Enterprise Africa March 2017 by CMB Media Group

AFRICA

THE BUSINESS MAGAZINE FOR AFRICAâ&#x20AC;&#x2122;S INDUSTRY LEADERS

March 2017

www.enterprise-africa.net

SPIROS FATOUROS:

Africa:

Premium Territory for Marsh ALSO IN THIS ISSUE:

Da Gama / Oasis Water / Becker Mining / Panarottis

PA R T N E R I N G W I T H SA B U S I N E S S T O K E E P WA L K I N G . JOHNNIEWALKERSOUTHAFRICA

EDITOR’S LETTER

Joe Forshaw EDITOR joe@enterprise-africa.co.za Hal Hutchison SALES MANAGER hal@enterprise-africa.co.za Emma Neethling SALES ADMINISTRATOR sales@enterprise-africa.co.za Sam Hendricks SENIOR PROJECT MANAGER sam@enterprise-africa.co.za Shaun Cousins PROJECT MANAGER shaun@enterprise-africa.co.za Shannon James PROJECT MANAGER shannon@enterprise-africa.co.za Peter Littleboy PROJECT MANAGER peter@enterprise-africa.co.za Adam Dowson PROJECT MANAGER adam@enterprise-africa.co.za Emma Smith FINANCE MANAGER finance@enterprise-africa.co.za Harvey Tarlton SENIOR DESIGNER harvey@enterprise-africa.co.za

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Published by CMB Multimedia Chris Bolderstone – General Manager Logo Two 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 2017

Welcome to our latest edition…

While the global economic environment remains uncertain, indications are that we have entered a period of recovery. We anticipate an economic growth rate of 1.3% in 2017,” said President Zuma as he delivered his State of the Nation Address in Cape Town. This comes as music to the ears of the business community which has been frustrated by economic uncertainty for a long time. Three of our feature companies for March admit that times have been tough. “This is the hardest most challenging time we’ve ever experienced,” says Tyrone Herdman-Grant of Panarottis. “Last year was probably the slowest that I’ve seen since joining the business,” says Nick Mowbray of T Birch & Co. “In 2014, the market was slow and we had to discuss strategies so that we could ensure we remained sustainable,” says Mark Gilbert of Stateline Pressed Metal. But with Zuma announcing that the country is entering a recovery period, and real growth is expected to return to the economy (albeit slowly), businesses can begin to plan for the future. 2017 looks set to an interesting year; we’re just three months in and already big announcements have been made. Take leading fleet management firm Afrirent for example (featured on page 68). This is a company that is committed to growth and is announcing a number of new projects and strategies that are set for completion this year. It will create jobs, wealth and opportunities in the economy and this is exactly the sort of positive news that is needed. This edition is full of positive news and, even for those who have found times tough, determination and a commitment to quality business practice has helped most overcome the challenges of a weak economic environment. Tell us how your business has combated the cold economy. We’re online @EnterpriseAfri1

Joe Forshaw EDITOR

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

98/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/MARSH SA: Africa: Premium Territory These are times of challenges and opportunities for the insurance industry, and nowhere more than in Africa. “Historically, Marsh has always had the view that if we want to go into a new territory it makes sense to be the Number One or Number Two there,” says Marsh SA Managing Director Risk Management, Spiros Fatouros. “And then we look for local acquisitions to match our appetite for expansion.”

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CONTENTS INDUSTRY FOCUS: INSURANCE 14/CONSTANTIA: Breakthrough For SA’s ‘Hounded’ Doctors’ At Risk

INDUSTRY FOCUS: TEXTILES 22/DA GAMA TEXTILES: Producer Of Original Shweshwe Continues To Grow

68/

28/T BIRCH & CO: A Mark of Distinction

INDUSTRY FOCUS: FOOD & DRINK 34/OASIS WATER: Flowing Into Africa 40/BIG DADDY’S LIQUOR: ET Carbon Disclosure Leader Award for Kumba 46/PANAROTTIS: “We Want To Be Known For Family And Quality Food”

INDUSTRY FOCUS: MINING 52/BECKER MINING SOUTH AFRICA: SA’s Trusted Mining Systems Supplier 60/EXXARO: Exxaro Leads Way On Structural Change 64/KUMBA IRON ORE: Record Highs Forge Strong Results

INDUSTRY FOCUS: AUTOMOTIVE 68/AFRIRENT: Driving Business Forward

INDUSTRY FOCUS: PAINTS & CHEMICALS 72/KANSAI PLASCON: Creating a Pan-African Paint and Coatings Business 78/FERRO SA: Lack of Foreign Currency Slows African Growth

46/ INDUSTRY FOCUS: MANUFACTURING 82/STATELINE PRESSED METAL: Eastern Cape Pressed Metal Specialist Geared For Expansion

INDUSTRY FOCUS: EVENTS 86/GEARHOUSE: A Mark of Distinction

INDUSTRY FOCUS: CONSTRUCTION 90/GHC: Project Managers Growing Despite Tough Times

INDUSTRY FOCUS: LOGISTICS 94/ILS: Expert Logisticsfrom Beginning to End www.enterprise-africa.net / 5

DEPUTY PRESIDENT ANNOUNCES MINIMUM WAGE OF R3500 Deputy President Cyril Ramaphosa has announced that the national minimum wage has been set at R20 per hour or R3500 per month for those that work a 40-hour week. Those who work a 45-hour week will have their minimum wage set at R3900. Briefing journalists at the Imbizo Centre in Parliament in Cape Town, the Deputy President said the new minimum wage will come into effect on 1 May 2018. The Deputy President’s briefing was aimed at providing details on the status of National Economic Development and Labour Council (NEDLAC)’s Committee of Principals (CoP) discussions on labour relations and wage inequality. “The national minimum wage, which is a floor below which no worker will be paid, will significantly improve the lives of millions of low-paid workers and begin to address the challenge of wage inequality in our country. “At its introduction next year, South Africa will join several countries around the world that have implemented a national minimum wage as an instrument of economic as well as social development. “The social partners have agreed to set the national minimum wage at a level that has meaningful impact on the wages of the lowest paid worker, while minimising any negative impact on employment,” he said. He said all partners signed the agreements with the exception of the trade union federation COSATU, after they asked to be given some time to complete their own internal processes of consultation. The Deputy President said 6.6 million workers were living on a living wage of under R3500 and that there is a need to

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begin a journey of improving the income of low-paid workers. “What we arrived at in terms of the national minimum wage is not a living wage. This forms a firm foundation of moving our country towards a living wage. It is a start. These agreements are a result of nearly two years of deliberations. “They are response by the call that was made by President Zuma. “In the declaration on wage inequality that was signed yesterday

and on labour stability, social partners confirmed the principles that have underpinned deliberations which form the basis for the agreements that have been reached.” He said companies that cannot afford the national minimum wage can apply for exemption from government. The Deputy President also said the minimum wage would be evaluated from time to time to assess its impact on jobs.

DEPUTY PRESIDENT CYRIL RAMAPHOSA

NEWS ROUNDUP INCREASE IN ALCOHOL AND TOBACCO TAXES

SA, FRANCE TO ADVANCE TRADE, ECONOMIC RELATIONS South Africa and France have agreed to enhance trade and economic relations. Trade and Industry Minister Rob Davies held a courtesy meeting with new French Ambassador to South Africa Christophe Farnaud in Cape Town where they discussed relations between the two countries. “Strengthening of relations between the South African and French businesses on composites and advanced manufacturing in general will create opportunities for both countries. Advanced manufacturing is viewed as a sector for future economic growth,” said Minister Davies. Total trade between the South Africa and France has gradually recovered to pre-crisis levels of 2007-08, growing by an annual average rate of 6.2% from 2010 to 2015. Currently major South African exports to France include vehicles, aircrafts, machinery and automobiles, while imports from France include pharmaceuticals, electrical and electronic equipment, turbo jets and vaccines for human use.

Finance Minister Pravin Gordhan has announced an increase in sin taxes for consumers of alcohol and tobacco. Tabling his Budget Speech in the National Assembly, he said alcohol and tobacco excise duty rates will increase by between 6.1 and 9.5% this year. This is likely to leave a bitter taste in the mouths of alcohol drinkers and smokers, with increases likely to be passed on to consumers. According to National Treasury’s Budget Review document, the targeted excise tax burdens for wine, beer and spirits are 11%, 23% and 36% of the

weighted average retail price respectively. National Treasury said since the implementation of the current excise regime in 2002, tax rates on most alcoholic beverages have consistently increased above inflation annually. The 2017 Budget continues this trend. The new proposal means that an excise duty of 149.6 cents will be charged on every 340ml can of malt beer compared to the current 135c, which translates to a 9% increase. A charge of R14.30 will be imposed on a box of 20 cigarettes, an increase of 8% from the current R13.24 per 20 cigarettes.

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MARSH SA MANAGING DIRECTOR RISK MANAGEMENT, SPIROS FATOUROS

MARSH SA

Africa:

Premium Territory PRODUCTION: Colin Chinery

These are times of challenges and opportunities for the insurance industry, and nowhere more than in Africa. “Historically, Marsh has always had the view that if we want to go into a new territory it makes sense to be the Number One or Number Two there,” says Marsh SA Managing Director Risk Management, Spiros Fatouros. “And then we look for local acquisitions to match our appetite for expansion.”

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INDUSTRY FOCUS: INSURANCE

For the insurance industry, Africa is the continent of opportunity. Here are some of the world’s fastest growing economies, dynamic demographics, and – significantly - a very low penetration rate; the total value of premiums as a proportion of GDP. South Africa accounts for almost 80% of all premiums in sub-Saharan Africa, with a 13% penetration rate; well above the developed world average. By contrast the figure for Nigeria, Africa’s largest GDP country, is just 0.6%. Unsurprisingly, Marsh SA, the Sandton-headquartered arm of the world’s leading insurance broker and risk adviser, is at the forefront of African aspiration. “In Africa we are looking firstly at geographical expansion, identifying target countries and opportunities where we see they fit both our

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expanding Africa client base and corporate strategy,” says Marsh SA Managing Director Risk Management, Spiros Fatouros. “Historically, Marsh has always had the view that we wants to go into a new territory it makes sense to be the Number One or Number Two there, and then look for local acquisitions to match our appetite for expansion.” PIONEERING INSURANCE A pioneer in risk and insurance services for over 130 years, Marsh provides advice and transactional capabilities to clients in more than 130 countries, and the name Marsh & McLennan Companies has existed since 1871. Last month MMC shares hit a 52-week high of $73.52 on strong fourthquarter results and recent deals. Investors are impressed with its growth - both organic and through acquisitions - and

focus on streamlining the mix of business through rising investment in growth areas including South Africa, where strategic acquisitions and partnerships have strengthened both its expertise and resources. Among Marsh SA’s defining strengths are Risk Management and Finance, specialist and conventional insurances and exceptional internal and external support services. Clients include high net-worth individuals, small, medium and large commercial, large corporate, mega and multinational clients across the full spectrum of commerce, industry and parastatal operations. “We have significant market penetration in the corporate, mid-market and commercial business sectors,” says Fatouros. “But by its very nature, numerous small independent brokers are servicing thousands of small clients. And while we have a significant client

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INDUSTRY FOCUS: INSURANCE

base in that space, from a market share perspective it’s still relatively low, so we are looking to increase our penetration here by both acquisitions and organic growth.” Within South Africa itself, high interest rates, currency depreciation, rising food prices, and other economic effects are impacting on insurance customers with tight budgets. As a result individuals and businesses with group policies are choosing inferior insurance cover, higher deductibles, or even cancelling their policies.

Africa there’s no doubt that the global environment has impacted the industry. “Customers whether large corporate or mid-market, have felt the economic pinch and this has put pressure on us in terms of finding value for clients, determining premium spend, where they can reduce that cover, and how they can better manage their risks within their financial constraints. “However South African corporate clients and mid-market companies are pretty sophisticated and I don’t think there is a significant portion of uninsured. I think the ethos here is quite well built up, so we are talking about delivering the right products and the right price and the best service meet the client’s expectations.” It’s a challenge and an opportunity for which Marsh SA exceptionally positioned. “In Africa and globally across

GLOBAL IMPACT So while the interaction of Africa’s GDP growth and very low insurance penetration rates opens up enormous opportunities for the sector, how are the insurers to capitalise in these cash-restrained times? “Within South

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Pioneers and market leaders

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our sister companies we are a business that really understand risks, understands people, and understands strategy. So we are well placed to work with our clients and assist them through these difficult economic times. “And we are doing this. In our conversations with clients we say let us look at your physical risk management, how can we change your audit programme, perhaps put them on different rotations, assess the type of cover you buy and what cover you need what cover you don’t need. We work together to really understand the risks of making a purchase decision and what they are really trying to achieve.” It’s an approach aligned with one of the major developments in the modern insurance business – growth and retention through improved customer experience and relationship; an outside-in approach in line with a customer-centric view of the insurance business. On-line selection is one major result of this shift, but even with the proliferation of digital methods to purchase insurance solutions, the significance of personal contact remains a big and arguably increasingly important factor. “With access to pc’s smart phones and similar technology, the environment has certainly changed in terms of individuals who are buying insurance, and this is definitely starting to push up to mid-market clients. It will be an interesting ground to see how over the coming years this all builds out. “But in terms of our strategy for individual insurance we are not focusing on a direct retail play and competing with the on-line direct insurers. We are focusing on providing bespoke risk management for our clients. “It’s like a private banking analogy for your private insurance portfolio; you will have a dedicated consultant who will work with you and understand your portfolio and your own best needs. It’s very much a differentiated model when compared with going online for insurance at the cheapest price.”

MARSH SA

SKILLS ISSUE NOW CRITICAL With a highly techno-skilled workforce increasingly critical for this industry, the challenges are stark. A new 71-nation survey of 487 CEOs in the banking and capital markets, asset and wealth management and insurance industries ‘Ahead of the curve: Confronting the Big Talent Challenges in Financial Services’ - showed over 72% viewing limited availability of skills as a threat to growth, with concern highest in the insurance sector at 81%. It’s against this backdrop that Minister in the Presidency, Jeff Radebe told the recent World Economic Forum Workshop that only 25% of South Africa’s labour force is skilled, dipping to 13% in the finance and insurance sector and just 8% in IT and telecommunications. And as Fatouros points out, it’s a shortage of skills and qualified people that is combined with a high unemployment rate. “More than this, January’s report from the World Economic Forum highlighted that by 2035 Africa as a whole will have more unemployed youth then the rest of the world combined. “There is a real challenge in terms of

how we get those skills into the modern age and develop them for the future, and it’s a challenge specific to sub-Saharan Africa. “In terms of a wider perspective there’s no doubt that information and data technology allows consumers to get educated much easier than in the past and acquire some knowledge about basic issues. “But to really get the depth of knowledge about a product, an industry or the complexities of risk, and provide value added for the client, we need to bring in young people and make sure their knowledge and intellectual properties are deep and sound. “It is going to be a challenge, but here at Marsh SA we are proud of a series of related initiatives including our mentorship schemes and the graduate programme where we bring in graduates train and promote them through the business.” Meantime accelerating growth is high on the Marsh SA agenda. “We are always looking at acquisition opportunities and there are a couple on the radar both from an Africa and a South Africa perspective.

BIGGEST YET PERSONAL “As an organisation, we have 1300 colleagues in Africa 800-900 in South Africa, and the benefit for our clients is that they are dealing with the biggest broker on this continent and the biggest risk advisor in the world “But we have structured our business so that we have industry specialists and products specialists, which ensures that a client is always dealing with an individual who knows his or her industry backwards, with specific products and solutions. “You are getting the benefit of dealing with the biggest organisation while at the same time working with a niche provider who really understands your business. This is what we are doing, and as a result we are adding real value for our clients.”

MARSH SA +27 (0)11 060 7100 africa.marsh.com

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CONSTANTIA INSURANCE

Breakthrough For SA’s

‘Hounded’ Doctors’ At Risk PRODUCTION: Colin Chinery

With rocketing medical liability cover premiums driving obstetricians and other specialists from their professions, Randburg-headquartered Constantia Insurance has launched South Africa’s first home-grown medical indemnity insurance product. “We are going in with a very high quality Occurrence Based policy at about a third lower than the standard industry pricing,” says CEO Volker Von Widdern.

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INDUSTRY FOCUS: INSURANCE

CONSTANTIA INSURANCE

Sky scraping medical negligence claims are forcing South African obstetricians out of private practice, with the SA Society of Obstetricians and Gynaecologists warning there will be none left in the private sector by 2020. It’s a scenario claims specialist and reformer Volker Von Widdern, CEO of Constantia Insurance knows well. On a recent trip to Worcester, two hours north of Cape Town, he found that all four obstetricians in this town of 97,000 were considering leaving the profession. “This is a crisis. They have trained for 20 years to practice and now they are fearful of being attacked. Their livelihoods and their personal environment are being turned upside down.” The medical negligence sector in South Africa is big business. Settlements can be as high as R10m to R21m with payout expectations pitched accordingly. World Health Organisation head Margaret Chan has warned Heath Minister Aaron Motsoaledi that South Africa’s contingency law will kill the country’s health system because lawyers are getting a huge percentage of the payouts. “To put it mildly, medical malpractice in South Africa from an underwriting perspective has been a challenge. Assumptions that certain risks apply on an industrywide basis are leading to actuarial forecasts and perceptions that have developed in to the crisis in the specialist sector of the medical practitioner side,” says Von Widdern. High premiums reflect high claims. Children disabled at birth for example, can claim, through

//ONE OF THE SATISFACTIONS YOU GET FROM RISK MANAGEMENT IS THAT YOU SOMETIMES GET THE OPPORTUNITY TO FIX SOMETHING THAT’S BROKEN//

their parents, guardians, or when they reach adulthood, not only for medical expenses but also for lifelong living expenses. However, the elements attributable to medical negligence or malpractice require further clarity. DOCTORS DRIVEN OUT “High premiums are driving doctors out of the industry. Underlying insurance premiums have gone up very quickly in the last three or four years - and we are talking about a tripling. For certain specialist sections this has made them unaffordable. “And this is a massive South African issue that has to be solved. Yet no one has engaged in normalising the underlying premise of what the risk is and getting this back into the realm of a risk managed reality,” says Von Widdern. That is until now. Launched late last year and underwritten since January, Constantia’s EthiQal is a comprehensive Medical Indemnity solution developed for South African Medical Practitioners. Offering ‘stable and sustainable’ premiums based solely on the local risk assessment of South African private sector settlements, EthiQal is backed by on-the-ground professional support for doctors facing litigation or disciplinary proceedings. “It’s new to the business and it is going very well,” says Von Widdern, former Chief Operating Officer at Marsh SA, who joined multi niche Constantia Insurance – Insurance Made Personal - last year with an impressive background in a broad spectrum of insurance activities, focusing specifically on risk management and related disciplines. Until now few local insurers have covered doctors, with no cover for those in the high-risk practice areas. These have had to

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INDUSTRY FOCUS: INSURANCE

CONSTANTIA INSURANCE ETHIQAL TEAM

look to overseas-based insurers and international organisations, such as the Medical Protection Society (MPS), to protect them in malpractice suits. “We have developed EthiQal according to South African risk profiles, cutting out the unfair skewing of premiums to certain practice categories – something that occurs all the time when working with international risk profiles,” says Von Widdern. QUALITY – WITH A PRICE CUT PROMISED FOR 3 YEARS “The first thing we did was change the pricing structure. The product is the same Occurrence Based policy with exactly the same indemnity, but we are going in with a very

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high quality, nation-wide service team at about a third lower than the standard industry pricing. We know the risk in the private sector is far less than it’s perceived to be. We are also going out with a three-year premium freeze for doctors with good risks – that’s 90% plus of all doctors.” Unsurprisingly, early reactions have been enthusiastic, with hundreds of applications for EthiQal being received. “We are welcomed into doctors’ circles, and

the presentations we have given to doctors’ groups have ended with the majority in the room clapping,” explains Von Widdern. Premium comparisons are compelling. The highest price premium in South Africa among Constantia’s competitors is for an obstetrician with a base price of R850,000. “It’s a massive amount of money for a South African doctor, and it means a very high proportion of the fee for delivering a baby is allocated to paying an

//TO PUT IT MILDLY, MEDICAL MALPRACTICE IN SOUTH AFRICA FROM AN UNDERWRITING PERSPECTIVE HAS BEEN A CHALLENGE//

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INDUSTRY FOCUS: INSURANCE

CONSTANTIA INSURANCE CEO VOLKER VON WIDDERN

insurance premium. “Our cost in this space is R526,500 excluding VAT - more than a third cheaper. Fixed for three years, and taking inflation into account, we are saving an obstetrician well over a million Rand over the next 36 months. Constantia is also the only South African insurer offering Occurrence Based cover; if you buy a policy in 2017 anything that happens this year, it is insured for the future. We are changing pricing fundamentally down the scales,” says Von Widdern. Underpinning Constantia’s ground-breaking EthiQal cover is

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a dedicated team of 20 specialists looking after doctors countrywide; underwriters, technical representatives, medical legal specialists and doctors who understand the workings of the South Africa’s medical systems. WALL TO WALL SERVICE “By comparison, the next best on offer would be occasionally one representative from MPS, or another competitor sometimes giving couple of hours a week to their product. We believe our doctors are worth far more, and we want to show them that we are ramping up to give them wall-to-

wall service in the medico-legal and indemnity space.” The backdrop to a crisis so severe that the SA Society of Obstetricians and Gynaecologists estimates that between 50 and 100 of the country’s 450 obstetricians will quit private practice this year, can be summarised in a single word: Fear. “What’s happened is that there’s been an increasing perception and concern in this sector of the risk of being sued. This risk has been driven by two key elements. The first is the capping of legal and claims activity in the road accident and personal injury indemnity fund has seen many personal

CONSTANTIA INSURANCE

injury lawyers changing their focus to other areas, one of which is medical malpractice “Another big factor is that for some five years South Africa has had contingency fee arrangements as a new form of law. As a result it became more opportune for a plaintiff’s attorney to take on certain cases and go for big settlements. “Some of these have succeeded and others haven’t. But some of the successes have turned the perception of risk in medical malpractice to a state of very high sensitivity.” Wits Professor Ames Dhai, part of a team working on reducing medical negligence reporting to Health Minister Aaron Motsoaledi, puts it succinctly. “People say they will sue the pants off you but the lawyer gets the pants.” For reformer Volker Von Widdern, EthiQal’s first syllable is as significant as the last. “It is highly socially responsible. We have a situation where obstetricians in South Africa are being hounded and blamed for every possible reason should a baby not come out in a healthy way. “Of course there are some mistakes, but not at the rate and in the way that our doctors are being attacked, and it concerns us that some of these attacks are for spurious and ostensible settlement reasons. “As a result, 70% of our obstetricians are considering leaving their practice. South Africa has a shortage of doctors, and one major reason for devising and launching EthiQal is to preserve the medical talent and resource in this country.” By looking at the entirety of the risk management, unpacking the litigation issues and dealing with these and the settlement structure in an entirely different way, Constantia can fundamentally address the entire sector of medical malpractice and change what is a significant headache for practitioners into something that is more normalised, says Von Widdern. “And for us, that’s a critical objective. “We have entered the market on

an industry re-positioning perspective, looking at the entire life cycle of risk from the moment a doctor opens his or her door to the patient, to the diagnosis, the clinical risk, the inter-action of hospitals and the post-care treatment etc. MEDIATION A KEY “We are also looking at the two other major elements; litigation and settlement. We have plans to fundamentally change the legal risk, starting with mediation, which takes out more than 90% of the legal risk and cost in applicable cases. And we have innovations on the settlement side, techniques to avoid those massive capital or onceoff settlements that have made the perception of risk so high.” Volker Von Widdern’s dedication to reform is tangible. “I started

taking part in the project team when I saw that this had to be grabbed from a risk management intervention point of view. For the past six months it’s been 50% of my day. “One of the satisfactions you get from risk management is that you sometimes get the opportunity to fix something that’s broken. Well EthiQal is about changing the entire medical malpractice make-up in South Africa. And that’s what we have done.”

CONSTANTIA INSURANCE 011 686 4200 info@constantiagroup.co.za www.constantiagroup.co.za

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DA GAMA TEXTILES

Producer Of

Original Shweshwe

Continues To Grow PRODUCTION: Manelesi Dumasi

Da Gama Textiles, home of the Original Shweshwe fabric, is continuing to invest in its factory to ensure it remains as efficient and productive as possible. Managing Director, Greg James talks to Enterprise Africa about new machinery and the ongoing battle against cheap imports.

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INDUSTRY FOCUS: TEXTILES

At the end of 2015 Enterprise Africa spoke to Greg James, Managing Director of Zwelitsha-based Da Gama Textiles and learnt more about how the company had overcome a difficult period and managed to reinvent itself as an efficient, industry leading business servicing South Africa’s domestic textile industry with shweshwe and other products. Established in 1946, following the second world war, when British expats moved into the Eastern Cape to grow a textiles industry, already large in the UK, Da Gama quickly expanded to become one of the most recognisable names in the business. By the ‘80s, Da Gama was the largest textile factory in South Africa with more than 9000 employees producing around 80 million meters of cloth each year. But thanks to an ageing fleet of

machines, a weak order book and the bleak nation-wide economic outlook, Da Gama’s progress all but halted. Employees numbers were shed, production slowed and machinery was in repair more than it was in production. The German industrialist holding the company at the time decided to sell up and the company’s main supplier, Cowie Trading, purchased shares. This sparked the beginning of a change in fortunes for Da Gama. Quickly, the new shareholders set out a plan to return efficiency to the factory. A proper maintenance programme was developed, improving the reliability and availability of machinery, and an efficiency drive began which saw production increase by 40%. In 2017, Da Gama’s growth continues and the company, which is known for home sewing, furnishing

and workwear/government tenders, remains on the growth path. “We’ve made good progress,” says James. “2016 was a consolidation period following the changes we had put in place. We spent a lot of time, energy and money on proper repair and maintenance programmes and that started to come to fruition. We had more capital investment via the government investment programme. We also had to get people focussed on where they could look for areas of improvement. Our order book grew substantially and we were able to increase production. “There’s new equipment coming on board and we’ve also increased our weaving capacity which was previously a bottle neck for the business. “We are looking at increasing the weaving capacity further from around

UNIQUE IDEAS. UNIQUE SOLUTIONS CHT/ BEZEMA South Africa is an established and long term supplier to Da Gama Textiles. Our up-to-date technologies and consistent quality in sustainable chemistry is one of the driving forces for Da Gama’s success. Together we share “know how” and innovate products that positions Da Gama as a forerunner in their ﬁeld. CHT BEZEMA is very proud to be associated as a ﬁrst choice supplier to Da Gama Textiles and congratulates them for the successes.

SERVING DA GAMA SINCE 1971 CHT CONTACT DETAILS e-mail : jonathan.bishop@cht.co.za Tel: + 27 31 7008436 Website : www.cht.com

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DA GAMA TEXTILES

//WE SPENT A LOT OF TIME, ENERGY AND MONEY ON PROPER REPAIR AND MAINTENANCE PROGRAMMES AND THAT STARTED TO COME TO FRUITION// 600,000 meters per month to around 1.5 million meters. That will be a R150 million investment. In its heyday, this factory was doing around six million meters each month and we’re currently sitting at around 1.7 million so we’re not confined by space.” The new machinery has provided a real boost for Da Gama and has not only benefitted the bottom line of the business, it has also given employees an opportunity to learn new skills. “All the new machines are up and running and the manufacturers send in overseas technicians for a month to train our staff how to use them. They will then come back in six months to lead a refresher course. They are big, complicated machines, packed with electronics and they differ significantly from our older machines,” says James. “It gives us consistency, we can produce better quality cloth and the machines offer more up-time and efficiency. It’s thanks to the government for providing those investments,” he adds. The government has invested more than R7 billion in the CTFL (Clothing, Textiles, Footwear and Leather) industry since 2009 and in 2015, there was a 1.8% increase in employment level resulting in more than 90,000 people now gaining direct benefit from the sector. After seeing the industry start to turn a corner, private investment has also started to return with companies such as Jacobs Capital, Da Gama’s shareholder, investing in similar operations. In the past five years, Jacobs Capital and the DTI have invested more than R680 million in the textile and clothing industry.

“Each year we get an allocation based on what we’ve spent. It looks like those incentives will continue for another two years, maybe further, but we’re on target,” says James. STILL BATTLING CHEAP IMPORTS At the end of 2015, one of the biggest threats to Da Gama was cheap imports from the Far East. In the early 2000s, this problem almost wiped out the industry but innovation and commitment have helped to turn buyer’s attention back to local suppliers in South Africa. For Da

Gama, cheap imports that challenge its core product, shweshwe, are not big concerns but with workwear and other products, the competition remains strong. “Half of our production is shweshwe for the traditional African market and there’s no real competition from importers. The competition is stronger against our industrial workwear lines. We have a product called CS 59 which is flame and acid retardant and its specialised cotton which the mining industry has to buy from local producers therefore we are somewhat protected although we have to remain in the right price range. We also have J 54 which is used for overalls and workwear and some people consider it a grudge purchase. Factories and industry has to buy this product but if they can get it cheaper through importing then they will. It’s

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www.enterprise-africa.net / 25

INDUSTRY FOCUS: TEXTILES

around 20% of overall production and we have to battle to keep orders,” admits James. “In 2016, the Rand devalued substantially and imports became more expensive. Through our local production capabilities we were able to secure bigger orders,” he adds. “In 2017, that situation has reversed and it’s now more difficult but, as we are able to deliver a better quality product on time, we have continued to increase our order book. The big challenge now is to maintain that while we’re under pressure with the stronger Rand against other currencies.” Of course, purchasing locally offers significant benefits compared to ordering from Far Eastern sources. “Our turnaround is quick and what we’ve found is that flexibility is a challenge if you import. For example,

//TEXTILES IS ONE OF THE OLDEST INDUSTRIES AROUND AND IT CREATES SIGNIFICANT EMPLOYMENT// becoming more productive and more competitive. “We’re growing nicely and we’re in a good position because of our shweshwe product which is growing by around 5% year on year,” he says.

if you order from China and receive bad cloth, you can’t just send it back and you can’t have input. With technical, specific, specialised products, we deliver high quality and our customers see the benefit of investing locally as they can come to the factory and see their product.” Even with the threat of cheap imports, Da Gama continues to perform well and following the installation of new machinery, James expects positive performance to continue. “The factory operates best when it has more volume. The better your efficiencies are, the more you can drive your costs down,

FOCUSED STRATEGY In 2015, there was talk at Da Gama about the possibility of opening up avenues of growth in other African countries and creating new market opportunities with South Africa’s fashion retailers. 14 months down the line, the idea of exporting into Africa has all but finished and the business with retailers only forms a minimal part of Da Gama’s total

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Leather

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DA GAMA TEXTILES

production. The company remains totally committed to its proven and profitable product lines and these are currently offering enough opportunity for growth. “What we found was when dealing with fashion retailers you get smaller orders; they might order 1015,000 meters of cloth in six months but we’ve got industrial workwear clients who are taking 80-100,000 meters a month so we were looking at retail to expand another market but we realised the volumes aren’t what they thought we were. However, we have got into that market but it’s a small percentage of our business. “Textiles is one of the oldest industries around and it creates significant employment so is protected in each country. There are many barriers to entry, such as import duties, so getting into African

countries is difficult. Our market is big enough so we don’t currently have the need to export into Africa,” says James. Minister in the Presidency for Planning, Monitoring and Evaluation, Jeff Radebe, said last month that the textile industry is one of the most strategic platforms through which South Africa can bolster trade of local products. The government is keen to drive this industry forward because of the opportunities it holds for contribution to the NDP. “We do receive tremendous support,” admits James. 2017 will be a year that sees Da Gama focus on quality improvements and increasing production levels, and as confidence in the industry returns, there is no reason why this truly South African company cannot cement its position as an industry leader.

“We want to become more efficient, improve our quality, and keep lifting our standards so we are known as the factory that produces the highest quality cloth. There is significant room for improvement when it comes to quality and in terms of the way we plan the factory and put the mix of different cloths together,” says James. “We’ve already seen results and we hope and expect that will continue,” he concludes.

DA GAMA TEXTILES 040 608 6200 info@cowie.co.za www. dagama.co.za

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T BIRCH & CO

A Mark of

Distinction PRODUCTION: Timothy Reeder

Having traded for more than 15 decades, the Birchâ&#x20AC;&#x2122;s name has been stitched into almost every distinguished South African fraternity in the last century, providing everything from academic robes, to clerical, municipal and legal attire.

Â© T BIRCH & CO

INDUSTRY FOCUS: TEXTILES

Today, Birch’s is one of the oldest outfitting and tailoring businesses in South Africa. Founded by Englishman Trenley Birch, Birch’s was established in the city of Port Elizabeth in 1860 and expanded its operation to Grahamstown in 1864, later following the booming gold trade and opening stores in Kimberly and Johannesburg. “Birch’s has always been synonymous with academic regalia,” states Director and fifth generation family leader Nick Mowbray. “Our academic robes grace the graduation ceremonies of most universities in South Africa, as well as in many neighbouring states. We had the privilege of designing and manufacturing the first robes for the constitutional court; we’ve robed royalty, presidents, distinguished church leaders,” he goes on. Birch’s stores have been the leading specialists in menswear in Port Elizabeth and Grahamstown for close to 150 years. Over the past eight decades, Birch’s Robe Factory, part of the T Birch & Company (Pty) Ltd group,

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in Grahamstown South Africa, has robed many great Africans. Starting life as importers of academic, legal and clerical gowns, Birch’s made the decision to set up its own factory in 1940 as specialist robe-makers. It has a proud and distinguished history of service to many customers throughout Africa, South Africa and across the globe, becoming along the way a name synonymous with quality and distinction. It is with the rich heritage of the Mowbray family, renowned for their quality service and attention to detail along with generations of dedicated craftsmen, that Birch’s Robes has grown to be the largest manufacturer of quality, made to order academic, legal, municipal and clerical gowns in the Republic of South Africa. Nick Mowbray takes us through the inception of the business, and the events which led to his family’s involvement which continues to this day. “As far as the Mowbray name goes, it was my father’s grandfather

who would have been the first in the Mowbray line,” he begins. “When Trenley Birch came out from England to start the business in 1860, he wanted to set up a clothing business in Cape Town. At the time, however, Cape Town was overtraded and this pushed him toward Port Elizabeth. He had no successor lined up ready to come in and take over the business, only a colleague who ended up marrying into our family, which is how we came to be a part of the Birch story. “My brother and I represent the fifth generation of our family in the business. From the get-go it has been a family affair, with various members involved throughout. “Today we have three stores in Port Elizabeth - two men’s clothing stores and one school wear clothing store, while in Grahamstown just 120 kilometres away we have another, which is also where our factory itself is based. Our other retail store is in Queenstown.” Birch’s stores have been the leading specialists in menswear in Port

T BIRCH & CO

Elizabeth and Grahamstown for close to 150 years. “Our menswear business is strongest in Port Elizabeth,” explains Mowbray. “In terms of growing it further, I recently rebranded all of our shops and introduced many new clothing labels. An advertising team was brought in to publicise aggressively, not least through social media like Facebook and Instagram, as well as print media. A lot of energy was put into doing this bringing a lot of growth in our menswear in the last five years. “Grahamstown, while strong is the school wear market, is challenging in respect of menswear, as it lacks the demand that we see in Port Elizabeth. The menswear side of things is difficult as we must strike a balance between the desired growth, and retaining the old customers and avoid becoming a different shop which completely forgoes the traditional brands in favour of all new, modern ones.” Expansion of this formula into new South African stores is certainly achievable, if all the ingredients are in place to allow it to succeed. “While we are looking at opportunities to open up new stores, there is a unique recipe to doing so with our type of shop. Unlike a chain store, we cannot expect to simply open up in every town and be successful. We would have to look carefully at any potential opportunity and be sure that it would work for us.” Nick Mowbray is unequivocal in his belief that Birch’s products are absolutely the best choice available. “Sewn in Distinction reflects the heritage that comes with each Birch’s garment, that is handmade,” he explains of the company’s inimitable tagline. “We absolutely stand by our product. From the feedback that we have had from the people who have attended graduation ceremonies abroad in other countries and seen the sort of quality that the students are wearing there, our garments definitely do match up if not exceed it.

“We actually import a lot of our trimmings from the UK, for our graduation hoods and similar products, so we really put the best materials into our products and our workmanship is also excellent.” It was the import disruptions caused by the second World War in 1940 that prompted Birch’s to open a specialist robe-making factory in Grahamstown - in the heart of frontier country. The decision has since benefited Birch’s many and varied clients, with their factory allowing the company to plan and manage production around customer’s specific requirements. With a recent investment in 1000 m2 warehouse extension, Birch’s has the infrastructure, and being the 3rd large employer in Grahamstown, Birch’s has the capacity and technical skill to maintain efficiency without

compromising on quality. “We manufacture academic wear at the factory,” Mowbray clarifies, “as well as legal wear for attorneys, barristers and the like, and also municipal wear and clerical wear for the churches. Our main progress of late has been in the biggest of these, the academic wear, where we provide for the different universities in South Africa. Over the last five years we have taken on a number of large institutions here, which has meant that we have had to update our computer systems significantly in order to handle this business. We have to be able to process all of the people coming to us efficiently and accurately, which has proved quite challenging. “We have upgraded the machinery in the faculty to a large extent, improvements which continue as we speak. We have also expanded the

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INDUSTRY FOCUS: TEXTILES

factory space by building more storage space for the garments - at any one time we may have 30,000 of these in stock which need to be stored. “Our staff are a vital cog in our business,” continues Mowbray, and a place like Grahamstown, he explains, allows Birch to select employees to strengthen the link between itself and its surroundings. “We are among the biggest employers in Grahamstown,” he says, “behind only the university and one other business. The average length of service in our factory is around 22 years, and so the skills are passed on through generations. We have been very fortunate in that there has never been a shortage of skills as a result, which benefits us greatly.” There is a reciprocal benefit to this policy of carefully training and developing the people Birch’s employs, Mowbray goes on to describe. “The IDC has given our industry a lot of support in this respect, with assistance in machinery and factory upgrades’ Birch’s is proudly recognised by their label and its slogan “Sewn in

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Distinction”, reinforcing the idea that with each cut, stitch and thread, Birch’s pays homage to the distinguished wearer of their robes. Even a policy of such dedication to its craft has not, Mowbray details, made Birch’s immune to the effects of the economic slowdown as experienced by so many of its competitors and fellow businesses. “Our graduation season, for example, starts in April,” he begins. “It forms a large part of our annual business and turnover. Quite a few universities firstly are unsure if they will even have graduations this year, and secondly if they are to have them, they have yet to decide when this will happen. “If these graduations do not take place because of the FeesMustFall campaigns then this will obviously have a massive impact on us financially, while the lack of clarity around the dates is affecting our planning. We need to know numbers of people graduating per qualification, per faculty. “The economy has really hit

our retail business over the last 12 months - on the men’s and the school sides. February to August last year was probably the slowest that I’ve seen since joining the business full time 11 years ago. A lot of the brands that we buy were also exposed to the weaker Rand, so we were seeing big increases in prices of sometimes 20 or 30%. We obviously couldn’t pass on these rises in full to our customers but equally there had to be some increase, and we saw some resistance to the higher prices coupled with lower disposable income compared to three or four years ago. “In our school wear business, for example, instead of buying five shirts people will buy three, and hang on to a blazer for an extra season.” This is yet another area where Birch’s is well served and protected by its long and distinguished heritage. “Saying that, we are an established business and we have been prudent in our approach to running it,” Mowbray goes on. “We own our buildings and we also operate without debt, and so in these more torrid times we do not have these really pressing concerns like rental, debt and interest.” Birch’s thoughts now turn to the possibility of entering new markets, where there is huge possibility for the company moving forward. “It really depends where we try to go,” says Mowbray. “Some people have never heard of us, whereas in other markets our label is very well known. In Zambia where we have done business at several universities people recognised us, while in Botswana, nobody knew us. I think, unless we have actually done business there, the name has not quite filtered through from South Africa yet, where the brand is very strong everywhere due to our long operational lifetime here. One part of the challenge moving forward will be to establish our name in these countries. “The way we will approach a lot of these, for us at least, unknown

T BIRCH & CO

territories, will be through possible joint ventures. Quite a few of these countries remain somewhat sceptical of dealing directly with South Africa, so we will look at establishing partnerships with business which are established in those places and getting the name known that way.” The scope of Birch’s reach means that the possibilities are vast for the development of its footprint. “We can export to anywhere,” Mowbray concludes. “We certainly wouldn’t dismiss the idea of even exporting to places are far and wide as England or America. We really have to explore those markets properly, though, which we have yet to do, in order to ascertain where the people in these places are currently buying from and if there would be a demand for our product.” Inevitably, the growth Birch’s seeks will also be achieved through its

exporting into other African countries. “We succeeded in re-gaining a lot of business in Zambia last year, which we originally had around 15 years ago. We’ve also done business with the University of Namibia, as well as seeing quite a lot of progress in Zimbabwe. Our plan now is to further that business and target places like Botswana, Ghana and possibly Nigeria as well. It really is a question of pushing that even further. “In particular with our academic wear business, we supply a host of universities and tertiary institutions in South Africa, either directly or indirectly through agents of ours. Our next port of expansion, therefore, would logically be into more African countries. In a similar vein, we will also be looking to add an online selling aspect to our factory website, whereby we will be selling our garments online.

software development

We hope that this will commence in June of this year.” Birch’s commitment to quality and its steadfast belief in its craftsmanship will continue to set it apart from its competitors in the field. “Personalised service, after sales support and the quality of the product definitely separates us from the bigger chain stores,” states Mowbray. “These are things which other businesses tend to not focus on anymore.

T BIRCH & CO +27 46 622 7010 www.birchs.co.za

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www.enterprise-africa.net / 33

LEFT TO RIGHT: KOOS DE LA REY, NAAS DU PREEZ, ALET DI POLO, PROF. KOOS DE LA REY (CHAIRMAN), MYNHARDT OOSTHUIZEN

OASIS WATER

Flowing Into

Africa PRODUCTION: David Napier

As one of the most effective franchise businesses in SA, Oasis Water is setting ambitious goals for the future; hoping to expand across sub-Saharan Africa and achieve double digit growth. Managing Director, Mynhardt Oosthuizen tells Enterprise Africa more about the companyâ&#x20AC;&#x2122;s ambition to bring consumers the finest quality purified and oxygenated drinking water.

INDUSTRY FOCUS: FOOD AND DRINK

The franchise sector is one which is becoming known for prosperity. A significant business model in South Africa, franchising is helping local and international brands grow while giving budding entrepreneurs the chance to start in business but with a range of benefits that might not be realised by following a traditional start-up model. In 2016, reports suggested that franchising activity contributed as much as 11.6% of the country’s GDP. 757 franchising systems and more than 31,111 franchise outlets provide quality products and services, and jobs, to countless South Africans every year. Entrepreneurs are attracted to the model because of the perceived lower risk, products that already have market share, lots of available support, easier financing, established supplier relationships, and all of the other benefits that comes with franchising. But, as successful as franchising has become, the economic environment that has made trading difficult in recent years continues to bog the industry. “2016 has certainly not been an easy year to be in business! It started on the back of Nene-gate and continued with a lot of economic and political curve balls,” said Franchise Association of south Africa 2016 Chairman, Naas Du Preez. “Having said that... I would rather be in business within a franchise system than be facing all these challenges on my own.” Fortunately, many of the country’s successful franchising operations have adapted to the current conditions and are not only managing to survive, they are thriving. Take Oasis Water for example; founded in 2003 with just one store, this specialist business has grown to support more than 250 stores and is now operating across the border in Namibia and Botswana with plans to take its model across the whole of subSaharan Africa. Oasis Water claims that its approach to the bottled water industry is unique, providing high quality water

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at affordable prices whilst also making inroads in the industry’s battle against packaging and containers becoming litter. The company supplies a wide choice and selection of refill water, bottled water, dispenser water, 100% ready-to-drink juice, 100% concentrate juice, energy drinks, assorted dried fruit and nuts as well as a collection of ice teas and coffees. It uses a unique purifying technique that results in finest quality purified and oxygenated drinking water. With a large franchise network, and some of the biggest names in industry as customers, Oasis Water is a business that is showing no signs of drying up. “The first concept was delivered in 2003 and then the first franchise store opened in 2004 by the industrial inventor Pat Pick,” Managing Director, Mynhardt Oosthuizen tells Enterprise Africa. “In 2006 he sold the business to a team of entrepreneurs who set out to commercialise operations. “Pat’s idea started as a result of cleaning a sandblasting grid for a wellknown industrial company. He realised that to ensure a quality product he required clean water with low levels of impurities. The available municipal water did not produce the desired results. He then decided to build a reverse osmosis system which he could apply to the municipal and recycled water in order to reduce the impurities to acceptable levels. The result was extremely positive and Pat set out to improve the system with the possibility of creating clean drinking water for public consumption. He introduced ozone to the water which kills all known bacteria and enriches the water with oxygen. The public acceptance of the purified water product was a success and the first store was opened.” Pick’s ideas form the base of the business today, but he was not the first to come up with ideas for water purification systems; this type of innovation has been around for half a century and has benefitted some of the most recognisable brands in the world.

“We’ve kept the basics but technology has advanced and we’ve been able to bring in newer, faster and more efficient purification systems,” says Oosthuizen. “You can buy water purification equipment from anywhere in the world but it’s the way that we have connected the different pieces of equipment and utilised purification and cleansing processes that is unique. NASA was one of the first organisations to experiment with this type of water purification process in the 60’s. A lot of that technology has been commercialised over the years and that is the base for a lot of what we do.” ONE BILLION LITRES Oasis Water has realised impressive and significant growth over the past 12 years but there’ll be no resting on laurels at the company’s headquarters in Pretoria, or at any of the franchise stores around the country. An ambitious growth plan has been developed and this is something that the company is pursuing feverishly. One element of the growth plan is to reach a milestone that no other South African bottled water company has to date: to sell one billion litres per year. “That is within our plan. No one in the water industry has done that in South Africa. We currently have an estimated 23% market share and we are intent on growing that to get to the billion litre target,” says Oosthuizen. Of course, when it comes to positioning franchise stores, purifying plants and bottling facilities, Oasis Water does not go for the shotgun approach. Every opening is carefully considered and calculated in order to ensure success for the company, the franchisee and the local community. “We have around 250 stores now. We have around 80% coverage around the country,” Oosthuizen details. “There are some rural areas that we do not cover yet but they are regions which have limited infrastructure and where it’s difficult to open up shop. “Our franchise contract is one that provides strong focus in a

OASIS WATER

marketing territory unless we feel there is significant demand for a second franchisee. This approach enables direction and growth.” WATER SHORTAGE? Considering the state of South Africa’s water supply at the end of 2016, you might think that Oasis Water would have suffered from shortages. The country has serious problems with drought, seriously effecting farmers and agricultural businesses. Even after the situation was somewhat alleviated following heavy rains, many are still being adversely affected with supplies in Johannesburg and Cape Town being described as ‘dire’ by local government departments. But Oasis Water has managed to mitigate against these challenging circumstances by operating across such a widespread area and forming strong partnerships with other

water suppliers. “Municipalities will supply us water in the cities and the towns and we also have private distribution systems where there might be an underground reservoir that people access to bring water to the surface,” explains Oosthuizen. “We don’t have a central bottling facility, it’s a distributed model and every location has the ability to purify water on site.” In fact, Oasis Water has not only been able to avoid any slowdown that might have arisen thanks to water shortages, it has emerged as a provider of water solutions in areas that need it most. Partnering with Jacaranda FM to launch #ProjectWaterDrop, Oasis head office and franchise stores delivered 50,000 litres of finest quality, purified and ozonated drinking water to drop off points at various drought stricken locations around South Africa.

“When there is a water shortage, people know that Oasis is the best water purification company available.” explains Oosthuizen. “That means we can purify any source of water whether its dam water, river water, rain water or water with diseases. The community understands that Oasis plays a vital role in water purification. If there is a serious drought, we have arrangements with companies that can provide us with water tankers and move water from surrounding towns. Droughts are localised; it’s seldom that you’ll see a drought that effects the whole country. This is the advantage of our model; if there’s a problem in one town, we can transport water from another. South Africa is a country where people work together to solve problems and if we can only deliver one part of the solution, we engage other companies to finish the job.”

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INDUSTRY FOCUS: FOOD AND DRINK

FLOWING INTO AFRICA With significant market share in South Africa and more than 250 franchise stores, the next step in a natural growth path is north of the border into Africa. Having already been established in Namibia and Botswana, Oasis Water’s model is proven outside of SA and the company is targeting widespread rollout, across sub-Saharan Africa in the coming years. “We hope to grow in Lesotho, Swaziland, Mozambique and Zimbabwe. As the model starts to gain traction, we will certainly be going north,” affirms Oosthuizen. “The first step is registering our business concepts and trademarks. If we receive that, then we will explore production. In Zimbabwe, for example, it took us five years to register our trademarks and patents. We’ve received those and the next step is to put in place a budget, a plan and a strategy so

that we can roll out in the country.” Of course, the company reaches out to partners in potential African markets and seeks local knowledge and expertise before making any concrete decision on investment. Firstly, accreditation with financial institutions is sought so that a potential franchisee can put forth a plan with which they can continue. Secondly, supply and logistics, “a complex thing” according to Oosthuizen, is developed; “there are different challenges with infrastructure which we might not be used to,” he says. Thirdly, it’s about ensuring the right operator is in place and that’s where Oasis Water conducts standard franchise interviews and profiles people based on business experience and psychometric testing. “If a person comes through the screening and has the support of financial institutions and a network

(+27) 12 807 1984 or www.oasiswater.co.za

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2016/08/04 12:20 PM

of supply infrastructure, we can then assist in putting up a store on that site. We prefer the owner operated model because we get dedication and commitment from both sides,” says Oosthuizen. Opportunities are significant in Africa and Oosthuizen uses the operations in Botswana and Namibia as examples, saying they have achieved higher growth rates as similar operations in SA. He also points out the warmer climate and the migration of populations to town centres as drivers of demand. “In the towns and cities, people look for convenience and understand that if they cannot find clean water, they may get sick and may not be able to go to work and that limits their ability to gain economic income so clean water definitely plays a pivotal role,” says the MD. “There are not a lot of global players in those markets; there’s Coca-Cola and Nestlé but they are not entirely focussed on providing bottled water, they provide various other products. One of our advantages is our pack size. We do not just offer a standard 500ml bottle, we go up to 25L containers and that is a big difference in Africa. People want water in a bulk package to cater for their entire household – cleaning, drinking, washing etc,” he adds. While still in its early stages, Oasis Water’s growth in Africa has been modest but the long-term plan is just as ambitious as the company’s targets in its home market. “If we can achieve the same level of success that we have in South Africa, that would be great. Our target is to enter the capital cities first and to secure those cities before we move to B-level and C-level cities,” says Oosthuizen. A FUTURE WATERFALL? The franchise model that has driven the success of Oasis Water over the years brings dual benefits when it comes to marketing and branding, and this is vital when it comes to staying connected to consumers and

OASIS WATER

understanding market dynamics. “The model gives us an approach from a local and national stand point,” details Oosthuizen. “We can undertake national advertising campaigns to establish the brand but at local level, the franchisees are very good at going to local schools and sponsoring local sports teams for example. That is something we cannot do from a corporate level. Our franchisees certainly do their part when it comes to brand building and they deliver something we cannot from corporate marketing alone. Our partnerships with franchisees is very important for us.” This type of direct marketing, allowing for the true values of the organisation to shine through, means that marketing messages hit home more often. “People can connect with this brand. If you look at some of the other major brands that are distributed through retail stores, there’s no one you can talk to that owns that brand. With Oasis, you can go to one of our stores and talk to the owner or the staff or the head office and there’s a direct people connection between the brand and the consumer. That is what people like – they want someone to talk to, they don’t want to send an email to an auto-responder. Our brand is very real and word of mouth is becoming one of our biggest advertising tools. You can spend money on marketing but you must consider human behaviour,” says Oosthuizen. In the near future, the company will complete an overhaul of its branding strategy, moving away from campaigns that detail the technical excellence of the product range towards a campaign that connect with consumers at emotional level. “We are connecting the qualities and attributes of the water to people. Quality water speaks to health and wellness and we have seen other brands leverage this emotional atmosphere. Our rebranding across all stores has delivered excellent results and we are actively working across all social media channels, and always

valuing customer feedback.” Considering this new marketing approach, and the opportunities that are available to increase market share, Oosthuizen has set his targets high. “Our growth forecast is around 12% per annum and our country’s growth rate is around 2% so we definitely have a high growth model.” Combine this potential with the African expansion strategy and you’re looking at a business that is set for significant growth in the next few years. Oosthuizen joined Oasis Water in 2008 as part of the team that purchased the business from the founder. Building the brand and franchise network over the years hasn’t left him tired; he remains as enthusiastic as ever about the success of water and the development of the Oasis Water brand.

“Water is a product that appeals to everyone so market potential is large,” he says. “Having the opportunity to provide people with a quality product that improves their lives is something which drives myself and the company forward on a daily basis. We see ourselves as a company that provides hope to people and we’ve seen that on many fronts – if you do not have clean water to drink then your life may be affected negatively. We are driven by improving people’s lives and by encouraging people into a healthy lifestyle,” he concludes.

OASIS WATER +27 12 807 1984 frontdesk@oasiswater.co.za www.oasiswater.co.za

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BIG DADDY’S LIQUOR

Drinks and

Mortar PRODUCTION: Colin Chinery

With radical new laws set to hamper South Africa’s drinks industry, Peter Coutsourides, Managing Director of leading wholesaler Big Daddy’s Liquor Stores, sets out the urgency for developing the entrepreneur mindset in a country of high unemployment and low incomes.

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INDUSTRY FOCUS: RETAIL

Liquor is headline business in South Africa. Last quarter saw ‘Megabrew’, the creation of the world’s biggest brewery with the R1.9-trillion takeover of SABMiller by Budweiser, Stella Artois, Foster’s global beer maker Anheuser-Busch. Now six months on - with a new bill foreshadowing big changes in the way alcohol is distributed and consumed - Industry Minister Rob Davies reports that South Africa has the highest level of alcohol consumption in the world - at 10 to 12% almost double the global average. The Liquor Amendment Bill calls for

the prohibition of the manufacturing, distribution or retail sale of liquor on any location less than 500 metres away from schools, places of worship, recreational facilities, rehabilitation or treatment centres, residential areas, public institutions and similar amenities. “What this means for us that it is getting tougher and tougher to open a liquor store,” says Peter Coutsourides, Managing Director of leading wholesaler, Big Daddy’s Liquor Stores. DIVERSIFY AND GROW “With the liquor laws getting worse you can’t have all your eggs in one basket

//JOHNNIE WALKER APPLAUDS BIG DADDY’S LIQUOR GROUP CONSISTENCY March 1, 2017 – Johnnie Walker has enjoyed a fruitful and rich relationship with the Big Daddy’s Liquor Group and is proud to have shared in its success story. The Big Daddy’s Group has long been a leading player in liquor distribution in South Africa, both through its own expansion and through partnerships. As a brand whose success is based on an enterprising spirit, Johnnie Walker applauds Big Daddy’s Group on its consistency and achievements. Established over 35 years ago, Big Daddy’s Liquor Group has weathered economic storms and an everchanging landscape of liquor and consumers. It’s this consistency that Johnnie Walker is proud to be a part of. Big Daddy’s have created an experience that makes our whiskies accessible. The group has understood the dynamics of a competitive market and has taken their lions share, showing significant growth. Johnnie Walker’s own story is one of resilience; the centuries old brand has traversed trying times to become one the world’s most established whisky brands. Johnnie Walker continues to maintain its relevance and grow its market in a world of changing tastes and trends. As an expanding national distributor, Big Daddy’s, has allowed Johnnie Walker to meet consumers at the right price, and brought quality of service too. Big Daddy’s has expanded into other markets and regions and the introduction of their own in-house tavern promotions team shows that they are willing to try new strategies and allow consumers to experience the full Johnnie Walker portfolio. In the pursuit of mutual growth, Johnnie Walker looks forward to working together with Big Daddy’s to create new consumer experiences, face new challenges and seek ways to grow the brand in creative and innovative ways. Johnnie Walker is a key brand for Diageo which houses a collection of brands. Diageo as a whole is thankful for the partnership with Big Daddy’s, which has offered us the opportunity to rapidly expand our footprint in fulfilling our consumers’ needs. It is important for our brands to stay connected to strategic partners who are also rooted in a rich history like ours. As a brand that embraces progress we raise a toast to Big Daddy for taking great strides and keeping consistency! @johnniewalker

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H E R E ’ S T O G R E AT STRIDES IN BUSINESS. W E ’ D L I K E T O T I P O U R H AT T O B I G DA D DY ’ S L I Q U O R G R O U P F O R ACQUIRING AFRICAN DISTRIBUTION LIQUORS. AS O N E O F O U R K E Y ACCO U N T PA R T N E R S , WE WISH YOU CONTINUED SUCCESS AND EVEN BIGGER STRIDES IN THE FUTURE. K E E P WA L K I N G B I G DA D DY ’ S . JOHNNIEWALKERSOUTHAFRICA

INDUSTRY FOCUS: RETAIL

and you have to diversify. Our primary businesses have always been liquor and commercial property, so we will either look at new ventures and franchise opportunities or continue investing in commercial property.” Big Daddy’s supplies pricediscounted bulk liquor across the Eastern Cape and Gauteng, with branches in Port Elizabeth, East London, Soweto Johannesburg, Uitenhage, Queenstown, Port Alfred, King William’s Town and Jeffrey’s Bay. A third-generation family business founded by Peter Coutsourides grandfather Peter Pitsiladi Senior, Big Daddy’s launched out in the early 1960s and has grown through an astute mix of family and customer-attentive values, price competitiveness and entrepreneurship. “It’s going the extra mile for the customer, getting to know them as an individual. And we hold this as a key value in our business today.” Big Daddy’s liquor business operates across what Coutsourides terms three hemispheres; wholesaler, retail and on-consumption. “The retail focus on medium to upper class residential areas, the wholesale serves the man in the street, the tavern owner and so forth, while on-consumption is basically providing liquor to restaurants, bars and hotels.” Beers and spirits dominate the wholesale and retail areas, with strong sales of wholesale boxed wine in specific clientele markets. “We have a very solid relationship with the wine suppliers and producers of South Africa,” says Coutsourides. Always a major part of the business, commercial property today matches liquor sales in turnover. “Every Big Daddy’s group liquor store is owned by

//EVERY BIG DADDY’S GROUP LIQUOR STORE IS OWNED BY US. FIRST WE PURCHASE THE PROPERTY, THEN WE OPEN THE STORE, AND THIS BRINGS A STABLE RETURN ON INVESTMENT// us. First we purchase the property, then we open the store, and this brings a stable return on investment. “If we buy a property and are unable to open it as a liquor outlet, we let that property to a tenant. We also have multi-tented anchored properties with a liquor store in place and the other tenants offering a variety of services and products for that particular demographic location. LOCATION AND OPPORTUNITY “You need to be based on the range of those specific customers, and the location area must have a growing rather than a stable population. In terms of liquor stores we don’t see ourselves as currently opening any new outfits in South Africa. In terms of property we are willing to expand anywhere in South Africa.” And beyond South Africa? “It’s not on the agenda. Different countries have different legislation and liquor laws, and we pride ourselves on being a family business. Our family members are involved in the day-to-day business, and it would be so much harder if you have to open a liquor store outside your own country and are unable to physically run it.” Liquor is a business closely linked to disposable incomes, and while the salary figures on pay slips may have increased over the past two years, in real terms the average South African is now

//AT THE END OF THE DAY THE MONEY IS MADE AT THE STORE LEVEL, AND IF YOU HAVE THE RIGHT MANAGER AND THE RIGHT TEAM THIS IS WHERE THE SUCCESS LIES// 44 / www.enterprise-africa.net

poorer than at the start of 2015. Financial institution Bankserv recently released its Disposable Salary Index, detailing how much South Africans are left with each month. The outcome was a 1.5% decline, a fall likely to impact consumers with income pressures. “The state of the economy is a definite concern for us,” says Coutsourides. “We have close to 27% unemployment, 47% of the South African population - in other words 25 million South Africans – are paid below the R3500 proposed monthly minimum wage, while those aged between 15-34‚ remain the most vulnerable in the labour space. “Whether this is a problem of business organisations or government having failed to address the issue by creating a civil environment that incentivises employees is an open question.” ENTREPRENEURSHIP: VALUE AND TEACH. South Africa “has failed to address poverty because of the absence of business venture creation and the lack of trying to promote entrepreneurship. There is an old-school mentality that thinks that if you get good grades or a degree and you will find a job. “But this simply doesn’t work today because otherwise we wouldn’t have millions of discouraged job seekers with degrees. “The perception of the man in the street in regard to success is a funny thing. In the rural areas a successful person is seen as someone who drives a nice car, not the one who has a tavern and employs five people.”

BIG DADDY’S LIQUOR

Unemployment and the rate of growth are affecting all sectors. “Household disposable income - which is the main indicator of the health of an economy - is decreasing and with it a shift in product consumption. People who bought a brandy and a coke will now buy a cheaper priced brandy.” On a very different economic plane, analysts are predicting Anheuser-Busch Inbev’s revenue and earnings will be up 24 and 44% respectively this fiscal year following the SABMiller take-over which sees the behemoth controlling almost a third of the global beer market. The downside forecasts big managerial job losses, but overall Coutsourides is hopeful. “I believe that sometime this month we should be more clear what AB Bevs strategy is for South Africa. I’m optimistic and think things will move forward in a positive manner.”

Meantime the doors of Big Daddy’s Liquor Stores are open for quality brands at competitive prices served by a knowledgeable and approachable staff some who have been with the business for more than twenty years. FAMILY VALUES “I see our values as a distinct competitive advantage. At the end of the day the money is made at the store level, and if you have the right manager and the right team this is where the success lies. It can mean a deal maker or deal breaker. If the manager or staff don’t greet you, then the chances of going back to that store are problematical. If you receive a warm welcome then it goes a long way.” Together with his four cousins, Peter Coutsourides directs this thirdgeneration family business founded by his grandfather and anticipates with

filial warmth the probability of dynastic continuity. “We have been a family business since the early ‘sixties. Fast forward 57 years and we are still a family business and it’s something to be proud about. “We are grateful for the groundworks that our parents have left us with and it is our job as a family and team to maintain and grow. “We work as a team, without a captain, and whosoever scores a goal, it’s the team that wins the game.”

BIG DADDY’S LIQUOR 041 405 9300 www.bigdaddysliquors.co.za

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PANAROTTIS PIZZA PASTA

“We Want To Be Known

For Family And Quality Food” PRODUCTION: David Napier

As the Panarottis franchise business, part of Spur Corporation, approaches the milestone of 100 outlets, Enterprise Africa talks to COO Tyrone HerdmanGrant about what makes this much-loved Italian eatery so special.

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With franchising operations becoming increasingly important for the SA economy, much attention is now being heaped on the industry in an effort to drive job creation and economic development. Since the global slowdown of 2008, the journey back to meaningful growth has been long and hard for many of South Africa’s industries, and franchising is no exception. But 2017 brings new optimism as the South African Council of Shopping Centres reports that favourable conditions could start to return to the market. According to its report, trading conditions improved in the retail sector in the third quarter of 2016 and more retailers (43% up from 26%) reported satisfying conditions, indicating improvements. The food sector is also reporting exciting predictions for 2017 with research from QSR Magazine suggesting that innovation and invention remain rife off the back of a strong 2016, not just in creation of food and food delivery but also in technology systems – the way we order and pay for our meals. Along with new, healthy meal ideas and a culture of mixing things up, ‘apps were and continue to be the biggest tech success of the decade’ encouraging convenience and return visit incentives, said the publication. In South Africa, the Spur Corporation is a leading restaurant franchisor, listed on the JSE and

PANAROTTIS CHIEF OPERATING OFFICER TYRONE HERDMAN-GRANT

operating more than 500 outlets in various parts of Africa, Mauritius, the Middle East and Australasia. One of its key brands is Panarottis Pizza Pasta, a family-friendly Italian-inspired restaurant focussed on delicious food made from the finest ingredients. Injecting positivity at the beginning of 2017, Panarottis has announced that new restaurants will be opening, improvements and upgrades will be happening across its entire network, and its unrelenting focus on quality food and service will continue. QUALITY UPGRADES The favourite offering from Panarottis is pizza, made from award-winning 100% Italian imported pizza flour. Going forward, to improve its pizza making, Panarottis will update its kitchen equipment so that customers receive the best possible product. “All of our businesses over the next five years will have wood burning ovens installed and conveyor belts taken out,” explains COO, Tyrone Herdman-Grant. “The advantages are the running costs and set up costs.

Currently, the conveyor belt ovens come from America and contribute around 8% of our set up costs but we think we can get that down to 2% with wood burning ovens. As for running costs, there’s so much alien wood around, the cost is almost half that of electric ovens. The quality of the product is also vastly improved. “Conveyor belts are easy to use, wood burning ovens require a special skill to use. We have to train people how to turn the pizzas. We decided we wanted to be the brand that offers the best top quality pizza; we think that people will vote for quality so that is why we’re making this adjustment. “When I joined Panarottis from Spur around five years ago, we made a consciences decision that we want to be known for family and quality food. We went through a brand relaunch and questioned every product that we are serving, asking whether we can do it better.” Quality product is one of the main elements distinguishing Panarottis from its competitors and this is true for everything from ingredients to

final product to service to atmosphere. Other businesses are also far less concerned with the originality of their ‘Italian’ ingredients, something which Panarottis is firmly committed to. “It is based on an Italian concept,” says Herdman-Grant. “We use a lot of Italian products such as Italian pizza flour and we follow the true methods of Italian manufacturing. Many of the other restaurants in South Africa use cake flour because of import duties. We draw on a lot of expertise from Italy. The company that we buy our flour from brings chefs out here every year to teach us the techniques that are used in Italy. “You can put good ingredients into an oven and get a bad pizza but you can’t put in bad ingredients and get a good pizza.” A truly South African brand, Panarottis was developed in 1990 by the Spur Corporation. “It was developed by our Chairman, Allen Ambor who is also the founder of Spur Corporation and opened the first restaurant back in the 60s. There was a gap in the market for a major pizza

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INDUSTRY FOCUS: FOOD AND DRINK

brand and he saw that and it has been very successful,” says Herdman-Grant. Today, Panarottis has countrywide coverage and has ambitious targets for the future, spurred on by the recently released positive 2017 projections for the industry. “We have 81 restaurants right now, with several others in the pipeline,” details the COO. “We’re expecting to open another in Zimbabwe very soon. “We work hard to make our stores sustainable – we want to make our franchisees profitable. We turn down a lot of sites – I could open five each month if I wanted to – but it’s not a numbers game for us, it’s about sustainability. When we reach 100 stores, we will celebrate, the brand has never had 100 stores so it will be a very important benchmark.” In the coming months, Panarottis will open in Borrowdale in Zimbabwe, complementing its strong African business already established in Mauritius and Tanzania. “We are very selective about our sites but Borrowdale is a very positive area and we are looking forward to growing there,” says Herdman-Grant.

CASA BELLA In something of a diversification strategy, Spur Corporation with influence from Panarottis, opened a second Italian themed restaurant group in 2016 – Casa Bella. Aimed at the more affluent customer, Casa Bella is an upmarket restaurant brand that ‘seamlessly merges a taste of Italian cuisine with a sophisticated yet friendly dining experience’. Both Casa Bella and Panarottis are based on Italian cooking but each has a different offering for different customers. “Casa Bella is a truly authentic Italian brand. Panarottis is more mainstream, family orientated, like Spur. It’s geared towards families, with play areas for children and good value. Casa Bella is aimed at a higher-end customer; people with more disposable income seeking high- end imported Italian quality product. We use authentic Italian products such as original pancetta and Italian pizza flour, we also use parmesan cheese from Italy, and we bring in tomatoes from Italy. We have an exceptional wine list which offers both excellent value and also high end wines,” explains Herdman-Grant. “At Casa Bella, our Italian grills are

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most popular, followed by pasta and pizza, hence the product mix does differ from Panarottis where pizzas are most popular.” Following the launch of the Casa Bella brand in 2016, Spur Corp Group CEO, Pierre van Tonder said: “Two restaurants were opened – one in the Western Cape and one in Gauteng – and both have shown impressive growth in the early stages, giving us confidence in this brand moving forward.” Today, there are five Casa Bella outlets across the country with three more planned for the near future. COLD ECONOMY Of course, Spur and Panarottis remain cautious about growing too much too quickly. While hopefully improving throughout the year, the economic outlook remains uncertain and sustainability is more important than ever. “In my 20 years in this industry, this is the hardest most challenging time we’ve ever experienced – and I’ve been through a number of recessions. Political uncertainty, exchange rate fluctuations, droughts and escalating overheads are all having an impact on

PANAROTTIS PIZZA PASTA

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INDUSTRY FOCUS: FOOD AND DRINK

our customers discretionary spend,” admits Herdman-Grant. “Realising the pressure our customer is under, we’ve only passed on a 2% menu price increase to customers yet our input costs have increased markedly by 14%. The recession is not a South African thing, it’s a world thing. There are world forces pushing against us coupled with our own local problems.” Despite these challenges, the COO remains optimistic and he claims that during tough times, franchisees are forced to be innovative resulting in new ideas and new ways of thinking which ultimately benefit the entire group. “We are maintaining our doubledigit growth rate, however this growth is under pressure from escalating input costs. Do we have a healthy business – absolutely. Do we have challenges – absolutely, but tough trading times bring out the best in us in South Africa. It’s made franchisees think outside the box and gain market share that they

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didn’t know was available. These things work in cycles and whoever gets out the other side will have a stronger business over the coming years.” FINEST FRANCHISEES It is this innovation and out of the box thinking that drives the business forwards and is created by people who are deeply connected with our brand. As the most important element of any franchise operation, getting the right people involved is the highest priority for Herdman-Grant and his team. “People are fundamental – without a good operator, you’re not going to have a good business. It’s very rare that we face significant challenges but when we do, we work hard to resolve issues. We recently had a business that was losing money and the operator sold and moved on. The next month, we installed a new operator and that business returned to profit so that proves how important people are. The only thing we

changed was the individual running the business.” Panarottis is equally stringent over its people selection as it is its locations. Extensive evaluations take place, including finance and personality consulting, before any agreement can be put in place. “There are a few checks and balances that we have to go through before we partner with a franchisee,” explains Herdman-Grant. “Firstly, it’s the financial gearing. In the old days a business could be 100% geared with the banks but now we wouldn’t accept anyone that doesn’t have at least 40% to 50% unencumbered cash. They then can apply for financing for the balance. A detailed analysis of the site is done prior to securing a franchisee which includes a comprehensive business plan and cash flow based on all the fixed and variable overheads. We also base the business case on the existing Panarottis network so we don’t use estimates, we can give

PANAROTTIS PIZZA PASTA

almost exact predictions. This is because all of our franchisees meet with our area managers on a monthly basis and our area managers do regular financial reviews with our franchisees. The financial reports get consolidated giving us very accurate stats. “Secondly, we use this model to negotiate with landlords. We use our accurate business forecasts to accept or decline rentals and landlords appreciate this. We don’t demand lower rental because that’s good for us, we say we want a lower rental based on the business model and franchisee sustainability. If we can’t get the rental, the business will not be sustainable, we get forced to go somewhere else – there’s a lot of science behind our site choice, our number one priority is making sure our franchisees have a successful business.” Almost all business relationships require trust but in franchising this is

hugely important for both franchisor and franchisee. Despite all of the efforts put in on both sides, trust can be tested and often each side will have to wait right up until the opening of a store before the quality of a franchisee is revealed. “Every franchisee goes through a 10-week training programme and that is non-negotiable. We also insist on owner operated businesses. After opening, for the first two weeks, there’s a lot of support from our area managers but after that it’s several visits throughout the month. “You never know what a good franchisee is until they operate the business. They can come with the right money, understand the training and accept the long hours, but until they open the door, you never know what their real character is like,” says Herdman-Grant. Currently working with what he calls “some of the best people in the business”, Panarottis and

Casa Bella are strong and stable, and will look for continued growth opportunities throughout 2017. In the six months to December 2016, the Spur Group performed remarkably well considering market conditions and Panarottis contributed to this with sales growing by 10.6% in an increasingly competitive market. As the tide changes in the economy, with meaningful growth expected to return to the market by 2020, Panarottis, Casa Bella and the Spur Group look set to remain one of the most recognisable, trusted and quality businesses in the market thanks to dedicated people like Herdman-Grant, his team and his tireless franchisees.

PANAROTTIS PIZZA PASTA +27 21 55 55 100 www.panarottis.co.za

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UNDERGROUND MINE TRANSPORT SYSTEMS

BECKER MINING SOUTH AFRICA

SA’s Trusted Mining

Systems Supplier PRODUCTION: Karl Pietersen

Becker Mining South Africa CEO, Ken Quick tells Enterprise Africa that the company is experiencing growth despite challenging conditions in the local industry and local economy. Developing new products, and offering a portfolio of tried and tested, high performance products, this is a company striving for progress.

As the mining industry in South Africa continues to be tagged as a ‘failing’ sector, leaders are urging the public and private sector to do more to turn things around. Once the shining star of South Africa’s economy, the GDP contribution of mining continues to slowly decrease. The private sector is asking for the government to do more to attract investment and the government is putting in place a framework that it hopes will realise

job creation and enhance economic development. In his 2017 State of the Nation Address, President Zuma stated that mining was a key focus area and part of a Nine Point Plan that would boost job creation. “Mining has always been the backbone of our economy and an important foreign exchange earner,” he said. Anglo American’s CEO, Mark Cutifani told the Financial Times recently: “We’ve had an industry [in Continues on page 57 www.enterprise-africa.net / 53

SAMINCO Feeder Breakers and Conveyor Systems

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Contact Details: Address: Palisades Business Park | 39 Kelly Road | Boksburg 1459 Tel: +27 11 397 6026 Email: salessa@samincoinc.com | mquirk@samincoinc.com Web: www.samincoinc.com

1000 Volt VFD Drive System for Conveyors built for Becker Mining Systems.

For 25 years, Saminco has been developing and manufacturing high power DC and AC drives and complete electrical systems for the mining industry. With over 200 systems in place in South Africa, we supply to OEMs for new equipment and directly to Mines for vehicle rebuilds.

A DRIVING FORCE IN POWER

//SAMINCO INC SAMINCO INC. AIMING FOR INDUSTRY TOP SPOT IN SA As one of the world’s most recognised names in the design and manufacture of High Power AC and DC Motor Control products for the mining industry, it was only a matter of time before American company Saminco Inc established a presence in South Africa – an economy built on a mining industry that provides an estimated 20% of the country’s GDP. Founded in 1992 by CEO Bonne Posma, Saminco has offices in North America, Europe and Australia and opened in South Africa four years ago to complement its global network servicing underground coal mine operators that work in some of the harshest conditions imaginable. The team in South Africa is led by Managing Director, Mervin Quirk and he is proud of the impact that the company has made in a relatively short period of time. “In just four years we have completed more than 200 different pieces of mining equipment – we already have a large footprint,” he says. “We are an industry leader with some of our products but we are hoping to become the leader across all of our markets, especially conveyor belts. “The core business is designing and manufacturing of VFD and DC drives for mining equipment. Currently in South Africa we have a wide range of VFD and DC Shuttle car system, continuous miners, VFD feeder breakers and VFD conveyor belts.” Thanks to its wide, high-quality product range and manufacturing expertise, Saminco has established strong relationships with some of South Africa’s most prominent mining organisations including Sasol Mining and Becker Mining. “We’ve worked with Becker Mining for four years and some of the company’s first business in South Africa was with them. Originally, we did installations on roof bolters and from there we started to produce soft-starters for conveyor belts where Becker would produce the complete panel which was delivered to the mining sector. “Together we look at engineering changes on a regular basis but we are confident that Becker is happy with the products we deliver as they have been ordering similar things for the past four years. In the future, we will be looking at a 1000 volt VFD

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drive for conveyor belts which is new technology for South Africa. This is a great product for the mining industry,” says Quirk. Thanks to local representation, Saminco has quickly established itself as an industry leader with many of the products it develops and Quirk is keen to grow the company so that it is recognised as the industry leader across all of the markets it operates in. “Currently in South Africa we have competition in some markets but we also have some products where we are the sole supplier. There’s international companies that can supply but they don’t offer local support for the product. “We have a full repair facility in South Africa and we also have a full technical field support operation. If there’s any problems in the field, we can immediately sort things out. We locally produce these drives and locally support them,” he says. Proof of Saminco’s success and excellence comes in the form of extremely strong performance in a time when the South African mining industry has been struggling. “While everybody has been talking about a poor economy and slow mining sector, we haven’t seen any slowdown at all and we’ve doubled the growth of the company each year. We manufacture an excellent product that has double the lifespan of any other – that is why we are so successful in South Africa,” says Quirk. Building on the strong foundations already dug, this is a business that will undoubtedly grow in the future. Quirk says that the business is looking for opportunities outside of mining and industry, working on new products, and training new people. “We have people with mining experience, we have qualified engineers, we have qualified electricians and we also train electricians in house.” Saminco has a policy of understanding customers’ requirements and then exceeding their expectations. Combine this with its impressive track record in South Africa, and around the world, and you have a winning formula that will help the company achieve its goal of leading the industry in all markets that it operates in. www.samincoinc.com 011 397 6026 sales@samincoinc.com

BECKER MINING

Continues from page 53 South Africa] that’s been shrinking for 20 years. If we are going to stop the rot, we need a document and a framework that encourages investment.” But Canada-based Fraser Institute’s ‘Annual Survey of Mining Companies 2016’ found that while investment in African mining is becoming more attractive, South Africa’s policy continues to stifle the industry. However, despite the doom and gloom mentality that has settled like a dark cloud over the industry, there are many organisations that remain focussed on their core business and continue to grow and develop, producing world-class products, providing employment and servicing the industry with high-quality input every day. Take Becker Mining South Africa as an example. Owned by the Becker Mining Systems Group headquartered in Germany, Becker Mining South Africa was established in 1983. For more than three decades, the company has been providing a critical service to the mines and general industry, encompassing the latest technology and engineering, as well as the manufacture, assembly and supply of components for diverse applications. The company has been active through many difficult times in the mining industry and wider economy yet it has not lost sight of its vision and continues to grow. “The company has grown organically and by acquisition,” explains CEO Ken Quick. “We now directly employ nearly 350 people and indirectly approximately 800 people through our strategically located sales distributor and service network.

“In addition to our operational head office in Alrode, we have three manufacturing facilities in South Africa. We supply mining infrastructure products which includes the following lines: Electronic Mine Automation Systems; Electrical Energy Distribution Products for coal and hard rock mining; and Electronic Mining-Communication and Safety Systems which include Leaky Feeder, Tagging and Tracking, WiFi, Gas Monitoring and Collision Awareness Systems, suited to a number of underground and surface applications. “We also supply Mechanical Equipment comprising of: Mine Winding and Guide Rope Attachments; Mine Transport Systems; Pumps specific to mining applications; A vast range of mechanical, hydraulic and electrical lifting and pulling equipment; and Steel Arch mine tunnel roof support. “All of these products are sold, serviced and maintained either directly or through distributors and partnerships in every mining area in Southern Africa.” NAVIGATING TOUGH CONDITIONS Drawing expertise from Germany and combining this with local industry knowledge, Becker’s ISO 9001:2008 certified products and services remain in high demand regardless of the tough economic conditions that have been worsened by the global commodity price crash. In fact, the company is growing and the CEO remains optimistic about the future. “We have actually grown and become more profitable in the past

//WE HAVE ACTUALLY GROWN AND BECOME MORE PROFITABLE IN THE PAST 12 MONTHS//

12 months due to the fact that we have increased sales and distribution networks whilst reducing overheads in the creation of specific areas of excellence within the organisation,” explains Quick. “We have also been able to successfully promote innovative and enhanced safety products, developed locally and throughout the world-wide group network, into sub-Saharan markets in Africa.” Taking note of current slow growth rates and unemployment levels, Quick indicates that companies must be alert to changes in the market and respond swiftly. “We should always be vigilant of trends and adapt quickly,” he says. “Should one do so, the perceived problems are actually temporary. In real terms, we have actually recently created employment in local communities through the establishment of our new distribution and service channels. The global commodity price crash has impacted the world-wide mining community, however, due to our diverse range of products, customers and markets we have found the transition easier to negotiate than a lot of other competitors. We have also been able to negotiate exchange rate issues thanks to strong export demand for our locally manufactured products. “The market is always changing and receptive to technological advances, an area in which we thrive and contribute accordingly through our Group’s global strategy,” he adds. Right now in South Africa, Becker Mining’s most popular products include high tech Electrical, Automation and Collision Awareness Systems but the company is busy developing new ideas for an everchanging market place. PRODUCT DEVELOPMENT “We are busy with innovative electrical solutions in hard rock and

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INDUSTRY FOCUS: MINING

INTRINSICALLY SAFE WIFI HANDHELD DEVICE

//WE HAVE A COMPETITIVE ADVANTAGE THANKS TO OUR PRODUCT QUALITY, PERFORMANCE AND RELIABILITY// coal mines and Wi-Fi Communication Systems for all underground mining,” details Quick. “We are also working towards the launch of an improved and re-engineered Collision Awareness System for hard rock, coal and surface applications, the area that we pioneered and have been marketing for the past 12 years.” Considering the aforementioned turmoil in the mining industry, Becker Mining

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has ensured its product portfolio is widely spread, limiting exposure. “We have diversified into other sectors particularly in the electrical, pumping and lifting fields,” says Quick “however, our major focus is still mining.” The company has also diversified in terms of the geographical markets that it operates in. Globally, Becker is active in Germany, France, Poland, Russia, China, Australia, USA,

Canada, Chile and South Africa but it also exports from its base in SA across the African continent. “We have exported into other markets for the past 26 years and continue to do so across our product range and actually have certain product ranges where we are market leaders in a number of African countries,” explains Quick. Strategies like this are developed locally and in collaboration with the head office in Friedrichsthal, Germany. The company undertakes regular world-wide strategic meetings to optimise the use of various centres of strength and excellence.

BECKER MINING

THE BEST IN THE BUSINESS Of course, Becker Mining faces competition in South Africa – there are a number of other organisations that supply similar products, but Quick says Becker’s products and people are what sets it apart. “We have a competitive advantage thanks to our product quality, performance and reliability,” he says. “The international group presence and the knowledge of customer needs as well as our loyal and dedicated employees who often specialise in particular areas within our organisation is also a real strength. “The world-wide pool of technical knowledge and experience, as well as the experience in mining itself, does set us apart. The advantages of the cross-pollination of this knowledge at initial development and manufacturing stages of the process are immeasurable,” he adds. Like any industry, people are the true drivers of mining, and at Becker people development is vital for the health of the business which is built on family values. As the company continues to grow, its focus on developing quality people will help it further separate itself from its competitors. Commenting on the way Becker Mining South Africa trains and develops, Quick says that the company prefers to develop from within. “When one considers formal and on the job training, this is a

significant cost contributor but overall it is money well spent on the future of the organisation. “We require a balance of education and experience as well as a means to identify potential from within. This is clearly demonstrated in one of our workshops where an average time of employment is 18 years and the longest serving employee with 42 years’ experience. In this area we seldom employ from outside and rather grow from within the ranks. People are aware of this and understand that they can reach their goals when the opportunity arises.” In South Africa, whether the industry returns to growth in the short, medium or long-term, Becker Mining has positioned itself strongly. With an industry-leading product range, global support

//WE ARE BUSY WITH INNOVATIVE ELECTRICAL SOLUTIONS IN HARD ROCK AND COAL MINES AND WI-FI COMMUNICATION SYSTEMS FOR ALL UNDERGROUND MINING//

and expertise, and an innovative and knowledgeable staff base, this is a company set for growth. Manufacturing the finest quality mining and industrial systems out of Africa, Becker is a vital cog in the industry and therefore a vital driver of economic development.

BECKER MINING +27 11 6 17 63 00 info@za.becker-mining.com www.becker-mining.com

No. 1 Overberg Avenue P.O.Box 3222 The Reeds, Centurion The Reeds, Centurion Pretoria 0158

Consulting and Training cc

Tel No: 012-657 1727 Fax No: 086 640 7918 Cell No: 082 441 4172 E-mail: Fstnet2@yebo.co.za

INTRODUCTION FST Consulting and training is a communications company, established in 1996, with head offices located in Centurion, Gauteng. FST Consulting has collated a multiple of professional and technical disciplines, with expertise and resources to organize, execute and control a variety of multidisciplinary projects in the communications/IT environment. It is a company philosophy to provide our customers with high quality, cost effective and user-friendly solutions. SERVICES PROVIDED The following services are provided to the customer as standard, at a high level of expertise; • Design, supply, installation, testing and commissioning of current standard (Cat 6) LAN Structured Cabling Systems, to include Fiber optic installations, Co-ax (CCTV), Telephone, Electrical Profibus, Computer Rooms, Wireless communications (Data, Voice, Video and Satellite applications), Security/Fire detection and Industrial Networks. • Electrical, Standby emergency power systems, Generators, Battery Backup and Solar Systems. • Customer liaison, seen in the myriad of, sometimes confusing, technological advancements and solutions offered to the end user, is critical as to present the customer with the most cost effective and efficient solution to his requirements. • Project management, being a highly specialized field, is offered to the customer/end user as to ensure optimum productivity, assured quality standards and minimal disruption to existing operations. • Quality management, to optimal application standards is offered to ensure proper integration of various systems. This will incorporate the use of products, components and systems from reputable, accredited local and international suppliers or distributors, of standards based components, as required for integration into existing applications or requirements. • Warranty certification and support, to ensure end user peace of mind, will be offered on all standards based, branded components used in all applications and installations. The warranty and duration thereof will be defined by the supplier/manufacturer, however, additional support, to ensure minimal disruption to services, are offered by FST Consulting and Training as a value added service to the customer.

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EXXARO

Exxaro Leads Way

On Structural Change PRODUCTION: Timothy Reeder

Although only 10 years old, Exxaro is one of the largest and foremost black-owned, South African-based diversified resources companies with business interests in South Africa, Europe and the USA, currently undergoing an important restructuring of its BEE ownership structure.

Despite its relatively short operational lifetime, Exxaro’s pedigree and skills have been carefully built up over many decades as a company rooted in South Africa, and one consistently respected by its peers for its innovation, ethics and integrity. At the time of its formation in 2006, Exxaro was the largest blackempowered mining company in South Africa, the result of an empowerment transaction involving the unbundling of Kumba Resources’ iron ore assets. The two companies formed through the transaction were Exxaro, focused on coal, mineral sands and base metals and industrial minerals, and Kumba Iron Ore, geared exclusively toward iron ore mining. The primary rationale behind the unbundling was to create a South African company for a new generation, while simultaneously broadening the spread of shareholders in both companies to encompass

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people from previously disadvantaged backgrounds, employees and the communities in which the company operates. The unbundling of Kumba Iron Ore Limited led to the relisting of Kumba Resources and Eyesizwe Mining assets as Exxaro. As part of the establishment of Exxaro, Main Street 333 Proprietary Limited (MS333) was created and introduced as the controlling black economic empowerment (BEE) shareholder of Exxaro. MS333’s ownership was a 50.19% portion of the issued ordinary shares of Exxaro. The existing BEE transaction was implemented as a ten year structure, and as such Exxaro’s tenth anniversary in 2016 marked the end of the company’s 50.19% BEE ownership structure. With the BEE restrictions having expired Exxaro, MS333 and its Shareholders have sought to agree high level terms governing a replacement

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INDUSTRY FOCUS: MINING

BEE transaction. Since its inception, Exxaro has grown into one of the largest black controlled companies in the South African mining sector. Exxaro is also aware of the current uncertainty around the legislative requirements for BEE in the South African mining sector, particularly the uncertainty surrounding the legal status of the current “once empowered, always empowered” principle. However, remaining empowered is an essential part of Exxaro’s strategy, not only in maintaining sustainable relationships with critical stakeholders and ensuring ongoing compliance with specific customer requirements, but also in its bid to further transformation in South Africa. “As leaders of one of the country’s largest employers, we should reassess current empowerment initiatives… We must evaluate what has worked and what has not worked,” Exxaro CEO Mxolisi Mgojo told delegates at the Investing in African Mining Indaba in

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Cape Town. Mgojo called for a different approach to BEE, urging the adoption of a more flexible measure of assessing the value of transactions. According to the new proposal, its BEE ownership stands at just 30%. This is still higher than the 26% required under mining legislation, but below the 51% black ownership that power utility Eskom, to which Exxaro supplies coal, is seeking when it signs new coal supply agreements. Exxaro assured investors, however, that existing supply contracts with the utility would not be affected. FD Riaan Koppeschaar said a new company, NewBEECo, would be incorporated and act as the new empowerment vehicle, replacing Main Street 333, and eventually have a 30% stake in Exxaro. Mgojo told Mining Weekly: “There is no danger that any of these contracts will be affected by our new BEE transaction. Many of these contracts have been in place for over 15 years and there is no way that

[Eskom] can come in in the middle of a contract and impose new conditions on the contract, while the contract is running.” Mgojo said that a review of BEE ownership was required to create sustainable black ownership and broader, more meaningful participation by black shareholders in the economy. “We need to find the right balance between the size and level of black ownership,” was his rationale. “More flexible and less geared structures will enable black shareholders to maximise their returns. “The conversation needs to move from rigid, reductive and restrictive ideas about fixed black equity in white companies. After all, are we really saying that we want a country where demand is 30% or 40% black ownership regardless of the size of the company?” He continued in a similar vein: “Surely we can be more sophisticated than believing that

EXXARO

an initial 26% black shareholding of a R6bn company must remain at 26% black shareholder of the same company that has grown to R100bn in value?” Mgojo’s comments come at what is undeniably a critical time for the future of mining regulation in South Africa. The country’s Department of Mineral Resources will publish amendments to the Mining Charter which, in their draft form in December, suggested fresh demands not discussed with sector. Additionally, the Chamber of Mines has prepared an application to the High Court to seek a declaratory order on the issue of whether mining companies are required to keep re-empowering themselves, after the expiration of the original BEE. “Policy must be enabling, rather than prescriptive, by acknowledging the milestone

achievements in transforming our economy and addressing the remaining obstacles for further progress,” said Mgojo. “The lessons of the past 24 years have shown that while we must remain ambitious in our transformation efforts for our economy, we must also be realistic, pragmatic and focus on achievable solutions.” In keeping with its efforts to continually divest from non-core assets in order to release funds, in November 2015 Exxaro reported the conclusion of a sale and purchase agreement with a consortium of Burgh Group Holdings Proprietary Limited and Lurco Group Proprietary Limited to acquire its Inyanda Colliery. As a result, Burgh and Lurco would continue using Inyanda Colliery for coal beneficiation, with more than 25 million tonnes of coal destined

for the local and international export market over the next five years to add significantly to the country’s infrastructure. “We are delighted to deliver Inyanda Colliery to its new owners” said Mgojo. “Inyanda Colliery was one of Exxaro’s flagship mines and will continue to generate immense value for the new shareholders.” Quinton van der Burgh, Chief Executive Officer of Burgh Group Holdings, added that, “the acquisition of Inyanda’s assets is a critical building block of our organisation.”

EXXARO +27 12 307 5000 investorrelations@exxaro.com www.exxaro.com

STRATA WORLDWIDE ARE PROUD SUPPORTERS OF EXXARO Strata’s mission is to provide products and services that keep working environments both safe and productive. Our core values are to listen to customer requirements, tailor solutions to meet their needs, and provide unmatched service and support throughout the entire business process. Strata specializes in: • PDS and Collision Avoidance • Emergency Refuge Chambers • Underground communications and tracking • Wireless atmospheric monitoring and gas detection Tel: +27 12 450 0960 Fax: +27 86721 4738 Email: info@strata-safety.co.za Web: www.strataworldwide.com/za

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Â© ANGLO AMERICAN

KUMBA IRON ORE

Record Highs Forge

Strong Results PRODUCTION: Timothy Reeder

Steel is the most widely used of all metals, employed in the construction of buildings and bridges, the manufacturing of vehicles and numerous household appliances. Kumba is Africa’s leading producer of iron ore and the fifth largest supplier of seaborne iron ore in the world, a central component of steel and one of the key minerals in the development of society.

Based in South Africa, Kumba Iron Ore seeks to be a leading value-adding iron ore supplier to the global steel industry. Operating primarily in South Africa, it has mining operations in the Northern Cape and Limpopo provinces, a head of office in Centurion, Gauteng, and a port operation in Saldanha Bay, Western Cape. Kumba also has a 73.9% interest in Sishen Iron Ore Company (Pty) Ltd

(SIOC), an entity which it manages. Kumba produces high-grade iron ore, which is mined at its three operations, all of which are managed by SIOC, with export ore shipped to customers across the globe from its port operation in Saldanha Bay. Kumba also has a marketing office in Singapore, in partnership with parent company Anglo American, and one in Luxembourg, which it owns wholly.

In total, around 11% of its product comprises domestic sales, while some 89% is exported. “Kumba is a business unit of global miner Anglo American plc,” according to Deputy Chairman of Anglo American South Africa and former Kumba CEO Norman Mbazima. “We operate three mines in South Africa, with a combined production capacity of 50 million tonnes of iron ore per annum. Our

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INDUSTRY FOCUS: MINING

products are valued for their superior physical properties and we are known for our consistent high product quality and reliability of supply.” Kumba Iron Ore’s production process covers it in its entirety, taking care of the exploration, planning and building and mining, through to shipping, marketing and selling the end product. Its steel-making ingredient is used both locally and exported much further afield, to its customers in, among others, Europe, China, Japan and the Middle East. In South Africa, exploration is focused on the Northern Cape, close to current operations, where Kumba can leverage off existing infrastructure and experience. Green field exploration is carried out in such prospective mineral belts as west and central Africa. Iron ore is extracted from mining the valuable iron ore bodies within its various mining leases, currently by employing open pit methods. The company is a major contributor to the South African economy, and provides direct employment to more than 13,000 people. It is also the largest private sector employer in the Northern Cape, which provides the location for its major operations. “Our focus as a company is on creating and sharing value,” continued Mbazima. “We are well positioned to realise our vision of making a difference to the lives of all our stakeholders, whether that be our customers, shareholders, host communities, employees, government or business partners.” Kumba’s Sishen and Kolomela mines are situated in the Northern Cape Province, with the former one of the five largest open pit mines in the world thanks to its production capacity of 37 million tonnes per annum. It uses dense medium separation and jigging technologies to produce a range of lump and fine ores according to customer needs. Opened in 1947, it is the company’s largest operation

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with a lifetime of 16 years and recently underwent a revised mining strategy including operation optimisation and redesigned waste mining. The Kolomela mine is near to Postmasburg in the Northern Cape province, meanwhile, and is the latest addition to Kumba’s operations. Commissioned in 2011 at a cost of R8.5 billion it boasts a production capacity of 10 million tonnes per annum. Using a dry crushing and screening process produces direct shipping ore for the export market. “Iron ore is a critical commodity which the world cannot do without,” explained Mbazima. “While markets may fluctuate, and companies need to adapt to changing circumstances, the fundamentals of the industry remain sound. Kumba intends to grow annual production in South Africa incrementally by about five million tonnes over the next three to five years. Additionally, we are looking to establish a second footprint in West Africa over time.” Ore from both mines is transported more than 800 km across a dedicated railway line to the deepwater port of Saldanha, on South Africa’s west coast, to be loaded for export. In February of this year, SIOC announced that it had entered into an agreement to transfer its third mine, Thabazimbi, to ArcelorMittal SA (AMSA). Until 2014 Thabazimbi was a captive mine owned and run by SIOC, but supplying ore exclusively to and funded by AMSA. “In line with our strategy to manage our costs more efficiently in what is a particularly difficult time for the local steel industry, this agreement allows us to take full management control of the processes and costs related to the rehabilitation liability at the Thabazimbi mine,” states Wim De Klerk, CEO of ArcelorMittal South Africa. “In addition, we will investigate the feasibility of different options to possibly restart operations

at the mine in order to supplement the company’s sources of iron ore and with the potential of job creation.” Themba Mkhwanazi, CEO of Kumba, adds: “A transfer of the Thabazimbi mine to AMSA demonstrates Kumba’s continued support for local beneficiation. This also simplifies the contractual relationship between the parties around the effective management of rehabilitation. We are pleased with this development as it would be to the benefit of both companies and stakeholders.” Iron ore continued to defy forecasts for a sharp price collapse earlier this month, adding more than five dollars per tonne and hitting its highest price since August 2014. Seaborne ore with 62% content delivered to the port of Qingdao rocketed up to $92.23 a tonne, $5.61 more per tonne than just days previously according to the Metal Bulletin. The index has more than doubled its value over the past year following near-decade lows of $38 a tonne in December 2015. This ongoing rally comes as China’s economy remains strong, with the top buyer continuing to need higher-quality ore than that produced locally to support Beijing’s ‘One Belt, One Road’ initiative which seeks to promote infrastructure projects along historical land and sea trade routes. The price spike also coincides with a recent slowdown in iron ore production, which grew only 1.1% last year to 3.26 billion tonnes, against the 6.5% compounded annual rate of growth in the nine years to 2015, as reported by Thomson Reuters. China forges more than half the world’s steel, and its imports of iron ore in 2016 topped one billion tonnes for the first time. This 1.024 billion tonnes constitutes a 7.5% increase to the annual total in 2015, and because Chinese ore is of such low quality most Chinese fines require sintering,

KUMBA IRON ORE

whereby fines are mixed with coking coal and partially smelted, before being fed into blast furnaces. Sintering adds to the environmental impact and costs of the process, which is not in line with Beijing’s current green agenda. China’s steelmakers have been substituting domestic supply and reducing the percentage of fines in favour of pellets and so-called “lump” ore from Australia, South Africa and South America which lowers costs and cut pollution by reducing the need for sintering. Most recently, Kumba announced its results for the year ended 31 December 2016, with Themba Mkhwanazi explaining the importance of its performance over the preceding 12 months. “It has been a successful year for Kumba,”

he states, “despite challenging and volatile iron ore markets. We acted quickly to restructure the business, reset the cost base and stabilise operating performance. In addition, we were awarded the residual Sishen mining right and settled our tax matter with SARS. We can now draw a line under these issues and focus on the business. “The rise in prices and realising full value for Kumba’s premium product, together with our cost reductions, resulted in improved margins and strong cash flow generation. With total production of 41.5Mt, both Sishen and Kolomela exceeded operational guidance following a successful restructuring. Controllable costs were reduced by 34% lowering our average cash breakeven price to $29/tonne. Strong demand for our high quality

product combined with excellent marketing allowed us to realise an impressive average price of $64 FOB up 18% on last year. “This year’s excellent performance has enabled us to build a strong balance sheet and a net cash position of R6.2bn. This will support a conservative capital structure and place us, as a single commodity miner, in a strong position to deal with potential further market volatility.”

KUMBA IRON ORE +27 12 683 7000 @AngloAmericanZA www.angloamericankumba.com

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AFRIRENT

Driving Business

Forward

PRODUCTION: Manelesi Dumasi

2017 looks set to be a bumper year for Pretoria-based Afrirent. With an ambitious expansion plan under way, this 100% blackowned fleet management specialist is hoping to finish the year as one of the leading names in vehicle rental and management across the entire country.

South Africa has a road network that totals around 750,000 km, it’s the largest on the African continent and it brings all people together. Whether from a rural village or a major metro, you can travel the country by road. For the South African government, management of the country’s road network has become a major priority, with millions of Rand spent every year to improve and upgrade. For government and municipal officials, travelling around by road has been made easier over the past decade thanks to the development of leading fleet management business Afrirent. Founded by CEO Senzo Tsabedze, Afrirent has been supplying a wide range of fleet management services to the SA government, and other customers, for the past 14 years. “I started the company in 2003. It was started by mistake; I was in construction and I had some trucks so one of the rental companies came to me and asked if they

could rent my trucks on a short-term basis for a government contract,” he explains. “They had trucks in service and wanted to use my trucks for three weeks. I wasn’t using the trucks as construction is an up and down business so I rented the trucks and I realised that I could make money so I started to pursue the fleet business.” The ensuing years saw Afrirent grow to become a key transport management provider, with a large fleet of vehicles covering all different sectors. Complementary divisions were added, offering telematics, fuel management, vehicle sales, and rentals. “Our biggest customer is the South African government,” says Tsabedze. “The municipalities around the country is where we get most of our business. We supply a mix of different vehicles. Some municipalities use our trucks for refuse removal, some use our trucks for water delivery, some use our earth moving equipment for road maintenance, we supply a lot of sedans; the various

departments will also use our vans and 4x4s for maintenance tasks.” 2017: FOOT ON THE GAS Today, Afrirent has nine offices throughout the country, covering all provinces but the CEO is bullish about further expansion and development with 2017 set to be an extremely busy but exciting year for the company. “We will be opening a Nissan dealership this month and that will be our fourth. We are in the market looking for a VW dealership so we will open two dealerships this year. Our target is always to grow in the fleet space but when you are in this business you need to own dealerships where you can buy and sell cars so you have access to stock. “We hope to buy 10,000 new vehicles for supply into our client’s operations. Already this month we have delivered 220 vehicles to a client. We want to supply 10,000 to clients, we don’t want to buy and keep them. Some of the big metros

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INDUSTRY FOCUS: AUTOMOTIVE

AFRIRENT CEO SENZO TSABEDZE

in South Africa operate 11-12,000 vehicles so if you secure one of these metros the target will be reached. The smaller municipalities operate between 300 and 800 vehicles so with a few of these as customers you will reach the 10,000 target,” he says. It’s not just South Africa that is in focus for Afrirent. Tsabedze details plans for expansion across sub-Saharan Africa. “We’re looking at Zambia, Namibia and Botswana. They are friendly, stable countries and our target is to have offices in those countries by the end of this year. You can’t just go there and set up, you have to look for reputable partners so you can empower local people who understand the local dynamics,” he says. In a move which could become a major driver of Afrirent’s car rental business, the company has also targeted South Africa’s airports, locations traditionally guarded by international rental businesses. “We recently opened our first car rental business at the Kruger Mpumalanga International Airport in Nelspruit,” says Tsabedze. “We have already approached management at Lanseria International Airport about setting up another rental business. They are expanding a wing and that will take 18 months so we hope to set up there when their expansion is complete. We are also talking to ACSA about securing space in airports around the country. We want to have car rental space in all airports by the end of this year.”

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He explains that there isn’t currently a reputable, South African company with the ability to service all of the country’s airports. “There are international players but not a local, South African, black-owned car rental business at the airports. They’ve never found someone with capacity, who understands the space. We have raised our hands and said we have the capacity and we understand the market and we tick all the boxes. “We also feel that a car rental business in necessary because right now, new car sales are not good but second hand car sales are doing well so we will move our new cars into the rental business for six months and then bring them back into the dealership to be sold as second hand vehicles.” Afrirent will look to its current customer base to fuel demand through the airports. Already servicing more than 40 municipalities, Tsabedze plans to approach existing clients to offer a full travel service. “When people travel around South Africa, they can use our cars at any of the airports instead of carrying credit cards with them. It makes things easier for everyone. We’re also hoping to build relationships with travel agents, airlines and hotel groups as they can offer packages that include our services.” 100% BLACK-OWNED Of course, expansion like this is not easy, or cheap. In an economy that is predicted to only have 1.3% growth in 2017, it has

become vital to form strong relationships with financial institutions so that growth can be financed effectively and expansion plans realised. “You can’t expand like this without the help of the banks. Fleet is linked to money, you need money to buy cars and then you collect revenue over time. We’ve got very good relationships with banks; in just the last two years we’ve received more than R200 million in financing,” details Tsabedze. The economic situation, which has seen many expansion strategies put on hold and many companies forced to consolidate, has had little impact on Afrirent and will unlikely halt any of the ambitions plans that the CEO has set out for this year. “There are certainly challenges but people always need transport. The government needs vehicles to deliver services. Our services are in demand and we are one of the few 100% black-owned companies so we have not really seen any impact or slowdown from a weak economy,” he says. A further development for 2017, that will further increase Afrirent’s strength, is the completion of a software development programme to enhance telematics offerings. “We’ve been developing our own telematics software for the past two years. We should be ready by the end of this year. It’s a big part of our business,” says Tsabedze. The idea for the new software is to upgrade current web-based offerings which include: Status Reports, UltraSensitive GPS, GSM communication using GPRS and SMS, Backup Battery, Panic Button (optional free feature), Over speeding alarms, Double Immobilizer, Driver ID Tag (optional extra), Live Tracking, Monitoring and Recovery anywhere in South Africa. This allows clients to be as efficient as possible with all operations. It’s not just telematics software that has been under the spotlight at Afrirent. The physical installation of the units into various vehicles is also something which the CEO and management team have

AFRIRENT

been looking at recently. “We’re always looking to develop people,” he says. “Right now, we are looking at technicians who fit telematics equipment to our vehicles. We have realised that it’s predominantly men who are doing this job but there’s no reason why women cannot also do the job. We decided that, going forward, we will actively look to hire women as installation technicians as it makes no sense that they are not being considered. We want to be the first company to have a female technician team, we want young people who have finished matric and don’t have money to go to university, and we will assist them with getting drivers licenses and train them as technicians.” The number of people employed by Afrirent currently sits at around 280. With the 2017 expansion plans, this number will grow significantly over the next 12 months and there

will be new opportunities for people with industry experience and also for those who have not been involved in fleet management but are looking to develop a career. The company has a leadership team with a vast amount of experience and they are ready to share with the next generation of South African business leaders. Some reports have suggested that demand for car and vehicle hire will continue to increase thanks to the increasing number of business travellers attending events such as conferences, workshops and meetings, and this is the stable of Afrirent. Tsabedze says that the company’s ability to build strong, long-lasting relationships, and its willingness to go beyond the call of duty is what separates it from the competition and will propel it into pole position in the years to come.

“Our local understanding, our government business and our ability to build successful relationships is what sets us apart. We have used our own cash to but vehicles for our customers when they could not get help from a bank. This means they will always view us as a partner and a company which goes the extra mile. “I targeted 2018 as a year that we flourish. We are doing very well now but with the work we are putting in, we expect to see results next year,” he concludes.

AFRIRENT +27 12 880 0108 www.afrirent.co.za

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KANSAI PLASCON

Creating a Pan-African

Paint and Coatings Business

PRODUCTION: David Napier

After being acquired by Japanese company Kansai Paint in 2011, South Africaâ&#x20AC;&#x2122;s Plascon paint brand is now aiming for market leadership across the entire African continent. Kansai Plascon Africa CEO, Farid Masood, tells Enterprise Africa that the company hopes to more than double in size in the next five years.

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INDUSTRY FOCUS: PAINTS AND COATINGS

Much of the success realised by South Africa’s leading paint and coatings business, Kansai Plascon, is owed to its long, interesting history and rich brand heritage. Its roots stretch back more than a century, to a time when there was little industry in South Africa, and when the company offered floor polish, carriage varnish, and ready-mixed tinted paints. It was the brainchild of Herbert Evans, a Welshman who had moved to South Africa and brought his trade with him. After his arrival in Johannesburg and the establishment of his business, growth came quickly. Herbert Evans & Co became known for quality, and excellent customer service. At the same time, Solly Rudner was building his own company, Chrome Chemicals, the manufacturer of Plascon Paint.

Plascon quickly became recognised as an industry leading product and in 1945 created its own company, Plascon Paints and Chemical Industries. In 1970, Plascon Paints and Chemical Industries merged with Herbert Evans & Co to form Plascon Evans, which for the next 30 years became the driver of innovation and excellence in the retail, trade, industrial and furniture coatings markets in South and Southern Africa. With the Japanese acquiring Plascon in 2011, the new focus is on creating a business with a footprint across most of the African continent. Recently appointed CEO, Farid Masood tells Enterprise Africa that, despite the fact that Plascon’s owners reside in the Far East, direction and strategy planning for the Pan-African business remains in South Africa. “We

define the business plan and how we want to grow,” he adds. “Whilst we get input and guidance from Japan, goals are set by the team, management and board that sits here in South Africa. “The acquisition of Plascon by Kansai was part of Kansai’s aspirations to become a much more global business,” he says. “Kansai’s philosophy has been to give acquired businesses autonomy, allowing them to operate the way they have in the past. Plascon has been a South African business for the last 128 years and the brand surely remains South African. So we are trying to leverage the benefits of this very strong Plascon brand in the market, combined with the expertise we extract from Japan, to grow across Africa.” Having originally focused only on auto paint manufacturing, Kansai has grown and is now one of the largest suppliers in the world for OEM auto paint. “Many of the Japanese auto companies are our customers (Toyota, Nissan etc.), and we want to leverage that R&D expertise into Africa - the R&D that goes into paint is first class,” says Masood. Thanks to the local expertise, and the historic success that the company has realised in the decorative paints market, Kansai Plascon Africa

FARID MASOOD KANSAI PLASCON AFRICA CEO

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KANSAI PLASCON

is beginning to contribute ideas and innovations to the global business. “Plascon is a leader in decorative paints with world class products that have been developed locally in SA, which are helping Kansai grow throughout the world, “ explains Masood. “In Africa, we have developed a design and décor concept using paint in conjunction with design. We call it ‘Spaces’ and Kansai has adopted that concept, using it in different parts of the world, most recently in Russia.” PAN-AFRICAN GROWTH Masood explains that today, the ultimate goal for Kansai Plascon is to build a Pan-African business and continue with the type of growth that has been achieved throughout its history, with his immediate focus being on expansion in East Africa. “On my agenda, East Africa is the

number one area for growth and we have already started an operation in Kenya. With the substantial opportunities available in this territory, together with our expertise and brand, we are well positioned for East African growth,” he says. “In East Africa, we think Kenya is a market that will continue to grow, supported by favourable economic and political developments that are happening there. It’s very exciting for us. Uganda, Tanzania and Ethiopia are all very strong destinations for the coatings business.” In February, Kansai Plascon announced the acquisition of Sadolin Paint’s East Africa operations. Subject to regulatory approvals, the deal will see Kansai Plascon acquire operations in Kenya, Uganda, Tanzania, Zanzibar and Burundi, with ongoing negotiations over the Sadolin business in Rwanda. Sadolin is the undisputed market

leader in the East African paint industry and boasts a strong 58-year history and export channels into important neighbouring African countries. This acquisition forms part of Kansai Plascon’s global expansion strategy and will see the company access a market that is home to around 25% of Africa’s population. “We are extremely excited about the acquisition of Sadolin,” says Masood. “Our 2020 vision is now being translated into reality as we evolve from a Southern African focused company to becoming a Pan African company, embracing the challenges and diversity of the continent. Kansai’s strong brand heritage, global technical capability, and trusted performance coupled with Sadolin’s respected reputation and presence in East Africa, will definitely strengthen our position as the leading paint company in Africa, enhancing our

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INDUSTRY FOCUS: PAINTS AND COATINGS

future growth and performance.” The company already has three iconic manufacturing sites in South Africa, at Mobeni, KwaZulu-Natal; Luipaardsvlei in Krugersdorp; and Epping in Cape Town. The most recent addition being a manufacturing and distribution business for decorative paints in Nigeria, established through a local partnership. Automotive Refinished coatings will be introduced in Nigeria in due course. Slow growth in South Africa has emboldened the company to move quickly and accelerate its African growth. “We see massive growth across Africa and we want to be the leading player in all regions of Africa,” says Masood. “The SA economy has remained flat for a number of years, limiting our growth in this market and hence we are looking to East and West Africa for expansion opportunities. Both are markets that we see growing with infrastructure development and construction. We will consider greenfield, acquisitions and partnership opportunities to expand, as we’ve done in Nigeria with the local partnership set up. We will use this as a base to expand into other areas, particularly Ghana, Ivory Coast and Senegal.” With the SA economy not creating big opportunities for growth, some companies have struggled in recent years and have been forced into consolidation strategies rather than Pan-African growth. Minimal GDP growth, constantly changing exchange rates, low investor confidence and political uncertainty have not helped encourage serious growth, but fortunately for Kansai Plascon, the effect of a bleak economic outlook has not caused serious concern. “We’ve been able to maintain our current position, although we haven’t grown as much as we should have,” says Masood. “We’ve been a premium brand, at the high end of the market in Africa for a long time. That part of the market has remained flat and we don’t see much growth there. We do see growth

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//EAST AFRICA IS THE NUMBER ONE AREA FOR GROWTH AND HOPEFULLY WE WILL BEGIN WITH AN OPERATION THERE SOON// in the mid-tier decorative segment and that is where we will be repositioning ourselves. In the next couple of years, we will be expanding into these segments aggressively. There’s a lot of opportunities around industrial and protective coatings, we also have a very strong auto-refinish business and we will be growing those areas as well.” PAINT PEOPLE Even with all of the innovation and technological advancements that Kansai Plascon has achieved, it would not have grown to hold the strong position that it does now without the ongoing commitment and passion of its people. Masood views people development as a business imperative and explains that being able to harness skills from other parts of the world is a real advantage. “People strategy is critical. One of the biggest advantages is being part of a multinational group,” he says. “Attracting, selecting and developing people to the level that is needed for the next ten years is a challenge, but we are geared as an organisation to achieve this. We have a large Kansai business in India and Asia, we have operations in Japan, we’re growing in the Middle East and North Africa, we’ve just bought a company in Europe, and so this opens up significant opportunities for collaborative learning as we grow and learn from each other around the world. The CEO himself has utilised his experience with the company in other regions to help his own development and now, working with a large and experienced team, he says that it’s the quality of the employee base that allows Kansai Plascon to set its standards so high. “I have spent the last 10-15 years

working in emerging markets and helping businesses grow from an investment banking and private equity stand point and that has helped me. I helped Kansai set up the business from a financial perspective in the Middle East and North Africa and that’s how I got to know the company. “When they asked me about expanding across Africa, I knew that I could bring my expertise and help them grow but I had to learn about the paint business. When I was interviewed, I explained that I didn’t know much about paint, but I was told I have 2700 people across Africa who know a lot about paint. I bring knowledge on finance and running businesses in emerging markets, and we have a lot of people who know about running a paint business. So, we work together as a team, where our combined strengths enable us to set higher expectations and deliver on our goals,” he says. Since joining the business in April 2016, Masood has set out his ambitions very clearly, and with a strong brand, international quality standards, world class innovation, and extensive local industry knowledge, there’s no reason why these goals cannot be met. “We want to grow our business by two and a half times in the next five years and the key to achieving this ultimately is through building a capable organisation with skill sets that will meet the new business challenges across Africa, “ he concludes.

KANSAI PLASCON 0860 20 40 60 advice@plascon.co.za www.plascon.co.za

KANSAI PLASCON

Kansai Plascon has been on a modernisation journey for a number of years and in 2014 decided to embark on a technology-led transformation journey. After an initial completive stage, Kansai Plascon partnered with PwC to advise on this journey. The first step was to understand the business requirements and the gap between these requirements and the then current business systems. PwC was able to bring an enterprise capability model to the table that enabled the business to identify business and technology requirements in a structured manner while leveraging off best practices available in this enterprise model. After assessing the gap between current systems and business requirements using a highly effective heat model approach, various options were investigated to arrive at the most suitable future systems architecture as well as target technology solution. The recommended future application architecture at Kansai Plascon was an ERP-centric architecture that gave Kansai Plascon an integrated system across the group and delivers on the vision of one company one system one version of the truth. Integration complexity was also reduced, technologies performing the same function were minimised and a scalable, robust ERP system formed the core of the architecture. PwC then assisted Kansai Plascon to appoint the various technology vendors to assist in the transition journey and assumed a strategic role as the PMO manager. Project Quality assurance was part of this function and this enabled Kansai Plascon access to experienced resources to guide them on the journey. The PwC Training and Change Management team assisted Kansai Plascon to deliver the change in the business. The project was delivered over two phases first in the decorative business units, followed by the automotive, industrial and colourants business. The process was completed over 18 months. Parallel to the above, the Kansai Plascon IT organisation went through a transition since new technology was introduced to the business, strategic partnerships were established for cloud hosting and service delivery which warranted a new operating model. Once again PwC assisted with advice and capacity augmentation.

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FERRO SA

Lack of Foreign Currency

Slows African Growth PRODUCTION: Colin Chinery

Technology Based Performance Materials Company Ferro SA saw 2016 export targets remain flat due to key African markets which were hard hit by massive dollar shortages. But this innovative and progressive business looks to 2017 with optimism. “We are anticipating exciting gains in Africa for 2017,” says Group Export Manager Robin Legg.

In 2015 Ferro South Africa was named as Durban Chamber of Commerce and Industry’s Large Manufacturing Exporter of the Year. Exports then around 11-12% were targeted to reach 25% of turnover in 2016, and for the Gauteng and KwaZulu-Natalbased Ferro businesses, the New Year looked export-bullish. Prospects were particularly bright in African regions with significant investments in manufacturing, mining and

construction, sectors where Ferro products are widely utilised. But the anticipated growth was somewhat stalled, notably in Nigeria, a prime Ferro SA market. The plunge in oil prices has hurt Nigeria, Africa’s biggest economy – ($490b nominal GDP as against third-placed South Africa’s $313b) particularly hard. Oil makes up some 90% of Nigeria’s exports and 80% of national revenue, providing the bulk of foreign exchange for the economy. And as Nigeria grapples with the

foreign exchange crisis, for Ferro SA, “our West African market drive where we had major growth last year has slowed down as a result,” says Group Export Manager Robin Legg. FOREIGN CURRENCY LEAKAGE “Nigeria exports crude but imports petroleum, so the bulk of foreign currency has been channelled this way and the lack of forex has been adversely affecting the manufacturing and construction sectors.

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INDUSTRY FOCUS: CHEMICALS

“Sales in the East African Region have been generally flat with only certain sectors experiencing good growth (Ferro SA has an agency agreement with Time Chemicals Ltd to cover East Africa). “In Zambia and Zimbabwe, our clients have also experienced currency shortages in 2016.” Ferro SA has a wide range of technology and a vision centred on product innovation and customer focus. Marketed across 23 countries - 17 in Africa - and uniquely developed for each application by a highly trained and dedicated

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Ferro technical team. The Ferro SA business has been complimented through the acquisition of Spectrum Ceramics in 2007, NCS Resins in 2012, and two years later by Arkema South Africa - renamed Ferro Coating Resins; this was the first stage of the strategy to enter the South African surface coatings market, supported by a technical assistance and distribution agreement with Arkema in France. More recently other acquisitions and agreements have strengthened the brand with the ‘Technology Based Performance Materials Company’ credo.

TECHNOLOGY OF CHOICE Since the company was bought out by Managing Director Ian Forbes in 2004, strategic acquisitions, good management and strong leadership have seen it grow more than tenfold. “In the last twelve years Ferro SA has spent well over R905 million on capex and acquisitions with the objective of broadening and diversifying the product and market base of the group,” says Legg, “the major part of the capex spends focused on quality enhancements and total cost savings.” Importantly, along with all the

FERRO SA

acquisitions, Ferro SA has retained the important technology licenses to most products and has territorial agreements allowing sales operations in Indian Ocean islands, Australia and sub-Saharan Africa. This year’s acquisitions of Synthomer, Revertex SA and Arkem allow Ferro entry into the South African water-based dispersions and emulsions markets and other niche sectors in which Synthomer and Arkem operate. PERFECT FIT Synthomer South Africa has a long history and an excellent reputation as a dispersions company with an exemplary record of delivering high-quality products to the local market, and is seen as a perfect fit both with the Ferro credo and Ferro’s business philosophy. Leaders in their respective fields, Revertex Chemicals and Arkema Resins are the first companies to produce and market both dispersions and solvent-based alkyds in South Africa. “We’re well positioned now and we’re market leaders in most market segments in which we operate. We have signed technology agreements that ensure we are abreast of the latest developments available internationally – these include Ferro Corporate, Esmalglass, Reichhold, Tiger Coatings, Arkema, Smaltochemica, Durst, Akzonobel and Owens Corning - all global players. We have access to all of their innovation and development so we’re in a good position to stay at the cutting edge of supply for our clients,” says Robin Legg. “The target potential export growth into Africa is definitely more lucrative than our South African market. Our domestic market growth year-on-year is around 0.4%, while the export markets offer an opportunity of 4-5%.” Looking to the New Year, Legg

says all Ferro SA divisions have potential. “But the ones that are really exciting are Ferro Coating Resins, Ferro Dispersions, Arkem and NCS Resins, all of which are offering new scope for 2017. Powder coating continues to grow with Kenya and Nigeria the biggest drivers - and Plastic Master batch overall remains steady.” QUALITY PLUS SPEED In Africa, Ferro SA competes with countries from the Middle East and Asia and the markets are highly competitive. “In a lot of cases it’s a price-driven market, but being in South Africa has advantages in being far more efficient in terms of turn around, and the product quality coming out of our plants is being preferred by end users.

“With our new and enlarged package coming together, there’s a lot of potential for 2017 given this larger product range available to the exports markets. We are planning gains in Africa for 2017.” And might there be further acquisitions to grow this pioneering and expansionist South African company? “We continue to look for new opportunities, that’s for sure.”

FERRO SA +27 (0) 11 746 4000 www.ferro-sa.co.za

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STATELINE PRESSED METAL

Eastern Cape Pressed Metal Specialist

Geared For Expansion PRODUCTION: Karl Pietersen

For more than 30 years, Stateline Pressed Metals has been supplying into South Africa’s automotive manufacturing industry. Today, the company is structuring itself for a growth drive. CEO, Mark Gilbert tells Enterprise Africa more…

A depressed economy, pressure from international competitors and a global commodity price crash has made for an unsettling environment in South Africa’s steel sector. The country’s steel mills remain unable to compete with prices from China and Japan, and this is in turn making life difficult for all industry sectors that have any dealings with steel. Take the automotive industry as an example, once a powerhouse of the SA economy and a significant employer in the Eastern Cape, today many of its international businesses choose to import steel from elsewhere to save money. It’s a problem known only too well by Port Elizabeth-headquartered Stateline Pressed Metal (SPM). The company has been specialising in the production of pressed metal parts for the auto industry and others for more than three decades. But as motor manufacturers look to be efficient and competitive, they have started to look for cost savings with

steel products. Fortunately, SPM enjoys longstanding, healthy relationships with some of the country’s biggest businesses and, as the government puts its foot down on a localisation drive, this is company that is raring to expand and develop. “We are working on a project that will see us invest in a new press shop but we are going to need some volume to support that from local OEMs,” states SPM CEO, Mark Gilbert. “It would be on entirely new premises and would create a number of new jobs. “If an OEM supports us, and if they are serious about localisation, we are serious about making investments to accommodate localisation. When we start to realise the higher volumes that have been discussed, then we will make a new press shop a reality. “We produce quality pressed metal components and also some value add, sub-assembly components. The Japanese mills have come with very competitive

pricing and our local mills are around 40% more expensive than overseas producers but there doesn’t seem to be any intention to address this. The prices at our mills do jeopardise South Africa’s ability to localise steel pressing business. If we want to buy steel from Europe or elsewhere, we then have to consider the logistics and that can kill the business case.” STRUCTURAL CHANGES In order to meet the ever-evolving requirements of local OEMs, and remain relevant in the industry, SPM has also made changes to its ownership structure to comply with the latest BBBEE necessities. This is a hurdle which many small and medium enterprises fail to navigate resulting in scorecard downgrades and eventual loss of trade. “In 2014, the market was slow and we had to discuss strategies so that we could ensure we remained sustainable and win new projects,” says Gilbert. “We

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INDUSTRY FOCUS: MANUFACTURING

MARK GILBERT CEO STATELINE PRESSED METAL

received guidance from our clients at GM and they said our black ownership was our challenge. We partnered with Vuwa Investments and we sold 26% shares to them. Since then, we’ve made some structural changes and at the beginning of 2016, we sold 5% shares to our Academy CEO, Athi Lupodwana; we sold 5% shares to Mrs Tenji Hobongwana, and Vuwa acquired an additional 15% so we are now a 51% black-owned company and we are ticking all the boxes that the OEMs are asking for.” The company has already seen fruits of this labour, gaining orders from new clients and attracting further business from existing clients – it’s an example of successful transformation strategy. “We have received orders from Gibela in the rail industry and we are trying to develop that further. We are making plans for products for Toyota, VW and GM as they look for localisation. All of the OEMs are looking for localisation with black-owned companies and so we have been quoting a tremendous amount,” says Gilbert. In May 2016, Toyota publicised a R6.1 billion investment into South Africa as it announced it would make the all-new Hilux and Fortuner at its Prospecton plant in Durban, contributing to increased localisation of parts and modernisation of facilities and processes. “This latest

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announcement gives evidence of a company that is defiantly committed to South Africa by strategically investing in the people, tools and equipment to produce cars and commercial vehicles of world-class standard that are not only destined for the domestic market, but will also fly our flag high on the international stage thanks to a robust export plan,” said Toyota SA President and CEO, Andrew Kirby. In August 2015, VW announced a R4.5 billion investment for new models and infrastructure at its Uitenhage factory and in April 2016, Ford announced a R2.5 billion investment to facilitate production of its Everest SUV at the Silverton Assembly Plant in Pretoria. “It further reinforces South Africa’s position as a strategic export base for Ford Motor Company,” said Jim Farley, Ford executive vice president and president of Europe, Middle East and Africa. BMW is also investing heavily in its facilities at Rosslyn. STRONG HISTORY Along with SPM’s excellent BBBEE credentials and its ambitious plans for growth and expansion, the business is built on robust historic roots. Founded by American, Russel Oliveto in 1983, the town of Queenstown was chosen as a base thanks to its strategic position, close to all

of the major auto OEMs. In its early days, the company benefitted from government incentives on property for employing local people. “Queenstown is positioned centrally in the automotive cluster,” says Gilbert. “We have Daimler Chrysler around 150 km away from Queenstown; Ford, Nissan and BMW are in Johannesburg; and VW and GM are in the Eastern Cape, close to our Port Elizabeth office. “In 1989, Russel sold shares to his management team and they managed the company until 2012 when they sold the majority share to capital investors, LLR Capital. Myself, Nick Schloesser and the financial manager purchased shares from LLR Capital in October 2013. “We’ve always supplied automotive OEMs; the first ever component produced in Queenstown was made for Ford and we still have that component in our boardroom in Queenstown. We’ve supplied most of the major players including Ford, Daimler Chrysler, VW and GM. With GM, we’ve won supplier awards in different categories including Quality Supply and Continuous Supply, and we’ve also won awards with Toyota and VW.” Today, SPM is home to 191 employees, 141 in Port Elizabeth and 50 in Queenstown. In 2014, the decision was taken by the Directors to move the head office from Queenstown to Port Elizabeth. GEARING FOR EXPORT With the price of South African Rand making for favourable export conditions, many businesses are now looking outside of the country for opportunities to bolster lacklustre demand from the local market. SPM has been working hard to gain the appropriate accreditation so that it can join the successful group of manufacturing businesses that already export. “We don’t export at all right now,” admits Gilbert. “We would like to become an exporter but for that we need to be ISO 14001 accredited and we are currently in the process of implementing that, hopefully we’ll be complete by August. “VW is already advertising work for its plant in Kenya. In the beginning, they will

STATELINE PRESSED METAL

likely import a lot from South Africa as they will have an assembly plant rather than a full manufacturing set up. VW’s vision in Kenya would certainly help our operations here in SA and we would certainly make a case for investment if we were able to realise volume from that plant. For us, there’s no difficulty in building additional volumes to support an export programme.” The vision of building a competitive steel industry that has the ability to export is shared by the SA government. At the 2017 SONA, Trade and Industry Minister, Rob Davies stated: “A competitive steel industry that can support investment, increased jobs and exports remains a key priority for government.” SPM ACADEMY If SPM is to realise the growth that it is expecting in the coming years, it will of course need to increase its employee base and skills pool. With the shortage of skilled artisans in the manufacturing sector coming as no surprise, SPM has established a training academy where potential employees and those interested in careers in the industry can develop their skills and become part of a scarce group of people who hold these extremely valuable skills. The academy is headed by Athi Lupodwana, former SPM Business Development Director. “Specialised skills are scarce, no doubt,” admits Gilbert. “General workers who operate a piece of machinery or equipment are easy to come by. Unemployment here is high; close to 30% so finding general workers is not hard – there’s more than enough ability and capability in South Africa. “Artisans that maintain tooling or artisans who run facilities - that skill level has a tremendous shortage. Education is lacking and people need to be given the opportunity to learn real skills and that is where Stateline Pressed Metal comes in. We created the Stateline Academy as we’ve realised there is a skills gap so we are trying to close it through training and development at our academy. If it is successful for Stateline Pressed Metals,

we’ll send all employees through the programmes and then advertise it in the private sector. “Our intention with the academy is not to make money, we want to upskill people so they can get employed. We don’t have the intention of creating employees for SPM, we want them to gain employment elsewhere and others to say ‘they came through Stateline’.” The SPM Academy will become a valuable tool for the industry and, as the localisation drive gathers pace, could become a significant earner for the industry and the company. The National Association of Automobile Manufacturers of South Africa stated in February that it expects the country’s automotive sector capital expenditure to rise to R8.2 billion this year from R6.4 billion in 2016. ArcelorMittal SA is also expecting a buoyant year with BMI Research suggesting that profits would increase in

2017, catalysed by strong September 2016 quarter profits which were the highest since 2014 – all positive news for SPM. “We are really excited about the future,” says Gilbert. “The Minister of Trade and Industry is preaching in parliament that the government should be supporting the automotive sector, they want to develop, and we believe that it’s only a matter of time before the industry develops. The government is looking for localisation, they are looking for skill development, and we are excited because we tick all the boxes,” he concludes.

STATELINE PRESSED METAL +27 41 451 0105 www.spmza.co.za

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GEARHOUSE SOUTH AFRICA

A Mark of

Distinction PRODUCTION: Emily Ayson

When it comes to event planning in South Africa, the name on many peopleâ&#x20AC;&#x2122;s lips is Gearhouse South Africa. Gearhouse is a leading business in the events industry, supplying lighting, audio, electrical, stage, sets and much more, to large and small functions across the continent. It offers a truly comprehensive package from start to finish, from design and installation to maintenance and removal. Building a world class reputation for quality, innovation, affordability and reliability, it has been involved in some of the countryâ&#x20AC;&#x2122;s most renowned occasions including Cape Town Fashion week, the 2004 Presidential Inauguration and also Strictly Come Dancing and the X-Factor. Comprised of several specific divisions, Gearhouse never compromises on service and never lets a client down even in the most difficult situations, making the company the experts in its field.

INDUSTRY FOCUS: EVENTS

Beginning life in 1991 as a simple lighting company based in Johannesburg, Gearhouse Founder and Managing Director, Ofer Lapid has grown the businesses from a small operation ‘with a little equipment and a lot of imagination’ into an international affair. Now with sister branches in Durban and Cape Town, a dedicated fleet of vehicles, highly trained staff and the most comprehensive catalogue of state-of-the-art equipment of any supplier in South Africa, Gearhouse is always primed and ready to serve and impress its loyal client base with ‘vision, passion, teamwork and a commitment to excellent service’. As South Africa’s only representative in the illustrious AV Alliance, Gearhouse is regarded as one of the best in the industry, a reputation that the company embraces. A shining example of this can be seen in its recent involvement with a large-scale production of Annie in 2016, for which the company’s theatre equipment division, Gearhouse Splitbeam, supplied all of the lighting and rigging. In this case, it lacked a specific piece of technical equipment which was deemed vital to Annie’s iconic visuals, but without any hesitation, Gearhouse went ahead and purchased the item for use in this and other future productions, cementing status as a business utterly devout to its cause. As such, it is no wonder that

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Gearhouse Splitbeam Managing Director Alistair Kilbee believes that the company is one of only a handful of true theatre specialists able to meet the stringent schedules and needs of international touring productions. Similarly, lighting extraordinaire Tim Dunn has stated that Gearhouse will always go above and beyond and that they ‘never take the easy option’. However, it is not just at home where Gearhouse pulls out all the stops. An installation that the company helped with in the UK needed a very complex lighting system and once again, Splitbeam was called upon. IN LIGHT: Illuminating Capability Brown’s Landscape was a revitalisation of Compton Verney Art Gallery and Park, which used an interactive light display to mark the 300th anniversary of British Landscape Architect, Lancelot ‘Capability’ Brown. Knowing of the excellence of Gearhouse, 450 South African designed and manufactured ‘jar lamps’, linked by specialised DMX-type technology were commissioned. Each lamp was controlled individually to create a stunning visual experience and such a display had never been attempted before in either the UK or South Africa. With great pride about his involvement in this radical project, Gearhouse’s Michael Inglis says that ‘for anyone with a passion for innovation; being involved in a technologically pioneering event like

this, provides a fresh thrill every time. New challenges and new solutions…it’s what we thrive on at Splitbeam’. Similarly, Gearhouse is constantly striving to upgrade its stock and keep abreast of both technological developments and the complex changing needs of clients. The company recently purchased four grandMA dot 2 XL-F consoles which will be used equally between the Johannesburg and Durban branches. Not only will this piece of kit help create that extra ‘wow-factor’ at events, but as Lighting Operations Manager Stuart Andrews comments, the latest addition ‘fills a gap we felt existed in our inventory of consoles, for desks suited to the smaller and medium sized corporate work’. Such attention to the needs of their smaller clients has not gone unnoticed, and for Gearhouse, no problem or request is too big, impossible or insignificant; as Roddy Quinn, head of Real Concerts says, ‘even the small jobs are dealt with the same level of pride as the big jobs’. In maintaining such a stellar reputation, Gearhouse also has a proven dedication to green business practices, something that may come as a surprise considering that its very existence relies on electricity and transporting goods in heavy diesel-powered vehicles. For one, as many batteries, vats of generator oil and other consumers are recycled and digital signage is preferred rather than traditional paper posters and banners. Gearhouse also prefers to use compact, folding trusses and rigs to take up less space and thus reduce the number of vehicles required on the road. However, what makes Gearhouse great is not only its impressive and comprehensive stock of equipment and business ethics, but also its staff who form the whole backbone of the operation and are proclaimed as ‘the greatest asset’ of the business. All employees receive ongoing training and developmental support, ensuring that they possess unrivalled expertise about their trade. Gearhouse also actively encourages creative contributions from personnel at all levels, and if an employee has a bright spark

GEARHOUSE SOUTH AFRICA

of an idea, this is nurtured and worked upon – a far cry from the stereotypical power imbalances that are seemingly rife within other grand-scale companies. In 2006, the company also received its official Black Economic Empowerment certificate and furthermore, it openly welcomes job applicants from any and all walks of life. Yet it is not just current employees that Gearhouse support. It also has a teaching academy which provides a yearlong industry learnership for prospective field entrants. The core aim is to produce industry ready entrants that are trained to the incredibly high standard that Gearhouse expects, with lessons in both safety and methodology on offer. Students are enabled to learn at their own pace with certified experts, receive a small stipend and pay during work experience placements and they also have to take two final exams at the end of the course. On average, the academy has around

35 graduates per year. Furthermore, Gearhouse is extending its reach into schools, with the hope of inspiring youths to enter into the exciting world of Live Event Production. Recognising that socio-economic conditions may make it difficult for many young South Africans to find the drive or indeed resources to take on such a career, Gearhouse has begun working with Hyde Park High School to introduce a technical programme into the everyday curriculum. It is under the tutelage of Splitbeam’s Clement Makama and Jeff Thomson and dramatics teacher Danielle Bentel that pupils are becoming experts in their own right, for they are often given complete responsibility for the sound, lighting and audio for the school’s ceremonies, parent information evenings, assemblies and sporting events. In conclusion, whether it’s a small corporate luncheon, a stadium event or a theatrical extravaganza, clients of

Gearhouse both in South Africa and further afield can be completely safe in the knowledge that they will be taken care of. With an astounding reputation for world class service, an unparalleled range of stock and a devotion to ensuring that current and future events technicians are knowledgeable and passionate, the company is like no other. Tirelessly working to adhere to tight budgets, equipment specifics and the trials and tribulations involved in the events field, Gearhouse is always there to ensure that the show must go on.

GEARHOUSE SOUTH AFRICA +27 (0)11-216-3000 www.gearhouse.co.za

www.michaelgilldesigns.com michael@michaelgilldesigns.com | +27 11 888 1882

‘X-Factor SA designed for Geahouse SA | Rapid Blue

If ‘quality craftsmanship’, ‘state-of-the-art design’ and ‘pure professionalism’ are terms that you demand from your set design company, look no further than Michael Gill Designs. The company’s unique ability to shape, mould, create and give life to the television, stage and corporate set has become legendary across the length and breadth of the African continent and beyond.

20 years on... two decades of design

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GHC AFRICA

Project Managers Growing Despite

Tough Times PRODUCTION: Karl Pietersen

Completing major projects - all over Africa - on time, on budget and to top quality specs, GHC Africa is a project management firm with a glowing reputation. Director Mike Woodruff tells us more about how the company will be growing outside of SA, and how it will become known as the ‘go to’ project management company.

A common trend for growing South African business is to look beyond the border of the country for new opportunities on the continent. Many of South Africa’s biggest and best have established themselves as industry leaders at home and then focussed attention north of the border for further growth opportunities. This has been successful for many but also presents many new challenges – consider the different regulations, the different types of government, the transport and logistics, the employment laws, the tax structures, the unfamiliar markets, and the different cultures. Chasing opportunities in Africa is a challenging but exciting undertaking. Sometimes, however, pursuing new business in other territories becomes necessary. Take the construction business for example. In 2015, the Financial Mail claimed that the industry was in a ‘parlous state’. According to its report, stock prices for the JSE-listed construction companies plummeted and even the biggest had seen revenues fall by as much as 14%. Murray and Roberts claimed that up to 93% of its profit and 65% of its revenue during that period

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was coming from outside of South Africa. However, at the end of 2015, Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Lebogang Maile said that the construction industry was an exciting one, claiming “we have every reason to believe that the construction industry is fast proving itself to be Africa’s treasure trove”. Speaking at the 2015 Bauma Conexpo Africa, in Johannesburg he said that half of the 165 top construction and engineering companies in the world had expressed interest in expanding into Africa. In 2017, with the economic climate improving slightly, and the government plunging R900 billion into infrastructure projects, the construction business remains in a difficult position but there may be light at the end of the tunnel. WBHO recently announced slightly improved results, and Investec reported that the economy could return to target growth levels by 2020. This is of course good news for everyone involved in construction, especially those involved in long-term, large scale projects not just in South Africa, but all over sub-Saharan Africa.

GHC Africa is the perfect example. Founded in Johannesburg 25 years ago, the company specialises in construction project management and has completed high-profile instructions in South Africa and across the continent. The key differentiator separating GHC from its competition is its relationships building skills; this isn’t a business that works at arm’s length, GHC project managers like to get close to clients and fully understand needs and requirements of every project. Because of this, alongside a reputation for high quality and on time, on budget delivery, GHC has managed to mitigate the economic woes that have dogged the industry and is continuing to grow. “The last few years have been tumultuous,” says Director, Mike Woodruff. “We’ve been very fortunate as South Africa’s construction industry and the built environment industry has gone through a hard time and remains under pressure but we managed to pick up some nice, long-term jobs which has helped us build our reputation, knowledge base and staff skill set. We’ve had Mall of Africa and Menlyn which were over R2 billion projects and we’ve

INDUSTRY FOCUS: CONSTRUCTION

been involved in Jo’burg Sandton City with a number of projects. Now we are looking to replace that workload and that is the challenge for the moment. “There’s a lot of project managers who like to work from afar and manage by email. That’s not our style. We get involved, we get alongside our clients, we understand the business case of why they’re taking on the project and we like to think we relieve the client of responsibility of ensuring that building is built to meet their needs. We analyse the business case and we make sure that when we deliver the project, it’s something that clients actually need rather than something they want. We get very involved with clients and the evidence of that is in our repeat business – there’s a handful of clients that we’ve been working with for almost the entire existence of this company. “We like to meet people. Our clients have to trust a multi-million Rand or Billion Rand project to our people and they have to know our people are capable. The only way to sell that is by being in front of clients and talking to them about how you can add value. “We push design teams, we make sure they understand that what is good for one project is not always good for all projects. We’re always testing architects and engineers to come up with new and better ways to do things and ensuring its appropriate,” he adds. FULL SERVICE PORTFOLIO GHC’s offering is wide; there’s many ways that this innovative company can help you but its core services fall into four main categories – Commercial Management, Construction Management, Development Management and Project Management. “Our core function is to deliver on time, on budget and to top quality standards,” says Woodruff. “We believe we have a different culture to many other project managers as we get involved in the project directly. We also expand our scope beyond that of a normal project manager to help our clients put projects

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together – we perform a development management role before the project gets underway. We’re also heavily involved in the financial and commercial aspects of the project. Looking at our track record, we’ve completed some very high-profile projects including the Mall of Africa – the largest single phase retail centre development in sub-Saharan Africa – and Menlyn Mall, the biggest refurbishment of a retail centre. “We’re not a big company in terms of numbers but we have a core of excellent people who deliver these projects and we have an untainted record of delivering on time, within budget and to the required quality.” With an impressive completed projects portfolio that includes the Sandton Sun reconfiguration, Nelson Mandela Square reconfiguration, Sandton Tower refurbishment, Jabulani Square development, Barclays Africa HO – Lusaka Zambia, Accra Mall reconfiguration, Midlands Mall Lifestyle Centre, Welkom Hyper reconfiguration to name just a few, Woodruff believes that GHC can bring its expertise to clients in any industry. “Our speciality is retail but we do commercial projects for hospitals and similar. Our client base varies but we think we can apply our principles to any industry. Our added value is where there are many inputs and coordination that requires management to get the job done. For example, with our work at Kotoka International Airport in Ghana, there are a lot of components such as the building and the tenants and a lot of variables and inputs.” EXPANDING BEYOND SA GHC already has a strong business in Africa and has completed many projects in neighbouring countries. In 2017 and beyond, the company is hoping to grow this side of the business. “We go beyond South Africa; we’ve done projects in Zambia and Ghana and we’re looking further afield to Kenya and Nigeria. Our core market is South Africa but we go where our clients require our services.

“If a client came to us and asked us to work internationally, we would certainly consider it. Of course, we would have to consider the process as we don’t work from afar or do things over email, we would want people on the ground. We would have to consider setting up and office and relocating people but if a client insisted that they need a job done and it made sense financially, we would always look at it,” says Woodruff. Ghana in particular has become a market where GHC has achieved great success and many of the current developments that the company are busy with right now are located in the West African nation. “We’re working on the Achimota mixed use development in Accra, Ecobank’s multi-storey office block in Accra, Kumasi Mall close to Accra and the Kotoka Airport project. We’re also involved in multiple projects in South Africa and we’re looking at a big one at Tyger Valley in Cape Town,” says Woodruff. RAPIDLY CHANGING INDUSTRY As one of the industry’s long standing organisations, GHC uses all of its experience to embrace the changes that inevitably come thick and fast in a sector that is constantly evolving. “We’re 25 years old now, it’s a big milestone for the company. We’ve recently formed a new company, Origin Project Management, a 51% black-owned company. Our clients are very focussed on transformation and as part of our strategy we’ve taken that on board and embraced it,” explains Woodruff. Today, customers are more reliant on project managers as they look to focus on their core business. Changes in regulation, changes in technology and a focus on ‘green building’ have all encouraged clients, and potential clients, to think more closely about how far their own skills can go, and how necessary it is to bring on board a project manager that is experienced. “Clients are now expecting a lot more of project managers,” admits Woodruff. “When I arrived in SA in ’96,

GHC AFRICA

project management was almost an unknown discipline; often architects led the way. “The industry has become more complex. There’s environmental issues to consider with green star ratings, safety is paramount and regulations have tightened so we manage that very strictly, and buildings have become more complex with fibre, Wi-Fi, internet connections and various electronic systems. There’s a large emphasis on integrating services into buildings while making sure it is aesthetically pleasing,” says Woodruff. It’s also through personnel where the industry is changing. Naturally, people are a key factor for any business but with project managers that control such important sites and large amounts of money, using the right people is vital and this isn’t always easy. “We’ve seen a general reduction in skills in the industry

from a sub-contractor point of view,” says Woodruff. “Apprenticeships are not easy to get and some of the big companies don’t offer them at all so basic skills like bricklaying are scarce and getting top quality is difficult. We’re finding that consultants are also not upskilling and we have to manage that as clients are expecting top quality.” Fortunately, GHC has the experience and the ambition to embrace the changes that this liquid industry will continue to throw up, always meeting and exceeding client expectations. “As buildings become more complex and as land becomes more expensive, clients want projects built quicker but still within budget so the demand from clients has certainly changed,” says Woodruff. Going forward, despite the economic uncertainty in construction in South Africa, and around the world, the company will focus on maintaining and

growing its already sterling reputation and bolstering its Africa business – this will be a key strategy throughout 2017. “We want to become recognised as the ‘go-to’ project management company and to expand outside of South Africa. We will be looking north of the border for opportunities as our neighbouring countries will be maturing in terms of the consumer base,” Woodruff concludes.

GHC AFRICA +27 (0) 11 706 0615 ghcafrica.co.za

ENGINEERING - EXCELLENCE THE FULL PACKAGE CKR Consul�ng Engineers was established in Johannesburg over 30 years ago. In the past 30 years, the CKR Group has become a global player in the Mul�-Disciplinary MEPDF, ELV and ICT Consul�ng Fields. CKR operates from offices in Johannesburg, Cape Town, Durban and Pretoria offering full coverage of South Africa and the African Region, with projects as far afield as Ghana, Nigeria, Zambia, DRC, Angola, Seychelles and Mauri�us. CKR global opera�ons include offices in Dubai and Bangalore. CKR offers professional engineering services in the following fields:

• ELECTRICAL • ELECTRONIC • ICT

• MECHANICAL • FIRE SERVICES • WET SERVICES

Tel: +27 11 217 7300 Fax: +27 11 217 7335 e-mail: oﬃce@ckr.co.za website: www.ckr.co.za The Oval, Ground Floor, East Block Wanderers Oﬃce Park, 52 Corle� Drive, Illovo, South Africa

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INDUSTRIAL LOGISTICS SYSTEMS

Expert Logistics

from Beginning to End PRODUCTION: Timothy Reeder

Over its 30-year lifetime, Industrial Logistics Systems has become known as the expert in the field of Supply Chain logistics, and provides strategic consulting, infrastructure development and operations consulting services from initial strategies through to execution.

Logistics deals with managing the flow of goods between their origin and the point of their eventual consumption, and can encompass physical items such as food, materials, animals, equipment and liquids, through to more abstract items such as time, information and even energy. A complex and varied discipline, at its centre is the aim of minimising the use of resources, true for the logistics of both import and export. Industrial Logistics Systems Director, Clayton Thomas summarises

succinctly the company’s central purpose. “Anybody that’s moving products, anywhere in the world, we’ll assist them in doing that... It’s about ensuring availability – whether it’s a bearing or a can of baked beans.” To ensure the movement of goods in an efficient and cost-effective way, ILS offers consultancy and practical input throughout the entire process of warehouse distribution, from planning and building through to maintenance and organisation. Logistics is an integral aspect of

a company regardless of its size, as accomplished effectively it can have a huge impact on the efficient use of the supply chain, cutting costs where appropriate and avoiding any waste of time, or indeed materials. Logistics can be one of the main functions within an effectively-run company; the supply chain is a notoriously complex and often fragile global endeavour, one which is dependent on the smooth collaboration of a whole network of independent yet interconnected moving parts, requiring professional management.

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INDUSTRY FOCUS: LOGISTICS

ILS helps to make correct decisions through analysing existing operations and projecting future requirements. Founded in 1987 by Gary Benatar and Martin Bailey, based in Sandton and Cape Town, across its staff it has a combined engineering experience in excess of 200 years, which has helped the company to develop in excess of 500 facilities worldwide to date. It offers supply chain and logistics strategy services across a huge number of areas, including business planning and inventory models, operating methodologies and strategic risk assessment and management, through to the larger undertaking of location studies, sizing of infrastructures and transportation and physical distribution models. In addition, the company provides infrastructure development services that can encompass physical infrastructure services, such as site development, materials handling concepts, site layouts and building specifications. As a project nears completion ILS has the ability to see out the very final stages, from operations systems implementation services and management structures and staff organisation, to post-operational support services and operations and management support. ILS also specialises in project management and commissioning of the total system, as such taking responsibility from the conceptual and strategic planning stage through to full operation; ILS provides a full and exhaustive range of logistics expertise. The skill of Gary Benatar in

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INDUSTRIAL LOGISTICS SYSTEMS

designing, planning and managing Industrial Logistic Systems is in demand worldwide. “We strove to bring ourselves into a ‘best-practice’ logistics environment,” says Benatar on his rationale behind the company’s original founding. “We paid attention to every aspect of the business, not just the warehouse design. For example, we start at the beginning providing supply chain strategy, e-commerce fulfilment and integration, and where the warehouse should be situated. Then comes the design of the facility, the design of materials handling systems and the development of everything to do with the warehouse. “We get involved in the IT requirements, specifying and selecting the systems, setting up the slotting systems, the labour incentive systems and the system audits,” he goes on. “We also draw up the operational procedures, the labour management systems, the training manuals, and direct the ‘go-live phase’ when the pressure is really on. “Our clients such as Shoprite, Clicks, DISTELL, Vodacom, McCains, Dunlop, Priceline in Australia and De Beers come to us at the beginning of a project, and we walk the entire road with them. We integrate so closely with our clients that we even make a point of buying their products.” Industrial Logistics Systems seeks to act as an extension of its clients’ business, providing its very own specialist logistics department and subsequently. The interests of the client are of its primary concern, to ensure that ILS consistently and unfailingly adds value and worth in return for the fees paid to secure its service, and repay the trust that clients daily put in its work. To this end, all work carried out is done so to the very highest standards, allowing clients in turn to be able to deliver world class best practice. “From here we go international,” states Benatar on his ideas looking forward. “We have some exciting ideas and prospects in the pipeline. We have a good name in the international arena;

we don’t have to stand back for anyone. ILS is a positive place to be - a fun place. Everyone has access to the facilities 24 hours a day. A number of my staff are still studying and I give them every opportunity to qualify at their top limits.” These goals will be hugely aided by the fact that South Africa remains a dominant destination for transport and logistics companies. Klaus-Dieter Ruske, PwC’s global industry leader for transport and logistics, highlighted the fact that, “Africa is home to 1-billion people who will become consumers,” a circumstance which will require the delivery of goods and services. “There is huge potential for transport and logistics companies in Africa,” he underlined. South Africa was recently identified as being especially well positioned to shine as a global business partner, with the performance of its logistics sector being a key component in this. “The

South African government’s increased focus on and investment in infrastructure development have seen more than R260 billion being set aside for transport and logistics projects,” stated Dr Cornelius Ruiters, Executive Director of the CSIR’s Built Environment research domain, adding that, “The effective maintenance, expansion and management of our country’s infrastructure will enable South Africa to compete at a higher level globally.”

INDUSTRIAL LOGISTICS SYSTEMS +27 (0)11 656-1100 ils-jhb@ils.co.za www.ils.co.za

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EXHIBITION CALENDAR

KEY UPCOMING EVENTS ACROSS THE COUNTRY Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors.

RETAIL WORLD AFRICA Sandton Convention Centre MAR 7 - 8 SEAMLESS AFRICA Cape Town International Convention Centre MAR 14 – 15 HR DIRECTORS CONFERENCE 2017 Cape Town International Convention Centre MAR 14-16 ENERGY EFFICIENCY WORLD AFRICA Sandton Convention Centre MAR 28 - 29 NIGERIA AGROFOOD The Landmark Events Centre, Lagos, Nigeria MAR 28 - 30

SEAMLESS AFRICA MAR 14 | CAPE TOWN As a business in today’s omni-channel world, getting the seamless customer experience right is no longer a niceto-achieve luxury. It is the expectation of your tech-savvy, connected, informed customer that you get this right every time. Seamless is the key meeting place for this brave new world of commerce. It is a new event built on 20 years of experience – a seamless continuity from Africa’s largest and longest running conference focused on cards and payments, to a dynamic summit and large scale exhibition bringing together the converging worlds of ecommerce, retail and payments.

ENERGY EFFICIENCY WORLD AFRICA MAR 28 | JOHANNESBURG Property developers & owners, architects, retailers, interior designers and large energy users are continuously looking to source cost effective and sustainable energy efficiency and lighting solutions.

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Their most urgent need right now is to identify and evaluate the most efficient and appropriate energy efficiency and lighting solutions to help them achieve their objectives. The 4th annual Energy Efficiency World Africa (collocated with The Lighting Show Africa) caters to this need. Dedicated to showcasing the latest services and innovation to improve energy efficiency and lighting in Africa, this is the industry’s go to event. NIGERIA AGROFOOD MAR 28 | LAGOS Organised by the German trade fair specialists fairtrade agrofood Nigeria 2017 will take place from 28 to 30 March 2017 at the Landmark Centre in Lagos. Exhibitors from fourteen countries are ready to discuss business with professional visitors from Nigeria and all over West Africa. The exhibitors come from Austria, Benin, China, Denmark, France, Germany, India, Italy, the Netherlands, Nigeria, United Kingdom, South Africa, Togo and Turkey.

GHANA OIL & GAS SUMMIT Accra International Conference Center MAR 29 – 30

KUMBA IRON ORE

At Kumba, we are committed to supporting initiatives that have a positive impact on the local economy. The supply agreement that we signed with ArcelorMittal South Africa in 2014 does just that. It has allowed us to continue the reliable supply of iron ore to the local steel industry at mutually beneficial prices, which in turn has helped the local economy thrive by enabling the continued production of steel.

MICHELLE BESNAAR Kumba Iron Ore Employee

SIGNED, SEALED AND DELIVERING

Results such as these have fuelled Kumbaâ&#x20AC;&#x2122;s determination to be the developmental partner of choice for projects that benefit our country. www.angloamerican.co.za