Tri-Star Construction

T R I - S TA R CONSTRUCTION

TRI-STAR CONSTRUCTION

At Home in

Affordable Housing PRODUCTION: Karl Pietersen

Centurion-based Tri-Star Construction is enjoying an exciting but busy time as its project pipeline continues to grow. Tri-Star is a business that has been successfully delivering a range of different projects in a sustainable and financially sound manner. Senior Quantity Surveyor, Frans Maartens tells Enterprise Africa more about Tri-Star’s successes and ambitions.

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INDUSTRY FOCUS: CONSTRUCTION

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For most South African construction businesses, the industry has not been an exciting place to be. Since the 2010 FIFA World Cup, construction has slumped. Major projects have been few and far between, regular economic hiccups have derailed infrastructure spend, and an uncertain investment environment has forced any spend to be reviewed more closely than ever before.

With technical recessions, highunemployment, lack of consumer spending power, and poor business sentiment in the country, it’s clear that the environment needs much improvement before construction reaches the heights of pre-2010.

Some of the big-name players have closed doors, entering business rescue and liquidation. Corruption has been rife, and trust in organisations of a certain size has waned. But, while this situation has created a challenging operating environment, it has presented opportunities for

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responsible, sustainable, ethical, and financially-sound businesses.

Take Tri-Star Construction for example. Featured in Enterprise Africa in June 2016, the company was a diamond in the rough, taking on large projects and executing on time and on budget. Somehow, Tri-Star managed to outperform the industry and continued growing.

Senior Quantity Surveyor, Frans Maartens said that success was down to a fantastic reputation, built over four decades.

Today, the market remains depressed but Tri-Star continues to grow. “The sentiment is still the same, the market is still poor, and a lot of our competitors have fallen in these hard times,” says Maartens. “There have been a number of construction companies in our space, and in the space above us, that have entered business rescue and liquidation – there have been all sorts of problems.

“That being said, we are managing to grow. We have

// WE LIKE TO KEEP THAT COMPANY CULTURE AND WE FEEL IT CONTRIBUTES GREATLY TO OUR SUCCESS BECAUSE OUR MANAGEMENT IS INVOLVED // concluded all of the projects we were working on previously and we have managed to keep our books reasonably full. We believe that exciting times may be ahead for the companies that are able to weather the storm. The current middle-tier contractors are bound to be forced to grow due to the reduced supply in the market caused by others dropping out. It is extremely important for us to manage our growth over the next five years.”

TRI-STAR CONSTRUCTION

40 YEARS AND COUNTING Founded in 1979, Tri-Star has grown from a small regional concern to become a multi-disciplinary player with activity across a range of sites.

Through its life, Tri-Star has completed more than 360 projects, laid more than 250 million bricks, poured more than 1.6 million m3 of concrete, put up more than 25,000 homes, and interacted with more than 200 clients.

Now recognised as a reputable and trusted contractor, Tri-Star is looking to build on this reputation and include larger projects in its future pipeline.

“We recently concluded a planning session where we decided on how to resource the company going forward so that we can grow organically to manage a larger annual turnover over the next three to five

years,” says Maartens.

“We have seen healthy growth over the last three years and we are planning to remain on a growth path over the next three to five years.”

BIG BUSINESS MARKETING Tri-Star is effective at winning projects through the tender process, although this continues to be a difficult route. The company is also good at designing bespoke, turnkey solutions for clients, and delivering mass volume-based jobs for customers in the residential market. Because of its success with large projects, the company now intentionally markets itself as a premier construction contractor and is on the hunt for bigger customers.

“We are looking to secure some bigger projects between R200-500

// A FEW YEARS AGO, WE DECIDED TO ALSO FOCUS ON AFFORDABLE AND LOW COST HOUSING. THAT HAS PAID OFF GREATLY FOR US // million on the commercial side, and with that we are pushing towards the R2 billion turnover mark in five years,” states Maartens He explains that the company is very aware of the reduced capacity in the construction industry caused by various companies exiting the market. Tri-Star would like to be seen as a contractor willing and able to fill this gap.

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INDUSTRY FOCUS: CONSTRUCTION

“We are on a marketing drive to throw our hat in the ring, so to speak, for the industry to consider us as their contractor of choice.

“Part of our marketing drive is to get away from being known as a painting and renovations business.

Many people know that the company started out as a painting and renovations business, but the reputation has followed us and it’s something we are trying to get rid of. We have been doing much larger

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projects and been functioning as a reputable, professional construction company over the last 20 years. The painting and renovations reputation keeps following us and we want to shake it off by informing the market that we are a large commercial construction firm. We’ve sold off the painting and renovations division to our BBBEE partner. It has turned out really well for all parties and the business continues to perform very well.”

The result of this marketing push has seen Tri-Star awarded with large contracts in the housing market and exciting contracts in the commercial sector.

BIGGER, STRONGER PIPELINE Traditionally, Tri-Star has been strong in both the commercial and residential space, completing more than 360 projects. Tri-Star boasts a long list of happy clients that have benefitted from their clientfocused construction approach.

Residential work has also formed a large part of the Tri-Star portfolio in recent years and will continue to do so in future plans.

“What is really contributing to our success is the residential market, where we are known for our excellence,” details Maartens. “A few years ago, we decided to also focus on affordable and low cost housing.

That has paid off greatly for us. It

TRI-STAR CONSTRUCTION

is now a department within our company that is very strong and is contributing to our success. We are doing a lot of affordable, low-cost housing projects for companies that function alongside the government to build new megacities. There is a big housing shortage in South Africa and that means we are doing a lot of low-income, entry-level housing. It’s a space that we have focussed on in the last few years and it is now a big part of our business.”

He highlights affordable housing projects in Diepsloot, luxury apartment blocks in Bedford View, and student accommodation in Brooklyn, Pretoria as recent successes.

“We are working on a multiple developments for Valumax which currently comprises of close to 4000 units. We have delivered various

projects with them and are very proud to be associated with Valumax.

We continually strive to be their contractor of choice. The continuity of this work has enabled us to become extremely efficient at producing good quality products in very ambitious project time lines. Our affordable housing division is currently delivering up to 3000 units per annum and we believe this market will be sustainable into the future.

“The Infinite Luxury apartment block is a 15-storey building that we have just handed over and is now complete. Oak Tree Village we just handed over last month. It was a project we were involved with as a turn-key contractor which included Development Management as well as construction. The Destiny Hotel we are looking to complete by the

end of the year. We topped out on the structure and we are getting into the finishing phases. Another we have recently completed is two high-rise student accommodation blocks in Pretoria called Apartments on William.”

On the commercial side, Tri-Star will soon begin work on construction of a new hospital close to Soweto, demonstrating its ability to handle multiple large contracts at one time.

“It’s a 200-bed hospital in Protea Glen, where we will probably start earthworks in the next few weeks. Because we don’t have the pressure on us that some other companies do, we have been able to go out and secure commercial work alongside our residential work and that is very fortunate in the current market,” says Maartens.

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// WE KNOW THE MARKET WE ARE IN, BUT WE ARE IN AN EXCITING PLACE AS A BUSINESS. WE FIND OURSELVES DOING WELL BUT WE REMAIN CAUTIOUSLY OPTIMISTIC //

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MIRACLE TRI-STAR? Latest GDP figures from Stats SA have been underwhelming. In fact, after all the positivity injected by President Ramaphosa and his investment drive, the announcement of a 3.2% slowdown in the first quarter of the year was sobering to say the least. If the country’s construction companies thought that times might be getting easier, these figures hit home hard. So how is it that Tri-Star has continued to perform so well? What is different about this 40-year old industry veteran? According to Maartens, it’s all about culture and good old humble hard work.

“We have a nine-member management Exco committee that runs the business. We don’t have a single MD; we have a round table management style, and all of the members are actively managing company operations and are involved in the day-to-day running of the business. We certainly have a hands-on management style in the business. There is an open-door policy and the people on the ground are very close to the management that runs the company. We like to keep that company culture and we feel it contributes greatly to our success because our management is involved. Our clients and can feel it and see it and that gives them confidence,” he says.

Having moved into a new HQ south of Pretoria, developed and built by its own company last year, Tri-Star is a member of several trade associations, helping the company to maintain extremely high standards. Affiliations include the CIDB (Construction Industry Development Board), NHBRC (National Home Builders Registration Council), SACPCMP (The South African Council for the Project and Construction Management Professions), GBCSA (Green Building Council of South Africa), SAEMA (South African Engineering and

TRI-STAR CONSTRUCTION

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Mechanical Association) and SAARDA (South African Affordable Residential Developers Association) among others. The result is a growing business but one which constantly has its finger on the pulse of the industry.

However, at the end of the final quarter of 2018, the construction industry saw turnover decrease by 8.6% and total capital expenditure on property, plant and equipment dropped by 14.1% compared to the end of Q3. Typically, Tri-Star Construction remains upbeat.

“We are very aware that it is strange for us to be optimistic,” admits Maartens. “We know the market we are in, but we are in an exciting place as a business. We find ourselves doing well but we remain cautiously optimistic.

Growing at this stage might not make sense at this point but we do have to

plan for the future as we are going to be expected to take up work. It’s a great position to be in but we will do so cautiously so we don’t grow and then hit the wall.”

In May, some positivity emerged in the market when research business, Fitch, published expectations of an upturn in African construction activity. For South Africa specifically, positivity comes through government promises to inject R855 billion in infrastructure spend over the next three years. This prompted Stats SA to announce expectations that the construction sector should grow by 2.3% in Q2 2019.

For Tri-Star this is just an added bonus on top of what is already an encouraging time.

If economic uptick occurs, if government infrastructure spending is

pushed through, if business sentiment improves, and if Tri-Star can continue to delight clients by delivering highquality projects, then Tri-Star will become one of the country’s go to construction organisations, leveraging off what is already a very robust base.

Is this the ethical and reliable construction company that the country has been looking for? Based on performance over the past four decades, absolutely.

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