Enterprise Africa September 2016

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THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS

AFRICA

ENTERPRISE September 2016

www.enterprise-africa.net

MEL BROOKS:

G4S Builds Strong Business by Developing & Employing the

‘Best People’

ALSO IN THIS ISSUE:

Mazda / Prommac / Airvent / Resource Generation


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EDITOR’S LETTER

Joe Forshaw EDITOR joe@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 Shaun Cousins PROJECT MANAGER shaun@enterprise-africa.net Shannon James PROJECT MANAGER shannon@enterprise-africa.net Jane Larkman ACCOUNTS MANAGER finance@enterprise-africa.net Harvey Tarlton SENIOR DESIGNER harvey@enterprise-africa.net

Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-multimedia.com www.cmb-multimedia.com 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 2016

Welcome to our latest edition…

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This month we learn about company culture and ‘the way we do things around here’. Obviously, the culture in one business is totally different to the next, and each organisation has to sculpt its own identity through the development of a value system that is instilled by management. Company culture is widely regarded as one of the most important factors involved in creating a profitable business but also one of the most overlooked. Some think of it as a cost; an expense that should be minimised. But those that correctly invest, quickly see benefits. Take PROMMAC for example, a South African engineering firm. The company has created a culture that sees employees involved in decisions, they have opportunities for advancement, they have an environment in which they can relax, and they are upskilled with a focus on quality. Instilling this culture has resulted in a massive improvement on the bottom line over the past few years and it’s not the only example where this has happened. Other examples include Airvent, a Cape Town-based leader in the HVAC industry; Mazda Southern Africa, the international brand that is changing business models in South Africa; Le-Sel Research, the manufacturing business that has created a culture of improvement and growth; and G4S, one of the largest employers in Africa, whose culture of people development is unmatched and has been recognised around the world. All of these organisations have realised the results from a people focussed culture that favours development and investment in employees and as a result, all are growing and creating further employment in these times of uncertainty. They are truly examples to follow – read on for more information. If you are trying to build a culture of excellence and witnessing the results, talk to us about it: @EnterpriseAfri1

Joe Forshaw EDITOR

GET IN TOUCH +44 (0) 20 8123 7859 joe@enterprise-africa.net www.enterprise-africa.net

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06/NEWS: The Month that was... A round up of some of the latest news stories from around the country

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

8/G4S: G4S Builds Strong Business by Developing & Employing ‘Best People’ Developing and training people is perhaps the most important investment a business will ever make. People are your brand, your image, your product and your service – without quality people, a business cannot offer quality to customers. In Africa, G4S understands the importance of people development and has been recognised as one of the leaders in this field.

4 / September 2016 / www.enterprise-africa.net


CONTENTS

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16/PROMMAC: Maintaining A Positive Culture With some reports suggesting that just 31% of employees are engaged at work, development of a positive culture where staff are motivated and customers delighted is now a vital aspect of business planning. In South Africa, PROMMAC has developed the perfect culture and it is helping the company expand into new markets.

26/MAZDA SOUTHERN AFRICA: “We don’t want to be car-centric, we want to be customer-centric” As Mazda emerges from the pack of international car makers in South Africa as a contender for pole position in the future, word is beginning to spread that this is an automotive business that wants to look after your investment by engaging an innovative, confident, well-trained and customer-centric dealer network.

34/TRANSNET: So Far So Good for Transnet’s MDS Probably one of SA’s best performing SOCs, Transnet is driving rail, pipeline, ports and infrastructure forward. After announcing positive financial results, the company is now looking to grow from its solid base and continue with its all-important MDS.

40/LE-SEL RESEARCH: Investment Boost for Leading SA Manufacturer After partnering with the IDC in order to boost growth, Le-Sel Research is now seeing the results of some much needed investment. CEO, Andrew Frodsham tells Enterprise Africa more about how this long-established SA manufacturing business will grow in the future.

46/AIRVENT CAPE: 15 Years and Counting for Airvent Cape Expert advice, professional and precise air-conditioner installation, qualified technicians and an unrivalled focus on quality service have positioned Airvent Cape as one of the most respected and recognised companies in the South African HVAC industry. Group CEO, Mark Rogers tells Enterprise Africa more about the company’s growth over the last 15 years.

84/ 52/RESOURCE GENERATION: Boikarabelo Coal Mine Project Propels Resgen to ‘Industry Leader’ Status South Africa needs coal to fuel 90% of its electrical energy demand but apart from a handful of players, companies are seemingly unwilling to invest in this lucrative market. Enter Resource Generation, the exploration company turned junior miner looking to make the most of South Africa’s prosperous Waterberg region.

58/E&C CHARCOAL: Leading SA Company Hot for European Export Pietermaritzburg-based E&C Charcoal is one of the country’s leading producers of charcoal products that are used for braaing all over SA. But it’s in the export market where this seasoned organisation really shines, demonstrating that SA is the perfect choice for international customers looking for quality products and service.

64/MCCORMICK PROPERTY DEVELOPMENT Rural Retail Development Pioneers A local, family run business, McCormick Property Development has been leading its industry, while remaining committed to its values, since its establishment 33 years ago.

70/CENTURY PROPERTY DEVELOPMENT: When Property Becomes A Lifestyle With its origins in 1975 as a developer of shopping centres, Century Property Developments continually produce valuable assets of enduring quality and integrity which enhance the areas where they are located.

74/POYNTING ANTENNAS: Keeping you Connected Poynting’s primary offerings are solutions geared toward wireless high speed data applications, boasting a legacy of innovative design, manufacture and delivery of integrated antenna solutions to its partners and customers worldwide.

www.enterprise-africa.net / September 2016 / 5


BIG PENALTY FINE FOR ARCELORMITTAL SA ArcelorMittal South Africa Limited (AMSA) has agreed to pay an administrative penalty of R1.5 billion for its involvement in the long steel and scrap metal cartels. The amount, which will be paid in five annual instalments of no less than R300 million, will cover all pending cases against AMSA, including those that are still under investigation. In addition, AMSA has committed to a R4.64 billion capital expenditure over five years. The penalty comes as a result of an investigation by the Competition Commission. “This investigation was initiated following concerns about high and increasing prices of steel products observed by the Commission, despite South Africa being a net exporter of steel,” the Commission said.

The Commission’s investigation found that AMSA, CISCO, Scaw and Cape Gate (Pty) Ltd (Cape Gate), being competitors in the manufacturing of long steel products, engaged in collusion by fixing prices and discounts, allocating customers and sharing commercially sensitive information through the South African Iron and Steel Institute (SAISI) and the South African Reinforced Concrete Engineers’ Association. In December 2009, the Commission initiated an investigation against the consumers of scrap, namely AMSA, Highveld, Cape Gate, CISCO and Columbus Stainless Steel (Pty) Ltd (Columbus Steel) for collusive practices. The Commission’s investigation found that AMSA, Columbus Steel, Cape Gate and Scaw fixed the purchase price

of scrap metal. Minister of Economic Development Ebrahim Patel said the action by the competition authorities is part of a crackdown against abuse of market power and price-fixing that undermines the performance of the economy, imposes unnecessary costs on downstream factories and damages local jobs. “South Africa’s competitiveness and industrial performance require an efficient basic steel supplier industry. “High levels of concentration, together with collusion, undermines our national goals,” Minister Patel said. He said South Africa wants to send a message that it is open for business and it will act against conduct that damages competition and jobs.

FAMOUS BRANDS IN INTERNATIONAL BURGER DEAL

Fast food group Famous Brands has double the upmarket burger chain’s 75 British purchased Britain’s Gourmet Burger Kitchen stores in the next five years. (GBK) for R2.1bn, The company managed to save a major The group, which also owns casual amount during the purchase thanks to the dining chain Wimpy UK and fast food assets such dip in the UK currency thanks to the Brexit as Steers and Debonairs, plans to vote result.

6 / September 2016 / www.enterprise-africa.net

The firm started negotiations with GBK earlier this year and saved as much as R700m on the acquisition as the pound slumped following Britain’s decision to leave the European Union and South Africa’s Rand firmed after relatively peaceful local elections.


NEWS ROUNDUP SA POPULATION INCREASES South Africa’s population is now estimated at 55.91 million, Statistician General Pali Lehohla said last month. Releasing the results of the 2016 Mid-year Population Estimates at a media briefing in Pretoria, Lehohla said South Africa’s population grew by 1.62% between 2015 and 2016. According to the report, the black African population is in the majority with 45.11 million people and constitutes approximately 81% of the total South African population. The white population is estimated at 4.52 million, while the coloured population is estimated 4.9 million with the Indian/Asian population at 1.39 million. Gauteng has the largest share of the population with approximately 13.5 million people living in the province, followed by KwaZuluNatal with 11.1 million people. The Northern Cape remained as the province with the smallest share of the South African population, with approximately 1.17 million people living in that province. The report found that 51% (28.53 million) of South Africa’s population is female. The average life expectancy of South Africans is at 62.4 years, while life expectancy at birth for 2016 is estimated at 59.7 years for males and 65.1 years for females.

R11BN INVESTMENT INTO COEGA BEGINS

The Coega Development Corporation (CDC) recently hosted a sod turning ceremony to mark the R11 billion investment by the Beijing Automobile International Corporation (BAIC) at the Coega Industrial Development Zone. Earlier in August, Trade and Industry Minister Rob Davies announced the successful contractual conclusion between BAIC and the CDC to establish a completely knocked down (CKD) automotive manufacturing plant in the Coega IDZ. The BAIC investment is an outcome of the Forum on ChinaAfrica Cooperation (FOCAC) that was held in Johannesburg in December 2015, where President Jacob Zuma and Chinese Prime Minister Xi Jinping signed no less than 26 bilateral agreements valued at approximately R100 billion. The Minister described the investment as significant and deepens

South Africa’s economic relationship with China. “The size of this investment demonstrates confidence by China and confidence in South Africa as an investment destination. The investment is strategic and is a major project in terms of our bilateral relationship and a key project supported by the Inter Ministerial Committee on Investment,” said Minister Davies at the time. The project positions the Eastern Cape as an automotive hub and has the potential of deepening the component supply chain, job creation and economic development. According to Dr Ayanda Vilakazi, CDC Unit Head of marketing and communications, the 85,000 m2 plant will occupy 54 hectares of land in Zone 1 of the Coega IDZ. It is expected to create 2500 jobs directly and more than 10,600 jobs indirectly.

www.enterprise-africa.net / September 2016 / 7


G4S

G4S Builds Strong Business by Developing &

Employing ‘Best People’ PRODUCTION: Karl Pietersen

Developing and training people is perhaps the most important investment a business will ever make. People are your brand, your image, your product and your service – without quality people, a business cannot offer quality to customers. In Africa, G4S understands the importance of employing good people, investing in their development and has been recognised as one of the leaders in this field.

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As we discovered last month, the work that is undertaken in Africa by G4S, the world’s leading private security company, is vital. It underpins the operations of entire industries and helps individuals and organisations by providing security products, services and solutions. But what is it that allows this mammoth, Pan-African business to perform such important work, 365 days of the year, to the delight of its customer base, and while regularly gaining recognition from various international

8 / September 2016 / www.enterprise-africa.net

bodies? According to Regional President, Mel Brooks, it’s G4S’s 119,000 people in Africa that set it apart. “I believe that the great work our employees does to ‘secure your world’ and their continuous efforts to ‘live’ our company values, strengthens our image and supports us in unremittingly providing expert services to our customers,” he says. And he’s not the only one who understands the unrivalled importance of people in business. Former CEO



BUSINESS PROFILE

of Xerox Corporation, Anne Mulcahy said: “Employees are a company’s greatest asset - they’re your competitive advantage. You want to attract and retain the best; provide them with encouragement, stimulus, and make them feel that they are an integral part of the company’s mission.” Microsoft founder, Bill Gates said: “The key for us, number one, has always been hiring very smart people.” Lawrence Bossidy, former CEO at Honeywell and executive at GE said: “I am convinced that nothing we do is more important than hiring and developing people. At the end of the day you bet on people, not on strategies.” So it’s clear that in the today’s modern, largescale businesses, human capital is a primary concern. Attracting people, developing them, maintaining them and rewarding them is a tricky business. The traditional HR model has

10 / September 2016 / www.enterprise-africa.net


G4S

evolved over time and people are no longer just motivated by a pay cheque. A happy and productive workforce is driven by a company-wide culture that is developed by the leadership and is made up of a mix of values, ideas, visions and traits that ultimately drive the business towards its goals. So when your business is one of the largest employers on the continent, with people from diverse backgrounds and geographical locations, and the services you provide are so important to your customer’s operations, where do you even begin planning an effective people development strategy? According to Brooks, education, training and development are central. “With any growing economy, one of the key requirements is to drive education, training and development. A big percentage of people are under 25 and so programmes we put in place are to help us establish the workforce of the future

//OUR SIGNIFICANT FOOTPRINT ACROSS AFRICA MEANS THAT THE ECONOMIC AND SOCIAL IMPACT OF OUR OPERATIONS AFFECTS THE LIVES OF MILLIONS OF PEOPLE ACROSS THE CONTINENT// and to develop skills that our market and our business will require going forward. At this moment in time, we do find shortages of certain skills and we struggle to find people at the level of competence that we want so we’ve set up programmes that will address that and help, particularly, young people to develop a career in security and enter the workplace with a good set of core skills,” he says. LEARNERSHIP PROGRAMME In May, G4S announced that 300 previously unemployed men and women

had entered into a training programme that would see them train towards accredited security qualifications with the goal of raising industry standards in South Africa. The trainees gained classroom and practical experience, and the high level of training received means that they will be able to not only market themselves as potential employees for G4S but also to the wider security industry. Tian Taljaard, Operations Director, G4S Secure Solutions (SA) said: “It is so encouraging to see the enthusiasm

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www.enterprise-africa.net / September 2016 / 11


BUSINESS PROFILE

of this young group of South Africans who are excited by the opportunity to become a part of the private security industry and part of the G4S family. “This type of initiative is also good for business as it allows G4S to introduce new, well-trained personnel to our customers and to the broader industry.” The company is hoping that, depending on its needs, this scheme can become an annual process. “Although the security industry in South Africa is highly competitive, we are all fighting for the same cause – a safer and more secure South Africa,” says Brooks. “The security standards that G4S teach the trainees during their three month theory session and eight month practical training are aligned with international industry standards and allow the trainees to market themselves in the security industry. Upskilled and trustworthy candidates are always in

demand in our line of business. “We have already employed a number of these candidates and we have multiple cases where our customers (e.g. Neotel, Sahara Computers, Grand Central Airport) have specifically requested that these trainees be added to their permanent security detail, after observing the candidates during the eight months practical training deployment on their premises. The general impression that we receive from our customers is that these employees are motivated, well trained and punctual. “I can sincerely say that we can see the benefits that corporate social investment programmes, such as our Learnership Programme in South Africa, has for the business. Not only does the programme improve our engagement with local communities, but it also provides us with an innovative way of upskilling our talent pool that is used for

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workforce planning,” he adds. The opportunities that G4S provides for its people are being clasped with both hands by enthusiastic employees who are excited about a career in security and Brooks says that within the company, there are case studies of how training programmes have helped employees climb the ladder. “Aside from the Learnership Programme in South Africa, we have several examples within G4S where an individual with no security industry experience, decides to make a career of security and develop themselves from a trainee to supervisor and even managerial level. It is not only about G4S providing employees with opportunities but employees who decide to take charge of their own careers and develop themselves by actively engaging with the business, stepping forward and demonstrating that they do want to achieve more. In an organisation like ours, there are always opportunities for those who want to grow their careers and excel,” he says. “G4S is often required to recruit a large number of employees within a very limited customer deployment deadline. To have an available pool of upskilled candidates, who have already been trained in standard security practices such as bribery and corruption, allows us to provide our customers with high quality security officers at a much faster turnaround time,” he explains. TOP EMPLOYER 2016 G4S’s fantastic employee offerings, extensive training programmes and unrelenting drive towards upskilling and developing its people, and the industry, has resulted in international recognition. In October 2015, the company was recognised by the The Top Employers Institute as one of Africa’s Top Employers 2016. The Top Employers certification is only awarded to organisations that achieve


G4S

the highest standards of excellence in employee conditions. G4S is the only private security company in Africa that has ever been awarded Top Employer certification and marks further success following nine certifications in 2013, 11 certifications in 2014 and 2015, and now 13 certifications in 2016. Across Africa, G4S is recognised as a Top Employer in Botswana, Cameroon, Côte d’Ivoire, DRC, Ghana, Kenya, Malawi, Morocco, Mozambique, Namibia, Nigeria, South Africa and Zambia. The Top Employers Institute said of the company’s South African operation: “Our comprehensive independent research revealed that G4S 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.” Elanie Kruger, Africa HR Director for G4S said: “Our business is defined by the high standards and expertise of our people, and our customers rely on us to provide high quality, screened, effective employees to secure their assets and business activities. “This award recognises the work that we do to make sure our colleagues are supported to be the best they can be, and we’re proud to be a Top Employer for the fourth consecutive year.” Brooks explains that, apart from making the company stand out when it comes to attracting top talent, international recognition like this is also beneficial for marketing G4S to potential customers – perhaps one of the most underrated effects of an effective HR strategy. “We are very proud that G4S is the only private security company in Africa that has ever been awarded Top Employer certification. Being the largest private employer in Africa,

it endorses our commitment to our people and means that we adopt world-class working conditions. Customers and employees alike want to be associated with a ‘good employer’,” he says. “Top Employer certification has strengthened our position as an ‘Employer of Choice’. Our career centre attracts thousands of potential employees per annum. “In todays’ market, potential employees are selective in choosing their next employer. Good people practices are integral in our operations and differentiates us from our competitors and our ability to attract talent. “Scores achieved in the independent Top Employer certification process, also allows G4S to benchmark ourselves against the other Top Employers on a global scale,” he adds.

PAN-AFRICAN OPERATIONS While we learned last month that G4S is innovating its service portfolio and beginning to focus more and more on technology developments, manned security still remains a significant solution that is heavily in demand around the continent. Of course, working in 29 of the 54 African countries, with different threats, languages, cultures, political systems and legal requirements, G4S has to ensure that it is well-represented in all of its different territories and again, people are the key aspect in driving success across multiple geographies. But thanks to lacking economic development and poor educational systems, skills gaps can appear in certain markets and this is where G4S training programmes are so important for the company and its employees. “There’s an interesting fact that if

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www.enterprise-africa.net / September 2016 / 13


BUSINESS PROFILE

young people in Africa get one years’ worth of work experience, they are 80% more likely to have work for the rest of their life so whatever experience we can give people as early as possible, it will underpin their future and their ability to maintain their families going forward,” says Brooks. “We work from Cairo to Cape Town and so the availability of security officers and management personnel to deliver the premium services that G4S wants to deliver means that we need people who are well-trained, well-educated and with the correct language capabilities. In some countries, these skills are just not there so we need to develop them ourselves. “Our ever-growing customer base in Africa and globally, continues to trust in the quality, integrity and expertise of our employees, products and services. The security industry as a whole and the sometimes complex and hostile environments in which our employees work, poses many risks and challenges. Our customers and the general public are not ignorant of this fact and applaud the professional manner in which G4S overcomes and handles these challenges,” he adds. With some of the world’s fastest growing economies and largely underdeveloped regions, Africa remains one of the most attractive markets for international companies looking for new growth prospects. However, doing business in Africa can be extremely challenging and Brooks says that having a meaningful impact on the communities in which you operate can bring big benefits. “In our region, we have many fantastic CSR projects, all of which primarily focus on the development and support of Africa’s youth, mainly through education, healthcare, welfare and development through sport initiatives,” he explains. “As an organisation that specialises in the management of risk, we also recognise the impact that our business activities can have on the environment. We have therefore partnered with our customers, employees and suppliers to invest in energy

efficient technologies to reduce waste and water consumption. In 2015 alone, our employees participated in over 110 community projects and dedicated over 9400 employee hours. “Our significant footprint across Africa means that the economic and social impact of our operations affects the lives of millions of people across the continent. Extreme poverty, illiteracy, safety and unemployment, continue to be some of the most challenging realities of doing business in Africa. G4S believes that community upliftment is key to a sustainable business model in Africa. If we do not invest in the upskilling and education of our communities, then we will not be able to employee the ‘Best People’.” PROMOTING CORE VALUES G4S’s core values, and elements which underpin its global HR strategy, are Safety First, Customer Focus, Integrity, Best People, Performance, Teamwork and collaboration, and Expertise. These values drive everything the company does and successfully applying the values to day-to-day operations results in the delivery of excellent customer service and, ultimately, strong financial performance. “Everything comes down to our core values as an organisation,” admits Brooks. “One of the reasons we’ve obtained Top Employer status is because it’s fundamentally underpinned by our company values. We treat our people with respect and we train them well. We pay our people well and they are well looked after. We aspire to give people a future and career opportunities and that isn’t always the case with organisations across Africa. When talking to our customers, it is also important to them and it’s a meeting of values which can be hugely important. The Top Employer award allows us to connect with companies that place a similar emphasis on the people they employ.” The constant promotion of these values, the development of a culture,

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the ongoing focus on training and development, and the collection of important accolades is proving to be a valuable tool for G4S, both internally and externally. According to LinkedIn HR Contributor, Alasdair Hobbs: “The psychological link between a well-motivated and highly trained workforce, and substantial business performance is a scientific fact.” Brooks agrees, saying: “During 2015, nearly 80% of all G4S Africa employees participated in our biennial Employee Engagement Survey. More than 80,000 employees confirmed that they are well trained to perform their jobs, understand how to behave in line with the G4S values and believe G4S takes safety in the workplace seriously. “It’s not only a measure of how well our values are being adhered to or absorbed but it allows us to show to our customer’s what type of organisation we are so it can have commercial value, without a doubt.” Perhaps the most important indicator that G4S’s HR strategy and people development programmes are successful comes in the form of feedback from the industry. “I think that if you were to approach a security officer irrespective of who they worked for and asked them who they aspired to work for, they would say G4S,” says Brooks. This recognition further bolsters the company’s brand and image and makes bringing on-board quality people - the key to success that little bit easier.

+27 (0)10 001 4500 crm@africa.g4s.com www.g4s.com


G4S

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PROMMAC

Maintaining A

Positive Culture

PRODUCTION: David Napier

With some reports suggesting that just 31% of employees are engaged at work, development of a positive culture where staff are motivated and customers delighted is now a vital aspect of business planning. In South Africa, PROMMAC has developed a positive culture and it is helping the company expand into new markets.

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Every company that utilises any form of heavy industrial mechanical machinery has to create a plan for the maintenance and upkeep of that machinery to ensure that it performs to the best of its ability and is not hampered by unexpected breakdowns throughout its life. In many industries, heavy industrial equipment has completely changed the way tasks are performed, making processes quicker, more efficient and cheaper, and so the plant is respected and cared for. The mining and energy industries are

just two examples where heavy plant is a key element in the creation of prized products and in these sectors, care for heavy plant and processing equipment is a big but vital expense. This is where companies like Secunda-based PROMMAC offer a much-needed service. Experts in maintenance, shutdowns, commissioning, projects and drone services, PROMMAC is recognised internationally as a leader in its field and has successfully completed projects, shutdowns and plant maintenance for

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BUSINESS PROFILE

some of the world’s most prominent petrochemical and energy businesses. CEO, Jason English puts the company’s success down to its unique culture, that has been developed to make the most of employees and opportunities. “We’re owner-managed, very focussed, with a great team culture and we’re reinvesting into our people. If you have a well-managed business with a great culture and you’re investing in people that work there, the recipe can only lead to a good meal. It’s working for us right now; it’s up to us as leaders to avoid negative sentiment; leadership is the ability to hide your panic from others. We have to make sure our employees feel like they’re part of something even during these challenging times and if they’re involved then they’ll be energised and that shows through to our clients,” he says.

In 2015, global business magazine, Forbes, stated that culture was the ‘hottest topic in business’ and is an issue that business leaders need to get to grips with quickly. Thanks to the ever growing influence of social media, employees have more bargaining power than ever before. LinkedIn, Indeed, Glassdoor and similar sites all help to turn a company’s employment brand into public information so if you’re not a great place to work, people find out fast and this shifts power into the hands of job-seekers. According to Forbes specialist HR contributor, Josh Bersin, “culture is the set of behaviours, values, artifacts, reward systems, and rituals that make up your organisation” and at PROMMAC it’s something that is taken very seriously and the focus on developing a positive culture has led to excellent results.

“There’s an old joke that I always have with my COO and he’ll say ‘what if we invest in the people and they leave?’ and I’ll say ‘what if we don’t invest in the people and they stay?’ so it’s a catch 22,” explains English. “From our perspective, the market is challenging but we focus on two things. Firstly, build a culture where people want to work for you and that way it becomes easier to attract talent. We’ve done a lot of innovative things and I’ve spent a bit of time in New York at Innovation Week as a YPO member accessing the big innovative companies of the world and we’ve bought some creative thinking back to our workplace. We have think rooms with Hi-Fi systems and bean bags, we have a gym to get the endorphins flowing, we have war dances in the mornings to suit the local communities and create fun and

Choose DROMEX for the leading innovative head-to-toe solutions that will equip you and your team to operate safely in any potentially hazardous environment.

Protecting the lives that inhabit our workplaces doesn’t happen by accident, it involves a detailed assessment of the environment you and your staff will be faced with daily and implementing a sustainable plan that evolves with the needs of your business. Companies that have experienced on-site injuries will know that the expense is not only medical but also in the traumatic effect on productivity. A cost that companies can avoid almost completely by ensuring that their bread-winners are appropriately protected in the course of their role. It’s important to recognise that global business practices have changed and we are called not merely to make money but to be organisations that hear the heartbeat in the workforce and cultivate a culture of accountability. This evolution means that employees are also no longer willing to accept safety mediocrity, which has been commonplace.

18 / September 2016 / www.enterprise-africa.net

Stel Stylianou is at the helm and, together with his team of experts, dedicated to personally selecting every quality safety item in our range at the best prices so that we’re able to provide PPE that doesn’t cost an arm and a leg but that will save more than a hand or a foot. A process that means we stock EN Certified products from ISO 9002 accredited companies around the world. We have a state-of-the art 35 000m2 warehousing facility, which stores vast quantities of all our products which along with an established logistics network, means we are able to meet our customers’ requirements within 2-3 days. Our extensive experience in the various fields requiring PPE enables us to assist all our customers with technical back-up and selecting the appropriate products for their specific application.


THE MOST EXPENSIVE THING YOU CAN DO IS BUY CHEAP PPE. At Dromex we believe that all employees are entitled to maximum protection and that employers should never have to compromise on the quality of the protective products they supply. We believe that it is our responsibility to supply products that will deliver on this promise and its not something we take lightly.

Know safety. No injury. Know Dromex.

HEAD OFFICE Unit 1, 1 Blase Road, New Germany, 3610 T. +27 (0)31 713 1960 F. +27 (0)31 705 6508 E-Fax. 0866 844 595 Email. sales@dromex.co.za Web. www.dromex.net


BUSINESS PROFILE

PROMMAC CEO- JASON ENGLISH

enjoyment and a sense of belonging, we have many initiatives to reward good performance and we’re doing things that completely break the status-quo of typical red tape driven construction companies. The second aspect is about believing and investing in people. We have outlaid significant amounts of cash and invested in in-house training programmes which we have designed ourselves in the form of videos so that we can communicate in any language. This means we are able to break down the barriers of reading deficiencies and communicate in a visual way. We have a team that is constantly looking at innovative technologies which we can then use as platforms for training. We’ve also created a robust set of systems so people can fall in line but are not driven by red-tape. All of the necessary procedures are in place for general governance, general flow

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processes and about how things are done in the company so that people can step straight into it without hesitation. The key for us is to create an environment where employees natural entrepreneurial spirit can flare without risking the business principles” And to those who consider this type of investment a waste of money and time, an unnecessary expense, and something which is for HR textbooks, just listen to the effect the positive culture has had on the company’s results: “We’ve continued to see annual growth way in excess of the norm year on year for the past four years. In those four years, we’ve grown the business revenue nearly 1000%,” says English. CULTURE SETS PROMMAC APART PROMMAC has positioned itself as a partner to its customers; adding value rather than costing money, and of course, always providing service of the highest possible standard. This focus on quality along with an internal culture of excellence mean that PROMMAC is often chosen as an outsource partner, above its competitors, and goes on to build long-term relationships. “We have never lost a term contract that was awarded to us over the past four years and this is testament to our client’s belief in our service,” says English. “We work predominantly on industrial processing plants carrying out mechanical maintenance and shutdown management activities, but also have numerous divisions focussing on projects, drone operations and electrical and instrumentation. In 2014, the group acquired KUMUNYACK which is a focussed electrical and instrumentation business and is the backbone of the groups E&I strength. A lot of clients are looking at doing maintenance themselves but our approach is slightly different; we focus on keeping their plants running so they can focus on their core business - usually producing some form of commodity,” explains English. “When people undertake maintenance themselves, they employ people and people become complacent over the years, they start taking shortcuts and the plants deteriorate. Injuries become


PROMMAC

more prevalent and it’s difficult to fire lazy people. When clients have a dedicated service provider carrying out this work, they have an advantage as they can very quickly make changes if the service provider is not performing. Because of this, we always have to be on top of our game and we seldom have complacency setting in – that is where we have made ourselves stand out from the crowd.” This all comes back to the culture created by the company’s management. People want to go to work at PROMMAC, they want to perform well and they want to work alongside the experienced management team. “Most of our competitors are big international companies and most are listed businesses. We are one of the very few sizeable businesses that remains privately owned and that gives us a unique cultural advantage as owner-managed businesses are significantly more impactful than big listed companies who are usually run by managers who work for salaries. The owner-managed culture that we have is one of our strengths as this is our bread and butter and determines our salaries. The competition can do the work but they don’t have the culture that we have,” explains English. And the culture at PROMMAC is not designed as a marketing tool to enhance reputation, it’s developed so that the company can continually perform excellent work for its clients while remaining committed to the people that carry out that work. Over the years, the company has entered many of its employees into training and development schemes and KPI incentive programs and it is seeing the benefit. “We’ve taken colleagues from IT and turned them into onsite project coordinators and they now run jobs which are 150 man strong. We’ve taken employees who were working in the air-conditioning business and we’ve sent them through the system and they now work in project coordinator roles. We’ve had general workers who started with us sweeping floors who are at the point of becoming artisans and executing

//IN 2012, THE BUSINESS WAS SMALL – IT HAD A TURNOVER OF R30 MILLION AND AROUND 200 EMPLOYEES. FOUR YEARS LATER, WE HAVE R350 MILLION TURNOVER, 2000 EMPLOYEES AND A DIVERSIFIED CLIENT BASE RIGHT ACROSS AFRICA// important work on-site. It’s not always the perfect result, but it’s certainly aiding the culture of building within,” says English. This type of upskilling is not only good for PROMMAC and its customers but it’s also good for the wider industry and South Africa as a whole, bringing new skills and a capable labour force to the market. With the current economic climate making grim reading for most company directors, upskilling and development of the labour market is hugely beneficial and provides a platform for economic growth. “There’s definitely been a knock-on effect from an economic point of view but, as businesses, it’s how we look at these things,” says English. “I always think that in times of crisis there’s lots of opportunity. We don’t look at the crisis; I have a saying ‘worry about the things that you can control and don’t worry about the things you can’t’ so we can’t control the economy but we can control the direction of our business. Although we are under a constant challenge, we haven’t been impacted in a major way by the economy as we’ve changed strategy along the way by offering different types of solutions or reengineering our solutions to meet the changing needs of the clients and we achieved significant sales growth which has helped offset the negative economy. Our clients are under tremendous cost-cutting pressure so we look at where they’re spending significant cash in their own business and see if there are opportunities where we could better manage that area for them.” 11 YEARS OF GROWTH As mentioned, PROMMAC has achieved phenomenal growth in the past four years. “The company was founded in

2005 by Ray Walters,” explains English. “He had a single client base and was operating in local regions in South Africa. “In 2012, I left the corporate world to become the CEO of this company back in South Africa after spending 14 years with a large international oil and gas engineering services business. The business was small – it had a turnover of R30 million and around 200 employees. Four years later, we have in excess of R300 million turnover, 2000 employees and a diversified client base right across Africa.” Where some organisations might see the achievements made by PROMMAC as ‘enough’, English details plans for further growth, both in Africa and internationally – this is not a business that is happy to stand still and again ties back to the company culture of continuous improvement. One of the targets that will be keenly pursued in the coming months and years will be expanding businesses that PROMMAC has recently acquired in the Middle East – a region known for infrastructure, energy and petrochemical industry developments and a region in which the IMF has recently upwardly revised its growth predictions. “In the past four years, we’ve completed a couple of acquisitions and those have helped us expand. Through those acquisitions we’ve extended our client base very nicely,” says the CEO. “We have two businesses in the Middle East, both within the shareholder group of companies which are based out of Dubai with offices in Saudi Arabia and Abu Dhabi... Projeco Continues on page 24

www.enterprise-africa.net / September 2016 / 21


Our company name says it all PROFESSIONAL RIGGING SERVICES Its what we do. . Pro-Rig Trading has more than 100 years combined experience with Permanent Rigging Crews and additional Project and Shutdown crews in a wide range of industries. . We Specialize in moving of all machines, construction, erections maintenace and long term projects. We also supply Rigging Studies, Method Statements and Rigging Equipment as part of our turn key solutions to ensure that all projects are done in a timely, cost efficient and safe manner. . Please visit www.prorig.co.za for more projects



BUSINESS PROFILE

Continues on page 21 which is focussed on shutdowns is fairly small but we are starting to see some movement in the market. Our other affiliated company, Al Laith, is focussed on industrial services for construction and events in the Middle East and that’s a little diversified from the usual oil and gas work that we do. It’s a big business with around 700 people and it’s involved in some big projects like the Dubai Classic Golf Tournament and various large concerts amongst others. We are still learning and understanding a lot about the business and I believe we will learn a lot about the team, the core of the business, and how we as Prommac can learn from our affiliated businesses during the coming events season,” says English.

While logistically, PROMMAC’s Middle Eastern businesses are more than 7000 miles away from the head office in Mpumalanga, there are many similarities between the leadership strategies in the different regions and English is keen to install a similar culture in Projeco to the one that has proven so successful in South Africa. “Sheikh Mohammed’s vision for Dubai is very similar to the vision we have for our business. He’s a visionary leader that sees times of challenge as times of opportunity and we believe in that. I’ve attended a private function with him where he has detailed his plans for Dubai and for us, it’s very exciting. He wants to grow the Middle East to the number one tourist

24 / September 2016 / www.enterprise-africa.net

destination in the world with the biggest airport and huge infrastructure and that’s why our shareholder group entered the events space in that region,” he says. PROMMAC will also be focussing on its home market and expanding what is already a solid base in South Africa and a strong pipeline on the continent. “We’ve got an extensive operation with Sasol Chemicals and Sasol Synthetic Fuels, we have worked with Chevron and we’ve just finished our first shut down in the mining space,” says English. “The mining space has been in dire straits but we actively pursued that industry when everyone said we were mad and ended up landing a shutdown with a large blue-chip client. We’re


PROMMAC

actively involved in the mining industry and we’re trying to expand there, we’re trying to expand in refineries in SA, and in terms of Africa, we’re looking to see out the projects that we’re busy with such as Puma Energy in the DRC, Sherritt in Madagascar and it’s about consolidation with instability with the Dollar and the Rand in Africa.” Being a multi-disciplined, multiservice organisation, PROMMAC’s expansion is not just geographical; the company is also looking at add to its already large service repertoire by offering another unique packages: “We’re also focussed on expanding our Remotely Piloted Aircraft (drone) operations locally where we have a lot of backup support from another

affiliated company (IRIS Group) who carries out work in Europe and Asia,” says English. With all of these expansion strategies in place, and with a strong business model building success in PROMMAC’s core markets in Africa, this is a company that is extremely well positioned. With the culture that has been installed propelling this one-time small company towards internationally recognised status, much credit has to go to the leadership and, of course, the employees. For English, the future is clear: “For PROMMAC, we want to grow our SA operations and gain more presence in Africa. From a group perspective, the shareholders want to pursue the opportunities in the Middle

East and Europe, and share learnings from our larger group of businesses. We have made good progress so far, but this is just the beginning of something new, something exciting, and something fresh in our industry space,” he concludes.

PROMMAC +27 83 284 6313 office@prommac.com www.prommac.com

www.enterprise-africa.net / September 2016 / 25


MAZDA MD - DAVID HUGHES


MAZDA SOUTHERN AFRICA

“We don’t want to be carcentric, we want to be

customercentric”

PRODUCTION: Manelesi Dumasi

As Mazda emerges from the pack of international car makers in South Africa as a contender for pole position in the future, word is beginning to spread that this is an automotive business that wants to look after your investment by engaging an innovative, confident, well-trained and customer-centric dealer network.


BUSINESS PROFILE

//

Mazda products are known globally for quality engineering and sleek design, innovation and forward thinking, and the Mazda brand essence is about ‘celebrating driving’. Mazda cars are hugely popular, all over the world, but in South Africa up until 2014, Mazda vehicles did not have a dedicated sales operation and were marketed in partnership with Ford. The company had a marginal market share and was finding itself lost in amongst the many other international brands scrambling for recognition – unfortunately customers were simply not getting the chance to celebrate driving with Mazda. But that is now changing. In October 2014, Mazda Motor Corporation officially introduced Mazda Southern Africa (Pty) Ltd, an independent national sales and service

company and distributor of all Mazda products. Based in Midrand, Mazda SA was buoyed by the introduction of SKYACTIV technology and its products are now some of the most attractive in the marketplace. When Mazda SA was formed, Managing Director, David Hughes arrived with a new business plan, saying that the mission was to become a brand of choice and claiming that the company had started a journey towards being the most loved and sold car in the country. He tells Enterprise Africa that, to date, that dream is beginning to become a reality and Mazda is gaining traction in the market, even during these times of relative economic uncertainty. “The business model is working. Our CX-5 is now leader in its segment and we’ve been selling it for less than

28 / September 2016 / www.enterprise-africa.net

18-months. It outsells the VW Tiguan, the Ford Kuga, the Toyota RAV4, the Honda CR-V and so we know there’s appetite there,” he says. “In 2014, we sold 4090 vehicles of which 60% were light commercials, utilities or bakkies and that was the stable of Ford here. In that year, we sold less than 2000 passenger cars and our market share was under 1% - it barley had a pulse. In 2015, the market was down 5% but our sales were 9067 so up by more than 100%. What’s interesting is that only 15% of those sales were utilities so we made great inroads with the private buyer and the business buyer that behaves like a private buyer in a down market. “We were starved of stock as we were still young. The network had 127 Ford dealers selling Mazda but they were only selling 5000 vehicles between


MAZDA SOUTHERN AFRICA

//THE BUSINESS MODEL IS WORKING. OUR CX-5 IS NOW LEADER IN ITS SEGMENT AND WE’VE BEEN SELLING IT FOR LESS THAN 18-MONTHS// them. We now have 50 Mazda dealers and they sold 9000 vehicles last year. This year, the market is down 11% and at the end of July, the private buyer market was down 20% but Mazda sales were up by 55%. We’ve been averaging 1038 sales for the past seven months which means we’re on track to do 12,000 and that will mean that we will probably be the only brand that grows, year-on-year, in South Africa. “Only 5% of our sales now rely on commercial vehicles. If you compare where we were in 2014 with passenger cars and compare where we will be at the end of 2016, I think you’ll be able to say that we’ve done the job,” he adds.

BUSINESS MODEL Following the global separation of Mazda and Ford in 2010, the two brands remained tied together in SA until the launch of Mazda Southern Africa in 2014 but now that the control of the brand is independent, Mazda is forging its own strategic direction and adopting a unique but well-thought out business model that has the consumer at its heart. “The brand here for many years was sold under the distribution arm of Ford which did a very good job but the brand has moved on and is now more aspirational so were moving it from a price driven brand to a premium alternative.

“We don’t want to be car-centric, we want to be customer-centric and so we are focussing on the needs and wants of the customer and not just the desires of the manufacturer,” says Hughes. “In the spirit of looking after people, were not going to do fleet and rental, as it destroys resale values, and we’re going to uphold people’s investment and look after that investment.” When Mazda was trading as part of Ford, there was little marketing and no official Mazda dealers, but that has changed, with part of that change seeing a change in company culture which Hughes has helped to drive. “We’ve come here and changed the business so instead of just having two people worried about Mazda, we have a standalone national office with 40 people in sales and service, and another 40 in a self-contained warehouse that focus solely on Mazda. The ethos is ‘it’s

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www.enterprise-africa.net / September 2016 / 29


BUSINESS PROFILE

ok to care’; we want to look after people; we want to sell and service vehicles as if we were selling to family. We want to look after people’s investments and know that in the long-term, that will pay off,” he says. “I’ve spent a long time working for Mazda and in Australia we get close to 10% market share; the brand is number one with private buyers, we don’t do fleet there and the ethos is the same. The business model applied in Australia

MAZDA MD - DAVID HUGHES

30 / September 2016 / www.enterprise-africa.net

is the same here and that’s why I was bought in. It’s so simple but it works. The first thing is not to worry about customer loyalty but think more about dealer loyalty as they are the custodians of the brand. They can destroy or make the brand based on their relationships with customers. Most manufacturers concentrate on wholesales; pushing as many cars onto the dealers as possible and this results in discounts. We don’t do that. We have three guiding principles with our dealer network: Profit, volume and customer satisfaction but not in that order. “We know that if we find good people to come into the dealership and they know they can make money, they will build good facilities and employ good people and that is a recipe for success. “We don’t pay incentives for customer satisfaction, we believe that should be done for nothing. We don’t unbalance the playing field by offering one dealer more incentives that another – there’s no secrets. It’s an open and honest approach to the dealer network and people find it refreshing,” he adds. GROWING FROM SCRATCH When Hughes first arrived in South Africa, there were many challenges to overcome. Of course, he had to reorganise the company internally and ensure all regulations and legalities were in place to operate a sales company. He then needed to attract people so that the Mazda dealerships could be established and managed, and the brand could be effectively marketed. “One of the problems I had at the


MAZDA SOUTHERN AFRICA

//WE DON’T WANT TO BE CAR-CENTRIC, WE WANT TO BE CUSTOMER-CENTRIC AND SO WE ARE FOCUSSING ON THE NEEDS AND WANTS OF THE CUSTOMER AND NOT JUST THE DESIRES OF THE MANUFACTURER// start was finding 40 people from the industry to leave their safe jobs and come to a brand that was a little lost while putting this culture in place and it was difficult,” he says. “People will tend to fall back to the ways of the past but the challenge is keeping them with the Mazda culture and the business model. We’ve engaged consultants to help us with our training but it’s really very simple; well-trained people, that understand the business and have the freedom to make decisions and mistakes will want to work for you.

We’re becoming an employer of choice because word is getting around we’re breaking through the pack, in a difficult time, as a leader, not just in sales but with our culture. “We’re making inroads. There’s a survey here about satisfaction with the OEM and we were voted number one in overall satisfaction.” While South Africa has become a manufacturing base for many international motor companies, Mazda does not make cars here and has to import. With the current exchange rate,

that sees a weak Rand and a strong Yen, Hughes admits that matching demand with supply is another hurdle. “Another of our challenges is that Mazda can produce 1.7 million cars globally and there’s demand for more than two million. We simply can’t get enough production here and with the exchange rate, it does make things challenging.” However, despite the challenges faced by the Japanese brand, it has managed to garner industry recognition and in February, Mazda SA was named ‘Company of the Year 2016’ by CAR Magazine. “Mazda has made very impressive strides in forging its own strategic direction,” said CAR Magazine. “Under new managing director, the canny David Hughes, those strides have gained further momentum, but such a surge can only gain lasting traction through

www.enterprise-africa.net / September 2016 / 31


BUSINESS PROFILE

quality products. And here Mazda has delivered, introducing several wellreceived new models such as the 6, 3, and 2, the grin-inducing MX-5 and the CX-3 crossover to join its bigger CX-5 sibling. With this raft of well-engineered and competitively priced new models has come well-deserved commercial success, seeing Mazda buck the flat market to almost double its sales from 2014 to 2015 and increase its local market share from 0.6% to 1.9%.” FUTURE ACCELERATION So what can we expect from this reinvigorated brand in the future? How far can Mazda go, and how quickly? Can it really challenge the Volkswagens and Toyotas? Hughes believes 2018 will be a particularly strong year for the company as the product range moves into a whole new generation and on the back of this, Mazda is looking to boost its market share.

“We’re still young and our first period was just about relaunching the brand, transacting and doing things well. The second period is now about being customer-centric. In 2018, every model in our line-up will move to a new generation and that’s where our brand will move to the next level. We’ve earmarked 3% market share if the market returns to positivity. We won’t be adding more dealers or bigger facilities as we don’t need it,” he explains. “The next generation will contain new technology, more fuel efficiency, better transmissions, better diesel engines and more driving dynamics so we think by 2018, whatever downturn that is happening here now will be on an upturn and we’ll capitalise on that by emerging in a better position than when we went in. We’re already at 2.5% market share so challenging for 3% shouldn’t be too difficult and as the market grows we’ll

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have 50 dealers enjoying that growth.” To further bolster the company’s success, Hughes explains that new partnerships are being sought to ensure success in important markets; partnerships that could also help Mazda in its growth outside of SA. “North of South Africa is really a utility vehicle market and we don’t build one - we always have a partnership. Since the separation from Ford, we just haven’t had the product. The Ford Ranger and the Mazda BT-50 was our previous project but it’s public knowledge now that we’ve separated that project and the next project will be with Isuzu but that’s still in negotiation and when everything is settled we’ll look at how we can migrate into Africa. “We don’t have any concrete plans right now for Africa but we do believe it’s a market with big opportunities. Of course, there has to be an environment


MAZDA SOUTHERN AFRICA

that welcomes investment. Just to set up our sales company here in South Africa, we had to go through endless applications just to get the licenses. It’s very difficult to register and get licenses to do business but that environment is changing,” he says. By 2020, growth of at least 2% is expected to return to the SA economy, unemployment is expected to shrink and interest rates and inflation are expected to decrease. If these predictions playout, Mazda will have the perfect platform to attack the market and claim at least the 3% share that has been targeted. After that, if the company can continue to grow, important decisions will have to be taken about how the business takes

its next step as mass importing from Japan will become inefficient. “I’m building this business for the future and I think that there is an opportunity for Mazda to come here, either on its own or in a joint venture, and manufacture and export so we will keep that option open,” says Hughes. By focussing on its dealer network, delivering quality service to customers and maintaining the unique and innovative culture that has been laid down in the business, Mazda could quite easily give its competitors a run for their money and emerge, just as Hughes wanted, as a brand of choice in SA. “Mazda is a brand that engages the customer, the car and the road. It’s about

driving dynamics. “The product is good, it has good styling, it represents good value for money but there’s a lot of other brands out there that have this too. What sets us apart is the relationship we have with our dealer network – that is the key,” he concludes.

MAZDA SOUTHERN AFRICA 0860 069 700 customercare@mazda.co.za www.mazda.co.za

//

“I am an English-Australian; I was born in England but spent most of my working life in Australia. “My background is in engineering, with service and parts and also customer service. I’m a project person and I like to move around. I worked in Australia for Mazda before starting Kia and eventually selling it back to the manufacturer. After that, I re-joined Mazda and moved to Western Australia, helping the company regain its market share in Perth and then the company asked me to move to Indonesia. I was ready to go but then the Marriott hotel bombing stopped that move and I was reassigned to Melbourne. A few years later, the global financial crisis hit and everyone started winding things back but I decided to get on the front foot and continue to spend so that we could emerge in a strong position. We went into the crisis in a strong position and that gave confidence to the rest of the network. “In 2013, Mazda asked me to move to Africa to start a sales business and because I had experience starting companies, and winding them up, I was very interested. I knew that if we could install the same values here as we did in Australia then life would be good. “Africa has a way of getting to you. There’s something special here. There’s enormous opportunities for businesses and people.”

MAZDA SA MANAGING DIRECTOR

DAVID HUGHES

www.enterprise-africa.net / September 2016 / 33


TRANSNET

So Far So Good for

Transnet’s MDS PRODUCTION: David Napier

Probably one of SA’s best performing SOCs, Transnet is driving rail, pipeline, ports and infrastructure forward. After announcing positive financial results, the company is now looking to grow from its solid base and continue with its all-important MDS.

//

Transnet continues to follow its Market Demand Strategy (MDS) that aims to improve the life of South African citizens by creating employment, driving economic growth, expanding infrastructure development and providing continued financial stability. To date, the MDS has seen millions of Rand invested into rail, port and pipeline infrastructure and there is a lot more to come. By improving efficiency and productivity, increasing capacity and flooding the market with money that will have a multiplier effect through the economy, the MDS is of vital importance as South Africa moves forward. The MDS will drive the country’s container and heavy haul operations and will help to reinforce SA’s position as a global leader in supply of thermal coal, iron ore and manganese. It will also act as an example to the rest of sub-Saharan Africa, showing that South

Africa is a leader when it comes to logistics and transportation. “In terms of trade on our continent, we have to look at all of the missing links, all of the infrastructure finance, rolling stock finance so that we can improve and increase intra-African trade. Our African business is going to grow in importance because a lot of our neighbours are growing at a faster GDP rate than South Africa,” Transnet CEO, Siyabonga Gama tells Enterprise Africa. In recent months, the company has announced many successes that continue to reinforce its position as a respected and trusted state-owned company, something that isn’t always easy to come by. Just last month, Transnet received the first two class 45 diesel locomotives from Chinese company CRRC Dalian as part of an order that will see 232 delivered to South Africa.

CRRC Vice-President, Sun Yongcai was present at the handing over ceremony in Durban. This is part of a programme that will see Transnet receive a total of 1064 new locomotives from four international manufacturers. CRRC Dalian will manufacture the first 20 of its order in China before moving production to Durban. The locomotives have 3.3 MW MTU 20V 4000 R63L engines, AC traction equipment and a maximum speed of 100 km/h. The investment into new locomotives is driven by one of the key focus points in the MDS – to move railable freight from South Africa’s busy roads onto its rail network and, to date, this is looking to be successful. “I think that has been one of our saving graces,” says Gama. “We remain constant in rail. Even though containers in maritime were down by Continues on page 38

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BUSINESS PROFILE

//LOOKING AHEAD: ROAD TO RAIL MIGRATION WITH BARLOWORLD LOGISTICS In October 2013, Transnet Freight Rail Limited announced the signing of a Memorandum of Understanding with Barloworld Logistics, with a strategic focus on migrating road traffic to rail. The partnership, spearheaded by Transnet’s Group Chief Executive Siyabonga Gama and Steve Ford, CEO, Barloworld Logistics, kicked off in earnest in mid-2014. The Memorandum entails Barloworld Logistics identifying, developing, operating and managing intermodal terminals - and exploring investments in rail related assets (not locomotives). Mathys Enslin, Managing Executive, Integrated Freight Solutions at Barloworld Logistics, says “Our major flagship project to date has been developing the Musina Intermodal Terminal to become ‘the logistics hub’ of the newly promulgated Special Economic Zone (SEZ). In addition, we have made progress with regards to developing sites in Waterval Boven, Nelspruit and Luipaardsvlei in Krugersdorp.” Barloworld Logistics will also investigate opportunities to provide technology and marketing expertise around identified opportunities to TFR, while striving to enhance the customer’s experience on rail. The company will provide both the first mile (road) to the terminal in question, as well as terminal handling and management, with TFR taking the train on from there. From this point on, Barloworld Logistics offers a rail supply chain solution to the end destination. In consultation with customers, Barloworld Logistics will review opportunities to migrate its own road volumes to rail, where it is commercially and operationally beneficial to the cargo owner.

BI-MODAL TECHNOLOGY Looking ahead, the logistics company notes that while the partnership has had its challenges, both the opportunities and benefits are already being realised – particularly for customers, and for the economy at large. As the South African economy will benefit, socially and otherwise, as more volumes are sustainably migrated from road to rail, Barloworld Logistics is in full support of any approach that will deliver on this strategy. “Siyabonga Gama is leading significant change within Transnet and Barloworld Logistics is impressed by the re-energising of the Group and the exciting plans they have for the future of logistics in South Africa,” notes Enslin. In addition, a ‘potential game changer’ has been the recent announcement by TFR regarding their support - initially in respect of two pilot projects - for bi-modal technology. Bi-modal technology allows for a more seamless transfer of road cargo to rail by making use of bespoke road trailers that effectively transform into rail wagons. “We have had advanced discussions with the providers of one (of the two) bi-modal technologies selected by TFR,” says Enslin.

SMART SUPPLY CHAINS As a leading SMART supply chain solutions provider, Barloworld Logistics brings with it a highly differentiated offering and a sustainable approach to supply chain management with regards to rail. “Our passion for rail stems from our conviction that each transport mode plays a specific role in the supply chain,” adds Enslin. “Through collaboration and smart partnerships with recognised experts in the rail industry, such as our joint venture with the Barberry Group, we are now able to offer and execute integrated rail logistics solutions across a range of industries.” This expertise and experience in rail operations includes rail siding logistics management, multimodal terminal operations, collateral management and international standards of safety, governance and risk management. By harnessing both leading edge technology and top expertise, Barloworld Logistics manages all aspects of the value chain - delivering the benefits of rail transportation in a world where customers demand door-to-door supply chain solutions. MATHYS ENSLIN

MANAGING EXECUTIVE

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Get On The Smart Track Every day, ideas and raw materials are transformed into essential products and services that are used by millions of people. Our role is to ensure that they get where they need to be. Rail is a vital supply chain solution – it’s safe, convenient, – and it delivers. Ultimately, the smarter the supply chain solution, the smarter the business, and the greater the growth.

Your ticket to a rail supply chain solution awaits – rail@bwlog.com


BUSINESS PROFILE

SIABONGA GAMA TRANSNET CEO

Continues on page 34 a couple of percentage points, actual railable containers were up some 5% and that gives you a measure of that fact that our penetration into the market continues. This was despite the fact that for most of last year the price of diesel was very low meaning that trucks could compete with us, even on price, but we continued to improve. As the price of crude oil goes up, which it has, we can fast-track and differentiate our growth in those particular areas. “We have committed a lot of capital already to our MDS across various projects which are at various stages of completion. What we try and do with the MDS is validate the demand and we are now redirecting our investments to those areas that we believe have the potential for future growth opportunities. If you look at areas like the FMCG market and general freight, that is where we want to invest more as that is where road has a huge percentage of the market and we would like to attack that,” he adds.

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TRANSNET

SPEEDING TOWARDS SUCCESS Further success was realised following the announcement that multinational aerospace and transportation company, Bombardier (an integral supplier and partner to Transnet), had opened the first locomotive propulsion and control manufacturing facility in Africa. The new 6000 m2 facility in Johannesburg will produce Bombardier Mitrac high power propulsion equipment for use in the state-of-the-art Transnet Locomotives. The site will be a testing centre for high power traction converters and electrical cubicles and will become the headquarters for Bombardier Transportation in South Africa in October. “Bombardier’s production facility is an integral step in driving localisation, transformation and economic empowerment. The successful partnership with Bombardier serves a crucial purpose in enhancing and embedding our MDS and the role Transnet plays in growing our economy,” Gama said. “Transnet’s successful partnership with Bombardier ought to position our country as a regional hub for further development and growth so that we can expand our businesses into the rest of the African continent,” said Public Enterprises Director-General Richard Seleke. “We know that by working together with partners like Bombardier, we are building upon the industrialisation of our country. We are doing this by the transfer of skills and knowledge and by forging strong bonds and partnerships with Bombardier.” In July, Transnet announced the the completion of the first phase in the expansion of the coal line between the Waterberg in Limpopo and Richards Bay, KwaZulu-Natal. This is a hugely important project that sees the construction of a 1.8km long passing loop at Matlabas, enabling 100 wagon trains to cross without disrupting the operation of other trains on the line. It’s part of Transnet plans to spend R21.8 billion over the next seven years

//OUR AFRICAN BUSINESS IS GOING TO GROW IN IMPORTANCE BECAUSE A LOT OF OUR NEIGHBOURS ARE GROWING AT A FASTER GDP RATE THAN SOUTH AFRICA// to increase rail capacity on the export coal line to 81 million tons. “This loop has enabled Transnet Freight Rail (TFR) to increase its services from two trains to five a week, consistently without requiring more wagons. This improvement creates a high potential to run one train a day. Previously, Matlabas loop could only accommodate 50 wagon trains,” the company said. The construction of the Matlabas loop is the first of five phases to increase capacity on the Waterberg line. Construction of the second stage has begun and is expected to increase the current two million tons of coal from Lephalale to Richards Bay to six million tons per annum. The second phase includes the construction of a 2.8km loop in Thabazimbi, building a new 5km line to connect the loops at Bleskop and Norite, as well as creating a double line section. TRANSNET: AN AFRICAN BUSINESS Earlier this year, Transnet announced that it would look outside of South Africa for a location for a new manufacturing site for rolling stock and original equipment. The company already had advanced manufacturing capabilities across SA in areas including Pretoria‚ Germiston‚ Bloemfontein and Salt River in Cape Town. According to Transnet Chief Advanced Manufacturing Officer, Thamsanqa Jiyane: “[The location for the factory] will depend on where we get long-term contracts which will make sense for us economically to go and invest.” In Transnet’s annual results presentation for the year ending 311 March 2016, Gama said: “Revenue from cross-border activities increased from R1.5 billion to R2.8 billion as the

company’s plans to expand into the rest of the African continent gather momentum.” Following the successful delivery of 37 new coaches to Botswana Rail, the CEO was urging other African nations and their rail companies to look at the success that Transnet has had in Africa. “We are emboldened by this success and we are hopeful that other countries will follow in the correct tradition behind Botswana. They can see what we’ve done in Botswana and realise that these are some of the best passenger coaches you can get on the continent,” he says. These successes are just a small collection of major achievements that the company continues to make every year. The rail industry is the backbone of any major economy and as South Africa’s continues to develop, and its expertise spreads across the continent, it looks certain that Transnet will remain at the heart of innovation and excellence for the foreseeable future. “The challenges are slightly different now because of the economic uncertainly but we are responding to that – it’s so far so good,” says Gama. With the global economy, and the SA economy, predicted to turn around by 2020, Transnet is perfectly positioned to further entrench itself in the everyday running of the country.

TRANSNET +27 11 308 3000 @follow_transnet www.transnet.net

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LE-SEL RESEARCH

Investment

Boost for Leading SA Manufacturer PRODUCTION: David Napier

After partnering with the IDC in order to boost growth, Le-Sel Research is now seeing the results of some much needed investment. CEO, Andrew Frodsham tells Enterprise Africa more about how this long-established SA manufacturing business will grow in the future… 40 / September 2016 / www.enterprise-africa.net



BUSINESS PROFILE

//

The South African cosmetic and personal care industry is in an unusual position right now as customers and households are economising and changing their purchasing habits to work around the tenuous economic climate. There’s undeniable evidence that people’s focus on looking and smelling good is stronger than ever but people are buying less, they are switching premium for mid-lower priced alternatives and are also looking for larger pack sizes, representing value for money. Businesses involved in the sector, many of which are largescale multinational organisations, are also changing their activities, spending less on development and shelving products that are less popular until a time returns where the market is buoyant enough to carry luxury items. It’s a challenging time for everyone involved but with the correct strategy,

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LE-SEL RESEARCH

as we have heard so many times before, you can thrive and manage to move your business forward. Le-Sel Research, South Africa’s leading contract manufacturer of cosmetics, toiletries and homecare products, has partnered with the IDC in a bid to stimulate growth and solidify its position in the market. In October 2015, it was announced that the IDC had approved an investment of R157.5m in Le-Sel to support future growth and respond to working capital challenges. Trinitas Fund General Partner (Pty) Ltd also agreed to invest a further R10m in the business. CEO Andrew Frodsham tells Enterprise Africa that, since striking the deal with the IDC, the company has in fact managed to gain more contracts and is managing to move bigger volumes. “In the last three years, everyone has been under pressure. Plain and simply, volumes are down. The economy has been in the hardest place since I’ve been around,” he admits. “Le-Sel is the one facility that is approved by all of the multinationals and there’s a whole host of smaller companies that exist because of Le-Sel. Without Le-Sel, Avon wouldn’t be able to produce their products locally, Unilever wouldn’t have a home here and you wouldn’t be able to entice Procter & Gamble to open up here. It’s a long-term view on the industry as a strong Le-Sel with a lot of volume running through it bolsters the whole sector and everyone that supports it. The company needed to recapitalise and the IDC needed to sustain a sector that was under pressure. The result has been that volume has grown significantly since this process started.” Thanks to this catalysing of the industry, and the confidence shown in the sector by the SA government, Le-Sel has managed to not only grow its work with existing

clients but also attract some new customers. “Typically, contract packing in South Africa was a back street operation. As investment returned to the country and multinationals moved back in South Africa in the 90s, contracting started to grow and the industry, us in particular, had a good run,” Frodsham explains. “Over the last three or four years, as the economy has struggled, contracting has been under real pressure from a margin and volume point of view. The IDC has partnered with Le-Sel and is investing so that the industry and some of its big players can grow. Our aim is to be the outsource partner of choice for the entire industry and we hope to take the majority of the volume through our internationally approved facility. “Unilever have been with us

for a very long time and they are moving a lot of new business over to us. They have appointed us as their core contractor in the personal care/ home care space in the country. The result is that a lot of new volume has moved into our business. Unilever is one of the multinationals that is fully invested in South Africa in terms of capability; they have state of the art plants around the country and they own a massive share of the SA personal/homecare market. They do a lot in-house but there’s certain technologies and volumes that are too small for their automated facilities so they outsource and we now have the lion’s share of all of that. Add to that Procter & Gamble who are new here; they don’t have facilities in SA and they don’t produce anything here in the personal care market. Last month

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BUSINESS PROFILE

was their first month producing here with Le-Sel and it’s something we’re hoping to build on,” he says. GROWTH & DEVELOPMENT Le-Sel has broken its market into smaller groups in order to target organisations that have different styles of operation. It is through these groups that the company will grow, building on its product range which already includes aerosols, cosmetics, creams and lotions, perfumes and fragrances, make-ups, and household products. “We break the market into different sections. Unilever is one part on its own – multinationals who invest a lot here and who have large volumes and where we can get anything that they can’t do. Secondly, it’s multinationals that have facilities in SA but where volumes are smaller and their facilities become too expensive. Thirdly, we’re looking at those who import like Procter & Gamble and Beiersdorf. Then there’s the Indian

entrants, such as Marico and Godrich, who have entered the market and bought up some brands that are designed for everyday Africans. Finally, we also target local medium-sized brand owners and our house brands,” says Frodsham. “Our biggest client is Avon Justine. Unilever is a large part of our lives. L’Oreal is an important client and Procter, Reckitt Benckiser and a group of South African companies are all significant clients,” he adds. Growth with each of these market segments has allowed for Le-Sel to maintain stability as focus can switch as market trends fluctuate. For example, right now, the local market is struggling with the slow economy but multinationals who import have been looking to localise activity and Le-Sel has directly benefited. Interestingly, Frodsham hasn’t always been involved with this family business and even when he was eventually onboarded, his intention

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was only to be involved on a temporary basis. “After my family emigrated from Zimbabwe, and my father started the company in Polokwane, I had no interest in being involved. I become involved when my father became sick very quickly. I thought initially that I would come into the company and help to sell it. This was right around the time when the rest of the world was starting to reinvest in South Africa and so we got on a growth path and grew happily for a number of years resulting in me staying,” he explains. It’s largely down to the skilled leadership of the Frodsham family, Andrew now providing direction similar to his father before him, that the business has managed to grow in the way that it has. Today, employing more than 500 people, the company’s facilities produce more than six million units of personal care products every month, products that can be found in every retailer and are used by millions


LE-SEL RESEARCH

of people in South Africa and on the African continent every day. AFRICAN MARKET Growing into Africa inevitably becomes a goal for almost all successful South African companies at some point in time. The draw of such a large and growing market, with relatively untapped potential, where competitors can be few and far between is understandably strong. Le-Sel is no different and had set out medium-long term plans that will see it open up on the continent in order to bring production closer to customers. “To go and set up a simple operation in East or West Africa remains the medium-term plan for LeSel. Keeping the administration here but being able to produce a basic range of everyday products closer to the source, with a simple processing line, remains our goal. “The supply chain to run a fairly complicated personal care manufacturing business is not present across Africa. In theory, a lot of the volume going into Africa, should be made here as we have the advanced supply chain. Without producing goods here and moving them up, the most obvious method is to import goods from the North, from Europe and the Middle East and that’s where we fail in this sector,” says Frodsham. He is adamant that more can be done in South Africa to take advantage of the huge opportunities that are present north of the border and while this has been the goal for SA’s government and big companies for some time, it’s not something that has been fulfilled in the way it should have been. “This whole view that South Africa is the springboard into Africa, and the excitement that comes from realising that there’s only 50 million people here but a billion on the continent, is distorted as we haven’t all done as well as we should

have done,” he says. “The idea that everything could be made here and pumped up into Africa is something that people talk about but we are not seeing it. South Africa hasn’t achieved all that it should be achieving in our space.” Frodsham hopes that this will change and sees the new Indianbased players as a group that could push this. “The Indian entrants in the market, that operate very differently to the western multinationals, could be a catalyst for change. They are certainly looking at SA as a central manufacturing hub for their African operations,” he says. As IDC money continues to flow into Le-Sel, and multinationals continue to choose the Midrandbased company as their local partner, the future looks promising. Even with the tight economic situation,

the facts remain that the country has ‘a strong grooming trend’ and this is only set to drive volume growth. The challenge will be to continue attracting volumes from low-mid priced alternatives so that if pricesensitivity does drive demand away from multinational products, Le-Sel will still have a strong pipeline. In the short-term, with the IDC investment, Le-Sel will support an ailing manufacturing industry, creating jobs and displaying to the world that SA remains home to a globally competitive consumer products manufacturing industry.

LE-SEL RESEARCH +27 (0) 11 654 9000 www.lesel.co.za

Proud to be in association with Le-Sel Research

Swiss Fragrance Compounds Sole distributors of Luzi AG Southern & Eastern Africa

(0)11 234 8399 | www.o6southafrica.com

www.enterprise-africa.net / September 2016 / 45


AIRVENT GROUP CEO - MARK ROGERS


AIRVENT CAPE

15 Years and Counting for Airvent Cape PRODUCTION: David Napier

Expert advice, professional and precise air-conditioner installation, qualified technicians and an unrivalled focus on quality service have positioned Airvent as one of the most respected and recognised companies in the South African HVAC industry. Group CEO, Mark Rogers tells Enterprise Africa more about the company’s growth over the last 15 years.

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BUSINESS PROFILE

//

South Africa’s position in the world, its subtropical climate and its warm temperatures mean that air-conditioning in the country has become big business. Over the years, many companies have popped up offering installation, products, maintenance and related services; companies in related industries have expanded their focus to include air-con services, and big multinationals have flooded the market with products. South Africa is famous for its sunshine with tourists but for businesses, sunshine and heat is not always conducive for an effective operation – people and products need to be cool, mechanical systems and computers need to be cooled, and public spaces cannot be too hot and become uncomfortable. Equally, in the winter, air-conditioning systems can help keep areas warm. “What started out as a luxury has now become a necessity,” says Airvent Group CEO, Mark Rogers. Founded by Rogers and a small

team after the turn of the millennium, Airvent has been working in South Africa’s air-conditioning industry, offering quality products and services, and upskilling employees for 15 years. The company’s contribution to this important sector has grown as the business has expanded. In the beginning, the small business served the domestic market, installing units into homes before eventually making the move into the commercial sector and picking up industrial contracts. “We started Airvent in September 2001. Airvent was founded by my father and myself and in the early days we focused on the domestic market as the cash flow in this sector allowed us to slowly build the company. It was challenging in those days as not many suppliers would offer us credit facilities and there was not a lot of support for start-up businesses. “Effectively, we started the company with only four people and we have grown over the years to a business where we now employ more

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than 200 people and we now have a diversified group of companies,” details Rogers. SERVICE IS HOT TOPIC Now that Airvent is established and recognised, Rogers is looking to further grow the business and this will be done in the same way that has seen it achieve such success so far – by offering exceptional service to customers. “Customer service has always been and will always be the number one focus point in our business as this is the differentiating factor in any service orientated business. “The business has grown over the years based on our offering to our clients in terms of the service that we provide and that for me is absolutely paramount. Cape Town is a fairly small city and if you don’t provide quality service, that word spreads quite quickly so the service levels that we offer our clients is what has made us a success. “Our quality service level is what has allowed us to differentiate ourselves in the


AIRVENT CAPE

//OUR PIPELINE IS CURRENTLY THE BIGGEST IT HAS EVER BEEN// industry and our sense of urgency and sticking to our promises is another thing that counts in our favour,” says Rogers. “I also think we have to look at the types of brands that we offer our clients – we’ve gone with the top notch brands in the market such as Daikin, Samsung, LG etc and that helps us maintain our reputation,” he adds. PROJECT PORTFOLIO One of the primary drivers of the growth of Airvent, besides the company’s unrelenting focus on quality service, has been a strategy change and an expansion from the domestic market into the commercial sector where the projects are larger and the scope for growth is big.

Currently, the company is involved in a number of projects that are prestigious for both Airvent, and for South Africa. “There’s been numerous flagship projects over the years; currently we’re involved in the SKA project outside Carnarvon where we’re providing all the air-conditioning for the computer rooms that control the telescope – that is certainly a milestone. We completed an installation at the Pep head office in Parow and that was a big project for us and our first real step into the larger market that helped put us on the map. Subsequently, we’re involved in many fairly large contracts. We have a R30 million contract with the City of Cape Town and over the years, what we have done well, is moved

from the domestic sector into commercial sector. We’ve done it carefully so that our cash flow can allow for the bigger projects. We haven’t negated the domestic market and we are still heavily involved there but we do see the commercial market as having more potential,” explains Rogers. “We are busy with a large contract for a shopping centre in Nelspruit and have just completed a successful shopping centre project in George. “We have also been involved in many solar farm projects in the Northern Cape; fairly large projects, quite a distance from our head office, and for me these are exciting because these projects have received millions of Rand of investment and they are generating power for South Africa which has been a problem over the past few years. It’s nice to be part of something like this that contributes to making South Africa a better place. “We have also been involved in many

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BUSINESS PROFILE

projects along the Atlantic Seaboard and we are proud to be associated with these innovative and beautiful homes. We are currently busy with a fairly large project called the Clifton Terraces which should be completed in about nine months’ time,” he says. AIRVENT: THE GROUP Thanks to ever-growing demand from its commercial market, Airvent has had to grow and develop its offering to meet the differing needs of complex problems. In the past 15 years, the company has developed into a group of companies in order to provide a turnkey solution to clients. Now with a centralized head office The Airvent Group has seven companies within its fold and the business has become efficient, streamlined and costeffective. “Although we now have a fairly large business we have created separate companies to ensure that we maintain

that personal touch when dealing with our customers. Airvent nowadays consists of Airvent Cape, Airvent Johannesburg and Airvent Helderberg which focus on the DX airconditioning markets. We also have Airvent Central Plant Solutions which specializes in the installations and maintenance of Chilled Water Systems. “We have also recently opened Airvent Electrical and Controls which was started to help with the integration of our air-conditioning systems and other systems in the building – it’s a specialised company that sets us apart as builders don’t need to outsource this type of electrical work and they can deal with just one partner. We have Cape Sheet Metal Works which is a manufacturing concern that we have grown over the years and it manufactures the ducting that we attach to the air-conditioning units and we’ve spent a lot of money automating this company. It has now become one of the most automated ducting manufacturing

companies in the Western Cape. We can now by the push of a button produce most of our ducting directly from a CAD drawing. It has dramatically decreased the amount of time required for the ducting to be made and that’s beneficial to our clients as turnaround time on projects is a lot quicker. It also helps our pricing remain extremely competitive,” Rogers says. “We also have Airvent Heat Pump and Solar which focusses on hot water for geysers and solar for swimming pools.” Growing outside of the Western Cape is another, more recent development for Airvent Cape and as business begins to pick up in other parts of the country, especially Jo’burg, Rogers says that the target will be to roll out a nationwide offering so that partnerships can be made with the country’s biggest construction firms. This is great news considering that many companies are currently finding life extremely challenging because of a slow economy. “Our presence in Johannesburg has been challenging as it is a very different market to Cape Town but we are slowly and surely getting to understand that market and the view is to go national with the Airvent brand and create a scenario where multi-national construction firms could collaborate with us and we could cover the whole country with regards to their needs. “We’ve found the industry to be fairly buoyant, especially in the Cape Town area. Our pipeline is currently the biggest it has ever been. The only effect we’ve seen from an economic perspective was a small impact on the price of some units at the beginning of the year but buildings are always going to be going up and they are always going to need air-conditioning, especially in South Africa,” he says. TRAINING & DEVELOPMENT Installation of air-conditioning systems is not a simple task. While the products have improved over the years and innovations continue to bolster the market, the physical process of installing these valuable systems remains a skilled profession.

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AIRVENT CAPE

Today in South Africa, around 26% of people remain unemployed and the infamous ‘skills gap’ continues to dog certain industries with very few skilled artisans available. For a growing company like Airvent, which needs skilled and educated employees, this is a problem which could not continue so a training academy was established to bring specific, recognised skills to the industry. “We effectively started the HVAC Training Academy because we were extremely frustrated with the quality of person that was out there in the market,” explains Rogers. “There were very few people who are qualified as air-con technicians and those that were qualified were extremely expensive. Also, there were very few facilities where you could go to become qualified. “In the old days, the parastatals would take people on and put them through apprenticeships and then they would work there for years while gaining their skills before moving into the private sector. Nowadays, the parastatals do not do that and as a result there are very few qualified people in the industry. “We thought, ‘how can we overcome this?’ We started the training centre, we took a long time getting it running and the initial costs were expensive because of the approvals that were required to have the training centre accredited. Now we can train our people to a level that we are happy with. We can also offer people in the business the chance to grow – without this they can become despondent. There’s now various modules in the business and they tie to a specific salary and so when you have completed the modules at the training centre you can move up to the next level. Our staff can see their path quite clearly and we have created that way forward.” This defined career path means that anyone who joins the company at a junior level can develop themselves

and advance their skillset, moving up the ladder into senior management positions. “The training programme has been running for 18 months but I’m a strong believer of elevating people within the business and there are good examples such as a young sales person who came on board and is now the contracts director. I like doing that and it’s important for me to be able to elevate people in the business. As the business grows, this will be critical. We want to give people opportunities to grow and it’s important that people know that and can see these things happening,” says Rogers. For Airvent, the future looks exceedingly bright (and considering the economic climate, it’s not often that we can say that). With a growing level of skill across the employee base, a growing customer base, a growing

range of services, an impressive portfolio of completed projects, a full order book and an ongoing focus on delivering quality, this is a business that has been positioned perfectly to become one of the South Africa’s nationwide industry leaders. “We are moving into a bigger market and I do enjoy that. We’re getting involved with some of the larger construction companies and that is very exciting,” concludes Rogers.

AIRVENT CAPE +27 (0) 21 981 6299 sales@airventcape.co.za www.airventcape.co.za

www.enterprise-africa.net / September 2016 / 51


RESOURCE GENERATION

Boikarabelo Coal Mine Project Propels Resgen

to ‘Industry Leader’ Status PRODUCTION: Karl Pietersen

South Africa needs coal to fuel 90% of its electrical energy demand but apart from a handful of players, companies are seemingly unwilling to invest in this lucrative market. Enter Resource Generation, the exploration company turned junior miner looking to make the most of South Africa’s prosperous Waterberg region.

//

Coal is the largest source of energy for the generation of electricity worldwide but in the past two decades, this fossil fuel’s popularity has been in decline because of its association with carbon dioxide releases and climate change. This is unfortunate for South Africa as the country is among the world’s top 10 coal producers, way ahead of powerhouse economies including Germany, Canada and the UK, producing more than 260 million tonnes in 2014. But despite the negative tags that surround the use of coal for energy, the facts remain and coal is vital for the growth and development of the global economic climate and in South Africa, one of the largest construction projects ever seen in the southern hemisphere – the Medupi and Kusile power stations – will

be coal-fired and demanding around 150 megatonnes each year. Coal is responsible more than 90% of the country’s electrical energy and that is not about to change anytime soon. With this is mind, Pretoria-based Resource Generation (Resgen) has developed a plan to mine for coal in South Africa’s Waterberg region, an area with huge potential and with reserves that make it extremely attractive for coal prospectors. CEO, Rob Lowe tells Enterprise Africa that Resgen has streamlined its approach to the market in South Africa and is now working towards production at its well-recognised Boikarabelo coal mine project. “Over the last 12 months the company has undertaken a complete, in depth, technical review of the project.

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This lead to the adoption of a new execution strategy and mining plan and in doing so reduced the company’s exposure to risk. The company will be protected from capital blow outs and delays by the appointment of a limited number of EPC contractors with good track records and strong balance sheets, against whom there would be the right of recourse in the event of failure or delay. “Resgen is currently focused on finalising its funding and the construction and completion of its Boikarabelo coal mine. The company is in the final stages of agreeing terms with its EPC contractors and is constantly looking at ways to optimise its mining plan. “The company recently agreed commercial terms with a funding



BUSINESS PROFILE

ROB LOWE

RESOURCE GENERATION CEO

syndicate for the provision of R5.2 billion to complete the construction of the Boikarabelo coal mine and begin production of saleable coal by the fourth quarter of 2018,” he says. The Boikarabelo coal mine is located in Limpopo Province and is considered by many to be a hugely important project in opening up the Waterberg coalfields. Gaining the financial support to boost the project has been a real shot in the arm for Resgen and its BEE subsidiary, Ledjadja Coal. The funding syndicate is made up of First Rand Bank, the IDC, the PIC and Noble Resources International (a Resgen shareholder). The funding has allowed the company to build partnerships with potential contractors, grow relationships with existing partners and invest in diversified projects. BUILDING PARTNERSHIPS With much still to complete before production begins in 2018, getting the correct partners on board to bring the

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RESOURCE GENERATION

project to the next level is vital. With the Boikarabelo coal seam laying between 20 and 30 metres below the surface, and with Boikarabelo tenements being located 40 km by road from an existing rail system that provides access to domestic markets and to the ports of Maputo, Richards Bay and Durban for export shipments, infrastructure development is a key part of the project. “Resgen has signed a fixed price, lump sum EPC contract with Sedgman for the supply and eventual operation of a coal handling and preparation plant. The company has also successfully negotiated an economically viable tariff with Transnet Freight Rail to provide rail access to port and third parties,” explains Lowe. “We have been working with Transnet for several years now in attempt to find a solution for the Waterberg coal fields and the need for a suitable and reliable rail system. As a result of the ongoing co-operation and partnering with Transnet in finding a solution, Resgen was able to agree a tariff that was economically viable for the project from the mine to the port facilities at Richards Bay. This will be considerably more economical than the previous export option through Durban,” he adds. One of the most important aspects of doing business in South Africa involves partnering and benefitting the communities in which you operate. Resgen has taken this aspect of its work very seriously and is heavily involved in various CSR campaigns at Boikarabelo. “It is vitally important to engage with communities in the areas that we operate to ensure that there is a harmonious working relationship,” Lowe says. “One of the most important ways to engage with the communities is through CSR programs whereby the community benefits directly and that lives are improved. “Resgen has several CSR projects including adult education, university bursaries, maintenance of local schools and community halls, upgrades to roads, effluent water treatment, and health programs. Through its five year Social and Labor Plan the company continues

to work with the communities around it, improving lives and building long term relationships.” In more good news for the company, an experienced and knowledgeable leader was bought into the organisation to help further grow Ledjadja Coal, the subsidiary involved in the financing syndicate. “In June 2016, the company appointed Zirk van der Bank as the Chief Operating Officer for its subsidiary, Ledjadja Coal,” explains Lowe. “Zirk is an experienced mining engineer with more than 20 years’ experience in the coal mining industry. He has held a range of supervisory and management positions at Moolman Mining, Shanduka Coal and Glencore South Africa.” THRIVING BUSINESS Resgen was formed as a mineral resource exploration company, in order to identify and exploit mineral resources. Originally

an Australian operation, with listings on the ASX and JSE, the business has grown and adapted and is now thriving in South Africa where the economy has been challenging in recent years. “The economic climate has been very subdued over the past few years with resources being amongst the worst effected, during this period the company continued on its drive to fund and complete the project. The resource sector is showing recovery and this will encourage new, and old, entrants to start new projects and breath life back into old ones,” says Lowe. “Unemployment and slow growth are factors that impact South African companies on a daily basis. The demand for resources is lower due to slowed industrial growth within a country, add to that high unemployment rates and affordability of goods and services drops even further.

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“For Resgen the key to addressing this is by spurring on growth. Through the development of the Boikarabelo coal mine over 3000 jobs will be created during construction, and over 680 full time jobs. Boikarabelo will also contribute about R250 million to the local economy,” he adds. And along with this impressive contribution to the economy, the Boikarabelo project will deliver saleable coal for Resgen for a long time, at least the next 35 years. “The company believes that coal still has an important part to play in the energy mix of South Africa, as well as many other countries, and by investing in the development of the mine there is an opportunity to exploit this demand. The company is also a firm believer in opening up the Waterberg coal fields as this will lead to the realisation of SIP 1 of the NDP, enabling an environment for

the creation employment and economic growth. “Resgen believes that the Waterberg region is the next viable coal resource holding around 40% of South Africa’s coal reserves and being one of the largest new basins to be opened up in recent times. Given the shallow depth of the resource it is easier to extract. The company believes that the share price will reflect value and sentiment. Once the project is in full production in 2018, we believe shareholders will find value in Resgen and we can already see that sentiment around resources is improving which should lead to better performance in stock prices,” says Lowe. FUTURE PROJECTS Investment is needed if South Africa’s exploration and mining companies are to continue finding coal reserves. With supplies at existing mines dwindling,

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it’s important for the country’s power generation needs, which seem to be moving towards a stable future, to be supplemented by adequate coal supply. While that investment continues to be sought from both the government and the private sector, Resgen is making moves in other areas to ensure ongoing success. by building a power station and making the transition from coal supplier to energy supplier, Resgen will offer better value to shareholders and provide another consumer for Boikarabelo coal while all the time addressing the country’s need for secure and stable energy supply. “Resource Generation currently has approval in place for a 245 MW IPP and has commenced work on the benefits of scaling this up to 600 MW. The benefit of building an IPP would be the mine-mouth feedstock model, greatly reducing operating


Resource Generation

RESOURCE GENERATION

costs. Resgen also owns the land earmarked for the IPP adding further to the benefits of an on-site IPP. “A desktop feasibility study was commissioned in February 2016 and findings were received in May 2016. An IPP would be financially beneficial to both the project and the owners of the IPP,” says Lowe. Supplying electricity for SA operations, as well as cross border projects, is a diversification project that Resgen has been pursuing this for some time and could help the company secure a position in the African market in the future. “We do not currently have a footprint outside of South Africa but we have seen the demand from other African countries for power which in turn leads to increased demand for coal. The ever growing African market will require a steady

supply of cross border power and/ or coal and Resgen could potentially provide either of these,” Lowe explains. LEADING THE WAY Since Resgen entered the SA market eight years ago, it has evolved from an exploration company into a junior miner and the company has now set itself in an extremely strong position for growth in the future across its diversified portfolio of projects. “Resource Generation is the most advanced of all the junior miner projects in the Waterberg, being so far ahead means that there was no example to follow and no easy lessons to learn, for Resource Generation it was about developing the project step-by-step and learning along the way,” says Lowe. This knowledge that the company has accrued in its relatively short

life, coupled with the expertise of its management and partners mean that peers are now looking at Resgen as a leader in the sector. “In relation to the Waterberg, Resgen is certainly an industry leader, for a junior coal miner to successfully put together the pieces that make a project work, such as mining rights, environmental approvals, water use licenses, land and servitudes to name just a few, and then to raise funding during a difficult, subdued, economic climate – this certainly makes us an industry leader,” Lowe concludes.

RESOURCE GENERATION +27 (0) 12 345 1057 info@resgen.com.au www.resgen.com.au

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E&C CHARCOAL

Leading SA Company Hot for

European Export PRODUCTION: Manelesi Dumasi

Pietermaritzburg-based E&C Charcoal is one of the country’s leading producers of charcoal products that are used for braaing all over SA. But it’s in the export market where this seasoned organisation really shines, demonstrating that SA is the perfect choice for international customers looking for quality products and service.

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Charcoal is the black residue made from carbon and ash that remains after heating vegetation substances to remove water and other basics. It is made by heating the substances, chiefly wood, without oxygen and is a long and arduous process. Once complete, and a saleable product has been created, charcoal has many uses but it’s probably most wellknown as a fuel for cooking in BBQs and as an industrial fuel. Charcoal briquettes and

lumpwood are available at almost every supermarket, gas station, corner store and outdoor shop and, because of South Africa’s love for the braai, these products are very much in demand. This has been the case for many years and so E&C Charcoal, one of the leading suppliers in the country, has managed to build a thriving company that is now celebrating its 40th anniversary. From farming the timbers that are used to make the charcoal, all the way through to processing, packaging and

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distribution, E&C is involved in every aspect of charcoal production for both the local and export markets. Having been led by the Holley family since its inception, and now under second generation leader, Charles Holley, the company is looking for ways to grow and the CEO says that exports will become more of a driver going forward. “The South African leisure market has been pretty static as our economy doesn’t really grow,” he says. “On the



BUSINESS PROFILE

other hand, exports are becoming more attractive as other markets seem to be growing and disposable income is improving. The problem with exports to Europe is the weather – it’s not always good for BBQs. “The growth for us in the future is certainly going to be on the export side and it could well be into industry as there’s a trend now of taking our charcoal and turning into a new grade called activated charcoal and using it for the purification of air and water.” Activated charcoal is made by heating common charcoal in the presence of a gas that causes the charcoal to develop many internal spaces and these spaces, or pores, trap chemicals. E&C, being Africa’s largest manufacturer and exporter of superior charcoal, is now moving more heavily into alternative products such as activated charcoal and this comes from already having such highly rated, quality product that is SABS accredited and frequently outperforms the rest, in terms of heat

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E&C CHARCOAL

and length of burn. “We have plentiful raw materials in this country and as our market grows in Europe, we are well positioned to grow as there are many companies around the world that do not adhere to FSC regulations so they will fall away,” explains Holley. “We are FSC compliant, our raw materials come from commercial plantations and forests and these are man-made and regenerated. In Africa, people are chopping down trees and not replanting them, you don’t find many commercial plantations and that’s sad,” he says. Regarding new products, Holley says that the company is already a leader in its market and will therefore continue to focus on its existing product portfolio which is widely viewed as some of the best charcoal available, coming from commercially grown Wattle and Eucalyptus timber plantations. Growth will come in the form of further exporting to new and existing markets. “We just started exporting to Australia and New Zealand but those BBQ markets are very gas focussed. We believe that by using gas you sacrifice taste. It’s interesting because here in South Africa and in Australia, the weather is perfect for BBQs but in Germany alone we export around 120,000 tons a year and the SA market is around 60-70,000 tons so even with the bad weather, the market is twice the size. “We have looked at North America but the freight costs are hugely expensive. We’re very sensitive to freight costs as it’s such a low value, bulky product. With Europe there’s already a balance of trade as we import a lot so the shippers are looking for product to fill containers. We also export to some areas in the Middle East,” says Holley. HOT HISTORY The history of E&C goes back a long way and right from the beginning,

quality has always been the focus; quality product and quality process. Before the business became known as E&C in 1976, charcoal was being produced as far back as the 1930s. Now headquartered in Pietermaritzburg, KZN has always been home for E&C. Today, the business produces around 20,000 tons of lump and 12,000 tons of briquettes with the vast majority being exported to almost every European country. “It’s 40 years since we got going on a commercial basis. Most of our products are sold through third parties – we’re big suppliers to Woolworths and Spar. We also supply into Germany, Scandinavia and other European regions, and we have our own brand in South Africa,” Holley explains. “The history is with farming

families in the Midlands of KZN. The origin was to make better use of what is essentially a raw material that couldn’t be used for commercial purposes. Around 10-15% of what grows, remains as a residue in a plantation after harvesting. The conventional way of dealing with that residue is to burn it but that is nasty from an environmental point of view,” he admits. “In the 1940s, it was realised that it was not a good idea to burn the residue. In our part of the world, in the environment in which we live, we have to deal with the residue. Through this process, my family started making charcoal but in those days there was no market for charcoal as people didn’t use it for leisure and the use in industry was minimal. In the 1970s, industry started getting interested in charcoal and the leisure value of charcoal was

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discovered. In 1976, the company was formed for two reasons. Firstly, for industry but because there were production facilities created for industry, supply quickly overtook demand and the directors, who were desperate to sell, started to export to Europe. “Initially, exports were only for the leisure market but eventually they moved into industry as well. Charcoal is a great raw material for purifying air or water and so industry now makes up an important part of our market,” he says. “A number of Midlands KZN farmers pooled their resources as exporting in those days was not an easy job. That’s where the name E&C comes from; Earl and Crow, who were two farmers in the area. Then the Holley family got involved in the 1980s and we kept the name E&C as it has traction in the market and is well known amongst customers. I am the second generation of Holley family leadership and I am very focussed on driving the business for at least the next five years,” he adds. Thanks to this long history, E&C knows every aspect of the industry and is prepared to deal with any challenge that might arise. It has lived through economic upturn and downturn, political transformation, environmental reform and is now, thanks to its unique positioning and its first mover advantage in the export markets, E&C Charcoal is leading the way, and Holley wants to encourage further investment into the sector so that further rural employment can be created. “There’s vast competition in our market. From the Eastern Cape through KZN and up to Mpumalanga, there’s huge belts of good productive land where timbers grow well and there’s lots of farmers who make charcoal so it can be difficult to compete. Competition is intense and it’s a constant nag for me that they keep chipping away. However, our

//CHARCOAL IS A GREAT RAW MATERIAL FOR PURIFYING AIR OR WATER AND SO INDUSTRY NOW MAKES UP AN IMPORTANT PART OF OUR MARKET// situation being very close to the main access and Durban and Johannesburg means that exporting is quite easy as we’re just 120 km from Durban and we’re on the route into Gauteng so getting products to market is comparatively easy. “We are the biggest company of our kind but we are not the biggest brand. As a company, we are multibranded and we’re happy with that strategy. “One of the big problems for us in South Africa is unemployment. Charcoal is an industry which is a rural activity and most unemployment occurs in our rural areas. To work in our industry, you don’t need too much of an education, you just need to be physically able so the opportunity to create employment is not massive but in the rural areas that we operate, it’s very meaningful. We have about 400 employees and I would certainly like to see that grow over the next five years. When buying from South Africa, you are supporting rural people and helping to create jobs,” he says. QUALITY RECOGNITION Today, Africa is exporting around 40% of the 800,000 tons of charcoal used in Europe. Nigeria is the biggest exporter with South Africa, Namibia and Egypt also making up big parts of the mix. Because of this, sometimes it can be difficult to stand out from the crowd and put your business in front of the eyes of the customer. But in 1988 and 1991 E&C Charcoal received the State Presidents Award for Export Achievement, further bolstering its reputation as a quality exporter. “Awards like this give us

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credibility,” says Holley. “We recently won an award for best South African household product and that also gave us credibility. We’ve won awards with Woolworths and other retailers and it does give traction and it sends out a positive message so it does help.” With the growing middle class in South Africa, and with economic fortunes expected to turnaround by 2020, E&C is perfectly positioned to grow its share of the local market as well as developing its export opportunities. There’s also now a trend towards eating better and living better, with people looking for quality in every part of the cooking process. Of course, this means that quality materials are being sourced and charcoal is a part of this. “I braai probably twice a week and I don’t just use our product. I like to know what’s out there. Our focus as a company is all about quality so it’s nice to know the advantages that we have in the marketplace. I love braaing; I find it creative and relaxing – it’s great for family and friends. There’s a changing attitude towards eating and food and people want quality with everything they do so that can only be good for our business,” concludes Holley.

E&C CHARCOAL +2733 342 1338 www.charcoal.co.za


E&C CHARCOAL

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MCCORMICK PROPERTY DEVELOPMENT

Rural Retail

Development Pioneers PRODUCTION: Karl Pietersen

A local, family run business, McCormick Property Development has been leading its industry, while remaining committed to its values, since its establishment 33 years ago.

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When PwC released its report on ‘Drivers of change for the Real Estate Industry’ back in 2014 following an industrywide conference held in Sandton, Johannesburg, the conclusion was that the industry is on the cusp of major changes. The advent of technology, effects of globalisation, changes in key demographics and disruptions in financial markets were just a few of the drivers of these changes and, according to PwC Global Real Estate Leader Kees Hage, “there will be a need for more specialist

roles in the industry. The quest for local knowledge, expertise and good government relations has become increasingly important. Looking forward to 2020, it is the real estate managers and investors who have the vision and momentum to anticipate emerging trends in the medium term and prepare adequately for them, who will be most successful.” But these predications are based largely on research in the urban and peri-urban regions, where populations are large and trends are easier to monitor. So what about

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BUSINESS PROFILE

the rural areas? What about regions which are largely underserviced and where real estate development is not high on the agenda? This is where Pretoria-based McCormick Property Development (MPD) comes in – a family run business with more than 30 years’ experience developing retail-focussed centres in rural regions of South Africa and other emerging markets in Africa. The company certainly has specialist, local knowledge; it certainly has good government relationships and it is certainly equipped with the vision to anticipate emerging trends. Over the years, MPD has developed shopping centres in rural regions with the goal of creating wealth and employment by investing in not only real estate, but entire communities in the process. Initially

focussing on the former ‘homelands’ in South Africa, MPD’s reach now covers many sub-Saharan African countries. Founded by current Chairman, John McCormick in 1983, the company is now run by second generation family leader, Jason McCormick. He tells Enterprise Africa that the company is today very different from its early days but its values still hold strong. “As the markets have changed, our model has changed. What was good for people 30 years ago, is no longer good for them now. Levels of education, levels of income and levels of aspiration have vastly increased. On the back of that, we’ve gone from small strip malls that were utilitarian with limited parking to fully enclosed malls with all the bells and whistles.

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“We look at international best practice with everything that we do. We still do strip malls in the deep rural areas where there isn’t sufficient spending power because of population numbers, to justify a 30,000 m2 Mall, but we find that today the tenant mix has changed. It used to be focussed on the lower-end, like food and other limited services, whereas now there’s more middleclass fashion in the deep rural areas and where there’s bigger shopping centres, we’ll have two supermarkets, entertainment, multiple banks and lots of parking.” While all the time the market has been changing, the demand for the type of property that MPD is expert in has not dried up and, importantly, the company has secured positions in familiar areas with real potential. “South Africa has the sixth highest ration of malls to population in the world so we are a mall-centric country and malls have very much become the ‘town squares’ of old, where people get together to socialise. South Africa as a whole has an oversupply of shopping centres in the urban areas and old towns but we’re in the last quadrant of the country that still has opportunities for new mall developments,” says McCormick. Originally, this business was thought of by industry peers as a risky idea but over the years, as the wellthought-out strategy has displayed significant success, many competitors have entered the market or shifted attention from their operations in urban areas seeking growth. But MPD is the only company that can call on a wealth of highly specified information to plan with. “The big change is that my father was the only person doing it for a long time but now there’s a massive influx of developers trying to get involved in rural areas because of the oversaturation in urban areas. Many of them have failed quite spectacularly


MCCORMICK PROPERTY DEVELOPMENT

because the models that we use to develop even a fancy mall are very different to what others are used to in the urban areas. Rents achievable per square meter are lower, building costs aren’t significantly lower but we have the advantage of 30 years of refining models; financial models, construction models, building models; to suit the same return on investment but at a lower rental income,” McCormick explains. “We’ve changed as we’ve moved. I’ve been in the business for 14 years, we saw the influx of competition coming and we prepared for that by working consistently to land-bank prime property in our chosen areas and now we have in excess of 30 land parcels that we will develop as and when the need arises,” he says.

labour costs. It takes a lean approach to operations, remaining nimble, and this has always been the way since John McCormick started the business in ’83. “Out of necessity, this company has always been very lean. Because we are lean in terms of staff numbers, we are able to go through downturns in the economy. Other companies that manage shopping centres will have teams of seven or eight people managing one centre and we don’t do that as we can get the same done with our resources, thanks to the systems and models we have in place, with fewer people,” McCormick states. MPD is even managing to help other businesses grow in these tough times. By growing its existing properties, it opens up more space for tenants who are looking to new locations, and of course, this is

another benefit to local communities. “We have customers like Mr Price, Truworths, Foschini and others that realised their growth was stagnating in the urban areas and so they wanted to push into our markets and that’s been one of the facilitators of growing our existing shopping centres. “We have acquired land up front that allows us to continually expand our shopping centres so if there’s ever a threat, we have first mover advantage and we’re able to add whichever tenants may be looking to come into the market,” explains McCormick. With 58 properties developed, 26 under ownership and management and the 59th, 60th and 61st developments currently in progress, MPD’s model has proven to be fruitful and it remains an example

WHAT ECONOMIC PRESSURE? In June, South Africa narrowly avoided the dreaded downgrade to ‘Junk’ status but the economy still sits on the edge of a knife. Unemployment crept up in the second quarter and the IMF cut South Africa’s growth forecasts to 0.1% down from 0.7% predicted in January. In 2015, the construction sector felt the pinch with the ‘Big 5’ all reporting tough trading conditions and loss of share price and these effects filtered through the industry. But McCormick is not feeling the pressure; in fact, the opposite is true. “Generally speaking, we’ve benefited. We’re seeing a continued increase in our trading densities across the portfolio and we’re fortunate to be in the positon we’re in in the market that we’re in. “It’s a great time to develop when the construction industry is down as everyone is looking for work and everyone has spare capacity so we’re developing at the same prices now as we were a couple of years ago,” he says. And unlike some competitors, MPD is not shackled by massive

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BUSINESS PROFILE

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MCCORMICK PROPERTY DEVELOPMENT

of how innovation and ‘out of the box’ thinking can result in all-round positive effects. But McCormick is clear that nothing is left to chance and laurels are not rested upon. “We manage all of our own properties – we would never let anyone else manage our properties,” he says. “We have by far the lowest vacancy rates in the industry, we have the lowest expense ratios and nothing goes unnoticed. Every month, we have large management accountant meetings, we go through everything with a fine-tooth comb and we monitor things meticulously. We own these properties so we have a real vested interest – there’s a huge amount of focus that goes into management and it’s one of the things that we are most proud of. “We’re a development, management and leasing company all rolled into one so we are a full turnkey service provider.” RURAL AFRICA With growth in rural areas of SA physically limited, MPD has broadened its scope and is now searching for opportunities north of the border. Already active in Africa, and with a strong position in some sub-Saharan nations, McCormick says that there are huge opportunities to be had if you can do business correctly. “Growth in Africa has been a target for us for that last five years but Africa is tricky. Some cities have in excess of 10 million people and they all need to eat but there is a lack of formal retail space – if everyone spends $1 a day, it quickly turns into a lot of money so there’s no doubt that the opportunities are there but it’s difficult. There’s a huge, quickly growing population, with quick urbanisation so the opportunities are massive but not without risk. “There are countries that we are interested in but we’re taking a

cautious approach while commodity prices are supressed.” The sheer number of sites and prospects that MPD is pursuing is an indicator of its strength. “We have two prime sites in Zimbabwe that we’ve land-banked while the economy turns around. East Africa is very exciting – Kenya and Tanzania are showing a lot of promise. It’s amazing how countries like Uganda and Rwanda have developed in recent years. For us, being in northern Mozambique, it’s logistically suitable so we see them all as markets with huge potential. “Property is a long-term investment and we take long-term views on countries,” says McCormick. When opening up in a new location, the same scrupulous attention to detail that underpins a SA development goes into each African project – of course, it’s easier when you can travel without restriction. “We would set up satellite offices in the countries we develop in but run everything through our head office in SA. We have four pilots in the company (including my father and myself ) and we own our own airplanes so there’s no waiting for flights or trudging through airports and this makes developing in very rural areas easier,” explains the MD. FUTURE FOCUS MPD is recognised for its involvement in many high-profile projects and in the future this will continue. The company has secured development opportunities, across southern Africa, that will keep it busy for some time. “Mall de Tete in Mozambique is an important project and will be our next to open, at the end of October. The really exciting one for us all is Alex Mall in Alexandra near Sandton where we’re doing a 30,000 m2 double-level, fully enclosed mall with lots of new upmarket concepts. It will have soccer fields and netball

courts to allow the local schools to play in the day and then at night we will have soccer leagues with the aim of getting kids of the streets and into organised sport. This will open in March 2017,” explains McCormick. “Phola Park began this month and that’s an exciting project, just short of 30,000 m2. Capital Mall will probably be the biggest shopping centre we’ll ever develop in South Africa and that has a first phase which is over 70,000 m2. “Then there’s the fantastic project in Matola in Mozambique which will be part of a large mixeduse development called Cidadela Da Matola. Alongside Mozambique’s largest shopping Mall of 47 000sqm, it will have two hotels, a casino, a gymnasium, a private hospital, government buildings, apartment tower blocks, filling stations, commercial office space, so it’s a big scheme and we’re building a large development there which will grow over time,” he adds. It’s clear that by using its extensive local knowledge, positive relationships and that ability to read market trends, MPD will remain at the forefront of the market, ride the waves, and lead by example when it comes to sustainable and financially sound property development. By 2020, when PwC re-evaluates the market, MPD will undoubtedly remain one of the most successful organisations in southern Africa.

MCCORMICK PROPERTY DEVELOPMENT 012 - 654 - 6330 @McCormickProp www.mccormick-property.com

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CENTURY PROPERTY DEVELOPMENTS

When Property

Becomes A Lifestyle PRODUCTION: Timothy Reeder

With its origins in 1975 as a developer of shopping centres, Century Property Developments has since turned to overseeing exclusive residential estates and commercial developments, continually producing valuable assets of enduring quality and integrity which enhance the areas where they are located.

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BUSINESS PROFILE

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Century Property Developments has amassed over its 40-year lifetime a proven track record encompassing numerous residential and commercial developments, a success which has been due in large part to its understanding of the unique South African context and its core principles of financial feasibility and sustainability. In this way, it has continued to refine and develop its own brand of uniquely South African architecture, indigenous landscaping, state-of-the-art security, alongside a heavy focus on a company-wide green approach and providing a high return on initial investment. A leading South African developer of residential developments and exclusive lifestyle estates, Century works tirelessly to combine its approaches to sustainability and financial viability with an unwavering design and aesthetic vision. It has shown itself to be committed to creating workable, well-planned developments that provide increasing asset values for purchasers, as well as actively improving the areas in which they are located. The evolution of this principled and conscientious organisation has seen it diversify greatly, principally through the addition of residential developments and luxury boutique hotels to its existing portfolio. These estates all feature the same comprehensive, high-quality infrastructures which have come to be expected of Century, which consist of a number of integrated lifestyle elements. South Africa has long been known for the potential it offers to prospective investors in property. Rental yields are notoriously good, while organisations such as the South African Property Owners Association (SAPOA), with its overall control of 90% of all commercial and industrial property in South Africa, are held in very high esteem by the relevant

sectors of government and thus offer a powerful platform for investors. Century Property Developments’s CEO Mark Corbett is unequivocal in the singular focus he himself has in investing in property, as opposed to the diversification usually recommended by the majority of fund managers. “I am property-biased,” he states, when pressed on his preferred choice of asset for investment. “It is the single asset class offering a geared return for which banks will lend 90% to 100% of the value. Your biggest cost – the bond repayment – is relatively fixed, while income escalates. While I would not consider myself a true investor – like many entrepreneurs I invest everything into my business – I have built my wealth from the property industry. I would say that one must never overcapitalise: buy a cheap stand in an expensive area, and when you invest, do so gradually to manage the risk.” With such common sense principals at its core, Century has succeeded in collecting a string of both local and international awards through the years. Central to this has been its prolonged focus on aesthetic principals unique to its country of origin, constructing an architectural brand inspired by historic farm-style architecture unique to Southern Africa. Among the most notable of these awards was the feat it achieved in 2011, managing to defeat more than 1,000 international competitors to walk away with the prestigious Globals Award for the world’s best retirement resort, held annually to recognise excellence in over-50s residential housing. Corbett spoke of the award’s importance to the South African developer, as well as to South Africa as a whole. “This category is intended to differentiate retirement ‘resorts’ from typical retirement villages and old age homes. The judges were particularly impressed by the focus on customised, bespoke

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homes, and the quality of amenities available to residents,” he described. The CNBC International Property Awards, meanwhile, is the world’s most prestigious competition and is dedicated to recognising the best real estate professionals and projects throughout the world. Century Property Developments somewhat dominated the competition in 2009, taking home a total of six of these coveted awards and in turn showing South Africa’s ability to triumph within what are highly competitive European and African property arenas. “We are truly honoured to receive these accolades,” said Corbett at the time. “This is our first year of entering the Europe & Africa Property Awards, and winning in all five of the categories we entered is a wonderful achievement! We pride ourselves on our uniquely South African approach, and I reckon that it was the combination of environmentally friendly principles and aesthetically pleasing architecture that won the day for us.” Largely responsible for this particular success were Century’s Waterfall Equestrian and Waterfall Hills Mature Lifestyle Estates, winning a total of six prizes between them. The former Estate was recognised as the Best Residential Development both in South Africa and in Africa as a whole, while Waterfall Hills fared even better, collecting a 4 star award as Best Development Marketing in South Africa and a 5 star trophy as Best Retirement Development in South Africa. Additionally, it was named Best Retirement Development in Africa, and, finally, Best International Retirement Development. Both estates also went on to represent the continent of Africa at the ‘Best of the World’ awards ceremony, held in San Diego, with Waterfall Hills Mature Lifestyle Estates winning the Best Retirement Development gong. Located just 10km North of the Sandton CBD, between Woodmead


CENTURY PROPERTY DEVELOPMENTS

and Kyalami and adjacent to Waterfall City, the 640Ha Waterfall Country Estate and Village is a highly sought after lifestyle estate. Billed as the place where “kindred spirits move to their own beat, where you are truly free,” it offers residents an upmarket, secure and spacious environment to build their dream home. Stand sizes in the development range from 1000m² - 1750m² and are priced from R2,8 million, with the property already proving to be a savvy investment; since the launch of Waterfall, clients have already seen the value of their initial investment increase by 200%, if not more as has been seen in a number of cases. It is predicted that, due to a valuable combination of high demand, a limited number of properties and peerless lifestyle facilities, the value of the property at Waterfall will continue to far outperform the industry growth

norm well into the future. Once complete, Waterfall will consist of various secure residential estates, retirement villages and business parks, and be fully provided for by the full range of services. These will include a Netcare hospital and the esteemed Reddam House private school, alongside a Gautrain Station and the largest shopping mall in Southern Africa, the Mall of Africa. Once again, there is also a strong focus on ‘green design’ within the development, to create a healthy community centred on environmentally conscious principles. The development continues to go from strength to strength, and of the Estate’s recently-acquired title of “Best Mixed-use Development in South Africa and Africa” in the prestigious African Property Awards 2014-2015, Willie Vos, CEO of

Waterfall Management and Operating Company, summed up Waterfall’s wide-reaching appeal. “We are delighted at this great achievement and believe this recognition is testament to the world class development we, and our partners, are building within South Africa. It is an Estate that promotes an integrated live/work/play environment that provides a new standard in quality Estate living.”

CENTURY PROPERTY DEVELOPMENTS +27 11 300 8700 sales@century.co.za www.century.co.za

www.enterprise-africa.net / September 2016 / 73


POYNTING ANTENNAS

Keeping You

Connected PRODUCTION: Timothy Reeder

Poynting’s primary offerings are solutions geared toward wireless high speed data applications, boasting a legacy of innovative design, manufacture and delivery of integrated antenna solutions to its partners and customers worldwide.

//

From its base in Samrand South Africa, Poynting is placed to cater for a whole host of wireless, high speed data applications within the telecommunication, broadcast and consumer markets. Among its capabilities are 4G LTE residential solutions and business-to-business (B2B) tasks, while its antenna provisions span GSM, M2M, DTV (digital television) as well as other CPE applications. Its innovative approach sees it today the proud holder of more than 50 patents, which are widely used in its unique antenna solutions for enhanced wireless communications - be these in LTE, 3G, WiFi, RF or indeed other applications. Poynting has used its enviable scope of knowledge and experience to gain what is a significant global footprint in its service provisions. Its head-office is

in South Africa’s Gauteng Province and is backed up by a regional head-office in Munich, Germany. Manufacturing operations are split between Shenzhen in China and South Africa’s own Johannesburg, all of which combines to allow Poynting to successfully supply to its customers and partners all over the world. Founded on a deep knowledge and detailed understanding of the key principles of electromagnetics, RF propagation, antenna design and development, Poynting employees today include the ideal mix of graduate as well as professionally registered engineers with doctorate level expert knowledge of the technology and the industry, ensuring it remains current and at the forefront of the field while possessing an unparalleled mastery of the science behind its functioning.

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BUSINESS PROFILE

At the close of 2015, Poynting found itself a key player in South Africa’s migration from analogue to digital terrestrial television, tasked with delivering some 500,000 digital TV antennas to the country’s Post Office. The shipment formed part of an initial order ultimately set to allow five million lowincome households to receive subsidised digital TV antennas and set-top decoders, as part of this transition from traditional analogue to the new age of digital TV broadcasts. The DigiAnt antenna at its helm is a folding horn-type TV antenna which operates in a wide frequency band from 470 MHz to 862 MHz, and which is widely considered to be the first new TV antenna design in South Africa for over five decades. “We are very proud to be able to ship the first South African designed and built digital antennas as part of the SA Government’s Go Digital transition programme,” said Eduard Walker, head of product management at Poynting Antennas, at the time of the delivery. Poynting’s most recent major, high profile foray saw the employment of its OMNI 291 high-gain, multi-band, omnidirectional Marine and Coastal Antenna by the German sailing team at the 2016 Olympic Games. An integral part of the team, this antenna covers all current, and indeed several new data frequencies in all bands, from 450MHz to 2,700MHz. Designed and tested in South Africa, it is ideal for sea-to-land communications between the competition yacht, the coach’s motorboat, and land-based operations. The ultra-wide range it possesses is possible only because of Poynting technologies that use multiple dipoles

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POYNTING ANTENNAS

and a unique data feed network, while the inclusion of the new 450MHz ranges render it fully future-proof. Embarking on something of a breakthrough in its engineering activities, Poynting was selected to design and build antennas for the iconic BLOODHOUND SCC, the ultimate supersonic car, in its attempt to beat the current world land speed record at Hakskeenpan in the Northern Cape. Members of the BLOODHOUND SSC team have held the world land speed record for 30 consecutive years and are now aiming for a speed of 1,000 mph (1,610 km/h). “We are so excited and inspired to have been selected from local and international companies making their mark in wireless antenna technology,” commented Engineering Project Manager Lara Viljoen. “With a highly qualified and experienced team, we believe that Poynting has

the research, skill and manufacturing capacity to add real value to this project. Nothing is impossible at Poynting and this kind of project is exactly what our team of engineers thrives on! “We’re relishing the challenge of designing antennas that will facilitate essential communications, data sharing and monitoring between the supersonic vehicle and the base stations,” Viljoen continued. “A key objective of the project is inspiring the next generation of scientists and engineers by sharing this engineering adventure and engaging educators, learners and families. As well as the excitement of aiming for 1 610 km/h, that is the key reason we’re involved in this landmark project.” The process of developing the antenna is perfectly suited to Poynting’s current specialised antenna development methodologies, and comprises a series of simulations,

prototypes, tests and qualifications, all to be conducted with the company’s trademark innovation and attention to detail. As Viljoen concluded; “BLOODHOUND SCC needs reliable high speed data communications from the vehicle to the MTN LTE base stations in order to stream the data. Poynting’s deliverable will be qualified antennas which will be mounted inside the vehicle fin and will be connected via RF cables to the User Equipment Sierra Wireless modules – in order to maximize the throughput bandwidth for the data link.”

POYNTING ANTENNAS +27.126 57 0050 info@poynting.tech www.poynting.tech

Watching over IP in Africa. For all patent, trade mark, design, copyright, anti-counterfeiting and the commercialisation of your intellectual property enquiries contact us today: Tel: +27 11 324 3000 Fax: +27 86 603 6118 E-mail: info@kisch-ip.com www.kisch-ip.com

Proud IP partner to Poynting Antennas. Patents | Trade Marks | Copyright | Designs | Franchising | Licensing | Anti-Counterfeiting | Commercial Services Plant Breeder Rights| Plant Variety Listing | Advertising Standards Authority Compliance | Internet & E-Commerce | Domain Name

www.enterprise-africa.net / September 2016 / 77


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.

//TABLE OF ALL EVENTS: CAPE LOGISTICS Cape Town International Convention Centre 06-08 September MARITIME AND OFFSHORE MARINE AFRICA Cape Town International Convention Centre 06-08 September OIL & GAS AFRICA Cape Town International Convention Centre 06-08 September TCSD AFRICA Cape Town International Convention Centre 06-08 September BUYABUSINESS EXPO Johannesburg Ticketpro Dome 08-10 September SMALL BUSINESS EXPO Johannesburg Ticketpro Dome 08-10 September

FOOD & DRINK TECHNOLOGY AFRICA 14 – 15 SEPTEMBER 2016 Food & drink technology Africa is a biennial trade fair held in Johannesburg, South Africa. The trade fair and conference is the third successful offset of Messe München’s drinktec, the world’s leading trade fair in the beverage and liquid food industry.

technologies, explore live demonstrations and interactive product displays, interact with industry experts and peers, and learn from content rich conferences and free-to-attend seminars. Dig up a mine of information and inspiration at Electra Mining Africa 2016. It’s where Africa’s mining, industrial and power sectors meet.

ELECTRA MINING AFRICA 12 – 16 SEPTEMBER 2016 Ranked as one of the world’s largest mining shows and the biggest mining, industrial, machine tools, electrical and power trade show in Southern Africa. Discover all the latest in products, services, technologies and trends at the largest mining, industrial, electrical and power trade show in Southern Africa. It’s 4 shows in 1. Engage with 850+ local and international exhibitors, source cutting-edge products and

AFRICA AEROSPACE & DEFENCE 2016 14 – 18 SEPTEMBER 2016 Africa Aerospace and Defence (AAD) is one of the world’s premier aerospace and defence events and holds a prominent position within the aviation and defence calendar. The exhibition takes place on a biennial basis in September. The first three days of the exhibition are traditionally trade days, followed by two days where the show is open to the public.

78 / September 2016 / www.enterprise-africa.net

ELECTRA MINING AFRICA Nasrec Expo Centre 12-16 September FOOD & DRINK TECHNOLOGY AFRICA Gallagher Convention Centre 14-15 September AFRICA AEROSPACE & DEFENCE Pretoria Air Force Base, Waterkloof 14-18 September FUTURE BANK EAST AFRICA Radisson Blu Hotel, Nairobi 27-28 September POWER, STEEL & HOUSING Abuja International Conference Centre 27-29 September INTELLIGENT CITIES EXHIBITION & CONFERENCE Fairmont Heliopolis Hotel, Cairo 28-29 September



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