sentiment attached to it but I know that the Eskom management and everybody on the project are certainly trying to change that view. Every effort is being made to turn that around. There is a strategy but how successful it will be remains to be seen.” South Africa has four pumped storage schemes: Drakensberg, Steenbras, Palmiet and Ingula and one other that was planned, Tubatse, has been shelved indefinitely. These facilities were all commissioned with the aim of balancing the country’s supply when demand is high but Logan points out that when Ingula is complete it is unlikely that load shedding will be eradicated completely. “One of the key issues of a pumped storage scheme is that it’s a net consumer of energy and it requires baseload power stations to be supplying surplus energy to the grid to allow us to pump water to store energy. What it will do is relax the pressure that has been put on open cycle gas turbines and the cost of running those turbines. They’re not designed to run for extended periods like they have been. It’s not going to wipe out load shedding; that’s just not the case,” he says.
www.enterprise-africa.net / November 2015 / 23
INGULA PUMPED STORAGE SCHEME
Load shedding is of course the main driver behind the negative publicity surrounding Eskom and earlier this year, changes were made to Eskom’s leadership with the plan of changing the fortunes of the continents largest electricity producer. Brian Molefe was appointed group CEO, Anoj Singh got the job of Chief Financial Officer and Ben Ngubane was named Chairman of the company. Molefe is hugely experienced and most recently plied his trade as CEO of Transnet. Under his leadership, Eskom has already seen improvements. Ngubane said of Molefe: “He has changed the whole vibe and morale among employees in so doing making a significant difference.” Molefe has also already established close relationships with power station managers and brought new synergies to the company.
“A lot more positivity has come from his leadership,” says Logan. “The message has been quite clear – no load shedding - and in recent times we haven’t experienced significant load shedding to the extent that we could of. It remains to be seen how sustainable that is; it’s one thing to make a decision to say no more load shedding but it has impacts on maintenance schedules and puts existing plants under significant strain but I know the follow up to that is a focused maintenance regime, it’s not like we haven’t thought about the maintenance challenges that come with running plant for longer than it should. I certainly hope that it will translate to something positive.” Public Enterprises Minister, Lynne Brown said: “I welcome these appointments and they are part of my ongoing interventions to stabilise Eskom.
// VOITH HYDROPOWER – RENEWABLE AND SUSTAINABLE ENERGY FOR AFRICA For more than 140 years, Voith Hydro belongs to the world’s leading companies for hydropower equipment and services for both new and modernization projects. With its product and service portfolio, the company covers the entire life cycle and all components of pumped storage plants as well as large and small hydropower plants. Besides generators, turbines, pumps, electrical and mechanical power plant equipment, Voith Hydro also offers automation systems and services, including spare parts deliveries and maintenance work. In eastern Free State, South Africa, Voith Hydro is currently involved in building a pumped storage scheme, Ingula Project – set to be the continents largest ever. The complete electro-mechanical equipment will be supplied by Voith. This includes four pump turbines, each with a capacity of 342 MW, the associated motor generators, as well as the entire control and automation systems. Further, the Voith Paper division was assigned to provide heating, ventilation and air-conditioning systems. After commissioning, the pumped storage plant will make a major contribution to South Africa’s rapidly expanding 21st-century energy demands.
24 / November 2015 / www.enterprise-africa.net
A pumped storage scheme is the economically and environmentally most developed form of storing energy during base-load phases while making this energy available to the grid for peaking supply needs and system regulation. The operating mode is quite simple: Energy in form of water is stored in an upper reservoir, pumped from another reservoir at a lower rising ground. In times of high electricity demand, power is generated by releasing the stored water trough turbines like conventional hydropower plants. In times of low demand, usually nights or weekends when electricity is at a lower cost, the upper reservoir is recharged by using lower-costelectricity from the grid to pump the water back to the upper reservoir. “Pumped storage plants are real multi-talents as they combine storage, reliable performance and flexibility, all rolled into one type of power plant. The Ingula plant will be strongly contributing to grid stability in South Africa”, says Heike Bergmann, Member of the Board of Management of Voith Hydro Heidenheim. www.voith.com
A strong Africa – with renewable Energy. In Africa, hydropower can foster both reliable power production and sustainable economic develoment. Harnessing the full power of the continent’s rivers requires the right choice of technology. Being at the forefront of the global hydropower industry, Voith combines experience with innovation. We offer turnkey plant solutions applying to both the field of power generation and the area of storing electric power. Voith is also a reliable and experienced partner for
modernization and services of hydropower projects, replacing and enhancing components to improve the efficiency of existing plants. With more than 140 years’ experience in the field of hydropower, Voith Hydro is well equipped to continue delivering excellence in hydropower in the years to come. www.voith.com A Voith and Siemens Company
BUSINESS PROFILE
“Together with Mr Molefe, who was seconded from Transnet in mid-April 2015, they have been successful in bringing stability to the company whilst dealing with a constrained grid.” Molefe spoke about Ingula at a media roundtable discussion in September saying: “Let me tell you now, Medupi was delivered on time and Ingula units 3, 4, 2 and 1 will be delivered on time. The final units of Medupi will also be delivered on time. These are the dates based on our turnaround plan and they are permanent dates. We will not continue to shift targets.” Perhaps his optimism brings hope to the people working at Ingula and also those who are desperate for peak demand supply to be better managed as, to date, they have witnessed some extraordinary setbacks including fatalities, injuries, industrial action and huge budget increases.
GREEN ENERGY DEVELOPMENT The Ingula Pumped Storage Scheme represents an investment by South Africa into green energy. Although a baseload is still required, it is undoubtedly a greener method of producing energy than some suggested alternatives. However, although there is much hype, locally and globally, about renewable energy projects, Logan explains that much development is still needed before we can solely rely on this type of technology for all our energy needs. “We all support green energy development and investment into that. It really is a buzz word around the world but something I advocate is that it’s not the solution to our power supply but it can help to alleviate carbon emissions. Green energy alone is not really the solution, we are still quite dependent internationally on other base load power stations
including coal and nuclear. I don’t think we’re at a stage where green energy will just replace those types of technology. They have their own challenges in terms of reliability of supply – the wind doesn’t blow every day and there’s not always bright sunlight. There is still a lot we don’t understand about green energy. I think it’s important to include renewable energy in the energy mix but I don’t think it’s realistic to call it a complete solution to the problem,” he says. “Hopefully in the future we’ll find something which can sustainably remove coal fired powered stations from the grid. “Examples I can use are countries like Germany which claim to use a high percentage of renewable energy however, they’re quite dependant on nuclear energy from France in the event that renewable energises don’t meet demand so they’re not entirely sustainable as a renewable energy outfit,” he adds. Many industry commentators say there are compelling reasons for SA to invest further in renewable energy. Countries like Mozambique, Rwanda and Ethiopia, or the ‘African tiger’ economies with some of the highest growth rates in the world, all resolutely follow green growth paths. Take Ethiopia for example. With close to 10% annual growth in 2013-14, the country is determined to avoid the pitfalls of what it calls the conventional economic path of increased emissions, depleted resources, being locked into ‘outdated technologies’ and vulnerability to increasingly volatile fossil fuel energy prices. Instead, its government says: “Ethiopia is committed to building a climate-resilient green economy.” The country is planning to increase
//IT’S NOT GOING TO WIPE OUT LOAD SHEDDING; THAT’S JUST NOT THE CASE// 26 / November 2015 / www.enterprise-africa.net
INGULA PUMPED STORAGE SCHEME
//THE IDEA IS TO HAVE AT LEAST TWO UNITS RUNNING COMMERCIALLY IN THE FIRST HALF OF NEXT YEAR IF NOT MORE// electricity supply tenfold by 2030; all with renewable technology. From a pumped storage perspective, Logan is confident that this type of technology has a lot to offer and will continue to play a part in developing Africa’s energy security. “I see the technology developing a lot. In support of a variable renewable energy supply, pumped storage will have a role to play in balancing supply and demand better,” he says. However, when Ingula is completed and while Tubatse is on hold, there are no further pumped storage schemes in the pipeline in South Africa and Logan says this is because, based on information available right now, there is not an immediate need for another system, not for at least another 20 years. “There are a few that are being studied. I recently done a study with EDF from France about a project in Lesotho. We also assessed the SADC for the possible outlet for supply of energy and we came back to the point that South Africa would most likely be the market for such a scheme,” he explains. “We looked at the South African energy mix as a result, and we spoke to the Department of Energy (DoE) who developed an Integrated Resource Plan which states which plant needs to come online and projects that need to come offline because they’ve reached the end of their design life and we saw that their growth forecast for the country were set at 4-5% and were currently only achieving 1.5%. In modelling that idea with EDF in Lesotho, selling energy to the South African market, we came to the conclusion that there was no need in the short term for another pumped storage project but
if we start looking around 2035, you start seeing a time where pumped storage would make sense. “Obviously, bringing a scheme online takes 10-12 years so we’re not talking about that far in the future. Of course, this is all based on the information that was available from Eskom and the DoE but if those forecasts change and the economy turns around in a big way then everything changes significantly,” he adds. RENEWABLE FUTURE One thing that is certain, Ingula and the other green energy projects around the country have exposed South Africa’s professionals to new ways of getting difficult power generation projects successfully negotiated and completed. The 64 solar and wind projects under construction at present have involved engineering, banking, legal and many other types of company, offering experience and immersion in what is a relatively new type of business.
The key now is to finish Ingula with no more delays, connect it to the grid and let it do what it was designed to do. All being well, it could prove to be a springboard for investment into future renewable projects of a similar nature. Logan has been involved with the project from the very beginning and while some staff levels on site are now starting to decline as the finish line draws closer, he has no intention to leave until everything is 100% complete. “We have demobilised some staff in the past few months and we will continue to do so through 2016 but personally, I have every intention to be here all the way through until the end,” he concludes.
INGULA PUMPED STORAGE SCHEME +27 11 800 8111 csonline@eskom.co.za www.eskom.co.za
www.enterprise-africa.net / November 2015 / 27
CROSS FIRE MANAGEMENT
25 Years and Still Saving Lives and
Protecting Property PRODUCTION: David Napier
Cross Fire Management is facing an exciting future. As it continues to expand into Africa, with big contracts from prominent developers, and its activities in South Africa also showing no signs of slowing, its founder says that the plan has always been to become the very best.
28 / November 2015 / www.enterprise-africa.net
CROSS FIRE MANAGEMENT
CROSS FIRE STAFF
//WE’VE BEEN VERY FORTUNATE AND WE HAVE A GREAT CLIENT BASE THAT COME TO US AND WE GET A LOT OF REPEAT WORK FROM CERTAIN DEVELOPERS//
//
Earlier this year, Bryanstonbased Cross Fire Management celebrated its 25th anniversary. The company has been operating in the fire safety industry since its very first day after it was established by CEO John Cross and today the business specialises in the design, supply, fabrication, installation, servicing and maintenance of a large range of fire protection and prevention equipment. Cross Fire Management is one of the country’s leading fire safety companies and operates all over South Africa and Southern Africa. With over 70 permanent employees, an established brand and decades of experience, this is a business that, despite the economic climate, is pretty hot right now. But it hasn’t always been that way. In the very beginning, times were tough and carving out a share of the market was a real challenge for John Cross. Personal trials also added
30 / November 2015 / www.enterprise-africa.net
to the difficulty of starting a new venture in South Africa in the 90s but this tenacious entrepreneur was determined. “We celebrated our 25th anniversary on the 1st of September. We started off working in a small office; just two of us, working out of an office with no windows and just one phone and one desk. We’ve seen steady growth over the last 20 years and the last two years have been pretty consistent with regards to our turnover. It started with us just doing maintenance work and revamps. In 1998, we got our first really big order from Carnival City Casino and from there things just grew and grew. We didn’t really want things to grow as quickly as they did but it was just natural evolvement,” Cross explains. “In 1998, I was shot in a hijacking. They told me I would be paralysed for the rest of my life but it turned out that I
One of the biggest suppliers of fire pumps and associated equipment within Southern Africa Davron Equipment was established in March 1990 and is now one of the biggest suppliers of fire pumps and associated equipment within Southern Africa. ased in Johannesburg, South Africa, with branches in Durban and Cape Town. Davron Equipment is an A.S.I. approved installer of fire pumps and associated equipment which would conform to ASI . Davron also supply equipment to other standards or guidelines such as SANS, LPC , NFPA and with L F listing. Davron is able to offer the customer a complete solution as a single source supplier. Davron could offer from single pumpsets, to packaged units, consisting of the main items such as pumps, engines, panels and electrical cabling, supplied as a plug and play solution as well as fully containerised pump houses. The reason for the supply of packages and containerised pump houses would be to secure total integration and compliance with technical requirement, rules and regulations, and for ease of installation for our clients. Davron Service & aintenance was established in as a sister company to Davron Equipment. The aim of Davron Service & aintenance would be to provide a service to the whole of the fire protection industry, by offering service and repair on any existing fire pump installations. This would comprise new installations installed by Davron Equipment or any other pump suppliers. As testament to Davron Equipments’ skills, competencies and experience in the fire industry, we have been appointed as an agent for Patterson pumps, for Sub Saharan Africa. Patterson pumps are the leading manufacturer of fire pumps to NFPA standards world wide.
Address: 128 & 130 Loper Avenue, Aeroport, Spartan T: 27 11 974 3770 | E: sales@davron.co.za | www.davron.co.za
BUSINESS PROFILE
//IT’S A REAL CHALLENGE TO RECRUIT LABOUR TO WORK ON SITE. ATTENTION TO QUALITY AND PRIDE IN WORK SEEMS TO HAVE GONE OUT OF THE WINDOW// am able to walk with difficulty, although I can’t get around sites like I used to. I came home one Thursday night and two guys put guns to my head and pulled me from my car. They shot at me five times, one of the bullets damaged my spinal column and it took me a year of rehabilitation to get back on my feet. I was 43 and being paralysed forever did not appeal to me. “We pride ourselves on the service we provide. We didn’t want to become the biggest but we did want to be the best in the industry. Right now, we’re probably second or third biggest in
South Africa. We have branches in Johannesburg, Cape Town, Durban and Ghana,” he adds. AN AVOIDABLE COST In modern times, fire is certainly a completely avoidable problem. With highly advanced technology and strict safety and security guidelines in place, companies should not have to worry about loss of revenue because of something that can quite easily be avoided. Back in 2012, a fire at the Princess Crossing shopping centre in
32 / November 2015 / www.enterprise-africa.net
Roodepoort reportedly caused over R100 million damage. In March this year, firefighters and civilians were injured in an oil factory fire in Durban which went on to cause an oil spill in the Port of Durban. In January, a fire at a timber factory in Roodekop needed firefighters from six stations to bring it under control. Imagine the time effort and money that could have been saved in these examples if a first class fire protection system had been in place. Cross Fire Management supply automatic sprinkler installations, hydrant and hose reel reticulation, medium and high velocity deluge water spray systems, dedicated fire water supply pump and tank installations, fire/smoke detection and evacuation systems, fire suppression gas installations, hand fire extinguishers and appliances, symbolic fire and escape signage, fire
CROSS FIRE MANAGEMENT
stopping and sealing and firefighting foam installations. Any one of these products could change the fortunes of a company during a fire scare. “There have been a couple of small fires that our systems have dealt with but there haven’t been any major fires where we’ve worked. The big fires that have happened have been in warehouses that don’t have the correct fire protection,” says Cross. COMPETITIVE INDUSTRY Before the formation of Cross Fire Management, there was one major player in the SA fire prevention industry. When that company closed its doors, many smaller businesses were spawned creating a fiercely competitive environment. “I’ve been in the industry since 1974. I started working for a UK company called Mather & Platt and they were very big with many divisions. They were eventually bought out by an Australian company and the South African division closed over 20 years ago. All the guys who had been with Mather & Platt began to start their own companies and from one major player in the industry, we ended up with a whole host of businesses. “We regularly have new companies enter the industry and they cut their prices drastically to buy themselves a share of the market, creating a price war. It makes it difficult and this year we’ve seen three companies go under, another is now in business rescue and two more are really struggling. You could definitely call it a volatile market,” explains Cross. For this reason, and because of a demand for quality service, Cross Fire Management expanded into Africa, performing especially well in
//WE’VE GOT A GOOD VIBE IN OUR COMPANY – IT’S VERY DIFFERENT TO ANY OTHER FIRE PROTECTION COMPANY//
PCT Tank Pty Ltd / Trading as Pipeco Tanks South Africa PIPECO INTERNATIONAL South Africa (Pty) Ltd was established in South Africa in 2007. It has a background of over 20 years’ experience in sectional panel water tank business through its parent company based in Malaysia. PIPECO Sectional Water Tanks are approved by Sirim QAS International, UKAS, PSB Corporation and S.A.B.S. Contact: Husain Alli: +27 82 946 00326 Pieter Huyser: +27 83 455 0371 Address: 292 Kwanbi Crescent, Sunderland Ridge, Centurion
www.enterprise-africa.net / November 2015 / 33
BUSINESS PROFILE
Mozambique and Ghana. Last year, Christopher Gilmour, investment marketer and analyst of ABSA Wealth and Investment Management said: “The thrust into Africa is not just a nice-tohave, it is essential for future growth.” “This is one of the reasons why we ventured into Africa and opened our branch in Ghana where we have completed three large shopping centres and have just picked up our fourth last month. “We were approached by a professional team who asked us if we wanted to work in Ghana and we had been dabbling in Africa; in Nigeria, Mozambique, Zambia and Angola but we had been going in and out, without an established presence. There’s not too many SA companies chasing the Ghanaian market and the local companies cannot compete with our quality,” details Cross.
34 / November 2015 / www.enterprise-africa.net
CROSS FIRE MANAGEMENT
NO DAMPENING GROWTH Interestingly, in these times of economic uncertainly and pressure on commodity prices causing confidence in markets to wane, Cross Fire Management is still experiencing a relatively buoyant market. “In September, we had a record sales month. In just one month, we picked up a third of our annual turnover in orders. It was absolutely massive. “We’ve been very fortunate and we have a great client base that come to us and we get a lot of repeat work from certain developers,” says Cross. This is remarkable news considering the state of the construction industry. We have all seen the news from the big construction firms that stock prices have been tumbling and we’ve seen evidence that a decline in mining investment and the almost non-existent roll-out of large state infrastructure projects has all but crippled some mid-sized firms. However, Cross remains positive and you can’t really blame him. “People say that the construction industry in SA is on a downward trend but you just have to look around Gauteng or the greater Johannesburg region and you’ll see two massive shopping centres have gone up lately, there’s a huge development at Waterfall Park, there’s a 110,000 m2 shopping centre going up, there’s high-rise buildings going up everywhere, there are four or five big office blocks going up in Sandton, and the Chinese are preparing a massive development in Modderfontein so I honestly believe there is a lot of work out there,” he says. This belief is not unfounded as the company has recently picked up four big shopping centre contracts where Cross Fire’s ‘go-to’ products have been installed.
CROSS FIRE MANAGMENT CEO, JOHN CROSS
//WE’VE BEEN VERY FORTUNATE AND WE HAVE A GREAT CLIENT BASE THAT COME TO US AND WE GET A LOT OF REPEAT WORK FROM CERTAIN DEVELOPERS// www.enterprise-africa.net / November 2015 / 35
BUSINESS PROFILE
CROSS FIRE HEAD OFFICE
“Right now, the biggest project we have is the Ballito Shopping Centre near Durban and then there’s our project in Ghana,” explains Cross. “We’re also working on a shopping centre in Springs and we’ve nearly finished one in Century City. They are all having standard sprinkler installations, complying with ASIB standards. Shopping centres and office blocks are all pretty standard, the difficult work comes with warehouses that have computerised racking systems and refrigerated storage areas. Mines and power stations also have expensive, highly technical systems.” Cross Fire Management is looking at expanding and diversifying its market and this type of broadening is partly down to the unfavourable economic climate. “No one knows what is
36 / November 2015 / www.enterprise-africa.net
CROSS FIRE MANAGEMENT
//TO FIND A DRAFTSMAN THAT IS EXPERIENCED IS DIFFICULT AS SOME COMPANIES ARE PAYING RIDICULOUS SUMS FOR GOOD DRAFTSMEN// happening with our economic situation,” says Cross. “We’re always trying to look at different markets.” CROSS FIRE PEOPLE The team at Cross Fire Management has been carefully pieced together over the past 25 years and is experienced and knowledgeable. However, when it comes to developing people and recruiting, Cross explains that it can be difficult. “We train a lot; we do in house training, especially our draftsmen. To find a draftsman that is experienced is difficult as some companies are paying ridiculous sums for good draftsmen. We
usually try to train draftsmen ourselves. It’s a real challenge to recruit labour to work on site. Attention to quality and pride in work seems to have gone out of the window. It really does make life difficult,” he says. In the future, the strategy and direction of Cross Fire will be decided by the management team without Cross who intends to retire in the next couple of years. “The operation of this company has been handed over to my MD, Catherine Stewart, and her fellow directors. I’m here now just to oversee the operations, offer advice, motivate the staff and check the financial side of the business.”
Equipment you can count on.
But even without its founder, Cross Fire Management will undoubtedly follow on its success path. The culture of quality and resolve that has been instilled over the past quarter century remains in place and the business will continue to save lives and protect property, across South Africa and the rest of the continent. “We’ve got a good vibe in our company – it’s very different to any other fire protection company. We do a lot for our staff and we have a good team,” concludes Cross.
CROSS FIRE MANAGEMENT 086 112 7677 info@crossfire.co.za www.crossfire.co.za
People you can trust.
Remaining at the forefront of industry advancement Sole suppliers of: ASIB,FDIA,NFPA APPROVED SUPPLIERS
Tel: (011) 396 1800/1/2 ǁ Fax: (011) 396 1810 ǁ E-Mail: info@firequip.co.za ǁ www.firequip.co.za
www.enterprise-africa.net / November 2015 / 37
MARSH AFRICA
Marsh Africa Upbeat About
Continental Insurance Industry
PRODUCTION: Karl Pietersen
Global insurance giant, Marsh, is continuing its push across the continent and is eyeing up opportunities in many African nations. In many cases, the continent is hugely under insured and with an ever growing middle class, there are opportunities in the personal as well as the corporate insurance sector. We talk to Johannesburg-based Marsh Risk Consulting Managing Director, Volker Von Widdern to find out more.
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BUSINESS PROFILE
MARSH AFRICA
//
Everyone knows that South Africa is the gateway to the African continent for international companies looking to take advantage of some of the fastest growing economies in the world. Traditionally, it has been businesses from the developed-world setting up in SA to take advantage of continental oil, gas and mineral potential but today the landscape is very different; the growing African middle class is providing a huge market for tertiary service providers. International businesses are not just setting up in SA; they’re localising their offerings to specific regions, investing in local people and communities. The insurance industry is a prime example of this. British insurer Prudential acquired Kenya’s Shield Assurance in 2014 as well as local Ghanaian firm Express Life in late 2013. More recently, French insurer AXA purchased a $250 million majority stake in Nigeria’s Mansard Insurance. The interesting thing about the insurance business in particular is that the market potential is enormous. Insurance experts and practitioners from around the world see a low insurance penetration rate (insurance market size/GDP) as a sign of high growth potential in the industry. According to Swiss Re, Africa’s insurance penetration rate stood at 3.5% in 2013 versus 6.28% globally, while the market recorded a growth rate of 10.2% versus 2.5% worldwide. Earlier this year, CNBC Africa stated that only 3.5% of the African market is insured, indicating a vast opportunity for insurance firms. A Standard Bank study of 11 sub-Saharan economies concluded last year that the “middle class” had risen from 4.6 million to 15 million since 2000 and would be over 40 million by 2030, with Africa’s biggest economy Nigeria leading the way.
Of course, there are challenges. Many reports suggest an absence of information on the insurance market in Africa is a main source of reluctance for insurance firms wanting to tap into the continent’s potential market. Then there is the notion that middle-class and lower middle-class customers in Africa are not as affluent as developed-world middle classes and therefore tend to be harder to reach and can require a larger use of face-to-face agents. But these challenges do not represent enough of a deterrent because there are now obvious rich rewards to be had in Africa and one of the major companies that realises this and is making moves to cement its position on the continent is Marsh and its Risk Consulting division. Marsh opened its doors in South Africa in 1999 as part of a joint venture with First Bowring Insurance Brokers (now known as First National Bank Insurance Brokers). The business has grown through strategic acquisitions and partnerships, always strengthening its expertise and resources. One important milestone was realised in 2011 when Marsh acquired Alexander Forbes Risk Services, a move which greatly enhanced its African footprint. “Connecting Africa to Marsh’s multinational client base and extensive range of resources is what our footprint on the continent is all about,” said Michael Duncan, Executive Leader, Marsh Africa after the deal had been formalised. “Despite being the acknowledged market leader in several African countries, by integrating our global clients’ African risks into their existing global risk management programmes we have substantially increased our client base and market size on the continent – before even landing one new client,” he added.
//THE MERGER DID VERY WELL IN TERMS OF COMBINING AND MAINTAINING THE TWO CLIENT BASES//
AFRICAN DEVELOPMENT Since the Alexander Forbes deal was completed, there has been a period of integration as the two cultures merge. We’re now a few years on and Marsh Risk Consulting Africa MD, Volker Von Widdern has had time to reflect. He says that one of the big successes of the deal has been retaining clients and staff. “One of the very strong points, something that is often seen as a risk, is the revenue retention and I think we’ve minimised that risk. The merger did very well in terms of combining and maintaining the two client bases,” he says. “The next area is people and I think we’ve kept at least 90% of all the people we believe are important; of course everyone is important, but in the context of not losing too many of our top-end specialists. However, the market is the market and every business of our nature has 3, 4, 5 or 6% employee turnover and sometimes when you have new entrants coming into the market like we have had, we are the biggest team and they will come and fish in our pond. “On the infrastructure side, we are going through the middle and back office elements where we now want to integrate more and more of our systems and those plans are in place,” he adds. Head of Marsh International, David Batchelor told Business Day that during the merger, client focus always remained a priority and improving the strength of Marsh in its specialist lines of business was another key aspect. These specialist lines include financial institutions; mining and metals; agriculture; aviation; energy; hospitality and gaming; the public sector; construction and infrastructure; and political risk. “I believe we know the risks in these businesses and know how to price the risks right for the client,” he said, “and our Joburg office doesn’t just get information from these industry groups. It also contributes to them. “I believe that in this merger we did not wrap ourselves into a cocoon but
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BUSINESS PROFILE
kept an external focus. I don’t think our clients could say they weren’t looked after,” he added. Industry commentators are now describing Marsh as either the number one or two broker in South Africa, Botswana, Malawi, Namibia, Nigeria, Uganda, Zambia and Zimbabwe. But the business is showing no signs of slowing down its growth drive. “The most obvious growth path for us is to follow our clients into African markets, and we are excited as they are high-growth markets compared with the mature markets that report to me in the UK and Europe,” Batchelor said. Von Widdern reiterates this idea, saying: “The broad strategy that has been indicated is that we’re seeking to establish a credible footprint across Africa to an extent which we can synergise with the Alexander Forbes that did exist and can come into the Marsh fold. We are still looking at this and any other business that is complementary to our footprint in Africa but are of a scaled nature and a highly prioritised nature. Definitely,
there’s a plan to have an ongoing focus in developing our footprint in Africa and its evolving in due course.” Partnering with local organisations who know the regional conditions is vital in expansion of this type as Innovation Group head of insurance, Jonathan Holden explained to CNBC Africa: “It’s about carefully selecting where good business is and, in many cases, partnering with people who’ve been there and can provide some sort of synergy in the business relationship. It’s very important to understand the market you’re going into. “One of the issues is Africa is seen as a country, when the reality is that it’s 54 countries, multiple languages, multiple risks including legal systems, monetary systems.” ECONOMIC HINDRANCE Obviously, when considering a growth and expansion strategy, you have to consider the threats and right now in South Africa (and around the world) one of the primary difficulties is economic uncertainty.
42 / November 2015 / www.enterprise-africa.net
In South Africa, the economy is slow and the Rand has seen significant difficulties over the past 18 months partly due to falling commodity prices, electricity supply constraints and lower confidence levels. Unemployment is high (currently around 25%) and Stats SA announced recently that the economy contracted by 1.3% (seasonally adjusted and annualised) in the second quarter of 2015. Figures like this cast doubt in the financial markets and, after the global recession of 2008, everyone is hoping that growth rates will improve. When the economy is slow, everyone is looking for their money to work harder and businesses and large corporations are no different. You can perhaps forgive some businesses for downgrading their insurance packages when their purchasing power has been so severely diminished. However, Von Widdern says that this isn’t always the best decision. “In an economically constrained environment, there are whole sets of issues that are relevant and that become opportunities but you have to be careful about the competitive dynamic, the way
MARSH AFRICA
//ONE OF THE ISSUES IS AFRICA IS SEEN AS A COUNTRY, WHEN THE REALITY IS THAT IT’S 54 COUNTRIES, MULTIPLE LANGUAGES, MULTIPLE RISKS INCLUDING LEGAL SYSTEMS, MONETARY SYSTEMS//
KINGJAMES 35011
decisions are made, multiple stresses on declining budgets; so where one might have been going down the road of a strong value proposition with high quality services, it’s remarkable that significant corporates will shift their buying patterns to just getting the basics even if the quality is just in the middle percentile versus the upper percentile. “You could be preparing for a renewal and next year’s services based on an underlying plan and all of a sudden the rug is removed as only half of the services that are perceived to be
relevant are within the scope of purchase,” he explains. “That level of caution of expenditure creates less freedom of movement for other players who are entering the industry or for those who have a less solid business model so they might go back to their existing customers and to preserve their own economics they might cut their rates and services drastically to secure a longer term contract. It’s really aggressive, knee-jerk stuff. “Now you’re in a space where
important things are left out and it’s very hard to demonstrate an intangible benefit against an immediate cost saving. “The dynamic of growth, cost pressure, budget pressure, and pressures in economic and competitive activity can have multiple consequences on the higher order quality provider like Marsh. We need to be responsive, alert and innovative when preparing for those kind of conditions.” Going forward, a number of key parameters will determine the continued impact of the financial turmoil on the insurance sector – namely, credit and interest rates, equity and market performances and the strength of the real economy. “In these situations, you have to try and find where you can really save money for clients with the right risk management, with the right risk structuring so that you can economise
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www.enterprise-africa.net / November 2015 / 43
BUSINESS PROFILE
in areas where premium or other money is being spent that may not add the right value and redirect that expense, cost and capacity into areas where it does protect he corporates and the clients in terms of the new or current exposures,” says Von Widdern. “It’s certainly true that the SA economy is not growing as fast as everyone initially predicted and those predictions are going south. There are still pockets of strong activity and we would have hoped that one of them would’ve been tourism but because of visa regulations and other factors, that is also not doing what we hoped it would so there are influences in the economy that are not as good as we would have hoped. Then you look at the general responses and you realise that big corporates are now being very cautious about how and where they spend their money.” Even in these tough times he says that most organisations will still try and protect themselves reasonably but that
companies have to try and pick out what remains important and then see whether it will have an operational hazard and/or a financial strategic implication. One thing that is for certain in these uncertain times is that if you prioritise an effective risk management strategy with Marsh, you will go some way towards building an effective business management strategy and you will be well looked after when it comes to the actual insurance offering. “From a client point of view; and this is where the marsh resources, skillsets and other things come into play; our risk managers come with very strongly researched technical views, principles and precedence, and are strongly motivated both on the legal side and the policy structure side with the financial and forensic accounting teams that we have. If there was a complex claim, we show up with a serious bank of people and that equally meets whatever the skill set is on the opposing side,” explains the MD. Last month, in our focus on Nedbank, Dennis Dykes, Chief Economist for the bank explained that while economic growth is poor right now, people should remain positive and try to look further ahead than just the next 12 months. “You have to look through the cycle and our long-term strategy will not change. There is a lot of interest in Africa,” he said. Von Widdern is always looking to the future and he has identified areas where the business is performing well despite the sluggish economy, however there are some spaces where improvement is desperately needed. “Areas that are consumer and services focussed are always stronger
//THE AREAS THAT WE WERE LOOKING FOR MORE POSITIVE SIGNS OF GROWTH ARE FIXED INFRASTRUCTURE PROJECTS AND THE LIKE// 44 / November 2015 / www.enterprise-africa.net
MARSH AFRICA
and they reflect the kind of employment patterns that we have,” he says. “The areas that we were looking for more positive signs of growth are fixed infrastructure projects and the like. That’s a concern as we don’t see specific evidence of that coming out to the extent that it’s been published or planned. “We are aware of significant funded projects that are coming through in Africa and we are happy that we’re well represented there and we are also doing very well in the renewable energy space so I think there are pockets of project activity where we are well represented and where we are seeing growth but what we really need is a broad base of manufacturing output increase which would drive many other ancillary industrial related growth activities. An area that we also really hope will bounce back and produce other kinds of income is tourism because in South Africa it has gone backwards.” The movement of Marsh into more African markets will continue to spread the business risk that is thrown up by fragile economic times
in SA and with the huge amounts of energy and construction projects being commissioned on the continent as the African middle class grows will only provide further opportunities for a company that is now a truly pan-African insurance powerhouse in addition to being the industry world leader. Of course, one has to consider where the real growth opportunities are situated and right now, for the insurance industry, it looks like that could be in life and pensions. Rapid economic growth in countries such as Ghana, Kenya and Nigeria has increased the number of people with money to spend on insurance to protect their wealth, while regulatory changes are encouraging the growth of domestic savings and pensions. “The attraction lies in the populations that are huge, and that is because the personal market, or the man on the street, that insurance market is relatively untapped. That’s where the growth opportunity lies. “I think what is critical is educating people and getting consumer awareness
about the benefits of insurance that is lacking in the lower end of the market in Africa, including South Africa,” explained Jonathan Holden. There are many reasons to be upbeat about Africa’s insurance industry and many companies are only just starting on their African journey. Fortunately, Marsh is ahead of the game and is already taking advantage of the many prospects that the continent has to offer. The company’s African vision is summed up by Marsh Africa CEO, Jurie Erwee who said at the time of the Marsh-Alexander Forbes merger: “Together, as we unite our growth ambitions to become the continent’s pre-eminent broker and risk adviser, we are committed to bringing the world’s best to Africa.”
MARSH AFRICA +27 (0)11 060 7100 info@africa.marsh.com africa.marsh.com
www.enterprise-africa.net / November 2015 / 45
VEGTECH 2000
Growing in Great
Greenhouses PRODUCTION: Karl Pietersen
Vegtech 2000 designs, manufactures, delivers, erects and installs some of the most technologically advanced polyethylene greenhouses and other solutions for all undercover growing requirements. While expanding into Africa, this innovative agricultural specialist is also undertaking massive projects in South Africa. MD, Barney Isralls tells us more…
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//
Earlier this year, the World Bank revised its predictions regarding the global food crisis. Apparently we now need ‘to produce at least 50% more food to feed nine billion people by 2050’ but land, biodiversity, oceans, forests, and other forms of natural capital are being depleted at unprecedented rates. Additionally, reports suggest that climate change is set to cut crop yields by more than 25%. All of this means we need to be much more savvy in the way that we grow, manage, sell and consumer our crops. In Africa, the food crisis has hit home hard in recent years. Some of the most extreme cases saw the ‘horn of Africa’ region’s famines in the 80s, in 2006 and again in 2011. Malawi and Niger had extremely difficult times in 2005-06 and West Africa had its share of problems in 2010. This is despite some of these countries having the fastest growing economies in the world. One of the drivers behind these problems were severe droughts which cause harvest failure. Focusing on growing techniques that have been developed in Africa, for the African environment is one way to combat the food problem. Even in times of difficulty there have been farmers that have been successful and manged to maintain a decent harvest. One company that is contributing in this regard is South Africa’s Vegtech 2000. Based near Cape Town, this agricultural specialist can provide products and turn-key services that help anyone with an undercover growing operation.
//IT’S LIKE AN ORCHESTRA; YOU NEED A CONDUCTOR TO MAKE SURE EVERYBODY IS DOING THEIR THING AT THE RIGHT TIME AT THE RIGHT LEVEL AND AT THE RIGHT PACE// “I would say that greenhouses is our main product – polyethylene greenhouses,” says Managing Director, Barney Isralls. “In Africa, we don’t build glass houses like they do in Holland or the rest of Europe; in Africa it’s all polyethylene houses. We sell polyethylene tunnels, net houses and a lot of accessories that go into the greenhouses. Our main focus is undercover projects - any crop that needs to be grown under cover, we do those projects. Whether it’s under shade or plastic or a tunnel; that is what we do. “Droughts can represent an opportunity for us as when you
work under cover you can grow much more with much less water. In the times of drought, our systems are extremely efficient and helpful for farmers. “Our focus is in Southern and Central Africa and we’re predicting that our business will double in size in five years. Food production is a massive issue in the world and we believe that we have a lot of answers for helping alleviate the food problems. I believe we are in the right industry at the right time. It’s like being involved in green energy – there’s no better time to be involved.”
OVER TWO DECADES IN BUSINESS Since its formation over 20 years ago, operating in an industry that has seen many ups and downs, Vegtech has gone through many changes. In fact, the company that exists today is very different to the one that was founded by Isralls and his partners back in the eighties. “The business was founded in 1989 as a consultancy company and it became the business we know today in 1992. That’s when we re-registered the company as a supplier of equipment rather than a consultancy and we’ve been operating ever since,” he says. “I was one of the founding members of the company. In 1989 we were appointed consultants for a large agricultural project. It was a fixed term contract and when it ended, there was no more work in agricultural projects in South Africa so in 1992 we had the idea
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VEGTECH 2000
//WE KNOW HOW TO WORK IN AFRICA BETTER THAN COMPANIES THAT COME FROM EUROPE OR AMERICA. YOU NEED A LOT OF PATIENCE WHEN WORKING IN AFRICA// to supply equipment and refresh the brand. Originally, I was a farmer and a private consultant. “The focus has definitely changed because previously we would teach people how to grow. We sold knowledge and nothing tangible. From 1992, we started selling equipment. Right now, we are going to add to our repertoire and offer agronomical backup and start selling knowledge again but obviously equipment is our main focus,” he adds. Clearly, the farming industry in South Africa has thrown up its fair share of challenges over the years, not always making the business environment an easy one in which to operate.
There have been strikes, climate change issues, land reform troubles, political and legal indecision, a lack of investment in crop farming and difficult economic conditions. But Vegtech has not only managed to survive through these trials, it has managed to thrive. “Working in South Africa is a very challenging environment. If you remain in business and you grow then you’re doing something right as the business environment is very difficult here,” says Isralls. AN AFRICAN OPERATION The products on offer from Vegtech are all made with the end user, and the end environment, in mind. The business is
48 / November 2015 / www.enterprise-africa.net
run by and for people with experience in African farming and the management offer first-hand experience and expert advice in exactly what is needed to suit local conditions. Isralls says that speed, size and spread of operations sets the company apart from its competitors. “Our main daily task is building and delivering projects, that is a very complex part of the operation. Selling it is a big thing but once is sold the work really begins. 95% of our projects are turnkey – we do the manufacturing, delivery, erection and we install all the accessories and commission the project. We have more than 120 labourers building in the field on any given day. “The average project takes around one month to complete. We are currently working on a big project that will take eight months. We work very quickly, it’s one of the things we pride ourselves on. We keep a lot of stock and it’s one of our big trump cards – we’re very quick off the mark.
//NETAFIM GROWING MORE WITH LESS TO FEED THE WORLD The global population is set to increase by more than 30 per cent by 2050, making food security one of today’s biggest global challenges. Drip irrigation technology can make a real difference, according to Gaby Miodownik, vice president and head of Europe, the Middle East and Africa for Netafim, the global leader in smart irrigation solutions for sustainable productivity Our world faces many challenges, and a rapidly growing population is only one of them. The standard of living and demand for high-quality food among the growing middle class, particularly in developing countries, is also on the rise. The Food and Agriculture Organisation of the United Nations (FAO) estimates that agricultural production must increase by 70 per cent to feed an additional 2 billion mouths in the next 35 years. At the same time, there is limited availability of key natural resources such as arable land, energy and especially water, while climate change is making a significant impact across the globe. All of these factors are forcing us to come up with new ways to produce food. Without innovative technologies that can improve yields while preserving resources, food scarcity will threaten our world.
//WE HAVE BEEN THE GLOBAL LEADER IN SMART IRRIGATION SOLUTIONS, HELPING FARMERS WORLDWIDE GROW MORE WITH LESS// A pioneer in drip irrigation since its establishment by kibbutz farmers in 1965, Netafim was born out of a need to combat the severe water shortage in Israel. “Since then,” says Gaby Miodownik, “we have been the global leader in smart irrigation solutions, helping farmers worldwide grow more with less.” Today, the global need to save water in agriculture is paramount. Some 70 per cent of all freshwater in the world is used for agriculture, especially for flood irrigation, a highly inefficient method but one that is responsible for 80 per cent of all irrigation in the world. “In contrast, drip technology leads to water savings of 50 per cent or more and nutrient savings of 30 per cent,” says Miodownik, “while increasing yields by 200-300 per cent compared to flood and furrow irrigation. Precisely delivering small drops of water and nutrients in a controlled manner directly to the plant’s root zone, drip also improves crop quality by giving the plant exactly what it requires. “Despite drip’s proven success over the last 50 years, only 4-5 per cent of all irrigated land is drip irrigated,” he says. Initially adopted among growers of high-value
“cash” crops, drip is now being used more often for basic food crops such as corn and sugarcane. “To successfully penetrate drip among the world’s 500 million-plus smallholders, who primarily cultivate basic food crops, we need to create partnerships among the public sector, private sector and civil society, and all players across the agricultural value chain. “Once such wide-scale cooperation is in place, we are convinced there will be mass adoption of drip worldwide. And once drip becomes the irrigation system of choice for farmers of all sizes – from smallholders to large-scale growers – the technology will make a real difference in the world.” According to Etienne Erasmus, Managing Director of Netafim South Africa, South Africa is experiencing a growing momentum and awareness in the use of drip as an irrigation method. “South Africa is a developed country with regards to irrigation and leads the way in our Southern African region” says Erasmus. “We see the growing interest in drip across our borders and hard work is needed to keep up with capacity building in developing countries and even in developing (from an irrigation point of view) regions inside South Africa” When farmers start to use drip irrigation for the first time they should know that very specific knowledge and skills are needed to get the full potential offered by drip as an irrigation concept. Netafim offers to help and train the end-users of their product to make sure the farmers reap the full benefit of the dripper products they bought via the Netafim dealer network. It’s very important that farmers realise that when they decide to change to drip for irrigation they must also make sure they find the right advice on HOW to use the system to GROW MORE WITH LESS! T: +27-21-9870477 F: +27-21-9870161 E: sales@netafim.net www.netafim.co.za
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BUSINESS PROFILE
“We sell a lot into Africa. We’re not only active in South Africa. We sell projects all the way up into Central and Western Africa. We’re building in Malawi right now, we recently finished a project in the DRC, we’re building a project in Botswana and also in Angola. In Africa, we would send one or two supervisors and then hire local labour,” he says. “There’s a big difference between the countries in Africa. Zambia and Malawi are quite business friendly and it’s quite easy to operate there but the DRC is more difficult especially when we’re shipping stuff there and hiring labour there. It varies from country to country. “Being based in SA helps us a lot. We know how to work in Africa better than companies that come from Europe or America. You need a lot of patience when working in Africa,” he adds.
//OUR FOCUS IN SOUTHERN AND CENTRAL AFRICA AND WE’RE PREDICTING THAT OUR BUSINESS WILL DOUBLE IN SIZE IN FIVE YEARS// IMPRESSIVE PROJECTS Vegtech uses as much locally produced material as possible in its installations. In fact, the company says that it now manufactures more than 60% of its products in South Africa. “It depends on the complexity of the project and we only import stuff that we cannot get locally. We import from Italy, Holland, Israel and Turkey. On high-level complex projects we might have to import 70% of the product.” As technology is developing so
quickly, Vegtech stays in close contact with suppliers and customers to ensure it remains at the forefront of the market, supplying what is needed for long-term success and not flash-in-the-pan ideas. One project, currently going up close to Durban, is an industry leading example from Vegtech. The development is a large coloured pepper grow and Isralls explains that this is a high-tech venture. “This is a very high-tech operation. It’s about as high-tech as you can go without going into glass. I would be surprised if there’s a bigger operation, with this level of technology, in Africa,” he says. “It’s in Kranskop, not far from Durban. It’s around 120,000 m2. This project is being built in phases. Every two years we do another phase. The current phase will take around eight months. It’s for a private company, a German missionary. This is certainly one of the most complex projects we’ve worked on. “There’s a lot of different skills involved. There’s electrical work, civil work, engineering work, construction, irrigation and many more so there a lot of different teams on the site. The project manager has to make sure that everybody works together. When you have a multi-faceted project you have to make sure that everything goes at the
//THERE’S A LOT OF DIFFERENT SKILLS INVOLVED. THERE’S ELECTRICAL WORK, CIVIL WORK, ENGINEERING WORK, CONSTRUCTION, IRRIGATION AND MANY MORE SO THERE A LOT OF DIFFERENT TEAMS ON THE SITE// 50 / November 2015 / www.enterprise-africa.net
VEGTECH 2000
right pace so that no one holds anyone else up. It’s like an orchestra; you need a conductor to make sure everybody is doing their thing at the right time at the right level and at the right pace.” Vegtech is hoping to hand the current phase over in February and Isralls says that they’re already talking about the next phase. GROWING IN THE FUTURE South African farmers are under pressure to increase their production to keep up with a growing population. Now with over 52 million people (an increase of around 25% in 15 years) the farmers, both large and small, need all the help they can get. It’s the same story in Africa where food production is an ongoing focus. This stems back to 2004 when former UN secretary general Kofi Annan called for a uniquely African green revolution focused on the improvement
of agricultural productivity through the replenishment of soil fertility, together with the use of improved seeds, and the promotion of human nutrition, market access, environmentally sustainable practices and enabling policies. Vegtech products are already used is Africa but Isralls wants to grow further on the continent. “We would like to be involved in more African countries outside of SA,” he says. “We want our business to be more balanced and more weighted on other African nations rather than most of it coming from South Africa.” To ensure Vegtech keeps moving in the right direction, Isralls says the business has started to implement a new marketing strategy in order to bring the brand right up to date. “After 23 years, brands need to be refreshed and people become complacent and think everybody knows them. People think ‘we’ve got 70% of
the market share and advertising and marketing are not necessary as we’re only in a small niche industry where we are the biggest player’ but that’s incorrect,” he says. “We realised that we need to refresh the brand; the original branding was done in 1989 and we needed to modernise and try and market ourselves better so that is what we’re doing. “It’s a three month project that we will come out of with a refreshed brand and some new marketing campaigns that will run throughout the whole of 2016,” he concludes.
VEGTECH 2000 +27 21 987-6980 info@vegtech.co.za www.vegtech.co.za
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STANDARD ELECTRICAL
African Business Providing the Spark
for Growth PRODUCTION: Karl Pietersen
Standard Electrical Co-owners, Stephen Pell and José Snyders tell us that after taking control of the business in March 2015, they have started to shape the business for profitable and sustainable growth. Even though the country’s construction industry is not thriving, this expert electrical contractor is setting its sights on growth into Africa, off a solid springboard in its home country.
//
Much like South Africa’s mining industry, the country’s construction and building industry has been wrought with problems in recent times. Even the biggest of the big have had to face up to the difficulties bought on thanks to a slow economy and falling commodity prices. Stock prices for major JSElisted construction companies have plummeted between 42% and 72% in the past year. The best-performing among them, WBHO, has declined about 15% in that time. The biggest among listed construction companies by turnover, Aveng, saw revenues fall 14% and net operating earnings drop 19% as headline EPS (Earnings Per Share) plunged 58% in the six months to December. It says it is feeling pressure from a decline in mining investment
and the almost “non-existent” roll-out of large state infrastructure projects in SA. It has also reported labour disruptions and problems with legacy contracts. And, unfortunately, things are not looking like brightening up anytime soon. According to Jason Muscat‚ senior industry analyst at FNB, growth in construction activity remained weak in the third quarter of 2015‚ with the slowdown likely to deepen for the rest of 2015 and into 2016 if the demand for new construction work remains poor. “Moderating growth in capital expenditure by general government‚ the inability of public corporations to make noticeable progress on key infrastructure projects‚ labour concerns and lower commodity prices which are dampening demand for investment by the mining sector‚ and a slowdown in investment into renewable energy
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negatively affected construction activity in the third quarter of 2015‚” Muscat told Business Day in September. Construction and related activities in the country account for around half a million direct jobs (2013) so what would the consequences be if the problems in the industry are to worsen? The answer is, significant. But fortunately there is hope for companies and contractors and that hope is coming from across the border in Africa and further afield. According to Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Lebogang Maile, growth in the continent’s construction sector no longer being “just a by-product of mining activity”, Africa will be able to further promote its industrialisation agenda, while supporting economic diversification
STANDARD ELECTRICAL
//WE’VE RECENTLY EXPANDED INTO BOTSWANA WHERE WE HAD SOME GOOD WORK. I THINK OUR NEXT MOVES IN AFRICA WILL BE IN BOTSWANA, ZAMBIA, NAMIBIA, MOZAMBIQUE AND GHANA// he said in September, speaking at the opening of the 2015 BAUMA CONEXPO AFRICA in Johannesburg. “We have every reason to believe that the construction industry is fast proving itself to be Africa’s treasure trove,” he said, citing KPMG’s Construction Survey Africa report, which stated that investments in real estate already accounted for 43.8% of capital investments and generated 33.6% of foreign direct investment jobs on the continent. Africa also ranked high as an investment destination for construction companies, with nearly half of the 165 global leaders in construction and engineering industries surveyed in
2013 indicating the desire to venture into the continent. Last year, the Asia-Pacific region was also a lifesaver for big South African construction firms, including Aveng and Murray & Roberts, where Chinese demand for Australian minerals has complemented a boom in oil and gas projects in the region. SETTING THE STANDARD So what are the benefits to South African contractors who look for work across the border? Stephen Pell, Coowner of Standard Electrical, one of the country’s leading electrical contractors, says that expansion of this type can help to ensure growth and profitability,
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while also spreading the risk of exposure to local market fluctuations. “If you’re moving into Africa with customers and funders that you know, then the risk of not getting paid has largely been taken care of and this is the biggest risk in terms of expanding into Africa. “We’ve recently done some projects in Botswana and I think our next moves in Africa will be focussed around Zambia, Namibia, Mozambique and Ghana. There’s opportunities in all of these countries and we plan to at least be operating in some of these countries by the end of next year. “It is a natural decision to look across the border as all markets do fluctuate and if you’re present in a number of markets then you have a better chance of managing your workflow. We have managed to improve the quantum and quality of our order book in South Africa, despite the tight trading conditions and we are now preparing the business to expand
into other regions and markets. We’re certainly not deserting our home base of South Africa but we are looking to spread and grow the business off that base,” he says. “Due to the nature of electrical contracting, compared to that of the major construction companies, we are able to be far more flexible and agile when moving to new areas. We only require a small core team for any project and are able to quickly upskill the local people to staff the rest of the project. We also do not require large fleets of plant and equipment, so crossing borders is less challenging than for the main contractors,” adds Pell. Of course, expansion into Africa isn’t something that just happens overnight; it takes a lot of hard work and planning and requires that you build a solid and successful base in your home market first. POWERFUL HISTORY “Myself and my business partner, José Snyders, bought the majority of the business at the end of March 2015. Importantly, the business is now 51% BEE owned,” explains Pell. “Standard has a long history and has been owned by many varying groups of shareholders. In 2013, on the back of declining margins in the electrical contracting space, the then owners decided to expand into energy saving retrofits of commercial properties. The business subsequently lost focus on its core business of commercial electrical contracting and struggled to maintain its dominant position. José and I got involved at a Standard Electrical board level during 2014 and
//BEING FLEXIBLE AND MOVING AROUND AFRICA AS AN ELECTRICAL CONTRACTOR IS MUCH EASIER THAN MOVING AS A MAIN CONTRACTOR// www.enterprise-africa.net / November 2015 / 55
BUSINESS PROFILE
started the first of a two phase, rightsizing and refocusing exercise. Having only acquired and taken operational control of the business in March 2015, we are currently engaged in ensuring further operational improvements and efficiencies, in line with our growth plans.” Originally founded in 1946, Standard Electrical is one of the largest electrical contractors in South Africa and is recognised as having played a leading role in its sector. With 68 years of experience, the company has been involved in all facets of the electrical contracting field, specialising primarily in office buildings, shopping centres, hotels and casinos, industrial buildings, clinics, hospitals, housing, high rise apartments and general reticulation projects. “I’m now more comfortable with how things are going, I can feel the momentum turning,” says Pell. “We have made some significant changes
//WE HAVE MADE A NUMBER OF CHANGES SO IT WILL TAKE A WHILE BUT ON THE BUSINESS SIDE WE CAN CERTAINLY SEE THE DIRECTION AND MOMENTUM CHANGING// and although changing and turning a business takes time and effort, we are certainly starting to see some good early signs. We’ve also started to inculcate a new culture in the business, based on our company vision and values.” THE FAVOURITE The vision of Standard Electrical is to be the industry’s favourite contractor, while our values which guide all behaviour and decision making are: professionalism; commitment; agility; and care. “In today’s current restricted market conditions, in our opinion,
STANDARD ELECTRICAL CO-OWNER, STEPHEN PELL
the way to best survive and thrive is to operate with discipline and professionalism and to deliver to expectations,” says Pell. “In an industry which is characterised by and perceived to produce poor quality and late delivery, we want the change in culture to ensure sustainable excellent performance, resulting in a consistent brand experience. “We’re not there yet but we’ve started the journey and we want to ensure that all our customers, clients and partners start to witness our improved performance through their improved experience. We have a long history and vast experience and are matching that with a professional, proactive and can-do attitude. “Quite a large portion of the senior management are hands on and experienced over a decade or two in this industry, so we’ve got skill and experience in the business. Unlike many other industries and companies, we do not face a massive skills gap, which makes our targets infinitely more achievable. Through the industry body, ECA, comprehensive training programmes are offered, which means we will be able to grow our junior staff alongside the projected growth of our company,” he adds.
//WE DO HAVE A LONG HISTORY AND WE HAVE A LOT OF EXPERIENCE AND WE NEED TO MAKE SURE WE MATCH THAT WITH PROFESSIONALISM – DELIVERING WHAT WE SAY WE’LL DELIVER WHEN WE SAY WE’LL DELIVER IT// 56 / November 2015 / www.enterprise-africa.net
STANDARD ELECTRICAL
Even with the SA construction industry looking the way it does right now, there are reasons to be hopeful. In 2013, the government announced it would spend R827 billion in building new and upgrading existing infrastructure. As this investment filters through, there will undoubtedly be opportunities for construction firms and contractors. “We believe we are on the right track and are already forging strong relationships with developers, engineers and construction contractors across the industry,” says Pell. ESKOM When former Finance Minister Pravin Gordhan announced the investment into infrastructure, he also detailed that R205.1 billion of the R827 billion would be allocated to Eskom for new power stations, Medupi and Kusile. Obviously, being the country’s electricity utility, the business of Eskom has an inherent link and impact on companies like Standard Electrical.
“I don’t think they’ve made life easy for the built environment market – that’s not even an argument. The market has suffered because of load shedding and lack of supply,” says Pell. However, as much as load shedding and power outages cause havoc for many people, Pell admits that the inadequate service from Eskom has presented his business with opportunities. “There’s an advantage for us as many developers and owners of buildings have had to put in emergency generators, energy saving retrofits and renewable energy infrastructure so there’s been opportunities but at the end of the day, you want a reliable power supply for the market to be able to grow and thrive,” he says. Since Brian Molefe was installed as CEO as part of Public Enterprises Minister Lynne Brown’s ongoing interventions to stabilise Eskom, there have already been changes for the better.
As Medupi and Kusile gradually head towards completion and other important power projects in the renewable and traditional space continue to be announced, it seems like there will be many opportunities for Standard Electrical in the future. Also, as the country’s big construction firms continue to sweep into the African market, there is an obvious opportunity for Standard Electrical to piggy back into the “treasure trove” that is the African continent’s burgeoning construction industry and complete the company’s mission of delivering extraordinary performance in the electrical and energy contracting sectors.
STANDARD ELECTRICAL +27(0)11 202 2420 info@stanlec.co.za www.standardelectrical.co.za
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BAFOTECH
South African
Bafotech Growing in
South America PRODUCTION: David Napier
Bafotech Founder and Marketing Director, Chris Boone has built his business successfully over the last 34 years but as the mining industry in South Africa faces decline, he has been forced to look further afield for growth opportunities.
//
The mining industry in South Africa has been hugely important to the country over the years. It has shaped the country politically, culturally, and economically, and helped to position us as one of the most powerful economies on the continent. It all dates back to 1867, when the first diamond was discovered on the banks of the Orange River. By 1886, gold and diamond rushes were quickly turning mining in South Africa into the nation’s staple economy. In 1970, gold mining in South Africa peaked, contributing 68% of global production for that year. By 2001, mining in South Africa had produced a total of 51% of global platinum group metals ever mined.
Today, South Africa is the world’s largest producer of chrome, manganese, platinum, vanadium, and vermiculite. South Africa is the world’s second largest producer of ilmenite, palladium, rutile, and zirconium and the mining industry remains one of the country’s biggest contributors to GDP and employment. But in this time of global economic crisis, financial unrest, Chinese decline, energy supply problems and commodity price uncertainty, South Africa’s mining industry has felt the pinch in a big way. Some of the major mining houses have been forced to close operations, retrenchments have been made, costs are continuing to rise as valuable reserves become more difficult to reach and businesses
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BUSINESS PROFILE
FROM L TO R: PAT BOONE (MANAGING DIRECTOR), LESEDI RAKGOKONG (CHAIRMAN), CHRIS BOONE (SALES AND MARKETING DIRECTOR), DANIE JOUBERT (FINANCIAL DIRECTOR)
//RECENTLY WE’VE SUPPLIED UNITS TO BOLIVIA AND COLUMBIA. I’VE ALSO QUOTED ON A FEW DIFFERENT UNITS IN BRAZIL AND IT’S LOOKING LIKE WE WILL SUPPLY SOME UNITS DIRECTLY INTO PERU// involved in the industry are increasingly looking at diversification to stay afloat. In August, Economic Development Minister Ebrahim Patel said that the mining industry is “in trouble” as it struggles to recover from 23,000 job losses since April and falling commodity prices from key markets like China. Mineral Resources Minister, Ngoako Ramatlhodi was forced to hold urgent talks with leaders of the industry to discuss the problems. However, even though the industry is facing the biggest challenges in its history, there are some that have managed to find positives. Bafotech, the Welkom based ‘one stop scraper winch shop’, is looking beyond South Africa’s borders to help continue the growth it has seen over the last 34 years.
LATIN AMERICA “Where things have picked up is in South America,” says Bafotech Marketing Director Chris Boone. “It’s growing slowly but we are starting to see things there. We have agents in Peru and although the conventional mining is on a much smaller scale, we are seeing positive activity there. In South Africa, we use 37kW or 50, 75 or 100 horse power winches but over there they’re using 10, 15 or 20 horse power winches. “Recently we’ve supplied units to Bolivia and Columbia. I’ve also quoted on a few different units in Brazil and it’s looking like we will supply some units directly into Peru. I’m planning to head out to Chile next year personally, depending on the market conditions,
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as there are a lot of Anglo American mines there and they tend to use bigger winches. “We do have a good reputation but there’s also a cost consideration. We flew our units to Columbia and it was cheaper than they could get them from North America. Obviously, they know our quality is there but price also plays a big part. The rate of exchange is playing a big role right now,” says Boone. Despite a softening in the global mining sector, Latin America continues to grow as a destination for mining investment, exploration and development on the back of its highly prospective geology, reduced cost profile and attractive mining environment. The region of Latin America covers one-sixth of the globe and produces more than its share of the world’s three most important metals – iron ore, copper and gold. With its huge iron-ore mines, Brazil dominates the region’s mining, whilst Chile, because of its important copper mines, was the second most significant producer of mined metals in Latin America during
BAFOTECH
2013. BNamericas Mining Readers Survey 2013 showed that 44.4% of mining company respondents saw Chile as the South American country with the best mining investment climate. WINCHES Bafotech is a manufacturer and distributor of high-quality winches and winch components that remove materials from the mines. Double-drum scraper winches and mono winches are the company’s core products and it also offers a comprehensive repair and refurbishment service. Double-drum winches are used after blasting to pull loose rock into a box hole and then into chutes to the main shaft where it is loaded into skips and sent away to a processing plant. The company has interesting origins, being started by Boone and his brother with nothing but a borrowed desk, two chairs and a computer that had been won in a raffle. At that time, the duo were simply buying and selling machines in a wholesale-style operation until they decided to manufacture the units themselves. Today, the manufacturing workshop is a 10,000m2 state-of-theart facility and is complemented by a 2500m2 repair workshop. Away from the well-publicised difficulties in the mining industry, there is another threat that is keeping Bafotech thinking and that is from the increasing mechanisation of mines. Dr Declan Vogt of the Wits School of Mining Engineering told Mineweb last month that mechanisation can improve productivity. “Workers are less enthusiastic about working on mines, and they are
demanding better pay,” he said. “Against this background newer platinum mines in the Eastern Bushveld were planned as mechanised mines, and several are running very successfully. A majority of the lowest-cost underground platinum mines are mechanised, as is the lowestcost underground gold mine,” he added. Boone says that mechanisation would not benefit Bafotech. “Our winches are for conventional mining which tends to be a labour intensive operation,” he says. “Many companies are looking at mechanised mining and LHD mining, and where a traditional system would use 300-500 of our units, a mechanised system would only use 200 so it’s detrimental to us.” But this of course means that the company is looking at new ideas and new products, some which are still in development and are yet to be publicly discussed.
//WE ARE LOOKING OUTSIDE THE BOX AND WE’RE BUSY DEVELOPING A FEW OTHER THINGS WHICH COULD WORK WITH A MECHANISED MINING SYSTEM//
STEELDEALS CC for
STEEL PLATES CUT TO SIZE
Profiling, Guillotining, Laser Cutting, Hi-Def Plasma Cutting and Bending WE SUPPLY & CUT:
Mild Steel, Commercial Quality, 300WA, 50B, Roqtuf, Roqlast, BENNOX, Weldox and Hardox plates T. +27 11 824 1087 F. +27 11 824 1089 E. ian@steeldeals.co.za 48 Nagington Road, Wadeville, Germiston, SA PO Box 64036, Highlands North, 2037
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BUSINESS PROFILE
“We are looking outside the box and we’re busy developing a few other things which could work with a mechanised mining system. All I can say right now is that we’re working on it and we’re busy with a couple of different things. It will be a big change for us so we have to see how we can work it and then we’ll go for it. “We could look at the building industry where we could work with structural steel but that’s a totally different type of business for us,” he says. OVERCOMING THE SLUMP Although Bafotech has started to mitigate the declining South African industry problems by branching out to other parts of the world, the difficulties will remain in its home market. Even
the International Monetary Fund has weighed in on South Africa’s economy, claiming that gross domestic product will expand just 1.3% next year, which would be the slowest pace since a recession in 2009. Boone says that Bafotech has certainly seen the effects of the slow economy but he is adamant that he will not be forced into lowering prices to an unprofitable level. “Our main business comes from the gold, platinum and chrome industries,” he says. “A lot of projects and a lot of development has been stopped because of low commodity pricing and that immediately effects most of the mining industry. We all need new projects and new developments for our products.
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“It’s very tough. We’ve stopped a lot of our Capex and we’ve also reduced staff where we’ve had to. We’re all just waiting and hoping that commodity prices turn around. We’re in a reasonable position; it’s not as bad as last year when we had the large strikes but we do have to be careful. We are getting a reasonable amount of work in although it’s all repairs and nothing new but we are certainly still on the right side of things. “The big mine in Botswana, BCL, have also been re-vamping their operations so work there has come to a halt in the last six months but we are told that they will be ready to go again very soon. We do have bits and pieces in Zambia but all of our opposition is going there and then it becomes a price war which I would like to stay out of. I
BAFOTECH
//WE ARE DOING A LOT OF DEVELOPMENT OF OUR OWN PEOPLE; SENDING THEM TO TRAINING COURSES AND HELPING THEM TO DEVELOP THEIR SKILLS// have to make certain margins so I would rather step away than get into a price war,” he adds. To ensure that no extra, unnecessary pressure is shouldered by the company, and the industry, Boone says that the focus on safety is one of his primary concerns. “We are doing a lot of development of our own people; sending them to training courses and helping them to develop their skills.
“Safety is an ongoing issue for us. We constantly look at any area where we can improve. We’ve changed the casing on our winches so that people can’t get their hands in and get injured. If something like this happens, the DMR (Department of Mineral Resources) will close the whole mine down so we work together with the mines to ensure safety standards are met. Safety is extremely extremely important,” he says. Although there is no doubt that
this is a difficult time for the industry and all of its stakeholders, Bafotech is a business that has been operating successfully for over three decades. It has family roots, a strong focus on offering quality, and an ownership structure that is well versed in riding the waves of the economy. As Lesedi Rakgokong of Matantabelo Investment Holdings (30% owner of Bafotech) says: “Tough times are not for giving up, but beefing up.”
BAFOTECH (+27) 057 396 2848/9 sales@bafotech.co.za www.bafotech.co.za
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UNILEVER FOOD SOLUTIONS
Healthy, Nutritional &
Full of Flavour and Flair PRODUCTION: Joe Forshaw
As consumers change their eating habits; now more informed about what is healthy and what is not; there is a new demand for more and more information about the food we are eating, both in and out of the home. South Africa’s premier foodservice provider, Unilever Food Solutions, is ready to contribute in this area.
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According to Stats SA, income from food and beverage activities in Feb-Apr 2013 was 11 364,9 (R million). This was a 6.6% increase from the previous year. In the period Jun-Aug 2015, the figure was up to 11 990,3 (R million) and this represented an increase of 8.1% on the previous year. It is clear, out-of-home food and beverage service is a booming business. Restaurants, bars, hotels, coffee shops, take away outlets and catering companies are all key contributors to this industry and with Africa’s rising middle class spending more on these services each year, it’s becoming vital for businesses to stand out from the crowd and provide first class service. Of course, in the food space, to provide first class service you need the best possible ingredients, you need industry-leading knowledge, you need time and energy saving ideas and you need to be as efficient as possible. Partnering with Unilever Food Solutions can bring you all of these things from one single source and will help you find the right balance of great tasting and nutritious food served to consistently
high standards while always keeping up with changing consumers tastes. Assistant Nutrition and Health Manager at Unilever Food Solutions, Keegan Eichstadt says: “We’ve been in food since the 1880s, and home to some of the world’s favourite brands: Knorr, Hellmann’s, Robertsons and more. “As part of Unilever, we understand consumers, your guests. We use this knowledge to help chefs and caterers keep up with people’s changing tastes. With our team of highly skilled chefs and nutritionists, we help our customers to find the right balance of great tasting and nutritious food served up to the same consistently high standards. Through our widespread presence we can make cuisine ideas travel. “From a nutrition perspective we are making a concerted effort to help our customers understand their guest’s needs and educate chefs on how to integrate our products in healthier meals. As needs and preference varies in taste with cultural diversity – so do the nutrition needs of various groups of populations in our beautiful country. We are here to help understand these differences better and advise accordingly.”
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BEHIND THE BEST MENU There is a saying that a good chef is only as good as his ingredients and those ingredients are only as good as the manufacturer, meaning that the supply chain is inextricably linked from source to plate. Unilever Food Solutions creates ingredients that save precious prep time in the kitchen, without compromising on flavour or flair. This mind-set has made Unilever one of the most recognised organisations in the world with some of the most well respected brands under its umbrella – this is across not only the food business but also home care and personal products. Unilever products are available in around 190 countries around the world and its portfolio is always growing. In food, Unilever products are found in 74 countries and the company says that, even during these times of economic uncertainty, it is there to help its clients improve. “We know that owning a restaurant is never easy and in these tough economic times it is becoming increasingly difficult to meet your guests’ demands for great quality, choice and value while costs are increasing,” the company states. “We want to make kitchen management easy and inspire you with ideas for appealing and successful menus that are efficient, profitable and, keep your guests coming back for more.”
BUSINESS PROFILE
//AS PART OF UNILEVER, WE UNDERSTAND CONSUMERS, YOUR GUESTS. WE USE THIS KNOWLEDGE TO HELP CHEFS AND CATERERS KEEP UP WITH PEOPLE’S CHANGING TASTES// HEALTHY, NUTRITIONAL, TRANSPARENT Importantly, as the middle class population continues to grow in Africa and demands on caterers change, Unilever Food Solutions is driving the industry towards a place where nutritional information is more transparent and more readily available. The legislative landscape is changing and consumers are also championing locally produced goods where ingredients in products are more obvious. Unilever Food Solutions World Menu Report found that as many as nine out of ten customers expressed a desire for further information to be made available when eating out in order to allow them to make healthier lifestyle choices. Ria van der Maas, Global Nutritionist for Unilever Food Solutions tells the company’s website: “Over
recent years we have seen a boom in fast and convenience food. With this has come significant concern regarding the nutritional impact of modern eating habits. The results of this research clearly demonstrate that there is a global need for greater transparency around nutritional information when eating out of the home to empower consumers to make healthier choices.” Eelco Camminga, Vice President of Unilever Food Solutions for South Africa, the Middle East and Pakistan, reiterates that idea saying: “It’s the responsibility of food service professionals to be more transparent with consumers about what goes into their food. At Unilever Food Solutions, we aim to help chefs and caterers simplify what goes into food and keep their recipes fresh and exciting. “Improved food information offers the food service industry a
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route to renewed growth following a turbulent period for the world market. Satisfying consumer demand for greater nutritional information offers a clear opportunity to generate growth in challenging conditions,” says Camminga. Craig Elliott, Executive Head Chef of Unilever Food Solutions in South Africa, the Middle East and Pakistan further reinforces this chain of thought saying: “Through our global nutritional expertise and research, we aim to support foodservice professionals in South Africa by providing them with detailed nutritional information on our products, delivering training to the different channels within the industry, and utilising the services of our country nutritionist to provide advice on nutritional issues. Globally, with our team of highly skilled chefs and nutritionists, we help our customers to find the right balance of great tasting and nutritious food served up to the same consistently high standards.” UNILEVER INVESTING IN SA Unilever as a group continues to invest heavily in SA. In October, the company opened its new 40,000 m2 ice cream factory in Midrand. In June this year, a new R1.4 billion home care factory as opened in Boksburg and Unilever also reopened its Indonsa Savoury Factory following a R511 million investment. All of these proejcts were designed to improve capacity, efficiency and drive sustainable growth for the company in the fast-growing developing and emerging markets. Peter Cowan, Chairman Unilever South Africa said of the investments: “It will enable us to better serve consumers with innovation and green technology, as well as improve service levels to our retail customers. It underscores our ongoing commitment to the long term future of South Africa.” To cap off a good year for Unilever in South Africa, in October the company was named one of the country’s best employers by the Top Employers Institute.
UNILEVER FOOD SOLUTIONS
Certification is only awarded to the best employers around the world: companies that demonstrate the highest standards of employee offerings. The Top Employers Institute’s research assesses all critical areas of the Human Resources environment, certifying organisations that can demonstrate they are continuously optimising employee conditions and leading the way in the development of their people. Unilever has been commended for its employee offerings for a number of years and the Top Employers Institute commented: “Unilever South Africa was awarded the Top Employers Africa 2016 and Top Employers South Africa 2016 certification. Our comprehensive independent research revealed that Unilever South Africa provides exceptional employee conditions, nurtures and develops talent throughout all levels of the organisation and has demonstrated its leadership status in the HR environment, always striving to optimise its employment practices and to develop its employees.” Antoinette Irvine, HR VP in SA said at the award ceremony in 2014: “We believe that employee engagement leads to better productivity… We are very happy that we can position ourselves as an employer of choice in the South African market.” It is this dedication to world class best practice that has allowed Unilever as a group and Unilever Food Solutions to position itself as a market leader in South Africa and the perfect partner to any business, small or large, that is looking to grow in the food and beverage industry.
UNILEVER FOOD SOLUTIONS 0860 314151 marketing.foodsolutions@ unilever.com www.unileverfoodsolutions.co.za
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SA MANUFACTURING
SA Tooling Desperate for Corporate & Government Support PRODUCTION: Karl Pietersen
The South African toolmaking and manufacturing industries go hand in hand. You cannot have one without the other. So why is it that manufacturing seems to be doing pretty well, even in a slow economy, while toolmaking has been having problems for the past few years?
//
In July, manufacturing production increased by 5.6% year-on-year, driven mostly by a 39.6% year-on-year production rise in the automotive industry and a 17.4% year-on-year rise in the metals and machinery industry. The manufacturing sector currently employs around 1.7 million people, and continues to occupy a significant share of the South African economy, with manufacturing output accounting for 15% of GDP. Backing up this important sector is the toolmaking industry but despite the growth of manufacturing, that success has not filtered through and toolmaking is facing difficult times. In 2008, Simthembile Pakkies of the Tooling Centre of Excellence KZN highlighted the importance of toolmaking in a M&G article saying: “You wear a shirt with buttons and those buttons must be made by a tool. You carry a cellphone and a tool must be used to make that cellphone. You use spice on your food—that spice bottle is made by a tool. A tool makes everything around you. We have estimated that one toolmaker can create jobs for about 14 people.” But despite the demand for tools, the industry is having trouble attracting young blood and skilled
toolmakers are becoming harder and harder to come by. The Deputy Minister for DST in 2008, Derek Hanekom said: “South Africa has lost considerable capacity in this field and is currently heavily dependent on imported tooling, currently standing at about R2 billion per annum. “It is clear that the South African tooling industry is currently seriously in decline,” and this was all before the global economic crisis. The difficulties has not gone unnoticed and the DoE, DST, GTI and TASA have all stepped in with initiatives and financial support but today it seems that the problems remain. Some of the issues faced by toolmakers include weak business practices in contract management, planning, production and project management. “The market potential in toolmaking is phenomenal. In the automotive industry alone, we are spending $1.5 billion overseas on toolmaking work that could have been done in South Africa, had the industry been up to scratch,” said Ron MacLarty of Afrimold “If we want to put the growth of South Africa on manufacturing, tooling cannot be ignored,” said TASA’s Henk Snyman.
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So how what changes are needed, and what is causing problems? We ask Founder of Durban’s Spec Tool and Die, Dave Murgatroyd. “It’s so important that we get some sort of support from the government and the multinationals; that’s what we desperately need,” he says. “We’ve done some fantastic work for companies like Unilever. We’ve personally been responsible for three Gold Pack Awards with the Aromat canister, the Malibu Spice canister and the Rich ‘n Creamy ice cream tub which were all designed here. “What people don’t realise is that small businesses create the most jobs so the government needs to stimulate and support the development of small businesses. There’s no point training people if there’s no jobs for them,” he adds. Some reports suggest that investing in manufacturing can bring about benefits in the economy. According to Business Report, for every R1 invested in manufacturing there is R1.13 of value addition to the South African economy. But for this investment to mean anything, government support must be sustainable and keep people involved in the industry. “The understanding of what toolmakers actually do is often lost
//WE NEED THE MULTINATIONALS TO SUPPORT LOCAL INDUSTRY AND WE NEED THE GOVERNMENT TO STAND BEHIND THAT AND ENCOURAGE THAT SUPPORT WITH PROTECTION AND FINANCE// in the system somewhere,” says Murgatroyd. “In the last two years, my company has lost seven people to New Zealand. These are highly skilled artisans that I’ve spent many years and lots of money training. There’s no incentive for them to stay. In places like Germany and India, there’s a host of things in place to support the industry. “We had a thriving toolmaking fraternity 20-25 years ago. We had apprentices, apprentice boards, training facilities, all the corporates were investing but today I’m guessing there wouldISbe a total of around THIS A CAPTION, THIS 50 being trained in toolmaking if we’re lucky.” IS A CAPTION
According to Murgatroyd, toolmaking in South Africa does not enjoy the same protection that other industries do when it comes to imports. “In the plastics industry, convertors get protection - on finished goods they get a surcharge imposed on them, and if they import raw materials they get a surcharge imposed. It makes things competitive as opposed to just importing from China. It’s the same in automotive - if you import a vehicle you pay a charge whereas if you buy local, there’s no import duties. In toolmaking, there’s no protection. You can bring a mould in from China or wherever extremely
cheaply and there’s no protection for the toolmaker so we cannot compete. “We’ve recently had some international companies open in SA and they bring all their machinery and moulds from Europe. There’s no reason for them to source the tooling from South Africa and that’s been a big knock for us,” he says. With today’s technology, an attractive market for young people to enter and an inseparable connection with the wider manufacturing industry, investment in the tooling sector would not only benefit the country, it is now vital if we expect job creation and growth in a slowing economy. “We need the multinationals to support local industry and we need the government to stand behind that and encourage that support with protection and finance,” Murgatroyd concludes.
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MEDIA24
Leading the Way in a
Constantly Evolving Industry PRODUCTION: Nathan Murphy
Media24 has over 63,000 followers on Twitter and over 41,000 fans on Facebook. It publishes more than 48 magazines, 14 websites and 67 newspapers. Now it is turning to TV and video to further diversify its product portfolio. This is a company that recently celebrated its 100th year anniversary; a company that is certainly embracing the digitalisation of the publishing industry.
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//
The publishing industry has seen significant changes in the past 20 years – increasingly so in the last five years; at Enterprise Africa we know about this more than anyone! With the development of technology moving faster and faster, the established media channels have found themselves under threat. Today, anyone can report the news, anyone can write informative and thought provoking articles, anyone can make videos that can reach all corners of the globe and anyone can contact anyone for any reason. But we all already know this. So how is it that big publishing companies are being effected? One factor is the market. Today, the market for the written word is both bigger and smaller than ever. It’s bigger as the internet has changed distribution, giving bloggers and writer’s access to the entire world, and it’s smaller as the spaces between creator and consumer have been closed – because of the internet. So, the internet is the key to the change? Well, 90% of the time, yes. There is still a demand from some corners for something to hold, something to go out and collect but newspapers, magazines, books and even TV shows are all going digital, if they haven’t already. In the modern market, where demand for information is higher than ever, you have to be able to provide instantly. You have to utilise digital channels in order to connect with people in real time – if they want to read about something then you must make it available easily, quickly and inexpensively. In Africa, it is reported that internet use on mobile phones will increase 20-
//WE SHOULD BE FOCUSING ON GETTING OUR GREAT CONTENT TO AS MANY CONSUMERS AS POSSIBLE, ACROSS AS MANY PLATFORMS AS POSSIBLE// fold in the next five years – double the rate of growth in the rest of the world. For publishers, this is both a blessing and a curse as it means they will have to invest in change strategies and technology to get their material into a mobile format but they will also reap the rewards of having a market place that is significantly bigger than before. Media24 is South Africa’s leading publisher with interests in digital media and services, newspapers, magazines, ecommerce, book publishing, print and distribution. The company is now 100 years old and has witnessed the changing demand for media services first-hand. In 1915, the then named De Nationale Pers Beperkt, (now Naspers THIS IS A CAPTION, THIS and Media24’s parent company) IS A CAPTION
launched its first newspaper, an Afrikaans publication named De Burger (now Die Burger). Today, the company is home to many popular newspaper and magazine titles and also owns many websites that receive thousands of visitors every month. Magazines like Men’s Health SA, Top Gear SA, Grazia, Kick Off and Tvplus are all part of the Media24 portfolio. Newspapers including the Standard, City Press, the Daily Sun and the Witness are all part of Media24 and websites like news24, fin24, sport24 and news 24 Nigeria all form part of the company’s digital offering. The product portfolio shows how far the company has come, and how it is actively addressing the digitalisation
of the publishing industry. Evidence of a change in approach is found in the company’s official strategy which is to ‘reshape Media24 to remain relevant and useful to consumers and clients and create value for our shareholders’. Perhaps a driver behind this strategy comes from the grim-reading that comes when looking at other international titles and publishers that have failed with the digitalisation process. A CHANGING MARKET In 2009, following the global economic recession, a number of prominent print magazine titles bit the dust. I.D. magazine that had been published for 55 years went; Vibe magazine, published for 17 years closed; 10-year old National Geographic Adventure went and America’s Gourmet magazine closed after 68 years. This year, former global hit, NME magazine reported that its combined
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BUSINESS PROFILE
//THEY HAVE MANAGED TO INVEST IN BECOMING MORE OF A DIGITAL PUBLISHER AND AN E-COMMERCE BUSINESS, WHILE STILL DELIVERING PROFITS TO THE GROUP IN AN ENVIRONMENT THAT IS NOT EASY// digital and print circulation had dropped below 15,000 for the first time ever; a stark realisation for a magazine that once sold 300,000 print copies every month. One of the UKs top publishers, Future Publishing, recently reported difficulties seeing losses of £35 million and cutting more than 400 people. Future is home to global brands such as T3, Total Film and Gizmodo. Fortunately for Future, it has installed a turnaround strategy and is starting to see results after investment in its digital presence. In May, it reported the first profit at its struggling US business in seven years. It also reported that 50% of its revenues now come from
digital and diversified businesses. The company said that its digital advertising revenues grew by 14% year on year, e-commerce revenues increased by 250% and events revenues rose by 15%. Although this is still a difficult time for the company, it claimed that the transformation of a struggling print-focused business into a digitally diversified content business is now almost completed. For Media24, this transformation started a few years ago and CEO, Esmaré Weideman is fully behind the transformation. “Like media companies globally our traditional print operations have been hit hard by declining advertising
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revenue and circulation. Over 60 of our senior staff have been working on plans to reduce costs and drive efficiencies in our businesses,” she told The Media Online. “We have identified initiatives ranging from consolidating back-end functions such as finance and IT to optimising distribution and printing. Some of these initiatives will kick off immediately and others will be fully implemented over the next two years. “We should be focusing on getting our great content to as many consumers as possible, across as many platforms as possible. Also, we are preparing ourselves for a future where our new businesses, built to diversify our revenue base, will start kicking in and where publishing will be one of several solid revenue streams for the company.” Last year, Weideman told eNCA’s Jeremy Maggs that there is still value in advertising but connectivity in South Africa was causing a problem. “Advertisers are cutting back on their marketing spend and the real reason for that is the economy. The
MEDIA24
//WE HAVE GREAT BRANDS AND DIGITAL
PROPERTIES. YOU CAN DO SUCH GREAT THINGS AND THE AUDIENCES JUST AREN’T THERE IN THE NUMBERS THEY SHOULD BE// economy is very slow and advertisers as much as consumers are feeling the pinch. Advertisers are looking for more innovative, more targeted and more measureable campaigns. We need to demonstrate to our advertisers the value in these massive, loyal print and digital audiences that big media companies can offer,” she said. “We have great brands and digital properties. You can do such great things and the audiences just aren’t there in the numbers they should be. I could tear my hair out at the speed of broadband in this country. It’s more expensive and slower than in many other parts of Africa. One can only hope that it will become affordable for people to consume media in such a different and exciting way.” In July, Naspers CEO, Bob van Dijk complemented Media24 for the way it has handled the transition from print to digital in an interview with news24, saying: “I must say, our Media24 group deserves a compliment. They have managed to invest in becoming more of a digital publisher and an e-commerce business, while still delivering profits to the group in an environment that is not easy. “They know that offline advertising budgets are under pressure and they need to adjust and they are. In the meantime, they find the room to invest in new propositions, like Careers24,” he said. “They’re in for a tough number of years, where the business model will change quite significantly, but I would say they understand those standards quite well and are adjusting quite well,” he added. CONTINUAL DIVERSIFICATION Adding further to its migration towards digital and video services, Media24 recently launched a new TV
channel, VIA, on DStv channel 147. VIA is an Afrikaans entertainment lifestyle channel and starts with 22 new programmes on food and diets, relationships and style. This 24-hour lifestyle channel is another innovation by Media24 to create content and products for Afrikaans audiences across diverse Media24 platforms. “…we are delighted to include TV as another platform where we can serve our audiences working closely with our magazines, newspapers and digital platforms,” said Weideman. With so many publishing and media companies coming under
intense pressure because of their failure to keep up with ever-changing consumer demand and the burden of the economy, Media24 has proven itself to be an industry leader, successfully integrating print, digital and video. As long as this innovative business continues to invest in the future of journalism; whether it be blogging, video reporting, digital publications or 140 character communication; then it has the perfect base to launch itself and its customers into a bright and extremely well connected future.
MEDIA24 +27 21 406 2121 info@media24.com www.media24.com
Leading-edge mid-career journalism and communication training across Africa
The IAJ is a dynamic training institution set up by veteran South African editor, Allister Sparks, to provide mid-career training to media professionals that is leading-edge and relevant to the rapidly– changing media landscape. We are South Africa’s premier provider of journalism and communications short courses, longer-term mentorships, and residency programmes, with an African footprint and global reach through our key partners. In 1992 at its founding phase, the late President Nelson Mandela said: “Both I and the ANC strongly support the new IAJ. Uplifting the standard of journalism and integrity in our media, and in particular train more black journalists to take over senior positions…is crucial to our efforts to establish a sound, non-racial democracy in South Africa.”
T: +27 11 482 4990 | E: info@iaj.org.za | www.iaj.org.za f www.facebook.com/iaj1992 | l @iaj_za
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FOSKOR
‘Foskorites’ Are the //
Key to Success PRODUCTION: Joe Forshaw
Foskor has once again been named one of the best employers in the country. It offers unrivalled development schemes in both the professional and personal space and its ‘Foskorites’ are its most important asset.
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There is no hiding from the fact that times have been tough for the South African (and international) mining industry. A global commodity price decline and a slow market in China have forced confidence down and resulted in sluggish market activity for almost all mineral resources and this caused difficulty for all large-scale miners. There has been mine closures, retrenchments, industrial action and all kinds of bad feeling created among employees, management and government. But one company that has so far managed to navigate these challenging times with some success is Foskor. One of the world’s largest producers of phosphate and phosphoric acid, Foskor is a South African institute that was founded in 1951 by the IDC. It has customers all over the world and employs more than 1800 people. These people are referred to by the company as ‘Foskorites’ and are all vital to operations. Retiring CEO, Alfred Pitse said recently to Focus magazine: “My memories with all the wonderful people in the three divisions will stay with me forever because they are what makes Foskor tick. “Foskor is strategic for the country. We have the responsibility of feeding the country, over and above the fact that we have to return value on investment for our shareholders.” Foskor’s Mining Division in Phalaborwa mines phosphate rock (foskorite and pyroxenite), from which Foskor’s Acid Division in Richards Bay produces phosphoric acid and phosphate-based granular fertilisers. These are sold locally and internationally and are vital in boosting local phosphorus levels. Young plants are especially vulnerable to deficient phosphorus levels, but almost every plant needs it to maintain healthy growth.
//FOSKOR IS STRATEGIC FOR THE COUNTRY. WE HAVE THE RESPONSIBILITY OF FEEDING THE COUNTRY, OVER AND ABOVE THE FACT THAT WE HAVE TO RETURN VALUE ON INVESTMENT FOR OUR SHAREHOLDERS// Behind the production of phosphate rock and phosphoric acid are the Foskorites and the company’s commitment to them is something which cannot be questioned. Some mining companies have been heavily criticised for the way they treat their employees but Foskor was recently awarded by an independent HR specialist for the way that it develops its people. INVESTING IN FOSKORITES The Top Employers Institute is headquartered in Holland and has regional division all over the world. It certifies excellence in the conditions that employers create for their people and it recently commended Foskor for its HR policies, naming the company one
of the Top Employers in SA for 2016 and saying: “Our comprehensive independent research revealed that Foskor provides exceptional employee conditions, nurtures and develops talent throughout all levels of the organisation and has demonstrated its leadership status in the HR environment, always striving to optimise its employment practices and to develop its employees. “Certification is only awarded to the best employers around the world: companies that demonstrate the highest standards of employee offerings.” Foskor has received this commendation on a number of occasions before and on receiving the certification for 2015, Sarah Luthuli, VP Corporate Affairs and Human Capital said: “Foskor values people. We see
them as our main asset. As a result, their development is very key to us. We have a technical training centre where people are trained by others who have worked for Foskor and are now coaches and mentors and who assist with skills transfer. That helps in terms of sustainability of skills and of the business and also in long-term development especially of the young upcoming talent. “We enrich employees by making funding available for both personal and professional development. For example, we’ve got development programs for all levels of employee. We’ve got supervisory development programs for lower levels and if a person wants guidance as to how to access it we make sure that we communicate through all our communication channels so that all employees are aware of what is available. We even have employee assistance programs for both personal and professional development. “We hope to send the message that Foskor is a best company to work for. We value our people, we value the
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BUSINESS PROFILE
communities in which we operate and we value our environment.” Pitse backed up this emphasis on people, telling Focus: “Foskor has a family culture. I see Foskor as my home away from home.” POSITIVE FUTURE? In terms of production, recent times have not been fantastic for Foskor who, despite having such a great record in HR, are now starting to feel the pinch in global commodity markets. Foskor’s Chairman, Geoffrey Qhena explained more in last year’s annual report: “The external challenges experienced have largely been centred on the demand for our products, the resultant collapse of the selling prices for the major part of the financial year, and the introduction of new capacity were the major contributory factors. “In relation to demand, India has
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been at the forefront, since they are the largest importer of fertiliser in the world and their reduction in demand has been severely felt. The main driver of this fall in demand has been influenced by the reduction of the subsidies to farmers by their governments. The farmers had to find alternatives, reduce the use of fertiliser, or extend the rotation of their crops to minimise the use of fertiliser. This reduction also impacted the prices of fertiliser, thus impacting the phosphoric acid prices as the major input. The uncertainty of the export approach by the countries with highest capacities does pose major imbalances and this has also resulted in the prices being depressed. “Whilst we have been trying to contend with these factors, some countries in the Middle East, are positioning themselves to be major players by embarking on substantial
FOSKOR
//WE HOPE TO SEND THE MESSAGE THAT FOSKOR IS A BEST COMPANY TO WORK FOR. WE VALUE OUR PEOPLE, WE VALUE THE COMMUNITIES IN WHICH WE OPERATE AND WE VALUE OUR ENVIRONMENT// capacity increase projects which will have the effect of defining a new base. The above mentioned factors have resulted in the profit margins being squeezed thus resulting in a different approach being taken where a cost based approach to pricing is being adopted,” he said. Pitse reiterated these concerns, saying: “Our strategy, in response to the challenges we face, calls for improvement in efficiencies and throughput for creating operational excellence. “Over the long term, there will be continued secular demand
for phosphates. The industry will continue to grow at about 3% per annum. The market fundamentals are expected to improve. However, there will be a need for caution given the global dynamics of the business and events at a macroeconomic level in key markets such as India, Brazil and China.” CFO, Theuns Koekemoer was slightly more positive, saying: “Despite continued tough market conditions, the company has begun to show positive momentum. The operating profit increased to R118 million from a loss of R72 million in 2013, primarily
reflecting the growth in magnetite revenues and the impact of the weakening of the Rand against the US Dollar over the period.” One things is for sure, as long as Foskor continues to invest in its people then it should be able to steer its way through the uncertainties that keep cropping up. Companies that have a broad, trusted, innovative partnerships with employees seem to be those that perform well and while that status has been threatened at Foskor it remains for now and will hopefully be solidified in the future.
FOSKOR +27 11 347 0600 recruitment@foskor.co.za www.foskor.co.za
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EXHIBITION CALENDAR
KEY UPCOMING EVENTS ACROSS THE COUNTRY Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors. AFRICAN PORTS EVOLUTION 02-04 NOVEMBER 2015 African Ports Evolution 2015 provides the African maritime sector with an interactive conference and exhibition to focus on the challenges faced with ports and corridor development, as well as terminal management and service delivery to the port users.
//TABLE OF ALL EVENTS: POWER NIGERIA Eko le Meridien Expo Centre, Nigeria 03-05 November MACHTECH Cairo International Convention & Exhibition Centre 06-09 November MOMBASA HOMES EXPO Sarova Whitesands Beach Resort, Kenya 06-08 October WHISKY LIVE FESTIVAL Sandton Convention Centre 11-13 November GLOBAL SOURCES ELECTRONICS SHOW JOHANNESBURG Johannesburg Expo Centre 12-14 November EASTERN CAPE MARITIME SUMMIT Broadwalk Convention Centre, Port Elizabeth 13 November
GREEN BUILDING CONVENTION 2015 04-06 NOVEMBER 2015 The annual Green Building Convention is leading the sustainability journey in Southern African commercial property through inspiration, thought leadership and action. Industry leaders join the conversation and engage the audience to make a difference to the way we build and do business in the built environment. This signature event offers real opportunity for the right kind of co-operation and networking between industry professionals from investors, financiers and developers to professional services and product manufacturers. We aim to make a strong impact on the industry; address environmentally sound development; and demonstrate opportunities for sustainable success.
TOWNSHIP BUSINESS EXPO 18-20 NOVEMBER 2015 With the focus on entrepreneurialism, support of SMME’s, BEE compliant procurement and the growth of township businesses, the Expo and accompanying publication, My Growing Business, directly reaches a previously untapped market. With Government committed to investing millions in this sector, this expo gives you the opportunity to infiltrate this market, a market that is guaranteed to be the way forward. The expo will host 500 - 1000 hand-picked delegates and will be rolled out throughout Gauteng on an annual basis, and will take place in the heart of the townships themselves.
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CLOUD WORLD FORUM AFRICA Cape Town International Convention Centre 17-19 November AFRICA INTERNATIONAL AGRO-TECH EXPO Kenyatta International Conference Centre 24-26 November
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