Enterprise Africa July 2017

AFRICA

THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS

July 2017

www.enterprise-africa.net

FINSCH DIAMOND MINE:

50 Years &

50 Million Carats

ALSO IN THIS ISSUE:

VDMMA / Wirquin SA / Pienaar Bros / Cavmont Bank

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 Aaron Chapman PROJECT MANAGER aaron@enterprise-africa.co.za Emma Smith FINANCE MANAGER finance@enterprise-africa.co.za Harvey Tarlton SENIOR DESIGNER harvey@enterprise-africa.co.za

Logo One

Published by CMB Multimedia Chris Bolderstone – General Manager Logo Two E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU

Welcome to our latest edition…

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July’s Enterprise Africa is about milestones; celebrating companies that have reached significant markers in their history thanks to an ongoing focus on quality and a steadfast commitment to ambitious expansion plans.

First up, it’s Petra Diamonds and the Finsch Diamond Mine. 2017 marks the 50th anniversary of the start of production on site in Lime Acres in the Northern Cape so we talk to present-day General Manager Luctor Roode to understand more about how this world-famous diamond producer will continue into the future.

Pienaar Bros has been supplying PPE to industry in South Africa for 30 years from its base in Johannesburg. Taking advantage of digital tools, the company hopes to increase its market share and product offering by taking its vast range online, alongside physical expansion in other African nations.

In Zambia, Cavmont Bank is celebrating 25 years of successful operations and is soon to open six new branches that will complement its existing network. A quarter-century on from its founding, Cavmont is establishing itself as a world-class bank and will continue to delight its customers with high-quality products and service.

115 years after entering the South African market, global fuel giant, Shell, is continuing to develop its service station network by adding Vida e Caffe to selected locations. This is allowing the country’s drivers to fuel their cars and their bodies at the same time.

We also hear stories from VDMMA who have operated successfully in SA for 26 years, Carara Agro Processing who have been farming in the Eastern Cape for 13 years, Wirquin who have been delivering industry leading products in SA for 13 years, and Atlantis Foundries who have called the small town of Atlantis in the Western Cape home for the past 38 years.

How long has your business been active in South Africa and Africa? It’s well-documented that longevity is one of the most difficult things to achieve in the business world; share your secret with us and let’s encourage more businesses to make it to the five, 10 and 25-year mark.

We are online at: @EnterpriseAfri1

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

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

82/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/FINSCH DIAMOND MINE: 50 Years, 50 Million Carats And Counting 100 years ago, the Fourth General Conference on Weights and Measures adopted the Metric Carat as the official measurement for gemstone weights. 50 years ago, production started at South Africa’s Finsch Diamond Mine. Today, Finsch has produced almost 50 million carats, and with a new mine plan set to extend the life of the mine until at least 2030, it looks like there’s a lot more to come from this shining example of the SA mining industry.

8/ 4 / www.enterprise-africa.net

CONTENTS

42/

58/

70/

INDUSTRY FOCUS: MINING

INDUSTRY FOCUS: AGRICULTURE

22/PIENAAR BROS: 30 Years of Protecting SA

58/CARARA AGRO PROCESSING: ‘Absolutely Unbelievable’ Six Months For Carara Agro Processing

INDUSTRY FOCUS: AUTOMOTIVE 28/SHELL: Quality Retail Offering to Grow Across Shell Fuel Network 36/ATLANTIS FOUNDRIES: Atlantis Foundries Forging New Opportunities

INDUSTRY FOCUS: FINANCE 42/CAVMONT BANK: 25 Years and Counting for Zambia’s Cavmont Bank

INDUSTRY FOCUS: CHEMICAL 52/CHET CHEMICALS: Household Giants eye African Expansion

INDUSTRY FOCUS: MANUFACTURING 64/WIRQUIN: France’s Wirquin to Expand Further in South Africa

INDUSTRY FOCUS: ARCITECTURE 70/VDMMA: VDMMA Drives Transformation of Silo District

INDUSTRY FOCUS: TEXTILES 78/B&M GARMENTS: B&M Garments Remains Stitched in Fabric of Botswana www.enterprise-africa.net / 5

NEWS IN BRIEF ESKOM BRINGS IN DLADLA The Eskom Board has announced the appointment of Mr Johnny Dladla as acting Group Chief Executive with immediate effect.

This follows intense consultations between the Minister and Eskom Board to arrive at a prudent choice.

Both parties are of firm belief that Dladla’s experience and expertise will stabilize Eskom in the short-term.

“Dladla has sufficient skills to excel in this role. He has 22 years of experience within the Eskom, 17 years invested in various nonregulated businesses and 5 years as Chief Executive Officer for Eskom Enterprises and its subsidiaries,” said Acting Board Chairman, Zethembe Khoza.

“Dladla is a seasoned business leader with impeccable credentials.

His business acumen, which includes his commendable knowledge of Eskom intricacies, will come in handy in his new role. As Board, we are looking forward to working with him and his executive team to address the current challenges,” said Khoza.

Throughout these roles, he has demonstrated sterling leadership which manifested itself in his turnaround strategies, Khoza added.

Gauteng creates over 700,000 new jobs

6 / www.enterprise-africa.net

SA hotel industry poised for growth The hotel industry in South Africa is poised for growth, says Tourism Deputy Minister Elizabeth Thabethe.

Speaking at the Hotel Show held in Johannesburg last month, Thabethe said according to the 2016 hospitality report by PwC, the number of available hotel rooms will rise at a 0.8% compound annual rate to 63,700 in 2020, from 61,100 in 2015.

The report projects that bed-night stays will increase at a 1.9% compound annual rate to 14.6 million in 2020, from 13.3 million in 2015.

Overall hotel room revenue is expected to expand at a 7.8% compound annual rate to R20.6 billion in 2020, from R14.2 billion in 2015.

She said South Africa now has 118,869 star graded rooms across approximately 5354 accommodation establishments, including hotels, lodges and B&Bs. “The growth in overseas arrivals, the increase in the number of star-graded establishments, and the range of accommodation options on offer indicates that our destination is perfectly suited to meet the needs and budgets of our visitors.

“We are confident that there is potential for even further growth in tourism in our country,” she said.

“African destinations offer the world exceptional, unfiltered, life-inspiring authentic experiences. From our history and heritage to the wildlife and natural beauty – Africa never fails to create a lasting impression on travellers from across the globe,” she added.

The Department of Tourism is training and upskilling people in the industry to deliver on this promise, across all touch points of the consumer journey.

“Government and industry must continue to work together to make the tourism sector a leading example of radical economic transformation,” Thabethe said.

The Gauteng economy created 700,000 new jobs between 2010 and 2016 despite challenges in the economy, says Gauteng MEC for Economic Development, Lebogang Maile.

Delivering his Budget Vote last month in the Gauteng Legislature, Maile said the Gauteng economy has remained relatively resilient and has recorded the largest net gain in new jobs since the 2008 global financial crisis.

“In fact, since we came into office as the fifth administration in 2014 bi-annual employment has reached 317,000, breaking the ceiling of 300,000.

“Our provincial economy also succeeded in attracting investment, despite the seemingly unfavourable investment climate,” he said.

Maile said between 2014 and 2016 the province attracted R66 billion worth of foreign direct investment inflows, with the Gauteng Growth and Development Agency putting in a great effort to make Gauteng a desired investment destination.

In addition, 2732 businesses were assisted to access regulatory departments and entities through the Gauteng Investment Centre (GIC).

NEWS ROUNDUP

Deputy President receives Lifetime Award for Leadership

National dam levels continue to decline

Deputy President Cyril Ramaphosa has been presented with a Lifetime Award for Leadership by the Regenesys Business School.

The Lifetime Award for Leadership ceremony held at Regenesys Campus in Sandton, Johannesburg, last month, recognised businessmen and women who have excelled in business management and leadership.

In his acceptance speech, Deputy President Ramaphosa said to receive this type of award was both humbling and frightening.

“At 65 years old in November, I still feel like I have not yet even lived my life, and now to receive this Lifetime Award is a bit frightening, but I receive it with great humility and thank you for the honour that bestowed on me.”

He said the award belongs to many other people and to the people of South Africa.

“South Africa is a country that has given birth to many great leaders, people who have earned the respect and admiration not only of their fellow country people, but of many others around the world.

“We have learnt from the lives of those people that leaders are not born. They are made. They are moulded by circumstance, influenced by their elders, shaped by their peers, formed by the organisations they join and seasoned by the struggles they undertake. No leader stands alone.”

The Department of Water and Sanitation urged the public to use water wisely as national dam levels continue to decline, as the winter season is in full swing.

According to the assessment conducted by the department last month, dam levels are currently sitting on an average of 71.6%, compared with 71.9% the previous week.

Last year, at the same time, national water storage was at 53.8.2%.

“There has been a falloff in average dam levels in all provinces. The Algoa system, which consists of five dams serving Nelson Mandela Bay is at 35.7% this week, compared with 36.4% last week, which is a decrease of 0.7%.

“The Amatola system, entailing six dams serving Buffalo City, saw a decrease of 0.9% in the previous week. It was reported at 67.9% last week and is currently sitting at 67.1% this week,” the department reported in June.

The Cape Town Dams system, serving mainly the City of Cape Town, was sitting at 22.7%.

However, the department warned that the city is still a long way off from breaking this ongoing drought.

Dam systems across the rest of the country remain stressed. “Water restrictions will remain in all the other provinces, with the exception of Gauteng. Residents are urged to continue using water sparingly,” the department said.

SA’s current account deficit widens

Following the announcement that the SA economy has officially slipped into technical recession in the first quarter of 2017, further bad news was delivered when the Reserve Bank announced that the country’s current account deficit has widened to 2.1% of Gross Domestic Product (GDP) in the first quarter of 2017.

“The deficit on the current account of the balance of payments widened from R76 billion in the final quarter of 2016 to R92 billion in the first quarter of 2017. As a ratio of GDP, the deficit widened somewhat from 1.7% to 2.1% over this period,”said the central bank.

South Africa’s trade surplus was sustained for a second consecutive quarter, widening marginally from R56 billion in the fourth quarter of 2016 to R57 billion in the first quarter of 2017.

However, Nedbank economists expect the domestic economy to return to modest growth in the coming months, supported by the recoveries in agriculture, mining and manufacturing sectors.

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FINSCH DIAMOND MINE

50 Years, 50 Million Carats

And Counting PRODUCTION: Karl Pietersen

100 years ago, the Fourth General Conference on Weights and Measures adopted the Metric Carat as the official measurement for gemstone weights. 50 years ago, production started at South Africa’s Finsch Diamond Mine. Today, Finsch has produced almost 50 million carats, and with a new mine plan set to extend the life of the mine until at least 2030, it looks like there’s a lot more to come from this shining example of the SA mining industry.

© PETRA DIAMONDS

C

INDUSTRY FOCUS: MINING

//

Located in South Africa’s vast Northern Cape, around 160 km northwest of the mining town of Kimberley, the world-famous Finsch Diamond Mine sits celebrating 50 years of success.

Originally discovered by its namesakes, Allister Fincham and William Schwabel, in 1960 while prospecting for asbestos, the Finsch kimberlite pipe has become South Africa’s second largest diamond operation by production, after De Beers’ Venetia mine in Limpopo.

General Manager, Luctor Roode says that although this is a major milestone for the mine, it is mostly business as usual with little time for big celebrations.

“We might consider our annual achievers award function towards the end of the year as an opportunity to stop for a while and

celebrate this milestone.

“For a mine to reach this milestone is significant; you wouldn’t normally have a mine operate sustainably for this long.

We’re still going strong and hoping to see many more years added to the life of the mine.”

After starting up in 1967 as an open pit operation, the Finsch mine’s underground development began in 1978. The shaft was commissioned in 1982 and, since 1991, the whole operation moved

underground, mining beneath the open pit. After decades of development and consistent supply, the mine received a US $100 million investment in 2008 to upgrade its treatment plant before thenowners, De Beers Consolidated Mines, sold Finsch to London-based Petra Diamonds in 2011 in a deal worth US $200 million.

When Petra completed the purchase of Finsch, CEO Johan Dippenaar oozed excitement, saying: “This acquisition is a

//FOR A MINE TO REACH THIS MILESTONE IS SIGNIFICANT; YOU WOULDN’T NORMALLY HAVE A MINE OPERATE SUSTAINABLY FOR THIS LONG. WE’RE STILL GOING STRONG AND HOPING TO SEE MORE YEARS ADDED TO THE MINE//

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FINSCH DIAMOND MINE

landmark development for Petra and a further progression of our strategy to build one of the world’s leading independent diamond producers.”

Known throughout the industry for producing rich in gem-quality smaller diamonds, larger +50 carat stones, and a number of very rare fancy yellow diamonds, Finsch’s kimberlite orebody is expected to continue producing value for at least another quarter century and Petra is currently busy implementing a mine plan that will see the underground operation expanded significantly, lifting production from 1.6 million ROM (run-of-mine) carats per annum in FY 2016 to ca. two million ROM carats per annum by FY 2018.

“The depth of the pipe goes beyond the horizon which we have

opened thus far, so the life of mine can certainly extend further into the mining of Block 6,” says Roode.

In 2016, Finsch delivered 2.21 million carats (an increase of 7% on 2015 figures) and through its entire life, the mine has produced almost 50 million carats, making it one of the most significant diamond mines on earth.

The implementation of the current mine plan began five years ago and Roode tells Enterprise Africa that the ambitious project will be one of the most important in Finsch’s history, costing around

, Pretoria,

MINE PLAN “This mine has produced on average approximately two million carats per annum for the past few years but we have supplemented underground production with surface tailings operations, contributing approximately 300,000 to 400,000 carats per year,” he says.

“With surface resources being mostly depleted, we will ramp up underground production which come at a higher value per carats as opposed to tailings diamonds which

//WE STARTED COMMISSIONING THE SLC IN JULY 2016 AND WE ARE BUSY IN THE RAMP UP PHASE WITH TWO LEVELS ALREADY IN PRODUCTION//

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INDUSTRY FOCUS: MINING

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FINSCH DIAMOND MINE

have been through a recovery process already and which tend to be smaller, lower-value stones.”

To increase the life of Finsch, Petra Diamonds must dig deeper.

Over the past couple of years, most of the production was mined from the Block 4 block cave with the production level at 630 metres below surface. Block 4 is a mature cave with a high level of waste rock dilution. Just below Block 4 sits Block 5, expected to contain diamond reserves of 25.3 million carats at a grade of 58.6 cpht (carats per hundred tons). Mining in Block 5 will help extend the life of the mine to at least 2030. Petra plans to use the sub level cave (SLC) mining method over four levels in Block 5 from 700 mL to 780 mL before extending Block 5 to 900 mL from FY 2023-2030.

“Initially the 118-million-yearold volcanic pipe was mined as an open pit operation. This went on until September 1990, when this mining method was terminated, at which point the pit had a surface area of 55 ha and a depth of 423 m. From then onwards, the mine’s operations moved underground.

Two methods of underground mining are being used at Finsch today – block caving and sub level caving, in a mechanised and automated operation,” explains Roode.

“Historically, there were a number of studies to determine the best method to exploit the Block 5 resource. At the time when the transfer of ownership took place, a decision was made to opt for a SLC mining method which would not only give earlier access to the Block 5 ore body but also reduce the geotechnical risk associated with a block cave. The construction of the SLC also included the development and construction of a dedicated conveyor and crusher system for ore-handling to transfer SLC ore

to existing infrastructure at 650 m. Once the Block 4 has been fully mined, it will be decommissioned similar to upper historic levels.”

Essentially, block caving is a hard-rock mining method that destabilises an ore body, allowing it to gradually breakdown under its own weight, providing access to higher volumes of ore. With an SLC, tunnels (or drifts) up to 200 m long, are drilled and blasted through the ore body. Walls and roofs are reinforced with several support elements which include roof bolts, welded mesh, and sprayon concrete. Once the production drifts are ready, a set of holes, up to 34 m long, are drilled upwards through the orebody in a semicircular or fan-shaped pattern.

Each fan cut or ring blast consists of a set of fourteen to eighteen

drill holes, and each set is 2.0 m apart. In a 200 m long drift, about 100 fan cuts are drilled, with fan cut 100 closest to the haulage rim tunnel. The rings are then blasted and the liberated ore loaded by LHDs in a sequence from 1 to 100, and in sequence with adjacent and underlying or overlying levels. Ore is taken to tip points, where it is transferred through ore passes to jaw crusher, situated in the host rock close to the ore body. Large boulders of ore are either reduced in size using explosives, mechanical breakers or moved to a holding point for later secondary breaking.

The performance of the SLC is highly dependent on the extraction sequencing and the discipline in following the sequencing of the drill and blast process and, then, the draw control.

Congratulations Petra Diamonds Finsch Diamond Mine on your half-century milestone!

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INDUSTRY FOCUS: MINING

“SLC is suitable as you get access to the ore in a shorter period relative to block caving,” says Roode. “It is a more dynamic mining method than block caving, requiring drilling, charging, blasting and loading to happen in a coordinated and sequential manner on a number of levels at the same time. We started commissioning the SLC in July 2016 and are busy with the production ramp up phase with two levels already in production.”

In terms of technology, Finsch continues to install industry leading products and systems to ensure safety, efficiency and value. Of course, this means partnering with some of the world’s most prominent organisations.

“The SLC requires drilling of long holes and you need a sophisticated drilling machine to accurately drill the holes in a ring formation in a tunnel,” details Roode.

“We have partnered with some of the most sophisticated and reputable companies in the business including Sandvik, Atlas Copco, Aard and AEL. With mechanised tunnel development, TNC Mining, Jonrik, and Murray and Roberts were deployed to develop over 22 km of tunnel since the

inception of the project in 2011.”

Finsch is also currently busy implementing a MineRP Spatial System to aid in data analysis and to utilise information in the most effective way possible, creating an environment where quality decision making is easy and operational excellence is supported.

“I believe the MineRP system can be a LEAP change on how we operate and report in mining.

Integrating spatial and tabular data across disciplines will enhance the way we interact and manage at Finsch/Petra. Powerful and intelligent information will become available at your fingertips, wherever you are, and will forever change the way you plan, work and manage for the better,” says Roode.

© PETRA DIAMONDS

DIAMOND REPUTATION With the exciting developments underway at Finsch offering many opportunities for stakeholders to look forward, in the year of the mine’s 50th anniversary, some are also looking

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FINSCH DIAMOND MINE XXX

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backward, at the reputation that has been developed and how the mine has become known as a world leader.

“Finsch Mine has a very good reputation and we often have to fend off visitors from mines that are considering mechanisation, automation and sub-level caving. We still see ourselves as a mine that is at the forefront of technology in terms of mechanised mining,” says Roode.

The General Manager also explains that Finsch’s safety record is something which has been extremely closely guarded over the years, contributing hugely to the quality reputation, and this is something which will receive further attention in the future.

“Our safety record is extremely important to us, because a safe mine is a productive mine,” he says. “The complexity of mining has increased over time and especially during the development and construction phase, it has been a significant challenge to maintain the safety culture of the mine.

We will never rest with regards to safety and will always strive in achieving zero harm.”

FINSCH DIAMOND MINE XXX

© PETRA DIAMONDS

//

I was transferred to Finsch mine in 2007 in the capacity of Plant Manager, when Finsch was still a De Beers operation.

I later transitioned to the position of Production Manager.

When the mine was sold, I moved over to Petra Diamonds and was appointed as General Manager in September 2011. I’ve been in the mining industry for more than 20 years, starting my career in 1994 as a graduate trainee.”

GENERAL MANAGER

LUCTOR ROODE The mine has been lauded for its safety success, being accredited with ISO 14001:2004 and OHSAS 18001:2007 certificates, and it has picked up awards from the annual MineSAFE conference as well as the Northern Cape Mine Managers Association for safety excellence.

SPARKLING FUTURE Going forward, the outlook for Finsch is positive. The implementation of the mine plan has installed confidence within the operation. Roode puts this down to the investment from Petra that started in 2011.

“The transfer of ownership was a difficult period for the mine with significant skills losses and a high level of uncertainty. Once the transfer of ownership happened, we saw an immediate upliftment of energy and productivity levels, and a new lease of life,” he says.

“Sometimes, it’s not a bad thing for a mine to change ownership as the new owners have an appetite to secure the future of the operation and in many cases, bring new innovation and energy to a mature mine into which no significant capital investment was being made.

This was evident very soon after the transfer of ownership; it wasn’t long before the first drill rig arrived on site and we commenced with tunnel development, opening up access to the Block 5 resource,” he adds.

Globally, the appetite for diamonds remains; De Beers CEO Bruce Cleaver said in November last year that diamond jewellery consumption was not ‘in a bad place’ and that demand in the major markets (US, China, India, Japan) was ‘reasonable’. De Beers does expect global economic volatility to play a part in the industry through 2017/18,

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INDUSTRY FOCUS: MINING

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FINSCH DIAMOND MINE

© PETRA DIAMONDS

//WE STILL SEE OURSELVES AS A MINE THAT IS AT THE FOREFRONT OF TECHNOLOGY IN TERMS OF MECHANISED MINING AND WE HOPE TO LEAD TO THE INDUSTRY IN THIS SPACE// but the long-term looks positive with Cleaver stating that ‘millennials are very invested in the diamond dream and they regard diamond gifting as a very important part of their lives’ suggesting that opportunities will continue to develop.

With the SA economy facing its own set of unique challenges, such as downgrading by international credit agencies and entering technical recession, does Roode remain confident about the future?

“We are at a point now where a lot of the hard work is done.

We are in the process of ramping

up the project to full production and accessing fresh, undiluted and high-grade kimberlite. The improvements are already evident with run of mine grades increasing as the new ore source starts ramping up,” he concludes.

FINSCH DIAMOND MINE +27 11 702 6900 info@petradiamonds.com www.petradiamonds.com

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PIENAAR BROS

30 Years of

Protecting SA PRODUCTION: David Napier

After 30 years, Pienaar Bros continues to ‘bring safety to the workplace’ and, with a number of expansion and growth plans underway, its reach looks set to be extended further into Africa. Co-founder and Managing Director, Brian Pienaar tells us more…

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C

INDUSTRY FOCUS: SAFETY

//

With three decades of successful operations behind it, Gauteng-based Pienaar Bros continues to supply SA industry with first-class personal protective equipment while sharpening its focus on strategies for further growth locally and on the continent.

Starting life in Johannesburg in 1987, Pienaar Bros core focus has always been the distribution of PPE to a range of different customers spanning the mining, pharmaceutical, food, construction, automotive and engineering industries amongst many others.

Included in the company’s stable is protective gloves, eye ware and footwear; welding and disposable safety wear; respiratory protection products; cleaning products; safety signage, and much more. Pienaar Bros sources products from major global producers and also manufactures its own ranges at its factory in Johannesburg.

The history of the business goes back even further than the

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establishment of the firm in Jo’burg in ’87. “My late father started Pienaar Brothers in Cape Town in 1948 and then I came an opened up in Johannesburg,” remembers Managing Director, Brian Pienaar.

“We started with one branch and it grew to where we are now with 15 in South Africa – that’s just from Jo’burg and doesn’t include Cape Town – and others in neighbouring African nations, and we’ve got around 20 on-site supply stores at the large mines and industrial customers, with a total of 360 staff members.”

But today, the company has grown to a point where new expansion ideas are needed to take the business to the next level.

Undoubtedly a SA success story, the Pienaar Bros name is etched into the fabric of SA industry and Brian Pienaar is sure that success will continue in the future through three main strategies.

EXPANSION Firstly, Pienaar Bros is busy creating an online market place, increasing the company’s digital presence.

“We’re looking to drive demand and make it easy for our customers to access products. We want to give our customers the best service. We hope to build a platform where people can communicate with us without having to phone. We want them to be able to see the products they want in the catalogue or online, place an order, and have it delivered, hassle free,” explains Pienaar.

Secondly, because of the ever-increasing cost of exporting in Africa, the company is looking at bolstering its presence in Africa; in regions where economic growth is faster than SA; and in countries with industries that suit the product portfolio of Pienaar Bros. “We have branches in Botswana, in Gaborone and Francis Town, with around 20

people; and we have branches in Mozambique, in Maputo and Tete, also with about 20 people.

“We go in on the ground; we get premises and take the risk.

The next three countries we are looking at are Zambia, Madagascar and Namibia. There’s some big mines in these regions that are not being serviced effectively and so we see an opportunity. It helps the customer to control costs and run a better business. Mines must be profitable; that’s a critical component of the business set-up,” says Pienaar.

Finally, Pienaar states that the future could hold a monumental strategy decision for the business as he (as co-founder and MD) approaches the end of his working career. “We do have a succession plan, which might involve listing on a stock exchange, but we’re not there yet. I am heading towards the end of my career but we have a very strong management team and that is why we do well.”

Of course, expansion further into Africa is a logical step for Pienaar Bros. In the retail sector, the likes of Shoprite, Woolworths, Mr Price and MTN have all been successful on the continent (albeit through a number of challenges), and through fantastic relationships with international suppliers, Pienaar Bros has become the most recognisable name in the PPE distribution sector. Mining, construction, infrastructure development, engineering etc remain common on the continent and in most countries miners must be provided with, and must wear, safety caps or hats (along with other pieces of PPE) which are approved in the jurisdiction in which the mine operates.

“We hold probably R150 million of stock at any point,” Pienaar estimates. “We are the biggest distributors of 3M, DuPont, Uvex

PIENAAR BROS. IS AN AUTHORIZED DISTRIBUTOR OF

THE LARGEST MANUFACTURER OF SAFETY FOOTWEAR IN AFRICA

For enquiries on ordering safety footwear, visit www.pienaarbros.co.za or email enquiries@pienaarbros.co.za

INDUSTRY FOCUS: SAFETY

and Honeywell safety products in SA, and we are also big distributors of local brands including Johnson Workwear, Bova and Wayne. We are the sole distributors of Ansell products in SA. We are a large importer of safety spectacles, mainly the MAX range, and we import a lot of leather gloves from China. We also manufacture a lot of welding hats, face shields, safety caps, glove clips, bump caps, eyewear, goggles and other products all at our factory in Johannesburg.

“We have a fleet of around 50 vehicles so that we can ensure stock is

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in the right place at the right time and this is concern as the transport network in this country is not as sophisticated as elsewhere in the world,” he adds.

Manufacturing in South Africa is an important element of the Pienaar Bros business and allows the company to stay constantly connected to the industries it services. Also, the country’s needs are unique and by constantly communicating with customers and suppliers, Pienaar Bros is able to produce goods of the finest quality.

“In our field, in terms of distribution to the end-user, we are

certainly the market leader by a long way.

“South Africa has a large PPE manufacturing industry which employs probably around 150,000 people from workwear to disposable respirators to gloves. There’s a reasonable duty on workwear so it makes sense to make it here. We service many different industries but mainly mining, pharmaceuticals and heavy industry,” says Pienaar.

INDUSTRY LEADERS Pienaar Bros has not become a true industry leader by allowing

PIENAAR BROS

uncontrollable factors to influence its strategy and direction. The company has come through social, political and economic change and remains focussed on its core values of achieving the best service in the industry, with quality products that are cost effective and readily available. But the company doesn’t allow important business hurdles to pass it by; it keeps its fingers on the pulse and recognises that you must be able to adapt quickly to navigate difficult business environments and this is exactly what has been done over the years. Despite SA’s current economic slump, Pienaar is confident that the company, and country, has a bright future.

“In the short-term we do have problems but for the long-term we are very bullish,” he says. “We think that SA is probably one of the best

places in the world to invest. We have a very strong private sector in SA and we combine that with inefficient government policies and that is where our short-term problems come from but we believe the country, and the continent, can do exceptionally well.”

According to Fitch Group research arm BMI, the global mining industry’s value and production growth outlook for 2017 will gradually improve over the course of the year as metal prices are likely to trend higher, and despite recent hiccups, the SA economy is predicted to upturn in 2017. For Pienaar Bros, a business which is well-run and sitting on a robust platform, there is optimism.

“We have a strong head office, a strong HR department and strong managers on site in our branches.

“We certainly believe that the right people are out there. There’s nothing wrong with the people on the ground; they might need some training initially but we do have a reasonable labour force.

“We’re looking at growing on the continent, opening new branches, bringing in new products and a whole range of exciting growth activities,” Pienaar concludes.

PIENAAR BROS +27 11 824 2384 enquiries@pienaarbros.co.za www.pienaarbros.co.za

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SHELL SOUTH AFRICA

Quality Retail Offering to Grow

Across Shell Fuel Network PRODUCTION: Manelesi Dumasi

‘We put the service back into service-station, ensuring you always leave us a little happier than when you arrived’ is the message from Shell South Africa, and by building partnerships with some of the country’s most recognisable brands to deliver quality across its network, this message has a sound framework to support it.

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BUSINESS PROFILE INDUSTRY FOCUS: AUTOMOTIVE

SHELL SOUTH AFRICA

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At the start of July, the Department of Energy (DoE) announced that prices at the petrol pumps would fall; a welcome reprieve for motorists around the country. A decrease of 68-69 cents on 95 ULP and LRP, and 93 Octane, ULP and LRP sees customers paying R12.86 per litre.

This is the second consecutive month that prices have fallen.

Prices of Diesel (0.05% sulphur), 0.005% sulphur and illuminating paraffin have also fallen with the DoE citing global oil prices as the driver behind the decrease.

“The prices of petroleum products decreased, on average, in the international markets in line with the lower crude oil prices.

Oil Prices have reached their lowest point for the year as light sweet crude supplies particularly from the United States as well as Libya and Nigeria (unbound by the Organisation of Petroleum Exporting Countries (OPEC) cut agreement) continue to rise,” said the department.

But lower prices don’t mean an influx of customers for the country’s fuel retailers. Unlike other industries, fuel pricing is highly elastic in South Africa thanks to a tightly regulated market, so attracting customers remains tricky, despite the fact that they will pay slightly less for certain fuel products.

So how do the country’s petrol retailers attract drivers? What makes a commuter or traveller pull in to refuel? What differentiates one service station from the next?

This is the challenge faced by fuel companies across the country, and one of the world’s biggest, Shell, has positioned itself at the front of the industry by partnering with other brands to offer its customers more than just a ’fuel and go’ offering.

Back in 2013, Shell started

a relationship with Vida e Caffe, South Africa’s premier coffee retailer, to bring the Cape Townbased company’s European espresso bar culture to the Shell fuelling network.

The development of this relationship was driven by changing demographics and changing demands from a rapidly changing consumer base. Shell’s Head of Retail Marketing, Yaasier Abrahams told Enterprise Africa last year: “People’s lifestyles have evolved and consumers are looking for much more than just fuel when visiting a service station.”

He said that the reputation and brand-strength of Vida e Caffe, combined with the nationwide reach of Shell had resulted in ‘absolutely phenomenal feedback’ and the roll out of Vida stores at Shell service stations quickly reached more than 100 sites.

To help further enhance the customer offering, Shell and Vida worked together to develop a new brand, Torrador. A secondary brand of Vida e Caffe, Torrador offers the traditional Vida product range but allows for tailoring of services depending on location, especially with food.

In January 2016, Vida opened its 100th store in the Shell network at Dorp Street in Stellenbosch, demonstrating the country-wide demand for the idea, and today Vida covers a total of 150 Shell outlets.

The partnership has had the desired effect with Abrahams claiming that turnover and basket size in Shell convenience stores has increased since the launch. “Where we’ve put in coffee shops, we’ve seen the basket size in the store increase and we’re also seeing an uplift in fuel volumes because we’re attracting more consumers from the forecourt into the stores,” he said last year.

With the market heavily regulated, attracting customers through fuel price is not an option and so pushing quality products and quality relationships are critical parts of the offer. Shell has taken a long-term view on this strategy and over the years has partnered with a number of leading SA brands including Steers, Pharmashop 24, Clicks, Discovery Insure, Spar, KFC, Vida e Caffe, and more. These partnerships twinned with industry-leading fuel and lubricant products make for a brand with serious clout.

Abrahams explains that today, the Shell brand is highly-regarded among South Africans and the global organisation realises the potential of the SA market.

“From a brand recognition perspective, we do a global customer tracker on a quarterly basis that we have completed that for the past 15-20 years. Our internal brand metrics show us we are tracking very favourably in terms of brand preference as well as premium fuels perception and we’re currently sitting at an all-time high. From an external perspective, our local Sunday Times does a ‘Top Brands’ survey every year and in 2014, the Shell brand was sitting at fourth in the market behind Engen who is the largest player in the market. Last year, we shifted from fourth to second so we see that strategies and activities are being well-received.

“We are part of the growth segment within the Group and we will be seeing a lot more investment as we continue to grow and deliver value. We have a growing population where 50% is considered youth with long term GDP forecasts looking positive, as the middle class starts to grow and more people within the economy become upwardly mobile and have access to vehicles and have greater

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INDUSTRY FOCUS: AUTOMOTIVE

discretionary spend. We think it bodes well for the future of this country. We have a population of 55 million and yes, income inequality is still high, but the trajectory is very positive for us and the group recognises that.

“A good enabler for our growth not necessarily present in other markets is our service champions who are able to upsell products and build one-on-one relationships with customers,” he says.

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INNOVATING THE RETAIL SPACE Regarding the popular Shell-Vida e Caffe partnership, the success remains absolute. “We have around 620 service stations and 150 now have Vida full barista-served coffee,” says Abrahams. “We’ve had an aggressive roll out this year,” he adds. “It’s been going really well especially considering the tough economy that we’re faced with. Our local consumers love having our Vida staff making coffee for them

amidst the humdrum of their daily journeys.”

Adding to the offering for customers at Shell, Discovery Insure and Clicks have also come on board as fuel rewards partners, contributing loyalty rewards for members who refuel at Shell service stations. In November, Discovery Vitality - which already had a long-standing relationship with Vida e Caffe – began offering Vitality Active Rewards.

INDUSTRY FOCUS: AUTOMOTIVE

SHELL SOUTH AFRICA

“It’s been very successful,” admits Abrahams. “Together with our partners we have provided our customers with convenient offers whatever their mission, and rewarded them for their patronage and behaviour in terms of our fuel rewards partners.”

He highlights once more the importance of a successful retail offering in driving consumer demand and ensuring market share retention. Clearly, partnerships are vital to Shell’s strategy.

“Because margins are regulated, the non-fuel retailing space is incredibly important to us and our retailers.

“It’s an exciting time for us.

As consumers wants and needs have changed, and as technology has shifted, it’s opened up so many opportunities for Shell.

The opportunity to engage with customers across new platforms, such as social media, is allowing us to engage and converse with customers rather than just talking at them, and that is really rich for us.”

When Shell entered the South African market 115 years ago, the focus was simply the sale of paraffin and kerosene.

Today, arriving at a Shell service station, a consumer is greeted by a selection of world-class petroleum products, an industry leading retail operation, and much-desired services from carefully selected partners. “We’ve partnered with Clicks across their loyalty programme and we’ve seen phenomenal results where, in a market where fuel demand is declining because of the broader macro economy, to offer customers value with our partners has helped us defend and grow our fuel volumes and grow our other offers,” explains Abrahams.

“We also have expanded our footprint of Quick Service

Restaurants and we have more than 100 at our forecourts, catering to the growing demand for food across the network.”

FUELLING THE FUTURE Despite a flagging economic situation and a general feeling of uncertainty surrounding the country’s short-term future, Abrahams remains positive and says that Shell is committed to the SA market with further investment to come.

“We’re one of the first markets globally to be launching the new positioning for Shell V Power building on our technical heritage that we’ve built with Ferrari over the years as well as the recent endorsement of our V-Power fuels by BMW M,” he says.

“In the loyalty space, there’s a lot of development happening and this is an area where we have seen good growth. We have already introduced contactless payment for fuel at the pump across the network to facilitate faster and easier payments for our customers and we’ve seen some adoption. We’re also continuously looking to improve and evolve our Convenience Retail Offers as consumers wants, needs and expectations change.

“Both globally and locally food is increasingly important; people want fresh, they want healthy, they want the food-for-now and foodfor-later opportunities, and they want nutritional value so there are good growth opportunities to explore as the market evolves.

From a partnership perspective, we started piloting with Spar as a grocery alliance partner and we will be looking to expand with Spar going forward. We had three Spar pilots within the network as of last year and by the end of this year we’ll have 10 and we’ll also be looking to scale that up at selected

locations where the customer mission warrants over the next few years.”

And has Abrahams personal experience of the development of Shell South Africa’s retail offering been something that he is proud of and looking forward to continuing?

“You get this sort of opportunity once in a lifetime,” he says. “Where you are able to invest and build CVPs (customer value propositions) for your market, this is the stuff that allows you to leave a legacy for the next generation. It’s very exciting,” he adds.

“It’s important for the SA population as Shell through our retailers employ almost 20,000 forecourt staff and that is a significant contributor to an economy where you have 27% unemployment. We want to make a positive difference for our people but also for consumers in today’s challenging times. If we can make their journeys a little better every day, that is a good purpose to get up for,” he concludes.

The claim from Shell that to ‘Go Well’ you should ‘Go Shell’ and that certainly seems to be true, and looks like it will only be getting stronger in the future.

SHELL SOUTH AFRICA +27 11 996 7000 info@southafrica.shell.com southafrica.shell.com

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ATLANTIS FOUNDRIES

Atlantis Foundries Forging

New Opportunities PRODUCTION: David Napier

After a challenging year in 2016 as a result of the decline of the Class 8 Market in the US, Western Cape-based Atlantis Foundries, global leader in supply of heavyduty engine blocks, is looking forward to a prosperous future with a number of investments and opportunities bubbling in the pipeline.

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The ability to search out, capture and make the most of new opportunities is vital for business development, and when the market is tough, the economy is slow and the future is uncertain, this hunt for new prospects is more important than ever.

This is the situation for Atlantis Foundries; sold two years ago by Daimler to German foundry group, Neue-Halberg-Guss (NHG), the company is reviewing all of its business and hoping to forge new opportunities in new markets with new products, while continuing

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to offer first-class service to its existing clients all over the world.

Atlantis Foundries is based in the town of Atlantis in the Western Cape. It’s around 50 km from Cape Town Port and 55 km from Cape Town Airport so strongly located logistically. It’s core business is the production of cylinder blocks for heavy-duty cars and trucks, with the ability to produce other cast automotive components.

Formed 38 years ago, in 1979 by the SA government, the company has endured through social, societal, political, economic and technological change. 99% of its

produce is currently exported but, according to Chief Commercial Office Sally Redshaw, this could be about to change as Atlantis searches for opportunities closer to home to complement its existing export portfolio.

“Working with SA OEMs is absolutely something we’re looking at,” she says. “We’re focussing heavily on marketing, both locally and at group level. Because we were owned by Daimler for many years – their focus being Daimler products – they cancelled contracts with other customers with whom we had longstanding relationships so we’re

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INDUSTRY FOCUS: AUTOMOTIVE

actively trying to win those back and win new business.

“We recently participated in our first NAACAM (National Association of Automotive Component and Allied Manufacturers of South Africa) exhibition in Durban and it really exceeded our expectations.

The timing was perfect because it was part of a localisation indaba where Minister of Trade and Industry, Dr Rob Davies, announced that in order to qualify for the 2020 replacement of the current APDP (Automotive Production and Development Programme) incentive scheme, which is crucial for our competitiveness, they are looking for 60% local content for OEMs. That means that we have a much bigger opportunity to enter the local market than ever before and one of the easiest ways to localise is for the OEM’s to look at the engine build. Atlantis Foundries also offers the OEM’s the same (if not better) quality and standards that can be expected in other parts of the world and a competitive price.

The only drawback is that we are predominantly heavy-duty and we, at this stage, cannot yet produce aluminium engine blocks for passenger cars on a large scale.”

Opening up this new market would require investment into new facilities but would offer Atlantis access to a potentially major market with a first-mover competitive advantage.

“We are looking towards producing in lighter material because we see an opportunity in the local market, and an entry to expand into passenger car components – especially with the drive for localisation within SA,” says Redshaw. “Locally, there are no companies that supply engine block castings within SA and so we are looking at investment opportunities surrounding the feasibility of installing an aluminium line.”

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With a number of major global passenger and commercial players active in the manufacture of vehicles, including automotive super-powers such as BMW, VW, Ford and Toyota, South Africa produced around 600,000 vehicles in 2016; clearly an attractive market for a business like Atlantis Foundries.

PRODUCTION LINE INVESTMENT Since Daimler took control of the Atlantis business in 1999, the company went through an exponential growth period, increasing casting production from 30,000 to 69,000 net tonnes per year. Today, its reputation for quality is international. But to ensure the company remains at the peak of the industry, a strategy of continuous and ongoing improvement has been adopted.

But this is not easy for a foundry business; it’s not as simple as a software upgrade or a new machine, as Redshaw explains.

“Foundry technology is old and established, and involves very complicated processes.

There simply aren’t the same technological advancements as there are in other industries,” she says. “For improvement, we have to look internally to focus on standardisation, optimisation of layout, continuous maintenance and preventative maintenance. In terms of capacity, it’s difficult to increase in small increments in the foundry business, it’s generally a very large jump. You get to the point where you have to make a huge investment and go for a whole new mould line, new furnaces etc to get to the next level, and for that type of investment we need firm Customer Orders and commitment.

“What we try to do is make processes more efficient so that we can get more output with the same or less input. In terms of

automation, we’ve not focused robotics to reduce labour costs as the payback has been 3-5 years.

Historically, we only invested in robotics for safety, quality, or if it is impossible for a human to perform the task. However, that is changing; we are in a high inflationary country, labour rates are increasing 8-10% each year and the cost of automation is constantly reducing.

“We’re looking at it stage-bystage. We have one large robot for core dipping, we have a core drilling robot which we installed earlier this year, and we have plans for other, medium-sized robots. We’re not looking at going fully automated, that’s not easy in foundry, but we do have a lot of plans that are being discussed. The rate of installation will be dictated by our natural labour attrition.”

Any investment that can help improve efficiencies and processes will be welcomed by the company’s widespread customer base, and its 851 permanent employees. Locally, the Atlantis Foundries directorship formulates strategy and consults with NHG for large-scale expansion tactics.

“Our decision making is done locally,” explains Redshaw. “We are a separate entity although part of the group. We know that you can’t just apply the same things that work in Germany over here and that’s something we’ve learnt being part of Daimler. Only significant investment that needs approval go through the parent company.

We devise the strategies, goals and targets here in Atlantis. Of course, we do keep in mind the overall objectives and strategy of the group.”

FEELING THE HEAT? While the opportunities for Atlantis Foundries’ expansion may be great, there are some hurdles which first need to be cleared; or at least fully-

ATLANTIS FOUNDRIES

understood – you cannot expand your production line or market to new segments if the ROI is not worthy.

The major challenge faced by the company is the weak economic performance of the country. After entering recession in 2008 and rebounding in 2012, the country is once again only growing at marginal rates (approx. 0.6%) and this is worrying for those trying to expand. Of course, this situation is exacerbated by uncertainty in the global economic climate.

“Last year was difficult for us,” admits Redshaw. “There was a significant decrease in the market in the US, which dipped by almost 40%, and so we had problems at the end of the year and were forced to restructure slightly. We didn’t expect any turnaround in the volumes short-term, and that has been the case.”

She says that there is no indication that political influence has had any impact on demand from the US but politics could play a role, that the company will have to monitor, in the future.

“We are now getting indications that the market in the US is picking up again but there’s concerns for us about trade agreements, specifically with the US. 60% of our product does go to the US and under AGOA they are able to claim GSP on import tax making it interesting for them to buy from SA. We’re not sure about the future of that arrangement and that concerns us.

“Locally, the fluctuating currency price causes us problems as it disturbs pricing strategies with OEMs and there are pieces of industrial equipment and resources that we simply cannot source in SA and with a weak Rand they cost us more. The downgrading of credit status also concerns us.

“We have heard predictions that an upturn is coming and we

will soon get back to around 3% but right now we don’t know.”

If the company’s potential expansion into the passenger car industry materialises soon, this could provide a needed boost.

“In the heavy-duty industry there’s a cycle, and that’s the same for passenger cars. For heavyduty, we are currently in a down period and we could be producing a lot more but the demand simply isn’t there. With passenger cars, it follows a similar but shorter cycle and we don’t see a major problem right now; Toyota, Ford, Nissan, VW, Mercedes-Benz and now BAIC are all heavily investing and there’s a lot of interest from the OEMs,” explains Redshaw.

Away from economic concerns, Atlantis Foundries is also having to carefully consider its approach

to input costs. One of the key elements in its supply mix is steel and that industry in its own right is under increasing pressure in SA. “We need a good quality, reliable supply of steel scrap at a competitive price; it’s one of our biggest inputs into the product and it’s challenging. Many customers don’t appreciate that steel prices in SA are not aligned with general indices. In Europe for example, you can buy steel scrap at indices prices but it doesn’t work that way here,” says Redshaw.

“It’s a serious challenge. We’re competing against traders who are buying for the export market and that’s a challenge for a lot of people in the steel and foundry industries.

Also, where we are located in the Western Cape, there’s not a lot of industry so we can’t get material

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INDUSTRY FOCUS: AUTOMOTIVE

locally and that means we incur logistics costs.

“We’ve looked into importing steel and we’ve been approached by companies from China, India and Brazil trying to sell to us but the delivery time is long, quality is never guaranteed and the logistics

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costs are high so at the moment it doesn’t make sense,” she adds.

ISO 14001 CERTIFIED Another significant challenge facing Atlantis is the business worlds ever-increasing focus on environmentally friendly practise.

Companies are continuously put under pressure to reduce their impact on the environment and improve their carbon footprint.

But this is not something that Atlantis views as a challenge and the company embraces the move towards energy and environmental

ATLANTIS FOUNDRIES

efficiency as an opportunity.

“Being a responsible corporate citizen, it is a welcome concern for us. Right now, we’re facing serious water shortages in the Western Cape and in the past we’ve had loadshedding so we’re aware that effective management of resources is vital.

We have recently received our ISO 14001 certification so we do have an environmental management system within the company that pushes us to be much more conscious and aware while looking for more energy efficient methods and processes.

“We’re working on a sand reclamation programme as sand is a major input into our process. We’re looking at sand separation so we can use old sand from used moulds again and not dump it. We’ve replaced the lighting across our facilities with LEDs, we’re looking at putting solar panels across our site and we’re looking at boreholes and water re-usage programmes to ensure we remain focussed on resource and environmental efficiency, and this obviously has a positive impact on costs” says Redshaw.

CASTING THE RIGHT PEOPLE The next big obstacle for the Atlantis to conquer is that of skills.

Recruitment and development is an extremely challenging area for the company, with the oftenmentioned ‘skills gap’ coming into play but in the foundry industry, this is intensified by the fact that skills development cannot be fasttracked.

“It’s very difficult to find artisans with relevant industry experience,” details Redshaw. “The foundry industry is not a huge industry, especially in SA. There’s only a few major key players from across the globe and foundry is not something you can learn from a book; it takes a lot of years to learn the different permutations.

“We have to take on artisans with a basic skill level and knowledge and invest a lot of time, effort and money training them over a long period of time. We do have a very low attrition rate; we have a number of people who have been with us for more than 25 years and we have to plan for the future.”

To combat this problem, Atlantis Foundries looks to education for a solution.

“We have a heavy focus on CSR. Our local community is vital for us; approximately 90% of our workforce comes from Atlantis so we have a great sense of commitment and we feel responsible for our community.

We invest into schools, we pay for additional learning, we offer bursaries for students and we like to help families of our staff and others in the community.

“We have a good contact with the local colleges and universities and also, to a lesser-extent, with institutions in Johannesburg and this is usually where we source our students, artisans and learners,” says Redshaw.

INDUSTRY POLE POSITION It’s clear that although Atlantis Foundries has experienced difficulties in the past 12 months,

this specialist SA company has remained focussed on its core business and continued to delight customers with reliable, highquality supply – something which isn’t easy in the foundry business.

“There’s no other foundries in SA that can produce the size and weight of engine casting that we can,” enthuses Redshaw. “The main product that we make for Daimler is one of the most complex castings in the market and we produce it to the very highest quality, and we have a great record on quality. We don’t have a direct competitor from SA for the markets we’re in. We have a great reputation locally, we have a lot of history and we’re crucial to the Western Cape, the South African Foundry Industry and the community of Atlantis,” she adds.

The next step in taking this business to the next level is for Atlantis to secure new business, both locally and in export markets.

This will in turn allow the company to justify investment into expansion and build on its already sterling reputation while creating jobs and further benefitting the economy.

“We are always looking for innovation, efficiency and different ways of doing things to keep our competitive advantage. We’ve been in the game for many years, we have a lot of experience and that helps to carry us through,” details Redshaw.

“From our perspective, the future is bright. We think we have a sustainable future. There are many opportunities for growth and new business,” she concludes.

ATLANTIS FOUNDRIES +27 (0)21 573 7200 www.atlantisfoundries.com

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CAVMONT BANK

25 Years and Counting

for Zambia’s Cavmont Bank PRODUCTION: David Napier

Zambia’s Cavmont Bank is set to open a number of new branches to help service areas of the country where its reach is limited. It is also set to enter the mobile payments sector in an effort to bring unbanked Zambians into the formal banking environment. All of this in the year of its 25th anniversary – Cavmont Bank is an extremely exciting operation and this year could be an important milestone in its impressive history.

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INDUSTRY FOCUS: FINANCE

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Cavmont Merchant Bank first opened its doors in October 1992 and the journey of one of Zambia’s most successful commercial banks began. Now celebrating its 25th anniversary, Cavmont Bank is home to around 50,000 clients and 270 employees. It provides a sophisticated product portfolio through its branch network of 19 outlets across the country.

After its initial establishment, Cavmont Merchant Bank merged with New Capital Bank in 2004 and the new entity became the Cavmont Bank that Zambians know today. In 2007, following the search for a strategic investment partner, the Namibian group, Capricorn Investment Holdings (CIH), acquired a 44.2% shareholding.

At the start of 2017, CIH increased its stake in Cavmont, taking a 97.9% effective shareholding in Cavmont Capital Holdings Zambia, which owns 100% of the share capital of Cavmont Bank.

Starting out as a relatively small operation in a relatively small market, Cavmont has always been an

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ambitious organisation, continuously targeting multiple market sectors with high-quality products and first-class service. 25 years on from its original inception, Cavmont celebrates modestly.

“It’s a big deal; 25 years of operating is quite the milestone,” says CEO Charles Carey. “We’re celebrating in an understated way; we’ve advertised and sent messages out to customers; we haven’t paraded around in a marquee fashion but we’ve recognised our key stakeholders who have supported us over that quarter century and we feel that’s an appropriate way to celebrate.

It’s a humble 25 years and our celebrations have been appreciated by the people who recognise our contribution.”

Carey, who joined the business in 2013, has overseen a number of changes at Cavmont and says that after 25 years of development, it is now working towards global recognition for excellence.

“Our ambition is to ensure that we continue to improve and ensure

that anyone coming into a Cavmont Bank, from whichever market, associates us with other world class financial service providers.

“There are fundamentals across the business that you’d expect to receive anywhere from high-street London to high-street Lusaka. If you went into a branch here, even if you’d never set foot in Africa before, you’d see the similarities to flagship branches of banks anywhere in the world. We’re keen on ensuring that the infrastructure supporting our products and services is as robust in Zambia as it would be London or New York – that’s where we’re still growing as we’re reliant on different service providers such as power producers or road networks which are under a lot more strain here compared to other financial centres.”

To ensure growth continues, and to guarantee outstanding service for existing clients, the next phase in Cavmont’s growth strategy comes in the form of physical expansion and the opening of six new branches, creating jobs and opportunity for Zambia.

CAVMONT BANK

GROWING FOOTPRINT “If you look at our origins geographically, we had a biased towards Zambia’s northern provinces. Traditionally, we’ve targeted northern areas close to Lake Tanganyika and south from there. We’ve not grown in the central and southern areas and we don’t have a huge eastern coverage so there’s large swathes of Zambia that are underserved or not at all served by Cavmont,” Carey explains. “We have identified market areas where we know we have reputational advantage.

We’ve established our credibility in the market, we have a brand that people trust and we’ve won a number of different accolades both locally and internationally. In the financial sector, we’ve picked up achievements as the second most well-recognised brand, and across all sectors we’re known as the third most recognised brand in Zambia.”

Currently, Cavmont is present with branches in Lusaka (6), Chingola, Ndola, Kitwe (2), Mbala, Mpulungu, Mwense, Solwezi, Chipata, Chililabombwe, Kasama, Mansa and Mufumbwe.

“We’ve put a lot of effort into building up our presence and being able to extend our brand credibility across different geographies so the six different towns that we anticipate moving into, in the southern, western and eastern areas, will help complete our footprint and will help support our customers that have a growing need for nationwide coverage,” details Carey.

He adds that the majority of the planning is now complete and all that remains is to develop partnerships with local businesses to begin the roll out of the new branches.

“We’ve done the business cases and we’re now looking at what partnerships we need to set up to develop the network. We don’t want to go in and buy land and build branches but there are a number of areas that are transforming their BTL proposition; there’s malls going up that we think fit around what we’re doing, and we want to build BOT-type (build-operate-transfer) partnerships.”

Zambia is an extremely

urbanised nation (one of Africa’s most urbanised), and more than one half the approximately 15 million people reside tightly around a handful of economic zones sitting along the main transportation links. Rural areas are under-populated, underserved and are home to higher levels of unemployment.

Cavmont has had to choose its new locations carefully and, alongside its growing footprint, the company will look to attract a whole new group of customers through further innovation in its production range.

CAVMONT MOBILE PAYMENT PROGRAMME According to the IMF, Africa is poised to ‘become the epicentre of mobile payment adoption’.

McKinsey&Company agrees, saying ‘Sub-Saharan Africa offers tantalising potential for mobile financial services’,

and the Financial Times has lauded the mobile payment industry’s ability to ‘spawn entrepreneurs’. The welldocumented success of M-Pesa is the perfect case study for those looking to enter the sector and Cavmont plans to launch its new mobile payment product this month with the hope that, like M-Pesa, this innovation can bring the ‘unbanked’ into the formal banking environment.

“Access, cost, usage and other factors are starting to redefine what banks can do for customers and that’s something that we embrace.

We’re now in pilot stage of our initial foray into mobile banking and we anticipate having our product in market at the beginning of our financial year, or July 1st,” says Carey.

“Globally, branch foot traffic is diminishing significantly on a quarterly basis and therefore

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INDUSTRY FOCUS: FINANCE

you can end up with a legacy infrastructure which is not being utilised at the levels they should be.

We don’t suffer from that yet. Our network is reasonable but not overly burdensome. We can effectively leapfrog that capital asset position by using mobile technology which is a broadly accepted concept. Mobile technology in Africa has grown exponentially; our penetration of mobile banking is around 80-90%; there are only 40,000 landlines in Zambia but more than nine million mobiles,” he adds.

“The data in the market is shocking and suggests that financial inclusion both formerly and informally is still under 60%. Our population is around 15 million and around three million have accounts so that means we have around eight million of age potential account holders and that’s a big opportunity to grow

the business – not just by the number of accounts but also in terms of value.

There’s a tremendous amount of informal trading activity, and a business sector that is almost entirely cash-based and from a number of perspectives bringing the informal economy into the formal side would benefit and stabilise the wider Zambian economy in a big way.”

The 2016 Zambian banking Industry Survey from PwC found that financial inclusion is certainly an issue that needs to be addressed. “Financial inclusion remains high on the agenda of the Government and regulator,” the report said. “The challenge facing the industry is how to provide services to the ‘excluded’ part of the population that are typically located in rural areas with poor social infrastructure.” The report’s author, Andrew Chibuye, suggests that technology will be a driver in this regard saying: “We believe that technology is the biggest game changer for the industry.

Leveraging technology to stimulate growth is a key priority for all players in the market. The banks that adapt best to technological changes and make the best use of complementary service providers, such as mobile phone companies, are likely to achieve an improvement in efficiency and customer service while growing their customer base and revenues.”

Carey agrees. “Whichever way you do it, bringing in those cash trading individuals presents a big opportunity. It’s a perennial issue but is it impossible? Clearly not, the opportunity is absolutely there.

Informal markets still provide huge potential for businesses like us.”

Kenya’s M-Pesa supports livelihoods by providing access to medical insurance, bill payments and small business loans to those who would be excluded otherwise.

“We’re highly ambitious with our targets. The more aggressive and more focussed the institution is on that opportunity, the more spoils you will take,” says the CEO.

CAVMONT BANK

PROMOTING A SAVINGS CULTURE Another arm of Cavmont’s reach into the unbanked community are its popular savings products. Launched in May 2014, the Imiti Ikula children’s savings and Imbasela accounts are directed at addressing the needs of the public by providing them cost-effective, value-driven and tailor-made solutions. These accounts were specifically marketed towards unbanked individuals and in just two years, the products have grown to become an important part of the Cavmont stable.

“Looking at the numbers we bought in with those two accounts, it’s now just under 25% of our total customer base so it has grown significantly, and the values have also grown,” details Carey. “The cash that we’re holding in those accounts makes for interesting reading. It’s not big, high net worth individuals, they’re small accounts so we believe they are quality savings products, pitched at the right audience, with the right functionality.”

Cavmont marketed the importance of a savings culture to young people and small businesses, and emphasised the significance of a strong savings ethos to a strong economy. Using digital tools as well as traditional marketing methods helped Cavmont to reach its target audience, reinforcing the importance of technology in the industry.

“We’re not a deep-pocket marketing organisation and we do work with a lean budget so the creativity that we need to deploy product launches makes things more challenging. However, we do expect a big bang when we market and we do smart things to get the coverage from media. We’re good at what we do and other banks look at us and wonder how we achieve what we do.

“We’re among the top followed organisations in Zambia on Twitter and Facebook and that’s because we recognise the opportunities to

connect with people for very low cost. We recognise social media as a strategic initiative, and the rate of growth that we’re experiencing is significantly more than that of our competitors,” says Carey.

ECONOMIC STORM With all the brilliant work that Cavmont is doing, and has done over the past 25 years, significant challenges still remain, and the banking industry and those involved are clear that in order to move forward in the correct fashion, challenges must be faced head-on and innovative solutions must be sought.

The first, and perhaps largest, hurdle that the banking industry faces is the economic climate. Locally and globally, predicting the direction and health of any given economy is now more difficult than ever. The Zambian economy was the

INDUSTRY FOCUS: FINANCE

CAVMONT BANK

darling of international investors in 2012 while its neighbours were still feeling the hangover from the 2008 recession. Its debut euro bond was oversubscribed by a spectacular 15 times, attracting orders of nearly US $12 billion, even though it was offering lower interest rates than some developed-world bonds. Investment was also coming in big from Canadian and Swiss mining companies looking to get involved in Zambia’s rich copper sector, a sector which contributed 70% of the country’s export earnings. But in 2013, ‘14 and ‘15, copper prices tumbled thanks to weak demand from Zambia’s top trading partner, China. Between 2004 and 2014, the economy grew at an average of 7.4% but this slowed to just 3.4% in 2015 and now sits at just under 4%.

“We’re not a huge economy” admits Carey “but we have grown considerably over the last decade. However, when we get a headwind it does slow us down considerably. We went through, and are probably still in, a bit of a storm. We’ve seen a drop in metal prices and they’re not at levels that we need to inspire industry.

We then had exchange rate volatility and we’re down by about 40% from where we were two years ago. We then had inflation moving from single digits to over 20%. We’ve also seen infrastructure setbacks as the economy’s power is largely based on hydro and we had a decrease in seasonal rainfall resulting in load-shedding.

Together, these things impacted the economy and we lost GDP percentage points. Fortunately, we have the capital base to invest in alternative power sources and we’ve always been able to ensure that our product is seamlessly delivered.”

For Cavmont Bank, Zambia’s economic plight does not go unnoticed but the company has remained largely unaffected and continues on the growth path – the sign of a well-run business and a sound strategy.

“In the last few years, we’ve grown our number of outlets and our headcount so we’ve avoided detrimental outcomes from economic challenges and that’s because our approach to business is a long-term one and we know how to be careful with

our customers and prudent with our lending. Instead of looking at unpopular short-term cost cutting, we looked at lean management principles and refined operational costs well-before the pinch kicked in so we were better able to survive any storm.

“Liquidity has kicked back in, the government’s concern around exchange rates has abated slightly, cash has been released into the market, and as a commercial bank that is what we thrive on to developed economic activity,” says Carey.

Of course, the ability of Cavmont to develop successful strategies comes from its employee base, which Carey regards as the best in the industry.

CAVMONT PEOPLE “We have a developed sector and a good infrastructure for education around literacy. The banking sector is seen as an attractive job market for graduates so there’s not a real scarcity of talent but we do operate with a high price. Because of this we’ve started to invest in developing talent rather than buying talent. If we go to the right sources, we can pick up very intelligent and educated people who may not have experience in the banking sector but with the right training and development we can make most people very good bankers.

“Looking at our capacity, a number of our bankers haven’t been formerly trained in finance but we see a level of desire to continuously develop oneself and that is particular to the Zambian market. We have a programme through which we pay for the education of our staff and from our perspective, that’s an investment wellmade. We see that as soon as someone completes an accountancy or finance qualification, they’re onto the next and there’s a constant ambition among our staff to self-improve which is very healthy,” explains Carey.

With six new branches set to open soon, a focus on people development, and a growing interest in innovation and mobile banking, Cavmont will continue to create jobs and provide Zambians with economic security – one of the

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INDUSTRY FOCUS: FINANCE

five pillars of Zambia’s seventh National Development Plan.

SET FOR THE FUTURE Through mergers, changes in ownership, technology advances, recession and expansion, Cavmont has remained steadfast in its vision; to be a world class bank rated amongst the best in Zambia with a focus on partnering with all its stakeholders. Although Carey doesn’t see this vision to be achieved just yet, he is confident that Cavmont Bank is quickly heading in the right direction.

“We are recognised as a good quality bank, whether we’d be seen as world class yet I’m not sure, but in terms of delivering quality across the market to stakeholders, I think we are on track. Everyone is ambitious for us to continue growing sustainably and the level of engagement

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and support we have is testament to the fact that we are on track,” he says.

Growing into the mobile payments market, delivering quality service to customers through a respected product range, and, most importantly, growing its customer base, Cavmont Bank has every reason to celebrate.

“For many years Zambia has proven itself as a robust market and an area where if you do the right things, and do them well, you can do good business and we prove that,” says Carey. “We’ve had customer growth rate of 25-30% per annum and our deposit base is growing.

If your deposit base is growing, that is an indicator of how you’re treating your customers and the level of confidence that they and the market have in you.”

25 years of successful operation and growth has seen Cavmont cemented

among the market leaders and who would bet against this determined and exciting organisation growing even further and targeting the industry’s top spot? For Charles Carey, more can still be done: “This isn’t a project for me; I’m fully invested and I wouldn’t say mission accomplished. There’s still a lot to deliver and a number of challenges to bring adrenaline. I’m here to stay for as long as my board and shareholders think that I’m adding value.”

CAVMONT BANK +260 21 1360023 @cavmontbank www.cavmont.com.zm

CAVMONT BANK

“I studied at the University of East Anglia (UEA) and I started working during the holidays for an investment company where I did a couple of internships in London. After I graduated, I worked for that company but I was keen to get into a broader range of financial services and I ended up getting a job with Citibank which I looked at because I believe that its emerging market position and outreach was what I wanted to get into. I was born and bred in London but grew up in Hong Kong and I travelled extensively in Asia and Africa. I felt that Citibank, with its large market coverage, would allow me to fulfil my ambitions.

“I moved to a Kenyan group in 1997 and they had one bank and one financial services operation which they were looking to merge and I helped them do that. We got a license in Uganda and I helped develop that business.

“Ironically, I then teamed up with a group of ex-Citibankers who had started a company called Loiter Capital Partners who were growing their advisory investment banking programme and I went to Malawi to set up their operation there.

“I left Malawi after three and a half years and came to Zambia with the same group through a bank management contract with the largest indigenous bank in the country. We were helping to get that bank onto its feet and become more institutionalised and I did that for four and half years before Barclays approached me to join at Group level. I was seconded from Barclays Africa and Indian Ocean to Zambia where I took on the corporate investment banking business which I did for five and half years. The Namibian group that owns Cavmont approached me in 2013 and they were interested in moving in a new direction so I investigated further and joined in July 2013.

“My experience with Barclays and Citibank, both global financial institutions, gave them comfort that I had exposure to governance and capital market infrastructure, but I also had experience with smaller banks in Malawi where you don’t sit in offices holding meeting all day but where you have to get on the floor and meet customers – they wanted someone who could get involved and make things happen. I’ve been part of a number of high-profile transactions in Zambia and I have a lot of experience in the country and recognition with the Central Bank so I am a hands-on operator.”

CHARLES CAREY CHIEF EXECUTIVE OFFICER, CAVMONT BANK

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CHET CHEMICALS

Household Giants

Eye African Expansion PRODUCTION: Timothy Reeder

Established in 1965 with the aim of manufacturing day-to-day household products, Chet Chemicals manufacturing facility in Kempton Park, Johannesburg, now produces between 200 and 300 metric tons of liquids and powder detergents per day. Chet has contract manufacturing relationships with, among others, Unilever and Tiger Brands, and now looks to take its model even further afield.

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INDUSTRY FOCUS: CHEMICALS

//

Chet Chemicals constitutes the household and toiletries arm of Libstar Operations, and manufactures a vast array of products including bleach, dishwashing liquids, fabric softeners and laundry detergents. It manufactures for a number of major SA retailers in the household field, while Sealed Air/Diverse and GNLD make up the final two of its four major contract manufactures.

Headquartered in Johannesburg, Libstar itself began life in 2005, as an investment holding company investing in companies operating in the Fast Moving Consumer Goods (FMCG) industry. The company focuses mainly on the food, beverage,

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household and personal care segments of the market. With the Group consisting of 22 business units that operate nationally across 31 sites located in Gauteng, Mpumalanga, Kwa-Zulu Natal, Western Cape and Eastern Cape provinces, Libstar has annual net revenues in excess of R7bn.

Libstar believes wholeheartedly in what it terms simply the ‘power of partnership’. It is aware that its work does not take place in a vacuum, but in a vibrant mesh of relationships with customers, employees, suppliers, partners and communities. Libstar seeks to ensure that it always follows through on what it says, believing that its positive actions lead

to stronger partnerships while promoting productive teamwork, thus keeping its various business concerns in positive territory.

Following this lead, it has been Chet’s ability to partner with the most well-known Retailers and their brands that has been a key factor in its success, and the growth in scope of its capabilities. Sales Director Ross Rossouw takes us through the importance of these relationships to Chet’s burgeoning status in the market. “Our relationship with Unilever and Tiger Brands, as well as the Retailers in South Africa, is very well suited to our assets.

“In the early days, we had to look at those guys in order to optimise our volumes and as such

CHET CHEMICALS

make it a viable option for us - to keep our costs down, and to enter the major South African retailers. As a result, we’ve always had a good relationship with them.

“Unilever is currently busy commissioning an upgraded plant, which may see our contract work for them reduced. We therefore have to have plans in place to make up this potential shortfall in business, but they know that as far as accreditation and quality of product are concerned that they can fully trust in us to help them out from time to time.

“In the field of contract manufacturing in South Africa Chet Chemicals has been an ever-present for over 40 years,” Rossouw goes on, “and so we’ve obviously earned our stripes. This endurance has been down to our focus on the

quality and the service level we have offered over this time. We have been and remain successful because we manufacture a quality product which adheres to specifications that is what gives us the edge.”

This responds perfectly to one of the central pillars of Libstar’s overall mission; to enable its companies to create consumer, shopper and customer demand for world-class quality products and services executed perfectly, on time, in Africa and beyond.

As Libstar again recognises, Chet’s field of industry is not a vacuum; instead it finds itself surrounded by similar partnerships being constructed all the time and other firms looking to impose themselves upon the market. This must, therefore, lead to it being an extremely competitive business.

“Unbelievably so,” confirms Rossouw. “At all times you have to be extremely careful because you don’t want to step on anyone’s toes, but competitors are gaining market share at such a rate that business can lose value and it can be a real struggle.

“It is good for us in some ways however, and certainly keeps us on our toes in terms of keeping ourselves ahead of the rest. Obviously, it is good for the consumer too, as this competitiveness translates to more attractive pricing of goods.”

When it comes to investment in new machinery for Chet, this is targeted in particular at the bleach side of the business, one of the key weapons in Chet’s armoury as Rossouw explains. “If you break up our business, household is defined

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INDUSTRY FOCUS: CHEMICALS

as laundry and Household liquids, which bleach is then also part of. We also make a thick bleach, however, which is an all-purpose cleaner.

“This is the machine that we are replacing, and the upgrade has been made necessary purely due to the demand we are experiencing for this product. We have been growing in double digits for the last two or three years so we have simply outgrown the capacity of the current machine.”

This vital new machinery will, according to Rossouw, be commissioned in October of this year, allowing Chet to be up and running with the increased capacity before the end of the year. “We project that it will allow us to serve the current demand, with a continuation of the growth we are

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currently seeing, for around the next five to seven years,” he says.

This division is one of Chet’s focal expansion priorities; as Rossouw goes on to explain the impact of an uncertain climate on the company’s grander ambitions.

“The trading environment in South Africa is very tough at the moment,” he says, echoing the sentiments of the vast majority of major players in the country. “For this reason, you have to spread your investment over a longer period.

“We would love to replace our thin bleach machinery, which is also growing at a phenomenal rate of around 30% year-on-year, and this growth has been sustained for the last three or four years. As soon as it is viable we will be making the same improvements to this section of the business. As we are part of

the Libstar Group these requests go through them for authorisation.

The most recent indications suggest that we will receive it in 2018 and be able to proceed with this next project.”

In addition, Chet is always on the lookout for acquisition opportunities to give another dimension to its expansion plans, taking on board the smaller players and growing the scope of its business. “Libstar is a company that constantly looks for acquisitions to expand their current operations,” says Rossouw, “and we as a company are also doing so, especially where household is concerned.

“We are actually in discussion with one of the smaller South African companies in our field at this very moment. Negotiations and discussions are almost complete with regards to a JV; we just need to dot the i’s and cross the t’s.”

Chet Chemicals is reaching that stage encountered by many a burgeoning, successful South African company, in that it is now seeking avenues by which to expand its footprint beyond the country’s frontiers and into the rest of Africa. Its parent company wants to be the trusted partner and preferred ‘one stop solution’ in providing fast-moving consumer goods to every sector, but crucially it wishes to deliver on expectations beyond its targeted markets in Africa. Such a bid provokes significant opportunities and challenges, as Rossouw goes on to outline.

“At the moment, we are purely a contract manufacturer, which means that we don’t have our own recognisable brand with equity which we can just decide to take into the rest of Africa. As far as the categories in which we operate go, however, there is a big demand in Africa for the majority of them.

While the size or profile of these

CHET CHEMICALS

products may change slightly, we have the capability to make whatever it may be and the get it into market.

“As far as our footprint is concerned, we are already active in Botswana, in Namibia and in most of the neighbouring states, but at this time that is due to the activity of the formal retailers in those countries. A big part of our export business is the distribution channel via retail - for example Shoprite in South Africa has interest in many countries in Africa. We deliver to them, and they then take on the distribution for us.

“It is a very expensive business if you want to set up in a new country. There will be agents there handling the product who naturally will want to take commission, which simply does not make it a viable option for us at this stage. Because we supply a private label, or a house brand, the margins are not as rich as for some other companies who are developing and marketing their own brands.

“We have an alternative game plan, whereby we will identify in these countries perhaps a local producer, and then begin to contract manufacture or contract pack his brands instead as a way around the pitfalls we face. This worked for us in Namibia where we are packing the household range produced by one of the local guys there. Phase one has consisted of household powders, which we have been doing now over a 12-month period, and we’ll be launching phase two at the end of June, where we will also introduce the liquid products within the household range.”

This seems to be the key to Chet Chemicals’ future progression, with South Africa all but conquered in its provision of household wares.

“With regards our South African growth potential I think we are

pretty much there or thereabouts - I wouldn’t go as far to say that the market is saturated but it is not far off. There is not a lot of potential for incremental growth; the growth we see at this stage is the opening of new stores within the retail environment, and it is 100 times more saturated than in the rest of Africa.

“For us to be successful for the next 40 years we will have to start making plans to dominate the African market as a whole, and we are busy with that,” Rossouw begins to sum up. “In five or six years we hope to have good, reliable customers in strategic countries, where we employ our South African model in these new domains, contract manufacturing for somebody with the footprint, the capability and the infrastructure

to distribute the product there.”

Rossouw concludes his thoughts on the company’s future in typical Chet Chemical fashion.

“Building a partnership with companies, or individuals in these countries, to enable us to achieve this - that is where our growth will come from.”

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CARARA AGRO PROCESSING

‘Absolutely Unbelievable’ Six Months For

Carara Agro Processing PRODUCTION: Manelesi Dumasi

One year on from our last look at the Carara Agro Processing business in the Eastern Cape, Enterprise Africa revisits to find out more about how the company is performing through drought, economic uncertainty and generally unpredictable times.

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INDUSTRY FOCUS: AGRICULTURE

//

In June 2016, Enterprise Africa spoke to Eastern Capebased specialist producer of sweet cherry peppers and other food products, Carara Agro Processing. The business was enjoying an exciting and booming period, and thanks to a depreciating Rand value, exporting was thriving. Carara were developing new products, winning awards and discussing strategies for further expansion.

This month we talk to Carara Agro Processing again and ask if things are still flourishing. Managing Director, Mike Duxbury explains that business is

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stronger than ever.

“The last six months have been absolutely unbelievable for us; demand has gone mad since December,” he says. “Unfortunately, we just don’t have the stock to supply the orders that we are getting. We’ve never been in this position before, we’ve always carried excess stock, but we’ve sold all our excess stock and we’re carrying very little right now. That’s brilliant for us but it’s a concern that we might end up leaving a few customers short.

“Demand is coming from Europe, specifically Germany. It’s because of crop failure in SA from our competitors

last year due to drought, and we hear that the crops in Peru are struggling this year. From our competitors underperforming and our reputation for quality, we are seeing significantly increased demand.”

INVESTING IN GROWTH Following a hugely successful 2016, investments are being implemented to ensure that growth continues. Carara is keen to meet demand from all customers and is planning to upgrade machinery and capacity as Duxbury explains.

“We are still producing around 2400 tons but we are planning for a 20-30%

CARARA AGRO PROCESSING

increase in 2018. We’re busy planning the production side of the 2018 crop right now and we’re upgrading our canning line and numerous other things in order to increase our capacity so that we can meet demand.

“We’re investing in machinery and in processing capacity so times are exciting.”

Alongside new equipment and improved efficiencies, Carara is looking at new product lines to bolster its exciting range. But the company is also keen to research and invest in product lines that can boost the productivity of its facilities.

“We’re always looking for new products, especially those that can

smooth our production periods,” details Duxbury. “We’re a huge seasonal production facility and we want to spread our production time as long as possible. We have a huge factory that lies dormant in July through to September and for the rest of the year we’re starting to fill it up with the main season being March through until May.” Recent exploration into products that can help in this regard have seen Carara working with sweetheart peppers, fresh garlic and roasted vegetables.

“The sweethearts can come in in January, February and March and we can get them in before the pepper season.

It’s been fairly successful; we increased production from four tons to 150 tons and we’ve sold 40% of that this year already. We plan to increase production for next year because we believe in the product,” says Duxbury.

Processing fresh garlic ready for export occurs during November adding yet another contributor to the Carara revenue stream.

INNOVATION In June 2016, Carara released its gourmet chutney product for local and export markets. The product claimed a Gold Star Award from the International

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INDUSTRY FOCUS: AGRICULTURE

Taste and Quality Institute in Brussels for superior taste and 12 months ago Duxbury was excited about the potential of this offering. While growth in demand hasn’t been remarkable, the company remains optimistic about the possibilities for this type of product.

“We haven’t seen a dramatic increase in volumes but we still believe in the product. We continue to send out samples and we’re selling about 10 tons per year but it’s not significant yet.

“We’ve come up with a new range of chutneys – original, mild and hot – and we will look to push those aggressively,” Duxbury says.

Carara is also set to launch its new online shopping project very soon following the identification of a gap in the market as the MD explains: “In the local market, we’ve just rebranded and we’re busy working on a new set of labels and we’re going to launch our new online shopping programme very soon. This is particularly for the

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SA market. We haven’t gone into the major retail chains and we feel there’s an opportunity to deliver directly to people’s doorstep at a price lower than you could get in the retail stores.

“It’s a small project to start with but we hope it will lead to something bigger further down the line,” he says.

ECONOMY: SWEET OR SOUR? The last 12 months have been tumultuous for the SA economy.

Cabinet reshuffles, ratings agency downgrades, unemployment growing, global commodity markets dimming, and Rand prices fluctuating violently have all made for an uncertain and unpredictable environment. But this was the case in 2016 and back then Carara Agro Processing remained on the growth path. Asked if economic challenges have managed to slow the growth of the company, Duxbury says that currency price is where Carara feels the pinch.

“The exchange rate is totally out of our control but it has such a big influence on our business - it’s quite scary,” he says. “Believe it or not, last year’s exchange rate was far better than this year for us. The political aspects that have been widely reported, and the economic rigmarole, hasn’t had the impact we anticipated and the Rand has actually strengthened. All of our pricing is in offshore currency and we’re now getting less for our products than we were last year despite high inflation here. All of our production costs are increasing and yet we’re getting less of a return. As an exporter, there’s not much we can do apart from ride the wave and satisfy our customers in terms of quality. Last year we had an exceptional financial year and this year it’s not looking quite as good even though the orders far better than ever.

“We averaged R16.90 to the Euro last year and this year it’s R14.40, so that is a substantial difference.”

However, the economy in Carara’s key market, Germany, remains strong and imports continue to flow into the European powerhouse. Locally, the plans for the launch of an online shopping platform demonstrate an appetite for Carara produce, and so the company’s outlook remains positive.

PARTNERED FOR SUCCESS Carara Agro Processing was established 13 years ago and since day one the company’s leadership has recognised that the key to real success in this challenging sector is the building of successful relationships.

Long-standing, successful partnerships with farmers, government, export organisations, retailers, end-consumers, suppliers and with employees have helped develop the company into the strong position it holds today.

And despite economic challenges and practical hurdles for growers, 2017’s production numbers have been largely unaffected, and strong partnerships are an important part of things. “The

CARARA AGRO PROCESSING

Western Cape is talking about the worst drought in 100 years, the Eastern Cape has seen an incredibly bad drought but we’ve still managed to produce very close to our target production,” explains Duxbury. “It’s an unbelievable result and its down to commitment from our grower base. All of our crops are under full irrigation and so significant planning goes into it. Obviously, we are concerned about water availability going forward, both on the farms and at our facilities in Grahamstown, but we are putting in place contingency plans.

“We’ve developed a really strong grower-factory relationship without which we wouldn’t succeed. We know that without produce, we are not a business and we need quality fruits to provide the kind of quality our clients want. We put a lot of effort into giving back to the farmers,” he adds.

And it’s not just partnerships with farmers that are going well for Carara; the business also enjoys longstanding and highly beneficial relationships with a strong supplier base in SA. Take the company’s association with SA innovator ViscoDisc; a provider of unique disc inserts that keep produce from protruding above its preserving liquid. The pair have been partnering for a number of years helping each other grow. “It’s a critical input for us; if you don’t keep the product covered in brine, it tends to oxidise and you get a browning and that doesn’t look attractive. We also use the product in our cans,” enthuses Duxbury.

In the future, Carara Agro Processing will call on these types of relationship to continue the impressive story of success that has

JN 3601 ViscoDisc Enterprise Africa Advert 144x100mm Final path V1b 23-05-16.indd 1

seen it grow from a small operation in the quaint and charming city of Grahamstown to become recognised worldwide as a top quality, reliable and consistent producer of cherry peppers and other pickled products.

“We can’t complain, the business is growing and remains financially sound. We are in a very fortunate place,” Duxbury concludes.

CARARA AGRO PROCESSING +27 46 6228765 jess@carara.co.za www.carara.co.za

5/25/16 10:19 AM

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WIRQUIN SOUTH AFRICA

France’s Wirquin to Expand Further

in South Africa PRODUCTION: David Napier

World leading sanitary equipment specialist, Wirquin, will expand its operations in SA following an extended period of growth. New products will be added to the portfolio, manufacturing capacity will be increased and marketing activities stepped up to help the company realise the potential of the Southern African market and assist in a global push for expansion.

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GRAHAM HOGG SA GROUP PRO CHANNEL DIRECTOR

INDUSTRY FOCUS: MANUFACTURING

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Leading sanitary equipment specialist, Wirquin, was an idea developed in Western France, in the town of Carquefou near Nantes, in 1969. Dreamed up

by Henri Wirquin, a sanitary ware wholesaler, the company was quick to mark its name in the industry, building a reputation for quality and innovation. In 1977, S.A. Wirquin Plastiques was officially established by Henri Wirquin and Daniel Le Coent, and the company moved forwards with product development and marketing, with much praise from customers.

The ensuing years saw Wirquin grow internationally, opening up in Portugal, Spain, Romania, and South Africa in 2004. The company has also moved into Russia, China and the UK, and now has a presence in more than 80 countries around the world. 2017 marks 40 years of innovation Its vast product range is, according to Wirquin, ‘to improve the daily life of private households and professionals’. Its four core products are the ‘MW2 3/6 mechanism’, the ‘Quick-Clac’, the ‘JOLLYFLEX pipe’, and the ‘SLIM shower waste’. “ Today, these four products are known and recognized references worldwide,” Wirquin states.

Globally, Wirquin is now home to 1400 employees with 85 in South Africa. Sales Director in South Africa is Graham Hogg and he tells Enterprise Africa that the company’s SA operation will play an important role in the group’s global expansion and, locally, Wirquin facilities and product range will be growing this year.

“All of the subsidiaries in the group manufacture components and even finished goods for each other and our sales teams in those areas will determine which

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WIRQUIN SOUTH AFRICA

products will be suitable. SA has a range of toilet seats and flushing mechanisms that can be used universally around the world,” he says. With a leading manufacturing plant based in Somerset East, Wirquin SA hopes to contribute to the company’s global push into new markets including Russia, Brazil, USA and further afield.

In terms of product range improvements, the nature of Wirquin, which is heavily focussed on innovation, means fresh ideas are regularly introduced and six new products will be introduced in South Africa in the coming months.

“This year we will bring the NANO 6.7, EASY CLIC, SO LOW, VENISIO SLIM, LOCK+ and MODUFIX to the market.

“The NANO 6.7 is an ultracompact basin waste and trap in one, available in four variations.

The EASY CLIC is a universal retrofit 3/6l flush mechanism fitted without removing the cistern and comes with a 10-year guarantee.

The SO LOW is the complete DIY solution that truly simplifies the installation of wet rooms in renovation projects and is available in 210mm and 500mm lengths.

The VENISIO SLIM is a slim shower channel ideal for renovation, available in 300mm and 500mm lengths. The LOCK+ holds the toilet seat in place, stops seat movement on the pan, is a registered design and has a lifetime guarantee. The MODUFIX is ‘One toilet seat with five hinge possibilities’,” details Hogg.

The performance of Wirquin in South Africa has been remarkable over the past few years with the company growing significantly, despite challenging trading conditions and an ailing manufacturing industry. The company’s health is so impressive that it is looking at fresh expansion strategies including increasing its

//SA HAS A RANGE OF TOILET SEATS AND FLUSHING MECHANISMS THAT CAN BE USED UNIVERSALLY AROUND THE WORLD// factory capacity and growing into new geographical markets when positive opportunities come about.

“In the past 12 months, we have realised continued growth (+16%) despite tough economic times, and export into Africa, especially Egypt, has been positive,” says Hogg.

“Originally, our factory was 1500 m² and in 2014 was expanded to have 3500 m² under roof. As we take further South African market share our capacity has become constrained and will shortly result in a further expansion being a necessity.

“Expansion further into Africa is dependent on stability and availability of hard currency; currently we are present in SADC countries and will look at other markets as and when solid opportunities arise,” he adds.

There is also set to be further investment into marketing strategies, especially surrounding the company’s website and social media presence, and Hogg says that “social media has revolutionised marketing and will continue to do so, and market trends dictate at least a good website is needed to effectively

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INDUSTRY FOCUS: MANUFACTURING

//IN THE PAST 12 MONTHS, WE HAVE REALISED CONTINUED GROWTH (+16%) DESPITE TOUGH ECONOMIC TIMES// communicate with customers”.

DEEP SA HISTORY The staff and management at Wirquin’s South African operation have a long history in the industry and, after 13 years of successful operation and growth, the company is now a highly-significant part of the global organisation.

“Between 2000 and 2004

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Wirquin was imported and distributed by Actebis 356 CC, a company started by myself,” explains Hogg. “To unlock competitive pricing from the Wirquin Group, and to cement the global strategic position in the OEM industry, the shareholders of Wirquin in Europe purchased the majority share in the converted CC namely Wirquin SA (Pty) Ltd in 2004.

“Initially this was an import and distribution company based in Somerset East in the Eastern Cape.

In 2006, Wirquin Manufacturing was formed and the process of building a factory in Somerset East was started. The factory officially opened in 2007, initially producing flushing mechanisms and toilet seats. Today the factory manufactures toilet seats (both thermoset and thermoplastic), flushing mechanisms, plastic cisterns, solar tank cisterns and a range of components to supplement imported components to manufacture wastes and connectors.

“Orientation is given by the group board, and global targets and KPI’s are set by group in conjunction with the respective Plant Managers and Market Development Unit Managers,” he says.

The innovative products that Wirquin manufactures and sells in SA, and across the Southern African region, have vastly improved the way water is used and Hogg is proud to say that the company’s contribution to water-saving is massive.

“Currently, Wirquin saves approximately 10 billion of litres of potable water every year in South Africa due to its MW2 Dual Flush mechanisms. We estimate since the launch of Wirquin in South Africa, thanks to the 3/6L Dual flush, we have helped the country save in excess of 140 billion litres of drinking water - approximately 225 days consumption for the city of Cape Town which is currently under severe water restrictions of 100l per person per day,” he says.

ECONOMY IN THE DRAIN? While the progress of Wirquin in South Africa has been fantastic since 2004, the uncertainty of the future has raised issues within the industry and manufacturers are

WIRQUIN SOUTH AFRICA

finding it difficult to plan for the future with a lack of commitment to projects from clients. This combined with the health of the economy, downgraded by credit agencies and dropping into technical recession, makes for a challenging environment. But Hogg remains optimistic saying that those that are positive in tough times are those that emerge in a strong position.

“Does the current economic climate concern me? In a word – No. I believe that the opportunities outweigh the negatives. In trying times, it is the bold and resolute companies that will succeed.

The biggest challenge is not to get sucked into the quagmire of negativity surrounding the levels of blatant corruption that have been exposed.

“The regulatory, and political environment increase the risks associated with capital investment and midnight cabinet shuffles that result in credit downgrades do not exactly encourage people to spend money on long term projects,” he says.

Alongside the health of the economy is the threat of cheap imports from the Far East that provide competition for Wirquin.

But again, Hogg is confident. “Due to our brand positioning, there is not a direct impact, however they

//WIRQUIN SAVES APPROXIMATELY 10 BILLION OF LITRES OF POTABLE WATER EVERY YEAR IN SOUTH AFRICA// tend to draw the whole market lower which obviously affects margins.

“We are separated from competitors by four key elements in our business. First, innovation – it is in the DNA of Wirquin. Second, quality – which is not negotiable.

Third, our comprehensive range of products; and lastly, market penetration – we effectively serve all sectors including PRO, DIY and OEM.” Key areas that do bring about a cause for concern are human resources and currency pricing.

“It is difficult to find well trained and educated employees, across the entire spectrum of disciplines. The skills gap is apparent especially at middle management level,” says Hogg.

“However, training is always a priority.”

In the past 12-months, the Rand has traded at anything from 17 to 13 against the Euro, and has not showed consistency for a significant period. This creates challenges for Wirquin. “A business can manage a declining or

strengthening currency, however volatility always introduces risk – it seems that the Rand is easily moved both by international and local developments.”

However, despite these hurdles, the company remains resolute that the future is bright. It’s increasing product range, improving facilities, strong local supply base, and ongoing growth make for an extremely robust business case.

“Going forward, our targets are between 8-12% growth year-onyear, provided that the country is not downgraded further,” says Hogg.

Globally, the international expansion of Wirquin over the past 40 years has been sensational. In South Africa, its 13 years have been equally as exciting and the growth looks set to continue.

WIRQUIN SOUTH AFRICA +27 42 243 6000 www.wirquin.co.za

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VDMMA

VDMMA Drives Transformation

of Silo District PRODUCTION: David Napier

Much-celebrated Cape Town-based architectural practice, VDMMA, is approaching completion with its projects in the V&A Waterfront’s Silo District. The area has been developed into an all-encompassing ‘public realm’ for the entire city to enjoy.

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INDUSTRY FOCUS: ARCHITECTURE

has been the coordination and logistics for the construction of over 100,000 m2 on one development site. This being done with multiple tenants, a large team of consultants, various contractors and subcontractors whilst at the same time accommodating the operational needs of maintaining the wider V&A Waterfront which welcomes more than 24 million visitors each year.

A project like this could potentially become a nightmare for an architect but for Macio Miszewski of VDMMA, a Cape Townbased design and architectural practice which has taken the lead on the project, it has been a dream. He tells Enterprise Africa more about progress in Cape Town, the design capital of the world in 2014, and how the VDMMA team became involved following many years of success in the residential architecture industry.

//

As one of the most central, important, prominent, and vital development zones in the Western Cape (and perhaps in South Africa), the V&A Waterfront, specifically its Silo district, has received much attention in the past few years. On completion, it’s estimated that V&A Waterfront shareholders (Growthpoint and the Government Employee Pension Fund, managed by the PIC) will have invested more than R3 billion developing the area, specifically refurbishing a disused 1921-built grain silo, to create a pedestrianised precinct in the heart of the V&A Waterfront.

Development of the area has been split into different phases and in 2013, the Silo district unveiled No.1 Silo, the new home for investment business, Allan Gray.

The 18,500 m2 building achieved a six-star green rating from the

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GBCSA. In the same year, No.2 Silo (a 31-unit apartment building) was completed with four-star rating.

Completion of No.3 Silo recently, saw a further 79 apartments added to the region and No.4 Silo is now home to a Virgin Active Health Club.

No.5 Silo is a 14,500 m2 multitenant office building anchored by PwC and Werksmans. One of the latest projects for the region is No.6 Silo which will soon be home to a 252-key Radisson Red hotel. A highend 27-key Silo Hotel is also nearing completion along with the area’s major draw, the 10,000 m2 Zeitz Museum of Contemporary African Art (MOCAA). Underneath the whole district lays a super-sized car park and utility structure which has been under development since 2014.

One of the most challenging elements of this development

V&A SILO DISTRICT “We’re busy completing a 55,000 m2 project at the grain silo precinct,” he says. “That commission came about as a result of a project manager at the Waterfront catching sight of a block of apartments that we had designed. He approached us, we discussed ideas, and we’ve been realising this project for the last eight years.

“We were originally appointed to design the No.1 Silo which is the HQ of Allan Gray Investment Management (in JV with RBA), but we made it clear that we couldn’t do it in isolation from the rest of the project. The project manager agreed and the V&A Waterfront backed the idea so we formalised a proposal for the whole precinct area. We were then appointed to complete work on silos two, three four and five, and we partnered with other architects (with RBA, MDL and JP) on work meaning we covered the entire precinct layout.”

VDMMA

Asked if the project has been generally well-received by the Cape Town public, Miszewski explains that the intention has always been to create a positive public space and, so far, feedback has been fantastic.

“There was recently a launch of a small retail part of No.5 Silo, it was a freezing Cape winter’s night, and there were thousands of people who discovered this whole new precinct in the city and were excited, giving very positive feedback. People could see it’s not a private commercial domain; it’s a public realm and the city is moving in and enjoying it.”

Currently, VDMMA is finalising work on apartment blocks, but Miszewski hopes this is not the end of the company’s involvement at the Waterfront.

“The apartment blocks are the end of the project and we’re mainly working through inspection lists. There’s other work in the V&A Waterfront, which is the biggest developer in the Western Cape, and they have enormous bulk to continue expansion,” he says.

is, and we were published and from that came our first commission for a one-off, upmarket residence.

“Following that, we grew through word-of-mouth and continued to produce one-off, single residential, high-end, bespoke houses for clients, mainly around the affluent suburbs of Cape Town, on the slopes of Table Mountain,” he recalls.

The project which saw VDMMA win the national award (Institute of Architects Award of Merit) was a residential undertaking, working directly with a property owner. Named ‘the Sun House’, the Tamboerskloof-based project was completed in 1995 and became recognised as one of the country’s most unique ideas, catapulting VDMMA into the spotlight.

The company followed this success in 1999 with the design

of ‘the Tree House’, a multi-award winning residential home in Higgovale.

“The Tree House was a referral from our previous clients with the Sun House. It was a fantastic project to be involved with; the clients had an inexplicable belief in us and allowed us a freedom that we didn’t believe existed. I remember presenting the idea to them, explaining about five structural columns, like trees, with the building arranged beneath a canopy-style roof, and they said, ‘you must be crazy’ and followed that by saying ‘we love it’,” says Miszewski.

Since its establishment, VDMMA has completed projects for single property owners, developers, businesses, corporates, and municipalities. “We set up the business with the objective of

DESIGNED TO LAST VDMMA (Van Der Merwe Miszewski Architects) is the brainchild of its namesakes and its history, littered with world-class projects, contributed to its appointment as the lead in the Silo District.

“The practice was founded with my partner, Anya Van Der Merwe, and it was just the two of us along with a couple of helpers and a couple of students, primarily involved in very small residential alterations and small projects,” details Miszewski. “For a brief period of time, we collaborated with my father who was also an architect who had recently retired, and that sustained us briefly. We then won a national competition which was for the design of an ideal South African house, whatever on earth that

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INDUSTRY FOCUS: ARCHITECTURE

practicing design. We set out on the belief that whatever needs designing, we can do it. Whether it’s an alteration of a small apartment or the construction of an urban precinct, we’re not afraid of it,” Miszewski asserts.

CAREFULLY PLANNED EXPANSION Commercial success and industry recognition led to VDMMA growing its project base and employee base over the years but Miszewski is keen to ensure the business does not become like a machine and pursues very carefully-considered growth strategies.

“We have always avoided commercialising the practice and we haven’t aggressively pursued that type of expansion,” he says.

“Since the mid-‘90s, we’ve retained our profile as a studio of 10-15 people. We are a small designdedicated architectural studio. We have a flat hierarchical structure, we work in an open-plan space, and we can design whatever anyone brings to us in a workshop atmosphere.”

Has this deliberate and thoughtful approach to business development stifled growth for the company, bottlenecking capacity? Apparently not, with VDMMA among some of the most sought-after architectural businesses in South Africa and also attracting demand from potential international clients.

“We were approached by a Kenyan business which was looking for expertise in convention centre design. We have that experience through our work on the original phase of Cape Town International Convention Centre which started in 2000 and finished in 2004. Since 2012, we’ve been working on the expansion of that centre, heading slowly towards completion.

“We collaborated with that Kenyan business on design of a convention centre but that idea

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fell through. Subsequently, we’ve bid on other projects in Kenya and we have built a good relationship so that we can understand opportunities in that part of the world,” Miszewski explains.

“We were approached by a company from the Middle East for our convention centre expertise, we were approached by a company from Morocco for a high-end residential retreat but both projects are now on hold. We do a lot of work in Johannesburg, primarily in residential. We designed the De Beers mining headquarters in Jo’burg. If there is a need for us to expand into other regions, areas, or nations, we could and we would.

However, we remain rooted in Cape Town,” he adds.

VDMMA: ACADEMIC PEOPLE One of the major challenges set out in front of many companies right now is the ability to recruit skilled staff. 90% of the companies we talk to list recruitment as one of the most challenging aspects of business. Fortunately, VDMMA is not pegged back by the so-called ‘skills gap’ and receives a constant steam of first-class applicants. Miszewski puts this down to the company’s involvement in South Africa’s educational sphere.

“We’re fortunate as we receive non-stop applications as we have a track record with a reputation for being a design-orientated practice,” he says. “We also have a non-stop stream of students from the University of Cape Town, and also from Port Elizabeth and Gauteng, who come to complete their professional training in our offices. At least three of our current permanent people completed their student practical training and then came back to us. We are closely connected to the academic profession in SA; I regularly sit on jury panels for thesis presentations

at University of Bloemfontein, and that is where a lot of the resources in our practice come from. We have also given presentations and talks about our work at the Universities of NMMU, Wits and KZN.” As well as a sound understating of the industry and a first-class education, those looking to represent VDMMA must have a particular design-orientated thought process to back up any proposal and this is, according to Miszewski, perhaps harder to come by.

“We do require technical expertise and an ability to discharge work, but there’s also a mindset that is required for a studio environment like ours as opposed to a larger commercial environment,” he says.

“People are important but not too difficult. Our bigger problem is people outside of the business – difficult clients, consultants who don’t listen, or planning authorities who are belligerent – those are where the bigger problems in development lay,” he adds.

ALARMING ECONOMY With major projects completed and underway, more flagship builds being prepped right now, a strong and stable employee base, and a reputation for quality, you may think that everything is runs in the favour of VDMMA but Miszewski points out that a major challenge faced by the company is that of the local economy. Officially dipping into technical recession in the first quarter of 2017, the South African economy is weak and this does have an impact on the architectural industry.

“It has terrible consequences on the cost of material, the cost of production, the availability of labour, and the quality of labour.

It creates an environment that is litigious and fraught with anxiety.

But we have to continue and try to

No. 3 Silo Apar tments, Silo District, V&A Waterfront. Architect: VDMMA & MDL / Interior Design: Source Interior Brand Architecture Oggie FSC European Oak Legno Herringbone finished with WOCA Denmark Extra White Oil - 15/4 x 122 x 610mm

VDMMA

...handcrafted herringbone floors from sustainable forests.

Cape Town: 021 510 2846 | Paarden Eiland Johannesburg: 011 262 3117 | Sandton Durban: 031 000 1000 | Umhlanga nick@oggie.co.za www.oggieflooring.com www.enterprise-africa.net / 75

INDUSTRY FOCUS: ARCHITECTURE

get better at what we do,” he says.

“Projects are being put on hold, there’s a tremendous amount of negativity but our practice has survived eight recessions since 1991. In fact, 1991 was a recession so we started in a recession and I’m fortunate enough to say that the work we are doing is, in a sense, dislocated from the overall trends.”

The nature of the company’s ‘high-end and one-off’ work, positions VDMMA’s health in a space that seems, to date, to not be reliant on government outlay, where much of the spending cuts in the architectural space have occurred.

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The size of the business, and the aforementioned unique growth strategy, has resulted in the ability to remain nimble and change direction quickly, avoiding tedious situations.

“The Western Cape is viewed differently to the rest of the country and we are currently embarking on two new projects, one is onsite and one is far-progressed with documentation, and they are both apartment complexes for a client from another part of SA who sees Cape Town as a positive place to invest,” the Director details.

“Nationally, we are in dire straits and things get more and more bizarre,

driven by machinations in the political domain but we are confident that there is enough opportunity in our core markets to sustain through the challenging times.

“We’ve remained small enough to be nimble, so that we avoid going down the hire and fire route. For major projects, we would usually partner in a JV style with another practice to share the production load while maintaining the design lead. I don’t see many projects of that size coming around soon so we will focus on our small group, working on particular projects, for clients who operate outside of the

VDMMA

larger political crisis that envelopes the country,” he adds.

This is evidenced in the work which will begin shortly in the Cape Winelands where VDMMA will design a striking farmhouse in a vineyard. “We’re busy completing documents; it’s a bespoke, highend, one-off project and that takes us to our roots; designing directly in collaboration with the owners, in a natural setting that is indescribably beautiful.”

So, while work at the V&A Waterfront’s Silo District draws to a close, the future continues to shine for Cape Town’s own

VDMMA, despite the economic woes facing many. The business strategy developed to encourage a philosophy of design, and the ability to wow clients with individuality has resulted in an award-winning business that is recognised across South Africa’s industry, and further afield. But, according to Miszewski, there is much more that can be done.

“I would go on the word of my peers and my colleagues and I am happy to hear them talk about VDMMA as one of the top, unique design practices in the country,” he says. “If we are viewed as a studio

that has an identifiable design ethos, then I feel we are getting to where I want to go. But nothing is finished. I think we are recognised for the right things but we would never sit back on anything that has apparently been achieved,” he concludes.

VDMMA +27 21 423 5829 email@vdmma.com www.vdmma.com

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I founded the business in 1991 with Anya van der Merwe, and in the beginning it was busy and challenging; I worked three jobs at the same time. I was a part-time studio assistant at the University of Cape Town, I was working part-time for another large practice in Cape Town on a particular project, and I was working on our own projects for VDMMA. “When people ask me ‘when did you become interested in architecture?’ my answer is ‘shortly after I was born’. I grew up in an architectural household and there were books and journals around all the time. My father was a passionate modernist and he believed in the new era. He survived the Second World War, graduated from University in Liverpool and emigrated to SA with a fantastic optimism, believing that the construction industry was the only tool to rebuild the world after the war. He influenced me and I realised that architecture influences all spheres of life so I automatically fell into studying it and automatically fell into practicing it.

“I have always had an interest in construction and was very fortunate to have worked for Arup Associates in London where I was mentored by Sir Philip Dowson who had a fantastically pragmatic way of thinking about how buildings are put together and what they are made of. I refer to that time as my ‘university of practice’ as I had completed the ‘theoretical stuff’ and was now becoming closer to the act of building.

“I fear the anonymity of mediocrity.

I would rather be recognisable and controversial than anonymous and mediocre.”

DIRECTOR OF VDMMA

MACIO MISZEWSKI www.enterprise-africa.net / 77

B&M GARMENTS

B&M Garments Remains Stitched

in Fabric of Botswana PRODUCTION: David Napier

With times tougher than ever for Shashe-based B&M Garments, the company is looking to add value to its products and improve its range, offering first-class products and service to customers in a time where every order counts.

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Rewind three years and the commercial landscape in Southern Africa was very different. The hangover from the 2008 global recession was abating and spending and confidence had returned to the market. South African companies were expanding across different geographies, the mining and minerals industry that drives the region was performing relatively well, and some of the world’s fastest growing economies were located in the SADC region.

Fast-forward to today and the scene reads very differently; South Africa’s economy is weak, downgraded by the big international credit agencies; the aftershocks of the financial crisis of 2008 hit China and demand for minerals dipped causing a commodity price crisis; and global politics has become more uncertain than ever making futureproofing a difficult task. For successful business, now is a time for stability, for

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secure partnerships, and for confidence.

Look at the fashion retail sector for example. While consumer’s pockets remain tight, retailers must maintain control of their costs and quality. This means partnering with suppliers that consistently deliver, and have a reputation for value. B&M Garments, situated in Shashe near Francistown, Botswana, supplies clothing manufacturing services to South Africa’s big-name retailers. High-street brands such as Mr Price, Edcon, Retailability, The Hub and Foschini all look to the Botswana company for t-shirts, shirts, knitwear and other products. Its location makes it attractive and can keep lead times down compared to Chinese or Indian competition. But despite good relationships with customers, B&M Garments is feeling the pinch from a stale economy. Up until 2014, B&M Garments had invested around P20 million into its operation and up until 2007, it had

worked for major international brands including H&M and Bonprix but today, times are tough and there has been talk of the business relocating to Mauritius.

However, Managing Director Krishna Chinniah tells Enterprise Africa that, thanks to an improved partnership with local government, instead of leaving Botswana, the company will be investing in its facilities, alongside a local partner, to build a stronger, sustainable business.

“The main strategy of the company is to grow with added value; that is why we’re investing in embroidery machines, to add value to shirts. We are also looking at more advanced printing machines to add value to our t-shirt business and new dyeing machines so that we can expand our range of products.

“We will look to South Africa to source the machinery, specifically Berzacks which supplies high-quality machines. We should have these machines installed and up and running

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INDUSTRY FOCUS: TEXTILES

in the next three to six months and we believe it will help increase our turnover.”

STITCHED IN HISTORY B&M opened its doors in Shashe in 2000. Chinniah, a trained chemical engineer, worked in Mauritius following a seven-year stint working in the UK. Upon returning to his home country, he found little opportunity for a chemical engineer and instead chose to enter the textile industry which was booming and becoming increasingly prominent part of the country’s economy. After joining B&M Garments, which at the time worked heavily for H&M, Chinniah found there was a shortage of skilled labour and identified Botswana and Madagascar as potential areas for relocation.

Thanks to the incentives being offered by the Botswana government, Chinniah expanded the business into Shashe and began producing textile products to high international standards. In 2008 with the onset of the financial crisis, the company lost its big European contracts and refocused its strategy to target customers in South Africa. Although this took time, the idea paid off and the company now employs around 350 people.

“Our customers in South Africa such as Mr Price, MRP Sport, Edcon, the Hub and others are excited about our investments as it means we can complete more orders for them, where printing and embroidery are required,” explains Chinniah.

“In the local market, most of the t-shirts we produce need embroidery and printing for branding purposes.

We have some printing facilities but we do not have an embroidery machine right now so this will bolster our service portfolio in a big way.

“In the knitwear market, we have the machines and we are looking for more orders, mainly from the export market, to fill our capacity.

“With our increase in capacity and purchase of new machinery, we’re also

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going to need more technical people.

We will be recruiting and we will be training existing staff. In Botswana that is the way it is; where we are, there isn’t a lot of skill available and we always need time to train people.

Our technical staff come mainly from India and Sri Lanka. It’s similar to Mauritius where most technical staff come from India, Sri Lanka and other developing countries,” he adds.

ECONOMY UNZIPPED While the purchase of new machinery is exciting, and talk of potential recruitment drive may paint the picture of a blossoming business, Chinniah is quick to remind that all expansion and growth strategies are extremely carefully considered as the economic situation in which the region finds itself, and the state of the industry in Botswana, means that B&M Garments continues to find itself in a challenging position. Interestingly, the economic environments in Botswana’s neighbouring nations are key drivers behind slow business.

While Botswana’s most prominent export, diamonds, faced a tough time over the past few years with prices falling, the industry recovered slightly in 2016 but this had little impact on B&M; the real impact came from inability to commit to spending from customers in SA and Zimbabwe.

“It’s been very challenging,” admits Chinniah. “Our main markets are South Africa and Zimbabwe. The big chains in South Africa take 70% of our business and 20% goes to Zimbabwe with the balance supplied to the local market. The political instability in Zimbabwe has affected our sales very badly. Likewise, the political turmoil in South Africa and the unpredictable price of the Rand means that we are affected. Following President’s Zuma’s cabinet reshuffle, the Rand declined in the forex markets and our products lost value overnight with our imports becoming more expensive.

“We considered moving the operation to Mauritius but we are located in a rural area and are one of the biggest employers in the region so the local government in Botswana came to us and offered support as closing the factory would have had a seriously negative impact on this region.”

Fortunately, the government’s support goes beyond just financial backing at the B&M factory; it is also reaching out to the country’s retailers to encourage support of local industry.

“The government of Botswana has come to an agreement with retailers operating in the country and they must give at least 10% of the floor area to locally manufactured product. This has resulted in new orders for us as we have good prices – if you have low prices you get orders.

Obviously, we have to be sensible with our pricing as there is a certain margin we must make for orders to be worthwhile,” says Chinniah.

The IMF expects Botswana’s local economy to grow by around 4.1% in 2017, and increase from 3.5% in 2016 but down from the average of 5% over the past decade. However, according to the IMF, ‘economic growth in subSaharan Africa this year is set to drop to its lowest level in more than 20 years’, thanks to a plethora of issues including government policy and commodity pricing. Chinniah agrees saying: “In general, we are seeing spending decreasing slightly. It’s a general feeling all over Botswana that spending from customers is decreasing.”

TIGHT COMPETITION The second major hurdle that B&M Garments faces is competition. The well-documented basement pricing offered by companies from Eastern markets have long-dogged textile manufacturers of Southern Africa, but today local and international competition puts B&M Garments

B&M GARMENTS

under pressure from two angles. The whole situation is catalysed by the ever-increasing cost of road transport in Africa, and the challenges that are faced on those journeys.

“It’s not just the Eastern and Far-Eastern countries, we also face intense competition from companies in Madagascar and Mauritius as well,” says Chinniah. “We are part of the SADC community and that means we can export fairly easily into South Africa but our competitors in Madagascar and Mauritius are also starting to utilise the protocol to move their products.

“We also face the drawback that inland freight is in fact more expensive than sea freight, so our competitors can ship a 20ft container from Mauritius to Durban cheaper than we can send a small truck from Botswana to Durban. From Botswana, you must go to the border which is a time-consuming issue. We have had trucks hijacked and are in the process of buying new trucks and that will happen before the end of 2017.”

The transportation issue causes a problem further down the value chain, not just in delivering goods to clients, but also in sourcing raw materials from key market partners.

“I import raw material from India but competitors in Mauritius can import the same raw material from Mumbai to Port Louis which is a fairly easy journey,” says Chinniah. “I have to import from Mumbai to Durban, then rail or road the material from Durban to Botswana, then make the products, and then road or rail them back to South Africa. I have also experimented buying raw material from Lesotho but the inland transport cost remains high.”

Asked if the company could attempt to regain business with former big-name European clients, Chinniah admits that it’s unlikely in the current market while the likes of H&M look for cheap pricing from existing suppliers.

MANAGING DIRECTOR KRISHNA CHINNIAH

“It’s very tough,” he says.

“Those companies have now built relationships with suppliers in Bangladesh or China and enjoy favourable pricing. The market is difficult; manufacturing in Africa is very challenging. Without support from the local government, our operation would be very very tough.”

But, despite what seems like a lot of negativity, Chinniah and B&M Garments remains upbeat. Its relationships with South African customers and local government remains strong, its abilities and facilities are growing, its workforce will continue to be upskilled, and its impact on the local community remains invaluable.

A key theme of so many success stories over the past five years is that those who can survive through the

tough times and continue investing when all others consolidate are the ones who come out in the strongest position. This is the story for B&M Garments for the past 17 years.

“We are always looking to increase our product list and diversify into added value. With the government supporting us, we are also hopeful to take on more local orders, especially through added value products,” Chinniah concludes.

B&M GARMENTS +267 2485665 krishna@bnmgarm.co.bw www.bitc.co.bw/bm-gaments-pty-ltd

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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.

TANZANIA INTERNATIONAL TRADE FAIR Saba Trade Fair Grounds - Mwl. J. K. Nyerere JUL 01 - 05 SABC EDUCATION AFRICAN EDUWEEK Gallagher Convention Centre JUL 04 – 07 OIL & GAS AFRICA Cape Town International Convention Centre JUL 11 - 13 BUILDINT KENYA Kenyatta International Conference Center JUL 13 - 15 POWER-GEN AFRICA Sandton Convention Centre JUL 18 – 20 MEDIATECH AFRICA Ticketpro Dome JUL 19 - 21

OIL & GAS AFRICA JULY 11 | CAPE TOWN Oil & Gas Africa is dedicated to developing the mid-stream and downstream sectors across the continent.

As part of the Cape Industry Showcase (CIS) for the past 13 years, Oil & Gas Africa has been the key meeting point for local and international technology and service providers, equipment suppliers, and other companies directly serving the industry’s requirements.

Oil & Gas Africa 2017 will give industry professionals the opportunity to learn about new products and technologies, enhance their expert knowledge, and network with their peers.

POWER-GEN AFRICA JULY 18 | JOHANNESBURG Africa’s premier electricity industry

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event, covering power sector strategy, generation technology, renewable energy, transmission & distribution.

End-to end, it is the must attend event for all those generating and delivering power as well as large scale users of electricity.

KZN INDUSTRIAL TECHNOLOGY EXPO JULY 25 | DURBAN The KZN Industrial Technology Expo (KITE) is the regional industrial technology trade show for the KZN region, featuring more than 110 exhibiting companies and over 5,000 visitors.

KITE is the definitive forum for a diversity of industrial technology and services, specifically suited to the KwaZulu-Natal region. It provides a place where you can source products and services, share ideas and learn from industry experts, as well as network with industry peers.

KZN INDUSTRIAL TECHNOLOGY EXHIBITION Durban ICC JUL 25 - 28