DEC10_EMEA

Businessexcellence ACHIEVING

DECEMBER 2010

O N L I N E

www.bus-ex.com

Five rules golden

for transforming outsourcing partnerships

Editor’s letter

EDITORIAL

Managing Editor Becky Done bdone@bus-ex.com Editor In Chief Martin Ashcroft mashcroft@bus-ex.com

DESIGN

Production/Creative Director Zachary Smith zsmith@bus-ex.com Production Designer Mallory Lindsley mlindsley@bus-ex.com

BUSINESS

Director of Editorial Research Scott Mason smason@bus-ex.com Director of Sales Sean Brett sbrett@bus-ex.com Assistant Research Directors Vincent Kielty vincent@bus-ex.com Sam Howard showard@bus-ex.com Richard Halfhide rhalfhide@bus-ex.com Robert Hodgson rhodgson@bus-ex.com Administration & Operations Alice Doran adoran@bus-ex.com Chief Executive Andy Turner info@bus-ex.com Subscriptions info@bus-ex.com

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Knowledge is

power No entrepreneur worth their salt would attempt to start a new business without a business plan—an analysis, based on thorough and reliable market research, that details at the very least the target market and customer base, competitors, and financial projections.

But market research isn’t just for startups. It can also assist established businesses to attract new customers and retain existing ones; ensure that products and services continue to be accurately targeted; and most importantly, to avoid disaster.

Devmark Property Group is one company convinced of the benefits of ongoing market research. Little wonder, since it led the company to withdraw from the residential property market in 2006 just before the bottom dropped out. “Yes, it is true that we have a passion for thorough market research before we decide to do new developments,” asserts group managing director Hein Ehlers. “And

equally important to us is to carry out research when we have completed a development—you sometimes learn more from that analysis and how to improve processes for the future.”

This is a principle that South Africa’s Retsol Stores wholly embraces. The company is currently on a major drive to expand and grow its Corner Bakery brand, and to do this, it makes use of extensive market research. This enables Retsol’s franchisees to customise their menus according to local tastes and, at the same time, keep ahead of what their customers want and expect. “This is a strategy that has worked very well for us,” comments chairman Wayne Duncan. “We are able to keep our branding consistent across the business and build brand recognition while focusing our product’s range on a particular target market, on a store-by-store basis.”

Knowledge is power, as the saying goes; and sound market research can help you acquire it.

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STRATEGY: Collaborate to achieve business goals Collaboration systems are revolutionising the way SMBs manage data across their organisations.

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OPERATIONS: Transforming outsourcing partnerships Why are some outsourcing partnerships so successful, while others disappoint or fail— and what is the solution?

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SUPPLY CHAIN: The anatomy of success The right S&OP system can deliver healthier financial results and help de-risk the supply chain.

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SUSTAINABILITY: Sustainable in more ways than one As we emerge from recession, technology can help contribute to business as well as environmental sustainability.

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BT South Africa Talking up Africa This company is continuing to help multinational and regionally operating groups make sense of their communications.

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Barcelos Feeding healthy growth As the world emerges from global recession, the prospects look good for this rapidly expanding restaurant franchise.

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Retsol What’s cooking?

Undergoing a major restructure has placed this company in a strong position for rapid growth over the next five years.

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Devmark Property Group Flexible thinking Surviving the property slump and the subsequent market wobbles has required flexibility and reliable market research.

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John Craig Well suited ambition To help it compete in today’s tough retailing climate, this clothing retailer is rolling out a range of in-house brands.

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Shereno Printers Mightier than the sword Founded during apartheid, this design and printing company is now undergoing exponential growth and success.

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ABB Australia Fast-tracking success As 2009 drew to a close, this company achieved a remarkable feat of engineering collaboration, logistics and lateral planning.

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Target Engineering Construction Company Perfect aim Impressive growth over the past 40 years in the Middle East has been mirrored in the engineering and construction sector.

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Sotkamo Silver The silver lining This Swedish company is in the process of breathing life into the Taivaljarvi silver mine project in central Finland.

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KK Security Risk and reward This Nairobi-based company has made its reputation bringing professionalism to East Africa’s security industry.

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Vagonmash Specialists in design Thanks to its commitment to innovation and excellence in design, this Russian manufacturer is going from strength to strength.

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Emirates Falcon Electromechanical Co. Built on reputation This electromechanical building services provider is drawing on its strong track record to ensure continued success.

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MBT Petroleum Rocket fuel With the right background, a sound strategy and some entrepreneurial flair, this business has taken off like a rocket.

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Toyota South Africa Sustainable improvements Toyota South Africa has been utilising Toyota’s famous management philosophy to help it achieve sustainable improvements.

CBI-electric: african cables A commitment to service This cable manufacturer and installer is committed to safe, quality work, enabling it to stay at the top of its game.

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Lamprell A solid platform Economic growth in the Arabian Gulf has been matched by the growth and evolution of Lamprell, a beneficiary of the oil and gas bonanza.

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LontohCoal Coal to float With flotation on the Hong Kong stock exchange planned for next year, LontohCoal is set to become a major coal producer.

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Optimum Coal Acquisition trail Two highly productive coal mining assets and a pipeline of projects under development point to an exciting future for Optimum Coal.

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Feltex Fehrer In the driving seat Operating four plants across South Africa, this company is the main foam supplier to the country’s automotive industry.

CMC Holdings Ltd Beyond the border Now one of East Africa’s leading players in the motor industry, CMC Holdings Ltd is preparing to further extend its reach.

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Crown Berger Kenya Ltd Painting the nation Adopting world-class quality standards and practices has positioned East Africa’s leading paint producer well for future growth.

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Lusaka Water & Sewerage Company Water well Having achieved a remarkable turnaround over the past four years, this water utility is now aspiring to become world-class.

Ocean Rig UDW Equipped to deliver In the oil well drilling business, having the latest equipment helps; but it’s the human element that still makes the difference.

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Penn Pharma Penn pals This pharmaceutical services company offers something for everyone—from entrepreneurial sole scientists to multinational household names. aQuellé Purely different Benefiting from a uniquely pure source of spring water, aQuellé was first to spot a desire for flavoured water in South Africa.

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Plastop Bronkhorstspruit Breaking the mould State-of-the-art facilities and a focus on innovation are driving success at this plastic packaging manufacturer.

Keppel Seghers Starting from scratch Qatar has had to build a state-of-the-art waste management plant to avoid becoming a victim of its own success.

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Collab to

bus

Connecting the people, processes and knowledge of an organisa is a challenge common to many small to medium-sized busine (SMBs). Jamie Stewart, UK managing director of Exact, tak closer look at how collaboration systems are revolutionising way SMBs manage data across their organisat 8

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Strategy

borate achieve

sinessgoals

ation sses kes a g the tions

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n an increasingly competitive business environment characterised by mounting regulatory pressures, companies are searching for efficient ways to record, store and manage information often scattered across different systems, isolated in corporate divisions and spread across geographic locations.

According to a recent study by the Economist Intelligence Unit, 70 per cent of executives at SMBs believe that managing data across different silos represents ‘more than a moderate constraint’ to achieving their business objectives. Vendors are currently offering a plethora of conferencing, communication and application tools that support the sharing of information, yet as standalone entities these tools struggle to function as part of the nucleus of business processes. This leads to wasted effort, misunderstanding between divisions, and ultimately, to companies missing their business goals.

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Designed to implement a more effective strategy by optimising business processes, collaboration is the backbone that supports any organisation, bringing together information on customers, employees, partners, projects and finance.

Effective collaboration can unite disparate elements of a company’s operations—a crucial ingredient for success.

With fewer resources, lower economies of scale and less market power than larger corporations, many SMBs also have to cope with a heavy regulatory burden. Faced with these challenges, collaboration strategies for SMBs are now being aligned with strategic business initiatives and operations. In this day and age, collaboration needs to convert information into intelligent action if it is to help organisations achieve their critical goals.

Knowledge management tools are a critical component of collaboration for mid-sized businesses, supporting business decisions with up-to-date information on the performance of their company and the market. Regardless of which team has ownership of it, collaboration allows different business units to communicate and share this information, enabling swifter decisions on key issues. A single enterprise database or extended ERP system enables this information to be digitised and stored immediately, where it can then be structured and enriched by hyperlinks between data. Mandatory keywords and free text search options help to ensure that all relevant people have access to the information they require.

Today’s increasingly rigorous compliance requirements mean that companies are under more pressure than ever before to keep and manage accurate business records. But the amount of data that even a single business can produce can be staggering, and many companies are struggling to get current data properly archived. Despite their best efforts to comply, many organisations remain uncertain on exactly what data needs to be archived and retained. A collaboration foundation

that features a single source of information makes compliance much easier and more attainable.

Even those companies with multiple locations know exactly where to look for information. This approach makes expensive information inventories and complex analysis unnecessary.

Successfully automating all business processes allows an organisation to plan, execute and monitor activities, establish key performance indicators and track when needs are met or action is taken. A core part of this infrastructure is the creation and maintenance of trusted data. Data is entered once, into a single database, and all transactions flow within that source. This creates an effective information management environment where information is delivered to the person— when they need it, and how they need it.

Organisational communication needs to be a formalised part of people’s everyday working lives. Knowledge and document management is about taking what one person knows and making it accessible to the rest of the organisation. All information needs to be captured and managed in a user-friendly, flexible document creation and management system that allows organisations to streamline their internal and external communication.

Most collaboration tools are designed to boost employee productivity, with project management tools in particular targeting the delivery of measurable improvements that will affect an organisation’s bottom line. A project management solution gives employees access to relevant information such as availability of people and assets, time input and budget. This type of solution also doubles up as a knowledge base for storage of all information on completed projects, which can be used as a template for new projects, saving time and increasing productivity.

Product improvements are a key factor in determining return on investment in enterprise software. Businesses need a platform to capture and retain the speedy exchange of ideas that drives innovative development across the entire organisation. Working collaboratively allows

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Strategy

people to better understand and connect with their customers so they can act upon current and future needs. Ultimately, that means companies can develop, market and sell their products and services more easily.

Marketing often generates the second-largest expense budget for an organisation, but sales is responsible for generating revenue. A collaboration solution that promotes cooperation between marketing and sales can help companies to better identify business leads, and convert those leads into opportunities, and the opportunities into wins. It can also decrease sales times, optimise handovers between marketing, sales and services teams, and ramp-up time for new sales personnel.

But software must also be easy to use. The judges are not the IT department, but the people who use the solution as part of their work.

Ultimately, ease of use is about speed to return on investment: the faster a technology can be learned, the sooner the organisation can benefit.

Any collaboration effort needs to be closely aligned to an organisation’s critical business initiatives. For SMBs in particular, a solution that incorporates a single, centralised database is well worth considering as a faster, easier and less expensive solution to implement.

Collaboration capabilities that are an intrinsic part of a system used every day minimise the risk that can stem from change. Best-of-breed solutions can make sense for the larger end of the organisational spectrum, where IT budgets and resources are correspondingly greater. But such solutions historically take considerable time to implement, driving up costs and extending the time to reach return on investment. Enterprise collaboration systems offer all of the elements necessary for successful collaboration—not by layering a set of separate solutions onto the existing business software, but by being a part of the existing core business data and processes.

Exact provides software solutions that support every business activity and give real-time insight into the entire business. www.exact.com

action if it is to help organisations achieve their critical goals�

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Transfo ou

pa

As a co-author of a new book entitled Vested Outsour Kate Vitasek outlines the 10 key ailments that commonly a outsourced partnerships and presents five golden rules for su

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orming utsourcing

artnerships

rcing, afflict ccess

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utsourcing has been an established commercial practice for a quarter of a century, since the days when Peter Drucker coined the mantra: “Do what you do best, and outsource the rest”. Although precise definitions are contentious, it has been estimated that outsourcing programmes account for 12 per cent of US GDP. Three out of five companies polled in a recent PricewaterhouseCoopers survey have outsourced at least some business processes; and a 2008 Deloitte Consulting Outsourcing Report suggested that “83 per cent of respondents reported that their projects had met their Return on Investment goals of slightly above 25 per cent”.

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And yet business is littered with stories of outsourcing projects that fail—or perhaps more importantly fail to stay the distance—initial gains, certainly, but followed by a relationship that descends into acrimony. Some partnerships, such as the 20-year alliance between Jaguar and Unipart Logistics, just keep on delivering for both parties; others run into the sand.

This perplexed the United States Air Force (USAF), which spends over $60 billion a year with outsourcing partners. Why are some deals so successful, while others disappoint or fail?

USAF asked the University of Tennessee to investigate, and the results are contained in Vested Outsourcing—five rules that will transform outsourcing (K Vitasek, M Ledyard, K Manrodt; published by Palgrave Macmillan).

Lead author Kate Vitasek explains that after studying many outsourcing relationships in logistics and in other business processes, they have identified 10 ‘ailments’ that impede successful outsourcing, and the five rules that will help both sides find ‘the pony’.

The ‘pony’, Vitasek explains, is the difference between today’s solution and what the optimised solution could look like, if the parties only knew to look for it. (The derivation comes from the dialogue: “Why are you excavating that pile of horse manure, little boy?” “Why Sir, for this amount of manure there must be a pony in there somewhere”). The point is that, except for the outsourcing of the most commoditised services and processes, real and enduring success for both parties comes from thinking and acting, not about ‘What’s in it for me?’ but ‘What’s in it for WE?’. In other words, says Vitasek, outsourcing partnerships are not to be seen as a zero-sum game: working together, and following the five rules, the game gets bigger for both sides. That’s the pony.

So what are these ailments that frustrate such good intentions? (It’s worth noting that several of these behaviours are not exclusive to outsourcing).

1. Penny wise, pound foolish. A company outsources purely on cost. This can lead to tradeoffs in quality and service, ‘beating up’ the supplier, and a vicious cycle of re-bidding, and transitioning to a new ‘cheaper’ supplier. Either outsource providers will refuse to work with that firm, or they may bid so low that they go out of business.

2. The ‘outsourcing paradox’ is Vitasek’s term for

the situation where the service buyer’s ‘experts’ attempt to define a ‘perfect’ statement of work on how the process is to be performed, down to the last touch. Obviously, there is then no scope for the service provider to bring their own skills, knowledge and abilities to the table.

3. The activity trap. Related to the last point, this is where providers are rewarded on a transaction basis—the more operations they perform, the greater their revenue and profit. Clearly, there is no incentive to reduce the number of non-valueadded transactions, because that would result in loss of revenue.

4. ‘The junkyard dog factor’, as Vitasek terms it, is where, to protect their own jobs or status, employees in the outsourcing firm insist that certain processes simply must stay in house.

Often this also means that the ‘best’ employees, perhaps those who wrote the statement of work in ailment 2, are retained in-house as largely unnecessary ‘supplier managers’.

5. The honeymoon effect. Initially all is positive, as the provider ramps up to meet the customer’s expectations. But after a time, the low hanging fruit has been plucked, there is little incentive for the supplier to try harder for the more difficult goals, or to renew investment, and the relationship deteriorates.

6. Sandbagging. To get over the honeymoon effect, a buyer might offer bonuses payable on set performance improvements—perhaps a certain percentage reduction in inventory holding each year. It may in fact be possible to outperform this, especially in the early years, but the provider will be sorely tempted to ‘bank’ this potential gain against harder times.

7. The zero-sum game. This is the belief that if something is good for the outsource provider, it is automatically bad for the buying side. Vitasek extols ‘the power of ANDs’—‘can I have improved service AND lower cost?’ Probably—but not if you don’t believe in the possibility of ‘win-win’ to start with.

8. Driving blind is quite simply the failure of the parties to start off with an agreed definition of what success will look like. Often, costs are tracked, but there is little formal governance devoted to the other aspects of the relationship, such as service levels.

9. Measurement minutiae shows up in a plethora of metrics designed to capture every single aspect of the outsource provider’s performance—

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“All parties need to spend time collaboratively to establish explic

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perhaps 50 or 100 metrics, many of which may be of little practical assistance, if indeed they are ever reviewed at all.

10. ‘The power of not doing’. The contract may, for example, specify quarterly review meetings around a scorecard of metrics, but if the metrics are not monitored and the meetings not held, sub-optimal performance should hardly come as a surprise.

Those are the common problems that Vitasek and her team have identified in failed or failing outsourcing arrangements. But is there an alternative approach? For success in these sorts of outsourcing partnerships, Vested Outsourcing implies the adoption by both sides of five rules.

Rule 1: Focus on outcome, not transactions.

Flip the thinking from what detailed operations the service provider is performing, to desired outcomes—how is the provider improving turnaround, or whatever the problem was. Desired outcomes are still quantifiable, but take a different form—they may be targets for availability, reliability, revenue generation, employee or customer satisfaction and the like.

Unipart Logistics and Jaguar have a joint vision: “To support Jaguar Dealers in delivering a Unique Personal Ownership Experience to Jaguar drivers worldwide, ensuring industry leading owner loyalty through partnership and world-class logistics.”

This joint vision empowers Unipart Logistics to deliver the logistics solution that enables Jaguar to maintain its leading position and its quality image.

Rule 2: Focus on the what and not the how. If

the partnership is going to be outcome-based, it can no longer have a hundred different service level agreements (SLAs) that the buyer is going to micromanage. The outsource provider has won the contract because he is supposed to have the expertise that the buyer lacks. So the latter has to trust the former to solve problems. The service provider is, or should be, constantly in the marketplace, keeping tabs on new developments and processes. Performance partnerships let each firm do what it does best—unless you have the skills and resources to keep up with the latest innovations, leave the details to the experts.

In the Jaguar-Unipart relationship, Unipart Logistics invests in the creation and implementation of unique processes and products to maintain a continuous improvement to its service—for instance, the Direct to Dealer programme has increased availability and shortened lead time on customer-critical orders.

Rule 3: Be very clear on well defined and measurable outcomes. Ideally, there shouldn’t be more than about five high-level metrics. All parties need to spend time collaboratively to establish explicit definitions for how relationship success will be measured. Given those outcomes, the service provider can propose a solution that will deliver at an acceptable predetermined price. This constitutes a fundamental shift in the business model, moving risk from the outsourcing company to the service provider. The latter is paid for the value the desirable outcomes produce, not for the activities performed.

it definitions for how relationship success will be measured”

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“Optimise pricing model incentives for the best cost/service trade-offs”

The Jaguar Global Control Centre is the focal point to manage, measure and control the complex Jaguar aftermarket parts supply chain, from scheduling orders on suppliers through to dealer deliveries. It brings together people, processes and systems to continuously improve each step of the supply chain.

Rule 4: Optimise pricing model incentives for the best cost/service trade-offs. Vitasek says, “I need to pay on incentives that encourage you to optimise my trade-offs, to find the ‘power of AND’. When you achieve ‘AND’ how am I going to pay you?” This may imply open book accounting, although Vitasek acknowledges that isn’t always possible.

Vested outsourcing does not guarantee higher profits for service providers; but it does provide them with the autonomy and authority to make strategic investments in their processes that can generate a greater RoI for them over time.

Unipart Logistics invested significant resource in reviewing compliance and reducing duty payments—the benefits were shared between both companies.

Rule 5: A governance structure should provide insight, not merely oversight. The structure that governs an outsource agreement should be providing both parties with real knowledge of how operations are developing and improving—and of where the next threats and challenges may be coming from. As Vitasek says, “Contracts may be static, but outsourcing is dynamic”.

The Unipart Logistics team work with Jaguar engineers during the development of a new vehicle to ensure a high level of parts availability to underpin a car’s debut. The collaborative relationship works too, to support Jaguar’s expansion into new markets such as China.

Jaguar and Unipart Logistics are cited by Vitasek as having an outsourcing relationship that has in large part avoided the ‘ailments’ and followed the ‘rules’, as shown by the fact that the arrangement has continued to succeed for two decades, even surviving changes of ownership at Jaguar. She claims that “Jaguar say ‘we never look at the contract, we behave this way’. I advocate writing a contract that’s right for business, but then shove it under the table and don’t look at it. What Jaguar and Unipart Logistics have is a shared vision, as well as one of the best ‘lean’ philosophies in the world outside Toyota. End-to-end, total-cost, lean thinking applied across the supply chain is pretty powerful. Unipart Logistics convey their lean thinking to the supply chain which then unlocks value for Jaguar.”

Vitasek concludes: “Unipart and Jaguar have followed the rules—with a shared vision and a long-term contract on a lean path.” And that makes for an effective and workable partnership.

Kate Vitasek is a faculty member at the University of Tennessee’s Center for Executive Education, and the founder of Supply Chain Visions. Vested Outsourcing is published by Palgrave Macmillan.

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s Europe moves out of recession, many business leaders are reflecting on the lessons they have learnt. Thankfully, the phrase: ‘If only we had known how the credit crunch was going to hit us’ has been joined by: ‘What can we do to make sure this never happens again?’. Businesses are now examining the systems and processes that offer not just growth but protection and resilience.

At the top of this list of options is sales and operations planning (S&OP). In a recent supply chain management survey for Infor conducted by AMR Research, 88 per cent of respondents said they are already using or planning to deploy an S&OP solution in the next 12 months. The report also found that the number one area of S&OP that businesses want more support in is its ability to provide ‘what if’ simulation capability.

However, the impact of the recession is not the sole driver. The concept of S&OP has been around since long before the recession hit. However, it is only recently that technology has reached a sufficient level of maturity to enable complete systems to be developed. This is because S&OP is not just a technology—it is a comprehensive process that spans many departments, from finance to demand planning to design, production and even sales and marketing. Cutting across the business in such a fashion has traditionally been outside the realm of possibility for business applications.

Most S&OP solutions today are still based on the use of spreadsheets—an Aberdeen Group survey reported that up to 85 per cent were founded on spreadsheets. This led to an unhappy state of affairs, where up to 60 per cent of the time spent on S&OP was reported to have been taken up by activities such as manually importing and exporting data, then validating and cleansing the information.

This spreadsheet-based approach is long on effort and short on return. It does not offer proactive analysis, cannot integrate across the business, suffers from poor data integrity and consequently delivers weak reporting. All of this happens alongside the customary issue that spreadsheets are rarely easy to use. This stands in stark contrast to what businesses actually want from their S&OP— the ability to quickly and accurately explore ‘what if’ scenarios across the business.

Now that the underlying systems have matured to offer an alternative to spreadsheets, what should you look for in technology terms to

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support your S&OP process?

Firstly, a business needs to collate information from different sources and then put it into a common hierarchy. This means all relevant departments can not only input information but also take out their own analysis in the format and language that they already use. This is actually two processes combined: the first is to pull together data from disparate departments. Different departments will use different systems and technologies—from ERP systems for production to CRM systems in marketing, SCM solutions in demand management and financial software in accounting.

Secondly the imposition of a ‘common hierarchy’ simply means that the information is put together in a way that all departments talk the same language.

This demands an open framework where data from one system can move into and be used by another, without creating a whole new headache of integration. Services oriented architecture (SOA) is the most promising of these technology frameworks, as it offers the potential for open integration on common standards—not proprietary to an individual vendor’s technology stack.

What does this situation look like? Imagine three different departments all feeding into the S&OP system. Demand planning talks in terms of quantities needed and sales values; finance quotes revenues and costs; and production lists volumes and output.

The common language that arises when these functions communicate is that of value. This is usually, but not always, expressed in terms of sales, costs, margins and services levels. However the route to this improved bottom line can vary wildly.

It is also important that the hierarchy works at levels of detail that is relevant to decision-makers.

Senior management is more likely to talk in terms of product groups, regional performance and horizons of 18 months. Functional managers will want to drill to the underlying details and see actual customers, products and orders. The inability to bridge strategy and operations has traditionally been one of the sources of frustration for S&OP practitioners.

The second element of a successful S&OP implementation is enforcement. S&OP is a comprehensive process and it needs to be mandated throughout all departments. From a technological perspective, this means the use of a workflow engine that ensures the rules of the S&OP process are adhered to.

Supply chain

The

anatomy of

success Effective and dedicated sales and operations planning (S&OP) is a crucial aspect of any successful business. Andrew Kinder of Infor examines how the right S&OP system can deliver healthier financial results and help de-risk the supply chain December 10 www.bus-ex.com

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“Businesses are now examining the systems and processes 22

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Take the example where an S&OP process runs on a monthly cycle (this varies from customer to customer). The workflow engine (and indeed, the entire business) has an overall framework and timetable. Specific actions need to be completed on a given day by an individual or department.

For example, day six may see demand figures forwarded to production and flagged to finance.

In the scheme of overall processes these may be a pre-requisite of the production component order on day eight and finance estimates due on day 20. This is done primarily by email to flag the action necessary to the relevant person in a timely fashion. This links directly to the tools and systems needed to complete the action—for example, the ERP system in place.

The management function of S&OP can then track when these actions have been completed. This does not just measure adherence to the processes but also quickly identifies delays and bottlenecks.

To aid in the analysis, the workflow engine can also measure and report on changes to the plans.

This then leads on to the third element of successful S&OP adoption: the use of the processes to explore alternative scenarios. This is the all-important ‘what if’ capability that organisations prize above all else.

By copying across data from the S&OP systems into a separate, distinct ‘sand-box’, business heads from all departments can adjust individual parameters.

They can then see the outcomes of possible changes before committing to them in reality.

For example, a production manager can assess what happens if they change manufacturing patterns, or a supply chain planner can anticipate the likely impact of ramping up in response to seasonal changes in demand. Critically, the impact of these changes can be examined by other functions, including finance and sales. Most importantly, the business can then compare and contrast a range of simulated outcomes to see how they can improve the business in terms of customer service, cost or profit. The impact of change (and the attendant risk) can be reduced.

When changes are implemented, the business has a far better idea of what ‘should’ happen.

The last element of successful S&OP is its use to deliver ‘court sense’ to the C-level executives.

In basketball, ‘court sense’ refers to a player’s ability to see everything going on around the court and his understanding of how it contributes to winning the game. Similarly, S&OP should yield the visibility of information that executives need to guide their decisions, right across the business.

This usually refers to the ability to identify and exploit trends. This ‘bigger picture’ is commonly expressed in graphical forms, such as pie charts or graphs. However, to support the decisions made, S&OP must also enable a frictionless drilling down to the detail and back again.

Across the aggregated information that is covered by S&OP, this is quite a task and it is often where current systems fall down. Up until recently, S&OP has either offered only the view on the ground or the view from 30,000 feet. Thankfully this has now begun to change.

So what does such a successful implementation of S&OP actually deliver to the business?

According to research from Aberdeen Group, S&OP leaders report healthier financial results in terms of customer service levels, forecast accuracy, profitability and cash-to-cash cycle times—key measures for any business.

As the four tenets above show, S&OP helps organisations align strategic plans and operational execution. It also enables those plans to be enacted in the best possible method for the benefit of customers and the company.

S&OP has become an essential business process in de-risking the supply chain. The reality is that in any operational planning process there are multiple ways to meet customer demand. But which is the ‘best plan’? Best for customers?

Best for the business? S&OP—and the modern technologies that support it—delivers confidence that a business has explored the alternatives and hit upon that elusive ‘best plan’.

Andrew Kinder is EMEA director of Solution Marketing at global ERP software provider Infor. www.infor.com

s that offer not just growth but protection and resilience” December 10 www.bus-ex.com

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Sustainab S

ustainability put simply means the capacity to endure. Most people consider sustainability in terms of the environment and energy consumption, but equally, for businesses it should also reflect what can be easily supported by the business, financially and otherwise. The goal is to create a win-win situation in which the organisation can thrive without compromising the environment.

Using technology can certainly help businesses overcome environmental and financial barriers in order to allow them to strike the right balance between what is environmentally sustainable, as well as sustainable to the business.

The devolution of business travel and adoption of web, audio and video conferencing is a prime example of how technology can be used to create a ‘middle ground’, where businesses don’t lose out on the many benefits of close collaboration with colleagues dotted across the globe and, equally, environmental impact is at its lowest. With 80 per cent of communication consisting of nonverbal and visual cues, the use of video conferencing means that businesses can communicate more effectively with clients and colleagues. Expressions are better understood, confusion can quickly be addressed, and working relationships can be better maintained.

With the recent global financial meltdown, coupled with the travel chaos arising from natural disasters, weather disruption and strikes, many businesses simply could not sustain the wasted time or large corporate travel bills and had to make huge cutbacks. Where once corporate expenses would cover a flight halfway around the world, web, audio and video conferencing became a preferable and more financially viable option to business travel as fuel costs skyrocketed and airline delays became more frequent. In fact, during the ash cloud crisis, ACT noticed a 300 per cent increase in bookings for its Proximity video conferencing suites.

While it was obvious that business travel would naturally take a massive hit in most organisations that were trying to cut costs over the last 18 months, now it seems business travel is on the up in line with the economy slowly recovering. In fact, BAA recently reported a 3.4 per cent increase in passengers, largely due to the upturn in the business traveller market.

This is great news for the aviation industry and, clearly, business travel will always have its place in the corporate world; but organisations must remember that it’s not always purely about the bottom line—and using technology such as

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m

David Gladding, s sales at ACT Con as we slowly eme technology can h as well as environ

Sustainability

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moreways thanone

senior global director of nferencing, explains why, erge from recession, help contribute to business nmental sustainability December 10 www.bus-ex.com

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“With 80 per cent of communication consisting of non-verbal and visual communicate more effectively with clients and colleagues�

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Sustainability

conferencing to reduce business travel isn’t just about saving money when the chips are down.

It’s important to remember that flying and lengthy travel journeys take their toll in other ways as well. For example, a three hour business meeting in the US might ultimately produce 3,442 lbs in carbon output and the total journey might take up to 24 hours, not to mention the nearly £1,000 airfare. If, for instance, web conferencing was used instead, it could not only save the carbon output, but also save approximately £919 and the wasted time spent travelling*.

Air travel is also the fastest growing cause of greenhouse gases such as carbon dioxide, which have been strongly linked to climate change.

Globally, the world’s 16,000 commercial jet aircrafts generate more than 600 million tonnes of carbon dioxide (CO2) per year. And the European Aviation Industry alone estimates that their planes release nearly 350,000 tons of CO2 into the atmosphere each day.

Furthermore, a survey of UK chartered flights showed that just 63 per cent of flights were on time in the 2009-2010 season, so for a significant amount of travellers there is also wasted time to consider. This is time that could either be spent productively for the company or with family, importantly addressing work-life balance issues.

Advances in web and video conferencing can be helpful in giving employees the flexibility to plan work interactions around their schedules, rather than being dictated by everybody being in the right place at the right time. Video conferencing is the next best thing to sitting around a table and, importantly, can help avoid long haul travel, jetlag or even just sitting in traffic for teams that need to engage and collaborate but are located across different locations or time zones around the world.

This flexibility of remote working capabilities empowers employees to manage their own time effectively and create the work-life balance that works for them; and it’s no surprise that more and more employers are recognising that striking a

sensible work-life balance is not a nice-to-have optional extra, but a core strategic business issue that has wide implications for the quality of working life within an organisation as well as on productivity, motivation and loyalty.

The business case for a virtual team environment is indeed a compelling one; and not just when times are tight. For example, when the UK was snowbound earlier this year, one in five workers stayed at home and the cost to the British economy reached between £600 million and £2 billion, according to the Federation of Small Businesses. Technology, from mobile and remote working, to unified communications, IP telephony and conferencing, all contribute to virtual team environments and help avoid these losses due to uncontrollable circumstances. They can also save money on facilities costs and employees save time and money on commutes. Better still, companies with virtual teams are more flexible; they can hire and keep employees based solely on talent, not location; they can enter new markets without making large capital investments; and they can support a 24/7 workforce, all with very little environmental impact.

The somewhat forced cutbacks of the last 18 months should serve as a lesson to businesses and should be seen not as a negative, desperate cost-cutting exercise, but as a positive, long term strategy. Companies should look to harness these opportunities and at the same time streamline business processes and reduce their carbon footprints without compromising business relationships. Without a doubt, business travel will always have its place in multinational organisations, but the key is to strike a balance between the necessary travel and use of remote working technology which will ultimately be sustainable to both the business and the environment. *To calculate your Conservation by Collaboration, visit the ACT website: www.actconferencing.com/ aboutus/calculator.aspx

l cues, the use of video conferencing means that businesses can

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Talking up

Africa 28

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In previou made in A and oil. To telecommu in discuss

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us eras, fortunes have been Africa through gold, diamonds oday, the smart money is on unications, as Alan Swaby learns ion with BT South Africa

BT South Africa

I

t’s not surprising that one multinational executive in charge of IT told his contact at BT that he would simply like to hand over the keys to his IT shop and let someone else run it. Maybe such an admission is rare; but it’s unlikely to be the first time those sentiments have been expressed. The whole subject is getting just too complicated for mere mortals to comprehend!

If you share those feelings when viewed from a European perspective, imagine what it must seem like when your area of responsibility is Africa: 53 different countries with telecoms systems born out of differing colonial pasts, with differing levels of development—not to mention standards of reliability.

Faced with this kind of technical challenge, how do the global giants of this world pull all their network offices together in order to run their business efficiently? One way is to hand the keys over to BT. From its sub-Saharan headquarters in Johannesburg, BT South Africa has been helping multinational and regionally operating groups make sense of their communications since 1992.

“Our presence here,” says regional general manager Keith Matthews, “stemmed from our interests as a wholesale supplier of voice minutes, utilising investments in subsea cables

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BT South Africa

connecting regional telcos. But the business you see today is a result of how BT evolved when all the multinational clients were consolidated into BT Global Services.”

Since privatising the market in South Africa, the once monopolistic supplier of fixed telephone services still remains dominant but faces a threat from over 400 licence holders who, to some degree or other, provide competition. BT has no intention of playing in that particular scrum: instead, it focuses its attention on a relatively small number of South African companies with global or at least some regional aspirations and provides them with networked IT services. Whether clients want voice or data, or work on digital or analogue networks, BT uses its registered entities in 32 of the 53 African countries to cross literal and technological borders in the quest to help customers get the most out of their information and communications technology.

“Our presence here stemmed from our interests as a wholesale supplier of voice minutes, utilising investments in subsea cables connecting regional telcos” Seven years ago, the workforce amounted to just 10 people; today, there are 120 communications professionals designing and managing customised networks for more than 300 blue-chip customers in the region, including such giants as Anglo American, Unilever, Thomson Reuters and Sasol.

The question is often asked how BT offers value when it doesn’t own the networks on which it works. The reason is the £789 million invested by the group in R&D. “There are countless technology companies,” says Matthews, “but they tend to focus on the far horizon. BT, on the other hand, offers systems that work now. We sell to clients the same equipment and systems we use ourselves.”

The telecommunications business is not for the faint hearted; but as the original privatised utility company, BT has long passed through the phase many of its competitors and clients are currently facing. It has the experience and the systems that stand it in good stead compared with emerging rival companies.

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BT South Africa

Scallan Communications Scallan Communications ensures that BT Global Service’s business excellence is conveyed to key decision makers in South Africa through the most appropriate media. Reputational management and top-of-mind-awareness is crucial in every marketing endeavour.

Scallan

Communications

builds

and

maintains your dialogue.

In order to satisfy specific needs, many enterprises want access to a wide range of outsourcing options but research has shown that they often find managing multiple vendors to be problematic. On the other hand, a single supplier offers convenience and straightforward governance. Consequently, BT has put considerable effort into combining the multiplicity of services needed to run networks and

offers itself as a single source supplier, handling everything from hardware acquisition to managing and maintaining the constituent parts of the network and peripheral services.

The other side of BT’s business consists of providing expertise to national operators to improve their retail and domestic market offerings to their respective citizens. For a quarter of a century, BT has helped develop the African telecoms market with around 90 per cent of

operators conducting their business through BT. In 2008 some 561 million minutes of voice traffic in Africa were carried using BT’s infrastructure.

It is forecast that by 2012, from a total population of 922 million, the total number of mobile and fixed line subscribers in Africa will reach 443 million—90 per cent of which will be mobiles. It’s also estimated that the infrastructure market will be worth

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BT South Africa

US$106 billion by that time. Currently, enormous effort is going into laying new subsea cables linking the African continent to both East and West.

Some fear that this development will lead to a glut of bandwidth in Africa; but BT sees it as a chance to open new doors. “For example,” says Matthews, “BT’s Global Media Network is specifically designed to handle digital images in real time. It means a film can be shot in Africa and edited almost simultaneously in Hollywood.

Already South Africa has a growing film industry and this could be replicated anywhere.”

BT knows that where good communications go, so too will the multinationals follow. With the limited number of global ICT providers, it will be organic growth rather than acquisition that enables BT to continue growing. As such, the ability to introduce and extend services such as the Global Voice Platform is key for future performance.

Closer to headquarters, the future is also looking bright. It’s been estimated that while IT growth in the rest of the world will be around four per cent, the figure in South Africa could be 11 per cent. As such, BT is ideally placed to capitalise on this potential; but to operate effectively in South Africa, it’s necessary to meet the government’s Broad-Based Black Economic Empowerment (BBBEE) goals. In Sekunjalo Investments, BT has a local partner generally considered to be among the most successful and progressive of all black owned groups. Through the 30 per cent holding Sekunjalo has in BT’s South African business, BT plays its part in broadening wealth creation opportunities among the black population. www.btplc.com/Thegroup/BTUKandWorldwide/ B Ta r o u n d t h e w o r l d / M i d d l e E a s t a n d A f r i c a / SouthAfrica/index.htm

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Feeding

healthygro

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owth

Barcelos

As the world emerges from global recession, the prospects look good for the rapidly expanding Barcelos brand. Ben Sansom discovers how good quality rustic Portuguese cooking has been turned into a global restaurant franchise

B

arcelos restaurants are instantly recognisable throughout South Africa by their emblem, the red cockerel. And so successful has the brand been that franchises are appearing throughout the states of southern Africa and reaching out globally, with restaurants opening as far afield as Singapore, London and Canada.

The brand can trace its origins back to 1993 when founder Costa Mazzis opened a single restaurant in Pretoria and began developing his business concept in a modest way. His vision was to take the rich authentic flavours and cooking techniques of northern Portugal and deliver them to a South African audience through the creation of a relaxed and picturesque dining environment. Naming the restaurant after a city in northern Portugal, he incorporated many of that location’s rich traditions into the business identity.

The famed cockerel, for example, refers to the ancient story of an old Galician pilgrim who had been sentenced to hang, but appealed to the judge saying that if he was innocent as he claimed, then the roasted rooster on the judge’s plate would get up and crow. According to legend, the scarlet plumed cockerel rose from the plate and crowed, and as a result the man was freed.

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“In addition to South Africa, there are outlets in Ghana, Zambia, Nigeria, Singapore, England a

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n Botswana, and Canada�

Barcelos

Having spent five years developing the brand, the Barcelos team commenced franchising it in 1998, and growth from that time has been rapid. Today, there are 98 branches in eight countries worldwide. In addition to South Africa, there are outlets in Botswana, Ghana, Zambia, Nigeria, Singapore, England and Canada.

The company has embedded a range of management processes that not only safeguard the integrity of the brand but also provide a secure and reliable framework within which the franchisees and their businesses can flourish. To begin with, the Barcelos identity is strong, and aims to create a fine balance between the traditional healthy home-style cuisine of Portugal and the fast moving pace of today’s world, attracting not only those

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looking for a quick takeaway, but also families searching for an enjoyable dining experience.

At the heart of the Barcelos experience is spicy flame-grilled chicken, marinated for 24 hours prior to cooking, and prepared according to authentic Portuguese tradition. The marinades come in a choice of four flavours: tangy lemon, mild peri, very peri and the scorching supa peri. Using only the best quality spices blended to a secret recipe, the marinades are produced to strict international standards at a central processing facility, and then distributed to local outlets and shipped to restaurants abroad. The facility also manufactures and bottles its sauces and marinades, ready for retail to the customers.

Because the restaurant concept is based on traditional Portuguese cooking styles, every restaurant is designed in such a way that from their tables customers are able to see their food being prepared and cooked for them. And the design is also managed and coordinated from the company’s headquarters. Firstly, there is a planning and design department responsible for designing every element of restaurant appearance, keeping it fresh and revamping and updating the current portfolio of restaurants.

All the internal fixtures, fittings and furnishings are manufactured to these designs by an inhouse team of professional joiners. When new franchisees join the company, the same teams oversee the design, construction, fitting out and furnishing of new restaurants.

Secondly, the company has created a fully equipped graphic design and digital print studio staffed by a professional design team that manages all the advertising, marketing and web design.

Aware that branding and marketing are absolutely essential for the success of new outlets, the company provides all the advertising material for store openings, including menu panels, posters, banners, printed menus and pamphlets as part of the store opening complete package.

Speed of service within the restaurants is something that has also been perfected over a long period of time, and is due to a combination of factors—from thorough staff training and the installation of the most efficient and modern catering equipment, through to the implementation of advanced electronic point of sale (EPOS) order processing systems throughout the business.

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Used both at the front and back of house, these systems facilitate efficient order processing. Not only are orders input from touch screens in the restaurant and printed out in the kitchen, but the system enables managers to monitor and analyse food costs and ordering trends and take remedial measures should problems occur.

Of course, the quality of the people operating the franchises is absolutely critical to their success. Barcelos therefore has a rigorous screening and interview process for every new franchise application that essentially looks for service-oriented individuals prepared to be owner operators, who are not afraid of the long and necessary hours of hard work and will conform to the brand standards and requirements.

Meanwhile, the location of a proposed restaurant is vitally important. To ensure the business attracts sufficient custom, Barcelos operates three simple golden rules: the restaurant should enjoy a high visibility location, the shop front should open along the full width of the store, and there should be a high volume of foot traffic past the shop front.

In return, successful franchisees have the benefit of a well established business model supported by the latest technology and business processes, and a range of dedicated support services. While a new premises is being built and fitted out, for example, Barcelos will interview and appoint staff to operate the outlet.

A comprehensive training programme is then provided for all franchisees, managers and staff from an in-house training academy located at company headquarters. Once the business begins to operate, the support continues through a dedicated Barcelos operations team, who intensively assist the franchisees and outlet managers over the initial opening period and then continue to give regular support and assistance, playing a key role in communications between the corporate head office and the operational outlets.

With the global economic crisis now showing signs of abating, the company believes there are huge opportunities for taking this well established food brand worldwide. Having established outlets on four continents, Barcelos has proven itself in the international arena, and the network of outlets looks set to continue growing and developing. www.barcelos.co.za

Barcelos

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Retsol

What’s cooking?

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lot has changed since we last spoke to Retsol in 2009. The company, which was established in 2002, was working with Unilever to manage two of its franchises in ice cream and health food. It was also involved in the fast food and bakery markets, independent of Unilever—however, since then the firm has undergone a major overhaul.

“The decision was taken to refocus the business into two halves: one taking on the brands that were located mainly in shopping centres and the other taking brands focused around the convenience market,” explains Wayne Duncan, who is now the sole chairman since the business was divided. “So our rationale was really to restructure Retsol by divesting the shopping brands and consolidating our efforts in the convenience market.” Through this restructuring, the organisation has aligned itself strongly with the bakery market and is no longer involved with Unilever.

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Retsol

Retsol and its brands are fairly unique in the bakery space, as there are only a maximum of two other bakery franchise companies in South Africa. Despite it being such a small playing field, Duncan identifies three elements of his business that are important in differentiating it from the competition: “The first is the sheer scale of our business—we now manage in excess of 500 Corner Bakery or Engen Bakery brand outlets throughout South Africa. Secondly, these stores are located in forecourt convenience areas, which is a rapidly growing part of the retail market worldwide. Finally, our tie-up with Engen, the country’s largest filling station company, as landlord is an added boost.”

While the company’s customers are its franchisees, it is of course the consumer that purchases Retsol’s products and generates revenue. To ensure their satisfaction, the company engages in extensive market research, which has enabled it to customise its menu according to local tastes. “This is a strategy that has worked very well for us,” says Duncan. “We are able to keep our branding consistent across the business and build brand recognition while focusing our product’s range on a particular target market, on a store-by-store basis.”

To ensure that the quality of the products and service is consistently high across all outlets, the business uses mystery shoppers to assess the consumer experience in-store. “We contract a third-party customer research company to conduct the in-store observation,” he explains.

“Before we send in anyone, we come up with a questionnaire together, which identifies the factors we want to examine. They then send in their agents to a sample of stores and feed back to us based on the parameters set out in the questionnaire.” This information is then distributed to the wider franchisee network and is used to show where customer service is now, and how it could be improved.

Mystery shoppers and market research are not the only ways in which Retsol helps its franchisees to improve their business. “There are two key thrusts when it comes to managing our relationship with our franchisees,” says Duncan. “Firstly, we retrieve data from point of sale systems in store and put that through our own data warehouse. We then conduct a monthly

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analysis of this data on a per-store basis. We examine things like gross profit, the sales mix, turnover, operational standards and so on.” The outcomes of these analyses are then fed back to the customer via a network of regional managers.

“It is a very data-intensive process, but this is ultimately the yardstick by which we measure ourselves and help our franchisees to improve their businesses too.”

When it comes to managing its supply chain, Retsol has taken the decision to encourage its franchisees to use preferred suppliers—but it has no financial stake in them. “We have taken the decision to remain purely a franchise business and not get involved in the supply side in any way, other than approving suppliers for use by our franchisees. This is not universal practice in our sector by any means, but we feel that it is best practice—as a franchise, we are already taking a percentage of the turnover of each outlet and that it is unfair to then make more money from our franchisees from the cost of ingredients.” Instead, by using aggressive negotiating techniques with preferred suppliers, the firm is able to drive down costs for the whole chain, which benefits everyone.

The company also has a strong focus on growth, and is aiming to open / revamp another 50 to 100 stores annually within South Africa. This investment is projected to cost between R30 million and R60 million, depending upon how much work needs to be done at each location. In addition, over the past 12 months, Retsol has opened franchises in two neighbouring countries—Namibia and Botswana—with plans to move into Zambia,

Zimbabwe and Mozambique within the next three months. The rest of sub-Saharan Africa will come next year, with the Democratic Republic of Congo, Kenya and Tanzania being particular targets.

In the mid-term, Retsol hopes to have at least tripled in size over the next five years as part of its 2015 Vision. “We plan to achieve this primarily through organic growth of the existing business in the baking space,” says Duncan. “We are coming from a relatively low base in that, although we are quite a sizeable business already, our brand recognition is low and on a per-outlet basis our base is small.”

In order to achieve the desired growth, Retsol will be pursuing greater product innovation and using a more aggressive and consistent marketing strategy.

“We plan to use all kinds of media, including TV and radio, in order to raise brand awareness of Corner Bakery among consumers. So far, figures already show that we are trending in the right direction.”

The company is also tentatively probing the potential for growth through acquisition, although it is waiting for markets to stabilise before making any moves in this direction.

Over the past year, Retsol has evolved dramatically and continues to do so. By consolidating its business in the bakery sector and focusing its attention on forecourt convenience stores, it has been able to give the Corner Bakery brand more focus, both currently and for the future. Who knows what developments may come in the next 12 months and beyond; but one thing is for certain—for a company that maintained double-digit growth throughout the recession, the only way is up. www.cornerbakeryonline.co.za

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Flexible

th

Looking at the bigger picture has always a must for success; and in the case of Devm Property Group, it led to a withdrawal the residential market just before the bo dropped out. Founder and group mana director Hein Ehlers tells all to Andrew 48

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Devmark Property Group

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hinking

been mark from ottom aging Pelis

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arket research is a vital tool for any business looking to make an impact; and Devmark Property Group has turned this into a fine art as it seeks to stay ahead of fluctuations that have beset South Africa’s property market over the past few years.

Up until recently, of course, the country had been enjoying a property boom. Devmark has coped admirably with the subsequent market wobbles through its policy of shrewd decision-making when it comes to identifying which markets are the best ones to operate in. And this is where in-depth knowledge plays its part, courtesy of the market research.

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Devmark Property Group

Mitchell DuPlessis Associates Developing property projects is a team game.

Devmark and their MD, Hein Ehlers, recognise this their

and

exemplify

projects.

It

the

team

relates

to

relationships leadership

on and

interdependencies, and an enabling environment that permits specialist consultants to focus on their area of competencies while being informed on a continuous basis of the effect on the whole. MDA, as project managers, provide that co-ordinating and controlling management service.

AFRICAN TRUSSES & TIMBER (Pty) Ltd AFRICAN TRUSSES & TIMBER (Pty) Ltd is a leading truss manufacturer in the Cape Town region. We pride ourselves in providing this specialist market with advanced truss engineering designs in both timber and lightweight steel, the highest quality roofing materials and excellent service. Seventy-five years combined experience and the latest in MiTek design software allows us to successfully service this sector.

this century we had become one of the biggest property companies in this region,” he explains.

Today the Cape Town-based company is split into several divisions: Devmark Construction, Devmark Development, Devmark Design, Devmark Marketing and Events, Devmark Property Administration and Devmark Commercial.

There are clear overlaps across the companies within the group, and Ehlers says that the bulk of the construction work is actually carried out by sub-contractors. “The production and quality is controlled by our site management; we’ve taken good people and put them on sites and incentivised them so they deliver quality projects.

“The main thrust of our business, though, has been the development of three key segments: residential, commercial (incorporating offices) and retail,” Ehlers continues. “We anticipate market trends and move into specific markets at an early stage and move out before the market collapses.”

That ability to think flexibly was richly endorsed when the company decided in 2006 to move out of the residential market (prior to its widelyreported problems) and focus more on commercial development. “We had been working on high rise buildings and freestanding residential properties up until that point, but we pulled out of the market except for retirement villages—an area we continue

“We have a passion for thorough market research before we decide to do new developments” “Yes, it is true that we have a passion for thorough market research before we decide to do new developments,” asserts group managing director Hein Ehlers. “And equally important to us is to carry out research when we have completed a development— you sometimes learn more from that analysis and how to improve processes for the future.”

As founder of Devmark, Ehlers has been with the company every step of the journey since it started out some 22 years ago, initially developing urban convenience centres in the Western Cape Province. “We expanded into residential properties in the early 1990s and then into the commercial market, so that by the early part of

to work in today, as it differs from much of the residential market because purchases are not that adversely affected by the economic recession. I don’t see the residential market picking up for the next two and a half years, maybe longer.”

The company’s focus therefore is currently on rezoning land for the rights for two upmarket retirement villages comprising of 430 units; and the various stages of planning for two retail centres in the Western Cape. Ehlers says that the company has also started to purchase old commercial buildings with a view to renovation. “We feel these will offer great opportunities for growth and development areas when the market finally turns,” he states.

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Devmark Property Group

As the market took a downward turn, Ehlers says that funding and the criteria for funding became much more difficult; but Devmark’s forward-thinking approach had already enabled it to side-step much of the residential woe that was to follow.

Today, the group can look ahead to bright and busy times, thanks to its involvement in the redevelopment of the old Bellville Velodrome.

“This is the biggest tender in the history of Cape Town and totals approximately R3.5 billion,” Ehlers describes.

“It is a 110,000 square metre site that upon completion will comprise a retail shopping centre, a hotel, conference facilities, the redeveloped velodrome and sports facilities, as well as commercial and residential. The ultimate ownership is not cast in stone, we prefer to develop (our core business), but might end up with ownership.”

The decision to award the tender was taken by the City of Cape Town after a two-stage, public tender process which started in September 2007. The tender was won by Devmet Property Developments, a consortium of Devmark Property Group and Mettle Property Group, through a competitive bidding process that lasted more than two years. Mettle Property Group is 49 per cent owned by Metropolitan Capital, an associated company of the Metropolitan Group, and is a level eight contributor in terms of Broad Based Black Economic Empowerment (BBBEE).

And as BEE is embedded into the fabric of South African culture, it is an initiative that Devmark has fully embraced.

“We certainly don’t have any difficulties finding good black management and we have also set up relationships with lots of black suppliers,” Ehlers comments.

So in which direction does Ehlers intend to take Devmark Property Group? “Property operates in cycles, so we have to be careful and focus on projects that fall within our cash flow capabilities,” he states. “We also look at projects that will allow us to maximise our profitability rather than concentrating on volume. That strategy requires a lot of careful pre-planning to ensure we have our figures correct— and a reliance on the excellent long-standing relationships we have built with our suppliers.”

Ehlers says that when the upturn comes, it will be important to be ready. “In any downturn, people start to institute cost-cutting measures and often when the next upturn arrives, they end up without the necessary resources in place. We have always been pretty lean and will be ready to focus on the best sectors.

“I see significant expansion in the construction and events side and we are undertaking lots of external design work at the moment. We will carry on working on the retirement villages and believe there are areas of the city that will be ripe for commercial development; but we will stick to our model.

It is imperative to grow your business within the limits of your cash flow and we have a very firm base from which to launch our next growth phase.” www.devmark.co.za

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suited South Africa’s clothing retail sector has faced a challenge as customers find themselves with lower disposable incomes.

Lily Moreira, managing director at John Craig, tells Andrew Pelis how tough times have sparked new ideas

T

amb

ough times call for tough measures, or so the saying goes. But for one South African business, the current economic retail slump has led to rather more creative measures as it has cut its cloth accordingly.

The John Craig brand is synonymous with quality and is regarded by its loyal customers as a brand they can trust.

However, the financial crisis and the resulting fall in disposable incomes has undoubtedly made consumers more cost-conscious. This presented the company with a dilemma.

“For the past few seasons we have started to roll out our range of in-house brands, which has been a big move on our part, to become more cost-competitive,” states Lily Moreira, John Craig’s managing director. “Our focus is always to deliver great, affordable products that suit our customers.

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John Craig

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John Craig

“We don’t manufacture any product ourselves and a considerable portion of the product is imported by our suppliers,” she continues. “Our challenge is a combination of trying to understand customer needs in terms of product, brand, quality and price. At John Craig we have built a reputation for delivering brands and products that our customers can be proud of. It is important for us to preserve that niche in the context of the recession and the lack of disposable incomes. We have been concentrating on this initiative for a while now but it has really only been in the last six months that we have been comfortable with the products and suppliers.”

The shrewd move into own-brand products follows several years of successful growth for John Craig. Originally founded almost 70 years ago in Johannesburg, the company was sold through a management buyout in 2002 and since then has gone from strength to strength. “I was with an affiliate business for many years and was part of the buyout which involved almost all the existing management team,” Moreira explains.

“At the time, the company was not doing well and we felt that there was a good opportunity to buy the business and turn it into a profitable business.

“We felt that there was huge potential for John Craig but we had to cut costs first, which meant we got out of the non-profitable stores and

“At John Craig we have built a reputation for delivering brands and products that our customers can be proud of” utilised our existing assets more effectively. We then looked at stock turns and which brands were or were not working. The introduction of house brands, especially in formalwear, was a new venture that certainly seemed to be well received, as it was expected by the consumer that our quality was guaranteed,” she adds.

Having cut out the non-profit elements, the business quickly grew and within four short years had become an attractive proposition for a bigger investor. “We were fortunate with our timing—in 2006 Pepkor bought the company,” Moreira continues. “We were still a small retailer

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John Craig

at that point and along with that came problems of economy of scale. Being with Pepkor gave us the internal resources to grow—with property and human resources both important aspects. Up until that point we were always two years behind the market when we were looking at new properties, so if a mall opened with spaces, they were generally snapped up quickly. With the support of Pepkor, we have grown from 36 stores to 56 stores today, although a considerable percentage of our profit still comes from the older stores.”

While Moreira says that the company’s culture naturally changed a little following the takeover, much of what was sacred remains intact. “Certainly the buyout did change our outlook—I think that before then we had an entrepreneurial approach

and we made quicker decisions, sometimes to our cost. Today we have better processes in place and are more analytical in our decisions.

“We also have more emphasis now on training our 350 employees and we are starting to see the benefits. We are piggybacking some of Pepkor’s existing practices—they have some awesome training available and we have ramped this up over the last 12 months, with employees around the country coming to our central office. We are now training our store controllers and managers to improve selfmanagement and over the next six months we will be training up our second level of management to get them onto the same level as our senior management.”

This last comment is significant, Moreira feels, as it is essential to maintain legacy over time. “It is important that we maintain our culture inside the company to keep it a friendly, family-feel business. My biggest dread is to lose what made us a good company to work for. I believe that by promoting within, we have a better chance of retaining those values.”

Another value that John Craig strives to maintain is retention of its black customer base that has stayed loyal from generation to generation. “Our business developed its customer base by default really but has given us a tremendously loyal following in the black community. John Craig offered black customers credit when they could not otherwise acquire it and many of our activities have been deliberately in tune with our customers. We are not catering for high-end fashion design; rather, we concentrate on products that appeal to our clientele.”

The next stage in John Craig’s strategy is already well underway, with the opening of two new stores in the Eastern Cape region. Further expansion is planned in the Central and Western Cape areas but according to Moreira, this is an exacting science. “We are basically looking for the right sites and that is the only delay at this moment. We are much more risk-averse with our approach and want to ensure we find locations that will prove profitable. In the next couple of years we will also review opportunities to expand into the rest of Africa—the rest of the Pepkor Group is already either there or looking and much of the infrastructure will be in place before we are ready. In the meantime, our focus for the next 12 months will be to ensure we get our products and infrastructure right,” she concludes. www.johncraig.co.za

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Migh Formed during the dark days of apartheid, Shereno Printers has undergone exponential growth since the end of that repressive regime. Gay Sutton talks to administration manager Vee Garrib about the company’s long history of investing in people and the power of the printed word

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he birth of a nation is rarely as dramatic as it first appears. There have usually been individuals and groups unobtrusively supporting the first flickerings of identity. One of those quietly and discreetly doing its bit to aid the development of modern-day South Africa is design and printing company, Shereno Printers.

Today, family-run Shereno Printers operates from a large site in Boksburg, Gauteng Province, employing around 150 permanent staff. Just over 50 per cent of its business comes from a lucrative contract to supply printing services to the government.

Meanwhile, the company has made big inroads into the general South African marketplace and has increasingly been gaining contracts further afield.

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Shereno Printers

“Our aim is to grow our share of the design and printing market across the whole of Southern Africa,” says administration manager, Vee Garrib.

“So far, we have spread our wings to some of our neighbouring countries. We have, for example, printed books for Mozambique, ballot papers for Nigeria, and printed material for Zimbabwe and Botswana. We are continuing to look for opportunities beyond South Africa.”

Many elements of the company’s recent success, and its operational ethos, can be traced right back to its early beginnings. Launched in 1966 with just five staff operating from a single room in an Indian suburb of Benoni, this small family-run printing operation provided printing services largely for the local Indian community.

Growth during those uncertain early years was slow and difficult.

Passionate about printing but also interested in politics and the ethics of freedom, the Singh family offered underground printing services to the banned ANC, at considerable risk to themselves.

Suspected and often harassed by the authorities, they continued to print material for the ANC through the long years of apartheid. “When you’re in that sort of danger,” Garrib says, “you find ways to get things done.” As a result, Shereno became very nimble, innovative and flexible.

Now in the capable hands of the second generation of the Singh family, the company continues to be innovative and quick to react. Soon after the election of the first ANC government, Shereno was one of the companies approached to supply it with printed material, eventually winning a long-term printing contract for the government print works.

Today, this important contract is coordinated through a satellite office in Pretoria, which supplies design services and liaison staff who are on hand to respond to the government’s often urgent need for printed materials. “What tends to happen is that we will be approached at the eleventh hour to provide printed material and airfreight it to Cape Town so that it can be presented to parliament the next day,” Garrib explains. This would present challenges to any company.

“The boss will simply put a team of people together and get the work done. We could be printing thousands of books overnight for an order that we knew nothing about the previous morning.” Such flexibility and responsiveness has won the company

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an enviable reputation, and Garrib believes this rapid reaction capability is all down to the hands-on approach of the company’s management.

The personal approach has also percolated into other areas of the business. The significant growth over the last 15 years has resulted in considerable expansion of operational capabilities, including the acquisition, construction and expansion of the new headquarters and print works at Boksburg,

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accompanied by continuing investment in new printing and design technology. However, through all this the company has continued to focus on its people.

“We have deliberately tried not to mechanise all our processes,” Garrib says. “We have a philosophy of creating employment, particularly for young black people who are leaving the schooling system and looking for jobs.” Processes such as collation, which could easily be mechanised, are performed by teams of women that are brought in and quickly trained in the relevant skills.

A similar scheme is in operation in the print shop, where young assistants are hired and trained to help the machine operators. Their duties can include functions such as changing blankets, inks and cleaning the machines. “We also keep an eye out for those who show promise,” Garrib continues, “to develop them as apprentices.”

This year, the company has been training six apprentices under the government’s vocational scheme administered through sector-based

Shereno Printers

SETAs (Sector Education and Training Authority).

Registered with the Print SETA, the company contributes the equivalent of one per cent of its salary bill into the scheme, and is able to apply for a grant towards the cost of training the apprentices. The curriculum is set by the SETA, and includes a combination of practical on-thejob training and theoretical instruction at college.

The human focus of the business goes right back to its inception during the times of apartheid.

Throughout its history, the company has been operating a strong social responsibility programme, spreading its help across a broad spectrum of organisations and individuals, and responding where it can to deserving and relevant requests for help. During this time it has, for example, sponsored students through university and helped to kick-start innumerable black-owned businesses.

Looking to the future, the company has plans to

continue expanding and to establish itself as one of South Africa’s primary design and print services providers. “And we will do this by investing further in new printing processes, technology that will enable us to take on the really large print contracts.”

Meanwhile, Shereno continues to invest in new infrastructure at Boksburg. Two new buildings have recently been constructed: a storage facility to house paper and other supplies, and a block containing offices and a larger area for collation work. Investment in new technology is also continuing. In the New Year, the company will be taking delivery of a new Scodix digital embossing machine, the first of its kind in Africa.

Shereno certainly stands apart from its competitors as a family-run company with a dual focus on technology and people, and responsive hands-on leadership. All in all, it’s a winning combination. www.shereno.co.za

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Fast-t succes

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hen writing about ABB it is usually difficult to know where to start. The $30 billion power and automation group, with its Swiss origins, is as well known for its flat management and global communications as for its technology. And ABB Australia doesn’t make focusing any easier: with eye-catching contributions to the alternative energy, manufacturing and mining sectors as well as infrastructure of every description, ABB is nothing if not diverse.

However, one recent project really pulls together ABB Australia’s capacity to wrap up planning, design, manufacturing, logistic and commissioning capabilities in delivering an extraordinary result for its client. When Queensland’s main power supply company CS Energy needed a new transformer for its 750MW coal fired Kogan Creek generating plant, it not only needed a reliable solution for a unit; it needed it really quickly, to meet time-critical operational requirements. This was a business-critical order and time was of the essence.

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As 2009 drew to a Queenslanders we Christmas break, A off a remarkable f collaboration, logis planning. Its client impressed, as John

ABB Australia

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a close and most ere enjoying the ABB Australia pulled eat of engineering stics and lateral t, CS Energy, was rather n O’Hanlon discovers

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ABB Australia

ABB’s engineers quickly saw need for a design capable of meeting the challenging service conditions. They quickly came up with a robust solution, a purpose-built design to meet the needs of CS Energy. The client, aware that the normal lead time for a transformer of this size would normally be around eight months and extremely keen to get beyond the temporary measures it had to adopt to keep the plant running, took some convincing, says Julian Guild, ABB Australia’s sales manager for power transformers. “We talked to our transformer factory in Thailand and were able to get them to commit to three months ex-works, including design.”

That in itself was a remarkable commitment, and very attractive to CS Energy, but as Guild points out, you’d normally have to add another four weeks to the lead time to ship such a transformer weighing over 60 tonnes to Australia—and on top of that you’d still have to allow time to deliver it to the site and install and commission it. The thinking caps went back on as ABB and CS Energy tried to figure out together how not to squander the

manufacturing time gain on logistics.

They called on a specialist, Townley Group International (TGI) and between them came up with a plan to airfreight the transformer. That would potentially dwindle the delivery time to a couple of days, but there are not many aircraft that can carry a 60 tonne payload. However, TGI was able to arrange the charter of an Antonov An-225 strategic airlift aircraft. The fact that the only available slot was on Christmas Day was going to present some problems, but if it meant the transformer could be brought on stream before the end of the year, that would just have to be overcome.

Convinced, CS Energy supplied ABB with a letter of intent in mid-September 2009, on the basis of which the project swung into gear. There’s no such thing as an off-the-shelf transformer, says Guild, and every one the factory near Bangkok produces is tailored to the specification of the client. However, there were some unusual needs in this case, related to the unusual method of delivery. “A transformer is essentially a pressure

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vessel; during transport you remove the mineral oil from it and fill it with dry nitrogen,” explains Guild. “But with the changes in altitude and therefore pressure, nitrogen is seen as a hazard: if it got out it could suffocate the entire aircrew! Very unusually, we had to keep the transformer ‘open’, so we fitted it with a dehydrating ‘breather’ which takes the moisture out of any air that goes into the tank. As soon as the plane landed we applied a vacuum to the transformer and refilled it with a dry inert gas ready for the road transport leg.”

Working with Antonov engineers, the ABB design team fitted the transformer with anchor points aligned to the plane’s securing stations to ensure there was no chance of the load shifting in transit.

The job required TGI to attend the loading in Thailand and supervise the road transport section up to the airport on Christmas Day: the aircraft touched down at 1500 hours on Boxing Day. The logistics and risk management involved made this a unique and outstanding project, says Guild. “To get the transformer to the airport on time, it was necessary to design and manufacture the transformer in less than half the normal period. Then we had to test it in the factory, pack it and prepare it for transport to meet a plane that had been scheduled two months previously! Between us we were able to coordinate that down to the minute.”

After a six-hour road trip, the new transformer arrived at Kogan Creek and was installed during the holiday period—a critical operation, as Guild recalls: “Once it reached the site it had to be installed, something that normally takes a week or so; but we were able to do that in less than three days. We had three shifts working 24 hours a day between Christmas and New Year.” In the event, the handover took place towards midnight on New Year’s Eve—quite a tribute to the teams who redefined the term ‘unsociable hours’!

The transformer has been fully operational since early January 2010; and Kogan Creek power station site manager Ivan Mapp was more than happy with ABB’s ability to deliver on time and on schedule: “We chose to work with ABB due to the expedience in lead time and their reputation within the industry. ABB offered a delivery time that was unmatched by any other competitor and we knew that they had the expertise and resources to deliver on what was promised.” www.abbaustralia.com.au

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Pe O

ver the past 30 years the Middle East has undergone remarkable growth and development, much of it courtesy of its vast oil and gas reserves. One company that has been mirroring that development to the tee has been Target Engineering Construction Company.

The business was established in 1975 and is a leading single source contractor with standalone specialities. It has a Special Category classification in marine works, buildings and steel structure works in Abu Dhabi, while it is licensed to build unlimited floor towers in Abu Dhabi and Dubai.

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story of Target Engineering Construction Company is intrinsically ed to growth and development over the past four decades in the dle East. Ayman Taji has masterminded the company’s steady growth ughout that period; and here he talks to Andrew Pelis about the cy he will leave behind when he shortly steps down from his role December 10 www.bus-ex.com

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With four distinct divisions covering civil engineering, mechanical work, power installation and marine construction, Target has enjoyed steady, stepped growth. One man that has overseen this progress from Target’s inception is Ayman Taji, the company’s outgoing CEO. “We are headquartered here in Abu Dhabi; and you wouldn’t recognise the area as it was when we started out,” he says. “Then, it was little more than a village; today, it is a large, multicultural society. Target too has grown enormously over time and is now a bigger, more versatile, and stronger company.

“There was much less competition in the beginning and we have undergone continuous

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expansion to the point where Target is today a regional player with operations in the UAE, Qatar and more recently Saudi Arabia, while we also now work with the major EPC contractors.”

Taji says that a large part of the success story has been Target’s focus on “safety, quality and delivery, with profit not made the priority. As a consequence we are known for the quality of our work and we have maintained the trust of our clients. That has resulted in a lot of work coming from repeat customers, and has allowed us steady growth.”

Of particular interest in recent times has been Target’s expansion in oil and gas industrial construction, while the business has also built up its engineering capabilities. Taji says that such activity has a very clear aim: “We want to become a bigger EPC contractor. We are already working with many such companies on a medium scale but we want to become a substantial player.”

Similarly, the company’s focus on marine construction has included heavy investment in capital equipment including a number of workshops, 14 barges and cranes up to 280 tonnes. The investment has provided Target with exciting opportunities for future growth, reinforced by the company’s excellent track record completing different technically-challenging projects such as construction harbours, jetties, marinas, artificial islands, beaches, breakwaters, rock scour protection, quay walls and subsea pipe installations.

Target also holds the agency agreement for EZ Dock Floating system and has an associate joint venture manufacturing facility under the name of Marinetek Gulf—a 65:35 (with Target owning the bigger share) partnership with Marinetek Middle East Asia. Located at Sharjah Hamriyah, the JV produces heavy duty concrete pontoons under licence from Marinetek Finland.

Target’s reputation has been further enhanced by the creation and construction of 31 artificial islands (three of which were in deep sea), aimed at building a foundation for the 400kV overhead transmission line from Abu Dhabi to Taweelah. The business also carries out work for the Abu Dhabi Water and Electricity Department (now ADWEA), the Ministry of Public Works, and the Ministry of Information, both as a main contractor and also as a chosen subcontractor.

Taji is adamant that the combination of

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experience and quality are key components to this continued success, something the company is striving to improve upon over the next few months. “We have held ISO9001 accreditation for the past four years and were one of the first companies of our type in this region to do so,” he comments. “We are now working towards the environmental ISO14001 and occupational health and safety OHSAS 18001 certification and hope to achieve this by February of next year.”

In the fields in which Target operates, there are naturally strict industry controls that have to be met in terms of quality but also safety—and given that the company has over 10,000 employees, that is a large task. Many of the controls put in place are computerised and Taji says that every individual project across every division provides monthly reports that are pulled together from the company’s internal IT software to provide updates on progress, equipment control, scheduling, accounts and even specialist design.

And design is very much in mind with the latest move into acquisition, as Taji explains: “We are now finalising the purchase of a marine design company based in Europe which will give us a stronger engineering design reference in the marine sector.”

However, despite the benefits of technology, Taji feels that having in place the required level of operational resource remains a challenge. “It is true that there are labour issues that are not so smooth; but we provide extensive training and over time our staff learn and build their experience.

This is why our growth has always been stepped.”

And since 2007, an exciting new development has been offering even greater opportunities for expansion, says Taji. “Back then, the leading construction group Arabtec Holdings bought a 60 per cent stake in our business and there is a good synergy between their expertise and what we do. We are therefore looking at integration opportunities, particularly with a view to doing more work in Saudi Arabia.

“Our biggest job to date totalled 1.2 billion dirham (around $300 million) but we are now bidding on jobs valued at double that figure; and I think that Target can manage these projects now based on its reputation and resources.”

While Taji will be stepping down in the next few months from his position as CEO, he will still very

Ta r g e t E n g i n e e r i n g C o n s t r u c t i o n C o m p a n y

much play an important role in Target’s future, in an advisory capacity. “I will be overseeing our strategy of growth and acquisition,” he explains.

“We are shortly going to register and look at opportunities within Iraq, where there is lots of oil and gas activity in the southern fields. We have registered a brand and office in Turkmenistan; and have also been approached about work in Libya.”

Through diversity, experience and a focus on quality and safety, Target has laid the foundations for its steady growth. Although its leader will shortly be stepping down, he will be leaving behind a legacy that looks set to flourish in Abu Dhabi and will surely strengthen further under the expert guidance of Arabtec. www.target.ae

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Th Sotkamo Silver is in the process of breathing life into the Taivaljarvi silver mine project. CEO Dr Timo Lindborg talks to Gay Sutton about building a sound investor base and the future development of the company

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he Taivaljarvi silver deposit in central Finland could well become the first primary silver mine in Europe in many generations. Discovered in 1980 and brought to the threshold of developmentat the end of the decade, the deposit is an interesting example of Finland’s unique mining history.

A land of forests and lakes, Finland has traditionally been one of Europe’s largest producers of paper, a position it continues to hold today. Interestingly, though, it was those same paper companies that initiated the current trend for mineral exploration.

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Sotkamo Silver

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Sotkamo Silver

“During the 60s, 70s and 80s, it was common for paper mill companies to own great swathes of the forest, and at that time, many of them had geological departments,” explains Dr Timo Lindborg, CEO of Sotkamo Silver. “This area was owned by the paper company Kajaani,” a company that subsequently became part of UPM. “It was they who discovered the deposit, did some exploration and began to develop it in partnership with Outokumpu, which at that time was a large mining company.”

In the 1990s, however, the world silver markets plummeted and, having invested a considerable amount in exploration and development, Outokumpu closed down its mining interests and left the mining industry completely, transferring its business efforts to the steel industry.

Today, the Taivaljarvi silver deposit is owned

by Sotkamo Silver, a Swedish company listed on the NGM Equity stock exchange in Stockholm and launched in 2005 under the name Silver Resources. “We acquired the project from Outokumpu in 2005 and launched the company specifically to develop the deposit. Our aim now is to bring the mine to production by 2013 and to become the first pure silver mining company in the Nordic countries,” Lindborg says. “There are many mines where silver is a secondary product, but at Taivaljarvi it will be the primary product, with gold secondary to it.”

Previous owners Kajaani and Outokumpu had already invested considerably in exploration and development at Taivaljarvi. “They had progressed as far as completing their mine technical planning and pre-feasibility studies—in fact, everything was ready for investment,” he continues. Around 47,000 metres of underground exploration drilling had been completed; some 2.9 kilometres of underground mine access ramps had been constructed to a depth of 350 metres below the surface; and the ventilation shafts had been excavated. “And much of their work continues to be of value to us today. By our calculations, the work would probably cost us about €15 million to do at today’s prices.”

Since taking over Taivaljarvi in 2005, Sotkamo has completed an environmental baseline study and updated the previous exploration results, bringing them up to NI 43-101 resource estimation standards by completing new quality assays on

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the old drill cores stored by Outokumpu. In parallel with this, new tests have verified Outokumpu’s process analysis, confirming that the ore can be concentrated on-site using flotation and shaking table methods. Much of the previous mine development plan, which had been extensive and thorough, will also be applicable today.

A new programme of exploration is attempting to explore and increase the quality of the mineral resources and gold content in it. Mineralised rock has currently been identified in an area 150 metres wide by 800 metres in length, and the degree of risk associated with the project is very low because of the density of drilling that has been undertaken.

‘reverse takeover’, and continued operating under the name Gexco. However, since Lindborg’s appointment in May things have moved quickly: the company has attracted two significant investors into the Taivaljarvi silver mine project— the state-owned Finnish Industrial Investments venture capital fund, and independent investment company Teknoventure Management.

Such a display of confidence from the financial sector enabled the company to attract further private investors from Sweden, bringing a total investment of some €2.7 million to the project so far. The company has also raised capital through a direct shares issue on the NGM Equity stock exchange in Stockholm The focus of Sotkamo Silver going forward

“Our ultimate goal is to become a mining company” “Geologically, there is also the potential for it to go very deep. So far, we know it goes down to 700 metres and we have verified this with drill holes, but there is nothing to tell us that it doesn’t continue below that,” says Lindborg. “We have also found that the further down we go, the better the results become.”

The previously constructed access tunnels, however, have lain dormant since the project was closed down in 1991, and have filled with water.

Pumping, which began in June this year, has now passed the halfway stage. “And the good thing is that the tunnel is in very good condition, and no damage seems to have occurred during this time.”

The geological and technical challenges of bringing a mine to production are only one part of the picture. “With any mining operation in Finland, the biggest challenge is always to raise investment funding,” says Lindborg. And Lindborg is not new to these challenges—having started in 1993 as a mining consultant, he is one of Finland’s first mining entrepreneurs. “This is my third company,” Lindborg explains, “and it’s the second one that I’ve put on the stock exchange.” Having been appointed CEO of Sotkamo in May, he has used his experience to guide the company through a number of important strategic decisions.

In the spring of 2010, Silver Resources and the Swedish company Gexco merged in a so-called

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will continue to be on the Taivaljarvi project.

To this end, the company’s name was changed from Gexco, which stood for ‘gold exploration company’, to Sotkamo Silver after the region of Finland in which the project is located; and the Norwegian assets of Gexco have been sold off.

The goal now is to complete the feasibility study by the end of 2011, and to begin engaging with the biggest challenge of the project—raising the funds to take the mine into production. “Sotkamo Silver has spent around €1.5 million on the work we have done so far, and we calculate that the mine will need a further investment of approximately €30 million to take it into production,” reveals Lindborg.

If everything goes according to plan, Lindborg believes that over the next 10 years, the mine will produce between 400,000 and 500,000 tons of ore with an average grade of 100 grams per ton of silver and one gram per ton of gold. Recent drilling results, however, have exceeded these quality levels by a considerable margin. “But our ultimate goal is to become a mining company,” Lindborg explains.

“I believe there is going to be some consolidation among Nordic silver and gold mining companies, and my vision is that we participate in that. And then we also have a gold deposit in the south of Finland. When we have the capacity to do so, we will start to develop that too.” www.silver.fi

Sotkamo Silver

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Risan

rewar

When Nairobi residents Howard Crooks and Dere fed up with playing golf and decided to start a busi in 1994, their attention was captured by a company based on the coast at Mombasa. Sen Rocky Hitchcock tells John O’Hanlon how KK Sec professionalism to East Africa’s sec

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he ‘KK’ in KK Security stands for Kenya Kazi (kazi is Kiswahili for ‘work’). Though it was losing money, Howard Crooks and Derek Oatway thought the business had potential so, welcoming the challenge, they brought in security specialist Rocky Hitchcock and set about turning KK Security into a truly professional and profitable security company for East Africa.

Hitchcock was a British Army veteran with experience in a number of African countries and so was qualified to assist in delivering this vision. Today he is KK’s senior consultant based in Nairobi, where the company moved as soon as it secured its first major contract with Kenya Breweries (a division of the UK’s Diageo Group). By that time, KK was well established, not just in Kenya but regionally. Its foundation coincided with the end of Rwanda’s internecine war and KK was the first foreign security company to open for business there. “They needed someone untainted by association with the Belgians to provide security for the United Nations operations there,” explains Hitchcock. “We provided that assurance and trained security officers for the UN buildings and facilities.”

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Back in Nairobi, the Breweries contract was followed by another windfall contract. The 1998 bomb attack on the US embassies in Nairobi and Dar es Salaam made the security of these assets one of the most sensitive jobs on the planet, so it was a huge endorsement for KK’s reputation and capability when in 2002 the existing service provider failed to perform and the contract was given to KK Security, to guard not only the Embassy but also the ‘Family’—all the dependants of the Embassy.

KK still holds that contract, providing 800 security officers as the largest contingent of the 5,200 currently working for KK within the city. “The market is huge,” says Hitchcock. “2,000 security companies are registered in Kenya, though most of them are very small operations characterised by workers who have to buy their own uniforms out of a subsistence wage. In the UK, they would be called ‘man and a van’ operations but here they would be more of a ‘man and a bicycle’ operation.” As a founder member of the Kenya Security Industries Association (KSIA), KK is an elite organisation that has done more than any other to professionalise the industry, he says.

KK’s reputation is largely based on its training.

“We decided early on that our USP would lie in training security officers,” he explains. “We brought out former British Army SNCOs who were versed in training and put them together with young lads from the Kenya National Youth Service who had both language skills and some discipline to create training teams.” These teams were dispatched to Kenya’s large agricultural estates, where over the years they have trained nearly 8,000 security officers.

Prior to this, training in security was not done locally. The KK Team combined military and police experience to produce a training manual that was submitted to and validated by the Security Industry Training Organisation (SITO) in the UK. Today a certificate of security training from KK is seen throughout East Africa as the most reliable industry qualification, Hitchcock says—when recruiting security managers for clients, many of the applicants’ CVs are supported by copies of the certificates gained when they were working initially for KK as security officers.

There’s a training centre at each of KK’s locations, using modern technology to the full.

The basic security officer course lasts a full 12

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days, the supervisor’s course six days and various specialised one or two week modules are run in disciplines such as mobile response, hospitality industry or diplomatic security, including a special US government accredited course for officers allocated to the US Embassy. The trainers themselves also undergo a two month course.

In summary, KK training goes well beyond the industry standard of even the UK. The next step will be a national training academy.

This, like a proposed new control room manned by multilingual controllers and equipped with the latest IP-based surveillance data management systems, will be built near the Nairobi racecourse, close to the existing dog kennels.

Every one of KK’s 16,800 security officers is brought in for a three-day refresher course each year. On top of this, they are rewarded and incentivised in a professional way. Their wages are as secure as the cash they guard, invariably paid electronically into an account set up for them at a bank of their choice. This works well: East Africa is a cash-based society but it has a sophisticated network of ATMs, and officers in remote locations can be paid though Safaricom’s MPesa mobile phone cash transfer system.

As KK expanded, it placed security teams into gold and diamond mines in the Mwanza area of Tanzania, purchasing a small company that gave it a base in Arusha. It won a contract at Africa’s largest sugar estate, Kilombero Sugar, where it had a chance to demonstrate its innovative thinking by introducing camels for the patrols. “Camels are quiet and they raise the officers high enough to see over the sugar.”

It then went on to win Tanzania Breweries in not only Dar es Salaam but also all over the country.

KK understands animals—its Nairobi kennels are home to nearly 600 dogs, 12 dog vehicles and a centre where kennel hands, handlers and trainers go through courses accredited by the UK National Association of Security Dog Users (NASDU). “We train the handlers more than the dogs themselves,” says Jaun Mioch, who heads up this unit. “We don’t carry firearms, but dogs are more effective anyway. If you tell a guy, ‘Stop or I’ll release the dog’ he stops!” In East Africa, most break-ins are attempted by groups of people: Mioch relates an incident where a mob of 13 men were attacking a client’s facility but were dispersed by a single handler and his dog.

Firearms make dangerous situations worse, says

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Security World Technology

KK Security

Security World Technology speaks to leading brands continually to determine the security solutions that are apt for Africa. We have the experience and ability to make a difference to your business. That is why we are proud to be associated with the rapid growth that KK Security is experiencing. Our company was recently placed 13th on the Top 100 mid-sized Companies in Kenya. No doubt, our partnership with KK has contributed to this success.

Hitchcock. KK, for example, manages security at 15 locations for the United Nations Organisation Stabilization Mission in the Democratic Republic of Congo. “We guard their bases: they have guns but we don’t. We don’t do guns anywhere—even in Uganda where historically all security companies are armed. The role of a security officer is to ‘Deter by his presence; Detect by his senses; Deny entry’ (if possible)—but not on any account to die for the client. In other words, to run and call for assistance from the ‘big battalions’.”

Three years ago, KK Security diversified into facilities management; last year it purchased an ailing fire and ambulance company in Kenya; and it started a cash in transit business, KK Lodgit, in conjunction with Irish based International Risk Management Services with the intention of changing the face of CIT, moving from pure ‘muscle’ in the shape of armoured vehicles to technology-based ‘smoke & dye’ solutions to the protection of cash.

It has also been invited into Malawi and Zambia; and it has been looking at Nigeria and the Gulf.

However, KK Security has already achieved its primary goal: it has grown around 20 per cent every year since it was founded, more than justifying Howard Crooks’ (although Crooks bowed out in 1998 as the company was not growing as fast as he would have liked!) and Derek Oatway’s vision. www.kksecurity.com

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agonmash Group of Companies consists of two plants in St. Petersburg: Vagonmash CJSC and Petersburg Tram-Mechanical Factory OJSC (PTMF). Both companies are among the oldest railway car manufacturers in Russia. The main activity of the plants has been and remains the design and manufacture of passenger rolling stock for railways, subways and Gorelectrotrans.

Vagonmash was founded in 1874 and released its first railway car in 1898. In 1946 it began series production of the country’s first all-metal passenger rail car and in 1968 it began batch production of subway cars. In 2001, it produced the first subway train in Russia and the CIS utilising asynchronous traction drive, for the Kiev Metro. Throughout its history, the company has manufactured more than 15,000 units of rolling stock.

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Metawell The use of light and rigid aluminium sandwich panels in skins, floors, ceilings, partition walls and access aids brings considerable weight savings in modern rail construction. That is why well-known manufacturers of rail vehicles such as Bombardier (Metro New Delhi), Siemens (Velaro) and China Railways (CRH) make use of the corrosion-resistant Metawell panels. The Russian company Vagonmash JVC created a new ultralight metro train (project “NeVa”) and made the exterior skin, the roof lining and the interior curved ceiling with Metawell panels.

Today, Vagonmash manufactures dining cars; mail cars; baggage cars; passenger cars; and subway cars. Subway cars produced by Vagonmash operate in all the subway systems of Russia and the CIS countries, with the company’s products also being deployed in Poland and Hungary.

In recent years, Vagonmash has successfully developed and implemented several significant projects in the railway car manufacture sector. In 2005, the Kazan Underground Railroad opened, for which Vagonmash supplied five new-generation four-wagon trains with asynchronous drive and microprocessor control system.

One recent project has been the manufacture of three modern dining cars for a new luxury train— the Express—which included a new interior, improved layout, exclusive design registration and additional kitchen equipment. In August 2007 the company agreed with one of its main customers—Russian Railways—the engineering proposal to develop and manufacture the dining cars; and by the end of December 2007, cars in the Express began to take their first passengers.

Vagonmash has been building railway dining cars for use in branded trains since 2003—but this was its first time manufacturing luxury dining cars.

Another project, which ended in August 2009, was the supply of cars for the Warsaw Metro in Poland.

Between 2008 and 2009, Vagonmash delivered 30 cars to Poland, which were specifically designed in accordance with European requirements and which passed all required test cycles. The Warsaw Metro subsequently purchased an additional 12

cars without a re-tender in 2009.

Vagonmash takes an active part in professional exhibitions and conferences and is a member of many professional associations such as the International Union of Public Transport, the International ‘Metro’ Association, the Association of Manufacturers of Railway Equipment, the St. Petersburg Chamber of Commerce and others.

Quality is very important to Vagonmash. In 2007 the company achieved ISO 9001:2001 certification; and in 2008, an ISO 9001:2001 certification audit was successfully conducted according to the railway industry manufacturers’ standard. Certificates are annually renewed for the whole model range, with new production technology being introduced to improve quality, based upon information from consumers.

Vagonmash is currently implementing a major project to create the first modern fourth-generation subway train in the Russian Federation: Project NeVa. The technical parameters, design and basic design decisions are in accordance with leading world standards in the railway car building sector.

Vagonmash embarked on NeVa in early 2007, when it signed an engineering development agreement with Škoda Transportation (Czech Republic). On July 10 2009, the company presented the first NeVa carriage; and the same year, the company won a place in the citywide annual competition for Best Innovative Project of St. Petersburg.

In late 2010, Vagonmash plans to complete construction and begin testing the first six-car NeVa train. The company’s management decided to build an industrial complex at PTMF specifically

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for the mass production of NeVa cars; and in 2012 it plans to complete construction of the complex and begin serial production. Investment in production and construction sites for NeVa mass production will amount to around RUB3 billion.

PTMF is one of the main producers of tram cars in Russia and the CIS countries, with its products operating in 24 Russian cities and two towns in the Ukraine. PTMF was founded in 1934; and in 1947, staff were the first in the country to build ‘bolsheemkie’ four-axle cars (model LM-LP-47).

In subsequent years, construction repeatedly improved. In 1968, for the first time in Russia, the ‘trehvagonnye’ train, at 45 metres long, was launched in Leningrad. In 1986 full-scale production began of the ‘shestiosnikov’. In 1993, the plant developed the tram car model LM-93. In 1996, the LAN-86 was tested for the first time in Russia and the CIS, which utilised traction drives with transistor control system. In the late 1990s a series of prototypes of modern trams were run—LAN-97, LM-99 and LM-2000. In 2005, the upgraded model of the tram LM-99AM, ‘Solo’, was produced for the first time in Russia and the CIS, implementing a powerful system of energy-saving equipment using

asynchronous traction motors.

PTMF has been a member of the International Association of Enterprises of City Electric since its inception in 1993. The company is also a member of the St. Petersburg Chamber of Commerce.

PTMF is a leader in developing new models of street cars in the Russian Federation—products include the first six-axle car with 65 per cent lowfloor quantity (model 71-152); the first low-floor eight-axle two-way trams (shuttle); the first oneway tram with asynchronous drive (model 71154); and the first four-axle car with 40 per cent low floor quantity (model 71-153).

Mass production and deployment of the ‘Pioneer’, the first Russian six-axle articulated car with more than 60 per cent low floor quantity, began in St. Petersburg in 2007. Today, the streets of the northern capital operate 25 Pioneer trams.

In late 2009 the first 71-152 tram car model was launched in Barnaul (Altai Territory).

In May 2008, after the full range of required tests was passed, the Interdepartmental Committee (IAC) permitted serial production of the low-floor tram model 71-153. Three months later, the first of these trains went into operation in the city of Tula.

Currently, the 71-153 model is running in Moscow, St. Petersburg, Nizhny Novgorod, Tula and Krasnoyarsk, as well as in Donetsk in the Ukraine.

Model 71-154—a low-floor, high-capacity tram for two-way traffic, was designed for the Metrotram light rail system in Volgograd. It can also be used in large metropolitan areas. Metrotram is a unique tram system, currently 14 kilometres long with 18 stations. Of these, three stations are built to Metro standards, as a stretch of 3.3 kilometres is underground. In 2009, PTMF designers developed a modification of the 71-154 model for one-way traffic from one control room. In autumn 2009 the first tram of this model was created for high-speed lines in Kiev in the Ukraine. The 71-154 models significantly increase the possibility of adapting PTMF’s model range of low-floor trams according to customer demand and for use in the LRT system.

Specialists from Vagonmash and PTMF are in constant contact with their customers.

They collaborate to provide, develop and implement new technical solutions based on continuous monitoring of the parameters of railway cars, subway trains and trams. www.vagonmash.ru/en_history.htm

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Built onreputation Though construction work in Dubai has slowed considerably since the onset of the economic downturn, Emirates Falcon Electromechanical Co. (EFECO) is drawing on its solid track record and expertise to ensure continued success

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mirates Falcon Electromechanical Co. (EFECO) is engaged in all aspects of building services for electromechanical construction work, offering supply, procurement, installation, test and commission services for mechanical, electrical and plumbing (MEP) and infrastructure work across the city.

Like Dubai, EFECO has come a very long way since its inception in 2001, as Saad Taher, founder and managing director explains: “I established the business in September 2001 as part of a similar company which opened in Palestine’s West Bank back in 1991. We felt that the situation in Palestine at that time had instability and that Dubai offered a greater volume of work and business.”

EFECO is involved in the electromechanical building services trade and its broad range of services includes building electrical systems, air conditioning systems (HVAC), plumbing, fire fighting systems, telecommunication systems, water management infrastructure (including drainage, sanitary and sewerage systems), transportation infrastructure, energy infrastructure and communications infrastructure.

Taher says that while the services offered in Dubai are the same as those carried out in Palestine, there is a much greater sense of international culture and business in the Emirates. “This is an open place for companies from all around the world to do business,” he affirms. “Our supply chain is a good example of this—many of our supplies come from overseas but many of the providers have agents or offices here in Dubai, making business much easier.”

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E m i ra t e s Fa l c o n E l e c t r o m e c h a n i c a l C o.

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Initially, business was slow and EFECO concentrated on villa and residential compound projects, ensuring it met timelines and delivered quality. “The people we worked for, Arabtec Construction Company, were very satisfied with the quality of our work and our speedy delivery. When they were offered more work we were able to build an excellent relationship with them, focusing on residential work,” explains Taher. “Over time, the projects we worked on together became larger and between 2003 and 2005 we worked on thousands of villas around Dubai.”

By 2005, the company was beginning to extend its portfolio beyond residential villas and into commercial buildings, hotels and the residential high-rise market. Ongoing projects in Dubai today include the Conrad Hotel at Sheikh Zayed Road and the Palazzo Versace Hotel and Condominiums at Dubai Creek.

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“Training p we are alw

E m i ra t e s Fa l c o n E l e c t r o m e c h a n i c a l C o.

plays an important role in what we do and ways trying to improve skills�

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The company was also involved in the completion of Dubai World Central International Airport’s new air traffic control tower project— at 91 metres in height, the tower is the Middle East’s tallest freestanding air traffic control tower, housing offices, operations, technical rooms, a flight simulator and a meteor observation cabin.

The expansion of Dubai has taken place at a phenomenal rate and this in itself has increased the demands and pressures on Taher and his team.

“Since 2005, the growth of Dubai has been very fast, almost abnormal, which has presented a challenge for all companies to cope with the change of pace.

We knew that the demand in Dubai was always increasing, so we kept recruiting staff to cope.”

The success of EFECO saw its acquisition in 2007 by Arabtec Holding, which brought the business in to complement the Arabtec Holding Group as its MEP contracting works arm.

Taher says that EFECO’s staff play a crucial role: “This is a major factor for our growth and success—to have the right people and to have enough resources,” he asserts. “Training plays an important role in what we do and we are always trying to improve skills by running in-house workshops and encouraging staff to attend external seminars and courses. In the meantime, we work on ways to improve our skills through placing new people with our experienced ones, to gain hands-on experience.”

And according to Taher, that experience is one of the stand-out reasons that so many main works

contractors turn to EFECO. “We always try our best to satisfy our clients on projects and build up good relationships through positive communications.

The secret of our work is to provide sound quality products and service within the ultimate timeframe and budget. While we may not do design work (our role as a contractor is to do the installation and engineering), we do offer re-design and value engineering to the client or consultant based on our expertise, by proposing ideas that may save on the costs or improve the design.”

Work in Dubai has slowed down considerably, which means that competition for contracts has increased. “We always have to remain positive and use our experience to offer efficiency and value engineering to the client. This means being co-operative and helpful to all the people we work with and working together as one team. These are tough times but we are used to this situation and the need to be flexible, and realistic.”

Looking to the future, Taher says that Dubai will remain the core base for EFECO’s business.

“There are still lots of opportunities here. The huge number of projects from the past few years will require maintenance and facility management and even upgrades, as businesses look more towards environmental and energy saving initiatives, and towards green buildings. These projects will need professional companies like EFECO to help achieve their goals,” he concludes. www.arabtecuae.com/efeco/home.aspx

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MBT Petroleum

Given the right background and a sound strategy, some businesses can take off like a rocket, as Alan Swaby discovers

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ow would you take a start-up business from zero to a turnover of R2 billion in just five years? Well, the way that Johan Fouché did it was by creating an independent fuel wholesaling business, under the auspices of South Africa’s Black Economic Empowerment programme (BEE).

BEE is the country’s mechanism for re-distributing wealth and opportunity. It gives those companies with at least 26 per cent black equity certain benefits. In the case of MBT Petroleum, this was a licence to operate as a wholesaler. Fouché, MBT’s founder and CEO, found a suitable BEE partner in Charles Pietrie, secured a reliable source of product and applied for a licence. Pretoria was chosen as the headquarters for the venture and R30 million was invested in offices, storage facilities at the depot and a fleet of tankers.

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MBT Petroleum

But it was Fouché’s 20 years in the business that enabled him to recognise the need for a higher level of service and how his fledgling company could deliver. “At the retail level,” he explains, “the pump price is regulated by the government.

The price increases progressively the further from the coast petrol is sold but within geographical areas, no one brand has a price advantage over another. But outside the retail sector, the market is much more open.”

The government has ring-fenced refining and wholesale operations from retail, and oil companies are not allowed to have retail licences.

This means that while a petrol station might carry the logo of a particular brand of fuel, it will be owned and operated by an independent franchise holder—so selling franchises is a lucrative revenue stream. In the case of MBT, at a typical price of R2 million, Fouché reckons that his operators are paying less than half what they would pay to buy into a multi-national name.

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“Currently,” he says, “we have 35 outlets being serviced by MBT of which five of the outlets carry the MBT livery. MBT is also in the process of re-branding a number of other sites, many of them ‘white sites’ as they are known here. Within the next four years we expect to have around 150 MBT sites.”

Even so, 150 petrol stations isn’t many in a country the size of South Africa; and by themselves they’re not going to generate that kind of turnover. In fact, it’s on the commercial side of the distribution chain where the greatest gains have been made, and also where the market is unregulated and conducive to a more entrepreneurial attitude.

Without a shred of concern for the huge areas to be covered, MBT deals directly with agricultural, industrial and mining customers in all corners of the country. One of the issues Fouché identified as a weakness of the previous situation was its tardiness in meeting delivery promises. MBT has won business by keeping the simple promise to deliver product anywhere within 48 hours of an order being placed.

Perhaps the most remarkable aspect of the business is just how much is being done by so few people. The head office in Pretoria is staffed by just 17 people and MBT has 20 drivers driving company-owned trucks but supplemented by subcontracted haulage. “We have an operation bigger than most listed companies,” says Fouché,

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“and yet it’s run by a handful of people.”

MBT is a wholesaler without the means to produce its own petroleum products. Consequently, any product sourced from within South Africa will come from competitors. But this is where the BEE programme is really clever: not only does MBT score points by having black equity partners, suppliers score points for dealing with BEE inspired businesses.

And in South Africa, points mean rewards.

When setting up MBT, the first action was to negotiate an evergreen agreement with Sasol for a certain volume of fuel. But by itself, this is no longer enough. Already MBT is looking to BP and Total for 40 per cent of its needs—and still this is insufficient, requiring MBT to import product direct from the Middle East.

Bizarrely, sourcing product this way doesn’t make its prices uncompetitive so theoretically, MBT could source everything from outside the country. Once again, though, there is a hurdle: all the storage tanks and petroleum handling facilities at suitable harbours are already owned by competitors. MBT can negotiate to use them but not with a free hand.

“So far,” says Fouché, “we’ve doubled the size of the business every consecutive year but our ability to continue doing so depends on more control over the supplies we need. We have excellent partnership agreements with South African oil companies but we’d prefer our destiny not to be in the hands of others.”

MBT Petroleum

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The solution is to form a new set of strategic partnerships that will give MBT the facilities it needs to import product direct from the Middle East. “We are busy securing our own docking and storage infrastructure in Maputo—capital of Mozambique. The port there is the closest

possible to Pretoria and will cost us less than shipping and offloading in Durban.”

In keeping with its company slogan—‘Motivated beyond tomorrow’—MBT has various objectives for the future, over and above the desire to grow and win market share. Like many progressive companies, it is conscious of its carbon footprint and wishes to reduce the impact it has on the environment as a whole. Plans are being prepared to have the first green service station in South Africa—hydrocarbons will be replaced with bio-fuels and alternative nonhydrocarbon options also included.

The independent network model that MBT has created is no longer unique and similar BEE-based networks have sprung up. But it’s difficult to image them having a greater depth of understanding or first-hand experience of the industry; or to be able to function in the same lean manner achieved by MBT. www.mbtpetroleum.co.za

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Sustainable improvements By drawing on the tenets of automotive giant Toyota’s globally respected management philosophy, Toyota South Africa has been able to cut costs, improve operations and deliver sustainable benefits to the organisation

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ew companies can have influenced industry and business as deeply and fundamentally as Japanese car maker Toyota. Quietly and intelligently, during a period of national financial hardship, the company evolved a unique set of operational and business philosophies that have revolutionised thinking in the manufacturing sector worldwide, and are now performing the same miracle for organisations in sectors as widely divergent as health, banking and government services. Moreover, Toyota has been open about its philosophies in a way that may seem counterintuitive to some: it did not grasp these successful business advantages to its chest, but shared them, firstly with its suppliers and then with any company interested in learning.

The basis for Toyota’s operational excellence is the Toyota Production System (TPS), which defines the company’s management philosophy and how this operates throughout the organisation and into its supply chain. It governs everything from interactions with suppliers through to the shop floor and management levels, and finally to distribution to the customer.

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Today, Toyota continues to be the exemplar of what has become generically known as lean manufacturing. Moreover, through operational excellence, quality of product and the ability to manufacture what the customer requires, it has become the world’s number one car maker, manufacturing in some 27 countries and regions around the globe.

Its manufacturing presence in South Africa dates back to 1962, when a company called Motor Assemblies began to assemble cars for Toyota alongside vehicles for other OEMs such as Mazda, Fiat and Renault. By 1981 the plant had become exclusively dedicated to Toyota assembly and between 1997 and 2003, Toyota progressively acquired equity in the plant. Today it is 100 per cent owned by Toyota Motor Company and is run according to all its philosophies.

Nigel Ward, Toyota South Africa’s current VP of Purchasing and Engineering, has also grown

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with the company. Beginning as a trainee in the purchasing department in 1982, he witnessed the plant’s migration to the Toyota Way, and now has a very wide remit encompassing purchasing, planning and engineering.

The Toyota philosophy for supply chain management has always been collaborative and people oriented, and the company has spearheaded a remarkable change in global supply chain awareness over the past 20 years. “Historically, purchasing and supply chain relationships have always tended to be—and I use the word loosely— bloodied and confrontational,” says Ward. “However, through mutual trust and an open philosophy from both parties, we have ensured it is participative.”

Unlike many OEMs who source parts from around the world, the Toyota way is to localise its suppliers in the area of the Toyota plant, reducing the need to transport parts over long distances and removing a considerable amount of waste from the system. Toyota South Africa has been actively working towards this for many years, attempting to attract some of the world’s top automotive suppliers to set up operations in South Africa. But it was not until over two years ago that the company took the step of doing this in collaboration with six other automotive OEMs operating in South Africa.

The reasoning behind this move was, like most ground breaking ideas, surprisingly simple. Setting up a new manufacturing plant is both expensive and risky, particularly when it is supplying into a relatively small business sector—and the automotive industry in South Africa is small in comparison with, say, the coal industry. However, by acting together the car makers believed they would be able to leverage economies of scale, and make it financially attractive for top European and Japanese suppliers to relocate locally.

“We therefore launched an initiative called the South Africa OEM Collaboration Group,” Ward says. Members include the likes of BMW and VW. “The purchasing heads of each of them have formed an executive committee. Underneath us we have five commodity groups with a total of 45 people from the OEMs working cross-functionally to identify initiatives to localise new parts in South Africa. If, say, three of us can support the initiative, it can become very lucrative for a global supplier to set up here.”

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Ongoing training is a fundamental element of Toyota’s global kaizen (continuous improvement) philosophy; and the South African operation provides a wide spectrum of training through its Toyota Academy for Learning, Africa (TALA), which is organised into three schools. The first school is aimed at internal employee development, and offers a series of courses ranging from the basics of the

TPS and the Toyota philosophies through to team member and senior management development. The second school provides training for the company’s external partners, and is attended by the technical and sales staff from the dealerships.

The third school is for Toyota’s suppliers. “And here we’re trying to promote best practice within our supplier base in areas such as management,

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HR development, kaizen and the elements of TPS,” Ward says.

The downturn, of course, has significantly affected the automotive sector around the globe, and for Toyota South Africa and its suppliers the story was no different. “We saw a drop in production of between 30 per cent and 40 per cent,” Ward says. “In 2008 we produced 187,000 units and in 2009 we produced 104,000 units—so 2009 was what we think of as a year of survival.”

It may have been a hard year, but the company used that very challenging time positively, to bring about some significant changes and improvements in its own operations.

“To begin with we focused internally, examining our own operations and restructuring our business to perform better and to reduce costs.

Then we also worked closely with our suppliers to help them restructure their businesses,” Ward explains. “It sounds simplistic, but one area we worked on was scrap management. We examined how we create scrap in every aspect of the business, not only on the shop floor but also in the offices. From that we were able to change our wasteful processes and behaviours. We then shared this with our suppliers by showing them physical examples in our plant. For example, we showed them how we cut down on the number of forklifts so that we could use less gas.

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“In our own plant we also initiated an energysaving project which we called ‘no work, no watt’,” Ward continues. “We encouraged everyone to turn the lights off and use natural light. In some places, we even took the roof off, replaced it with translucent sheeting and removed the lights. We also made a big investment in solar heating to heat

water for all our ablutions—showers and so on.”

Ward is convinced that this type of kaizen activity is the only real route to sustainable business improvement. “You can certainly just slash costs,” he concludes, “but simple cost cutting doesn’t bring sustainable benefits in the way that this will.” www.toyota.co.za

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CBI-electric: african cables

commitment to service CBI-electric: african cables is at the forefront of the South African cable industry. As a manufacturer and installer, it is committed to safe, quality work, enabling it to stay at the top of its game

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ased in Vereeniging, Gauteng and owned by Reunert Ltd, CBI-electric: african cables has been producing a comprehensive range of electric power cables since 1935. Its products are used in many of the country’s key markets, including mining, manufacturing and industrial processes. It is also a supplier to Eskom and other general electrical contractors.

CBI-electric: african cables both designs and manufactures its products in-house. This strategy has enabled it to be more flexible and more responsive to customer needs—it is the only company fabricating cables in South Africa that is able to supply a range that meets any user requirement, regardless of the load. From low voltage PVC insulated cable to aerial bundled conductors, or high voltage XLPE insulated cable, the organisation provides key components that are vital to its customers’ operations. It has also developed products with additional safety features for use in hazardous environments such as mines.

In addition to design and manufacture, CBI-electric: african cables also provides installation and maintenance services for high and medium voltage cables under the banner of Power Installations (PI). This division has been in operation since 1986 and, over the past 24 years, has consistently performed as a leader in its field. Twenty years ago it installed the first ever high

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CBI-electric: african cables

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voltage XLPE cable laid in South Africa—a cable that is still in operation to this day and has never experienced any failure or malfunction in that time. Since then, it has remained a frontrunner in the installation of high voltage and low voltage cable on a turnkey basis. All cable is supplied

by CBI-electric: african cables and accessories are sourced on a local basis if possible, or from international suppliers if not.

Through PI, CBI-electric: african cables also carries out maintenance on electrical infrastructure throughout the country. While there are other businesses out there that can perform maintenance on XLPE dielectric cables, which have been the standard since the 1980s, the number that can maintain the fluid-filled, high voltage cables that were used before is dwindling. However, maintenance of these cables is extremely important—there is still 1,200 kilometres of fluid-filled cable in operation in the country. CBI-electric: african cables has taken the decision to maintain the relevant skills and knowledge among its staff so that they are able to service and maintain this older cable, preventing blackouts and malfunctions.

The firm maintains a pioneering approach internally throughout its business and industrial processes. As a manufacturer, as well as an

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installation company, it is important to eliminate waste and maintain quality. With this in mind, CBI-electric: african cables has learnt from the methods of two of the most popular and successful management systems—lean and six sigma—and hybridised the two. This unique system has enabled the company to increase efficiencies, improve material flow and keep quality extremely high.

This commitment to quality runs right through the business. PI is currently the only cable installation company in southern Africa to be ISO 9001 accredited; and CBI-electric: african cables is the first organisation in its category to gain the OHSAS 18001 accreditation, which sets the standards for health and safety best practice, and the third to become accredited regarding its environmental standards under the ISO 14001.

The firm is regularly audited to ensure that these standards are maintained.

Training is very important to the company as a whole. Levels of training in the employment pool are low in terms of the knowledge needed to manufacture, lay and maintain the full range of products that CBI-electric: african cables offers.

Consequently, in-house training is of extreme importance in maintaining the quality of the company’s output. As well as building up new recruits from unskilled to skilled, this dedication to in-house training also enables the business to keep on top of its knowledge base and to up-skill or refresh staff knowledge as necessary.

The company has taken a different approach to many others when it comes to its Black Economic Empowerment strategy. On 1 December 2004, it sold one quarter of its shares to affirmative business enterprise Power House Utilities (Pty)

Ltd. This union was unusual in that Reunert chose to empower a truly emerging BEE company, rather than a large established one. Power House was also chosen on the basis that it had the relevant track record and hands-on experience in the industry. Additionally, as well as being entirely black owned, Power House is 24 per cent owned by black female entrepreneurs. In this way, the partnership reflects CBI-electric: african cables’ ethos of commitment to excellence in standards and uniqueness in approach. In fact, this union has become the blueprint for the rest of Reunert Ltd. What becomes clear when looking at CBIelectric: african cables is that it is different to the competition. Attention to the small issues, such as continuing to train personnel on outmoded cable shows customers that it is committed to serving them, even if they are not using the most up-todate technology available. Producing the full range of cables for every requirement shows that providing the client with a tailored solution is at the top of the company’s agenda. Internally, giving staff training throughout their career and being willing to take on those who are eager but do not yet have the necessary skills demonstrates the company’s commitment to its people and to empowering the local community. Examining different methods of managing production and deciding to combine them into a tailored solution reveals how innovative the company is at all levels of business. And by choosing a relevant BEE partner, the firm has established its commitment to the welfare and future of South Africa as a nation.

In short, CBI-electric: african cables is more than a manufacturer of electrical cable—it is a key player in the South African economy and an important part of its future. www.cbi-electric.com

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Lamprell

The extraordinary economic growth in the Arabian Gulf has been matched by the growth and evolution of Lamprell, a beneficiary of the oil and gas bonanza. Andrew Pelis explores the history of one of the region’s foremost offshore suppliers

orm

T

he uncanny knack of being in the right place at the right time is one of the greatest business assets.

Since the late 1970s, the Arabian Gulf has been one of the best places to prove that theory, as the region became one of the biggest beneficiaries of the property boom. Previously arid regions were transformed as the area enjoyed an economic surge. Much of the financing for this development has come from one commodity—oil.

As oil prices rose during the 1970s, oil companies increasingly sought new exploration opportunities and the supply sector benefitted from that—including companies like Lamprell, which has played a prominent part in the development of the offshore industry in the Arabian Gulf for the past thirty years.

Incorporated in the Isle of Man, Lamprell was listed on the London Stock Exchange in November 2008 after winning the “Best Newcomer to the AIM Market” award in 2007. The company began in the seventies, when company president Steven Lamprell and his family relocated to Dubai. Today the business still regards the United Arab Emirates as it operational home.

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Jotun Paints Founded in 1926 in Norway, Jotun, one of the world’s leading paint manufacturers, established its presence in the Middle East in 1974, with Jotun UAE Ltd. Jotun has been at the forefront in terms of developing products specifically suited to local conditions.

Three decades of experience in the Middle East region has helped the company produce a variety of

conventional

and

specialized

coatings—each

incorporating the latest technological developments while offering performance with economy—catering to the various product segments and demands of the different markets.

Today, Jotun’s diverse product range includes decorative, protective, marine, floor/concrete protection, powder coatings and intumescent coatings, bearing a solid testament to the company’s reputation of being truly a single source solution for clients, consultants and contractors alike.

When the family moved to the area, the Emirate’s offshore marine industry was growing and Lamprell recognised the opportunity to offer engineering projects, with its inaugural jack-up rig conversion in 1989, which was followed by the refurbishment of its first jack-up drilling rig three years later.

Lamprell was quick to understand that the area lacked jack-up rig repair skills and was able to benefit from this shortage, completing over 180 rig upgrade and refurbishment projects in the ensuing years, and arguably becoming the leading refurbishment contractor anywhere in the world, by virtue of its completed projects in the Arabian Gulf.

Today, following a series of expansions and strategic moves, the company offers a variety of services including the engineering, procurement and construction of jack-up rigs, liftboats and drilling related equipment; the upgrade and refurbishment of offshore jack-up rigs; new build construction for the offshore oil and gas

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Lamprell

Anixter Anixter is pleased to support Lamprell with its cabling requirements here in the Middle East. By investing heavily in the required products and storing them at our custom built distribution centre in Jebel Ali, we can guarantee that Lamprell receives and pays for these items only when it needs them, which means the supply chain is much more efficient and cost effective.

This allows Anixter and Lamprell the opportunity to nurture and grow our “win - win” relationship.

sector, including floating production, storage and offloading systems and a range of oilfield engineering services that includes the upgrade, refurbishment and new building of land rigs.

At the present time, Lamprell operates three main facilities, in Port Khalid and the Hamriyah Free Zone in the Emirate of Sharjah in the UAE, and in the Jebel Ali Free Zone, in Dubai. The company has also expanded in Thailand in recent times, through the Sattahip Facility, as a result of increasing demand for refurbished jack-up rigs.

It’s no surprise to learn that the business has

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Lamprell

Hempel Paints Hempel Paints is one of the world’s leading paint manufacturers and has been producing paints for almost 100 years. With eight global R&D centers, 25 production plants, 49 sales offices, 150 stock points and over 650 coating advisors worldwide, Hempel is able to serve customers in more than 80 countries, ensuring rapid delivery of freshly made, high-quality paint.

Hempel Emirates LLC has been producing high-quality coatings in the UAE for more than 35 years for the marine, structural steel, oil & gas and decorative markets. Hempel Emirates has a modern production facility with capacity to produce over 20 million litres of paint per annum.

Hempel Paints—Protecting your investments.

enjoyed strong growth over the last three years, on the back of the bullish performance of the oil and gas sector. Revenues soared between December 2005 and 2008, from US$209 million to US$741 million.

Since being listed on the AIM, Lamprell has also enjoyed greater visibility in its forward order book

“Lamprell offers a range of oilfield engineering services that includes the upgrade, refurbishment and new building of land rigs” as a result of the increasing number of new build construction projects, which tend to be longerterm fixed sum contracts. Becoming publicly listed gave Lamprell the impetus to embark on an ambitious expansion plan, so that it can now undertake a wider range of services for clients: One new business opportunity is the construction of Scorpion S116E jack-up drilling rigs, with the company winning a contract with Scorpion Rigs Ltd to construct and deliver two completely outfitted and equipped LeTourneau designed Super 116E jack-up drilling units last year.

The present success of Lamprell can be traced back to the late 1990s, when once again the company benefitted from being in the right place. Customer demand saw the business start to broaden its range of services, entering the new build construction

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Lamprell

market for offshore oil and gas operators.

The company’s first projects in this new arena included the fabrication of calm buoys and mag anchors and having proved its mettle, Lamprell was awarded and successfully executed increasingly complex fabrication projects, including the construction of FPSO process modules and an FSO external turret.

By diversifying and evolving over time, Lamprell has remained in tune with changing demands within its client sectors and further demonstrated its ability to change direction when it began to

take on EPC new build construction projects.

Towards the end of the 1990s, with demand threatening to overwhelm capacity, the company took the decision to expand its enterprise, with the construction of a new purpose-built facility in Dubai’s Jebel Ali Free Zone, which was officially opened in 2002 and has already enjoyed further expansion.

The site is in the process of more development which will provide client offices, corporate offices, welfare facilities and warehousing to support the planned increase in liftboat, tender barge and FPSO process module building, service areas

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“Lamprell has enjoyed strong growth over the last three years, on the back of the bullish performance of the oil and gas sector” in which the company anticipates increasing demand over the next few months.

The new Hamriyah Facility, with in excess of $26 million of investment, is regarded as one of the most modern in the Middle East, boasting a quayside capacity that can successfully complete up to 10 jack-up rig upgrade and refurbishment projects at any one time.

With large covered and open fabrication areas the company also now has the capability to work on major new build projects, such as the construction of jack-up rigs, while other possibilities include the refurbishment of drill ships and semi-submersible drilling units which, up to this time, it has been unable to service effectively because of space and water depth constraints.

The New Hamriyah Facility has played its part in helping Lamprell to grow, by reducing capacity constraints and creating a “one-stop-shop” environment for the company to deliver improved services for its repeat customers.

The move to Thailand is a shrewd decision, taken not only to aid Lamprell’s growth in this

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new market, but also to provide the business with greater direct quayside access and it is hoped that this in turn will enable the company to accommodate larger projects.

To facilitate the process, Lamprell Asia negotiated an initial five-year agreement to use a portside facility of approximately 47,000 square metres in Sattahip, Thailand. The Sattahip Facility, which began operations in early 2009, has approximately 160 metres of exclusive deep water quayside access and will initially undertake jack-up upgrade and refurbishment projects, with the option to look at alternative work in the future.

Having been established in the UAE region for so many years has its benefits. The company has built a solid reputation for reliability and quality, twin factors why Lamprell enjoys so much repeat business. The new facilities have given the company broader scope to work on bigger projects for clients around the world, now that Lamprell has deepwater quayside access.

Lamprell’s commitment to quality is borne out by its quality assurance programmes which run

Lamprell

independently across each facility. The business operates with ISO 9001:2000, ISO 14001 and ISO 18001 accreditations, while also operating as one of only a handful of companies in the region to hold an API certification for oilfield equipment mechanical works including rotary equipment, crane repairs and mast and sub structure repairs.

Lamprell’s approach has been to move with the times and continue to meet its customers’ demands, with 2010 seeing the company win a large number of lucrative contracts, running into hundreds of millions of dollars.

This sustained period of activity has just been underlined with the announcement at the end of November of a $210-million contract from Eurasia Drilling Co. (EDC) for a new, LeTourneau-designed jack-up drilling rig.

The project will see Lamprell construct and

deliver a fully outfitted and equipped, selfelevating Super 116E (Enhanced) Class mobile offshore drilling platform, capable of operating in water depths of up to 250 feet, with a rated drilling depth of 30,000 feet.

The project vindicates the expansion to the Hamriyah facility as the rig will be fabricated in modular form at this site, with construction and commissioning to be completed at a shipyard on the Caspian Sea coast.

The company’s latest financial statement leant further endorsement as it confirmed refurbishment had been carried out on 42 jack-up rigs this year, the work scope showcasing its full range of upgrade and refurbishment services, with Hamriyah carrying out its share of the work, while work has now started on two jack-ups for National Drilling Company of Abu Dhabi, due for completion in the first half of 2012. www.lamprell.com

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Coal

tofl

With flotation on the Hong Kong stock exchange planned for nex up to become a major coal producer. CEO Tshepo Kgadima explai take to develop the potential of th

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float

t year, LontohCoal is gearing ins to Gay Sutton what it will he Lubimbi mine in Zimbabwe

LontohCoal

S

outhern Africa is rich in coal and mineral resources, many of them still undeveloped, and there are significant prizes to be gained for a soundly financed mining company with a long-term business strategy based on geological intelligence and analysis of market prospects. The real secret of success, however, is in reacting quickly and efficiently when opportunities present themselves.

Established less than three years ago under the leadership of CEO Tshepo Kgadima, South African coal mining company LontohCoal has done just that. The great leap forward came in May this year when the company acquired a 51 per cent interest in Liberation Mining (Pvt) Ltd of Zimbabwe. The deal, which brought with it the Lubimbi Project—a largely unexplored resource some 245 km north of Bulawayo—was handled with characteristic speed and efficiency.

“We then went on an aggressive drilling and exploration programme, doing more drilling in just three months than had been done on the site in the last 30 years,” Kgadima explained.

At a cost of around $3 million, the drilling commenced in May and was completed by August. “As a result we have been able to add over 7.2 billion tons of coal onto our reserves and resources. Of this, 1.3 billion tons can be mined by open cast methods, and 40 per cent of that will be coking coal.” The discovery has turned Lubimbi into a significant opportunity for LontohCoal and for Zimbabwe, and stimulated a great deal of interest from Asian steel mill and power plant operators in China and India.

One of the biggest challenges facing any new mine is how to get the coal to the end user, and LontohCoal is currently engaged in feasibility studies to quantify the investment that will be required to create a suitable transport infrastructure.

Although Lubimbi is conveniently located just 48 km from the main rail line linking the DRC, Zambia, South Africa and Mozambique, the line will require upgrading and a link constructed to the mine.

“We’re budgeting on this work taking around three years,” Kgadima said. “Meanwhile, we are finalising a transaction to acquire a 51 per cent stake in a port concession at Maputo in Mozambique, which will provide storage capacity for 800,000 tons of coal. All we will then have to do is increase the loading capacity on-site.”

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LontohCoal

FRA Coal FRA

Coal’s

primary

business

is

the

sourcing,

buying, washing and selling of coal, which in turn is distributed to its clients within the various industrial sectors of Southern Africa. FRA Coal facilitates costeffective and efficient coal distribution with quality products, technical support, logistical and product solutions—using skilled, motivated and empowered employees while adding value for all stakeholders.

The lifetime of the Lubimbi mine is estimated at around 200 years, so LontohCoal is looking closely at the long-term operational options. Engineers are currently engaged in scoping studies examining the feasibility of constructing a power plant and a coalto-liquids plant at the site. Attention is also focused on identifying the best long-term option for exporting coal to the lucrative Asian markets, as this would require a deep sea port capable of docking large ocean going vessels. “We are looking at a number of options, including expansion of the rail lines so that our coal can be exported from the deep sea port at Richards Bay in South Africa,” said Kgadima.

In the short term, the plan is to bring the Lubimbi mine into operation and make the first shipment of coal in May 2011. Using the rail link as it is today, the company should be able to transport around 1.5 million tons a year by truck to the local station and then by rail to the dock at Maputo.

“By the time we have developed and expanded the mines to produce something in the region of 10 million tons of coal a year, the railway line should be ready to handle such volumes.”

Kgadima has an interesting and unusual background, one that surprises many commentators in the industry, but which has prepared him very well for his current role. An investment banker with 15 years’ experience as a company director, he has extensive expertise in business development, project finance, business start-ups and commodity trading—a far cry from the engineering or geological experience of most new mining company heads.

For the previous eight years, however, he had been heavily involved in resource investment work for the mining sector, a part of which had included researching the coalfields of southern Africa—Mozambique, South Africa, Zimbabwe

and Botswana—analysing which of the deposits could most cost effectively be developed and from which the product could most easily be shipped to the end user. “Our current portfolio of properties was acquired pretty much on that basis,” he said.

The initial funding for LontohCoal was provided

by Kgadima’s employer at that time, the mining finance advisory firm Lontoh South Africa. “We started by acquiring the Hlobane View Colliery in KwaZulu-Natal. This colliery is now in production, and in the next three years we hope to become the largest anthracite producer in Southern Africa, delivering around two million tons of anthracite a year, the majority of which will be for export.”

Kgadima runs a tight ship, surrounding himself with some of the best engineers and geologists in the business, and he believes this is one of the major contributors to the company’s success.

“We have a very flat management structure.

Each of our directors is involved in identifying viable geological real-estate opportunities and assessing their feasibility. We don’t leave that to our juniors. Our decision-making processes are therefore quick, and we are able to deploy our resources effectively,” he explained.

The financial aspects of the company’s development have also been handled with characteristic planning and forethought. Since the company’s launch, a number of South African private investors have come onboard, and from the beginning of 2010, the focus has moved to encouraging Africans to take part in direct ownership of the company. “Today, we have 173 shareholders and their shares are unencumbered, which is a big plus for us,” Kgadima explained.

However, the company is now gearing up for the next major phase of financial development.

LontohCoal is to be floated on the Hong Kong stock exchange during the first half of 2011, and will have the distinction of being the first African company to do so. “This is a very important move for us. It will give us access to the Asian investment markets and enable us to raise the $500 million funding that we will need to develop the Zimbabwe coal mining project.”

The company certainly acts quickly when required, but its actions are measured and calculated. “All our decisions have been informed by the market prospects in the countries

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“We went on an aggressive drilling and exploration programme, doing more

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LontohCoal

neighbouring Zimbabwe. South Africa, for example, imports just over two million tons of coke and 3.5 million tons of coking coal a year,” Kgadima said. He expects the demand for coke and coking coal from the copper mines of the DRC and Zambian copper belt to increase to around three million tons a year. And in Zimbabwe itself, he believes a further 1.2 million tons of coking coal will soon be required each year for the local

reserves of some 600 million tons. “We believe there is an opportunity for us to either acquire or merge with other licence holders that are contiguous to us, and thereby create a critical mass of anything from 1.2 to 2 billion tons of coal.” But that, however, is for the future.

In the short-term, the company is gearing up to produce at least 10 million tons of coking and thermal coal a year from Zimbabwe, not only for

e drilling in just three months than had been done on the site in the last 30 years” steel mill and ferrochrome smelters.

The company continues to look for opportunities for expansion, and is actively exploring possibilities in Mozambique which has one of the world’s largest remaining reserves of coking coal. Meanwhile, LontohCoal holds undeveloped interests in the Waterberg Coalfield with inferred

the regional market but also to meet demand from the growing power generation and steel milling market in Asia. “With all the actions we have taken,” Kgadima concluded, “we believe we have positioned ourselves to become a largescale mining company within the next few years.” www.lontohcoal.com

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Acqu

tr

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Optimum Coal

uisition

rail

With two highly productive coal mining assets and a strong pipeline of projects under development, Optimum Coal looks set to become one of South Africa’s largest coal mining companies. CEO Mike Teke talks to Gay Sutton about the company’s strategy for growth

O

ptimum Collieries, located in the Witbank coalfield region of Mpumalanga, have a relatively long history of coal production.

Opened in 1968 by BHP Billiton, the collieries’ primary customer for many years was the Hendrina power station, run by the South African power utility Eskom.

Over the intervening years however, as BHP expanded the collieries, it also increased its customer base to include the inland and export markets.

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Optimum Coal

The collieries entered a new era of growth in 2008 when they changed hands and formed the primary asset of Optimum Coal, a vigorous new company backed by the Rand Merchant Bank (RMB) and driven by the aim of becoming one of South Africa’s largest coal mining companies.

“During our first year in operation we were fortunate in that we were in a sweet spot in terms of coal export prices, which reached a high of $150 a ton,” explained CEO Mike Teke. “This enabled us to pay off our debts from the acquisition and generate cash to develop our assets.”

The company’s first action was to initiate a programme of development and expansion of its assets. Optimum Collieries, which then comprised three open cast mines, Pullenshope, Kwagga and Eikeboom, made an investment of R558 million to construct and commission a new underground mine, Boschmanspoort. Production began in 2008 and by 2009 Boschmanspoort was producing

2.6 million tons. The target for this year is four million tons. “We are particularly proud of our achievement here, because we began producing coal from the mine while we were still building the infrastructure,” Teke said.

A second major early investment was targeted at creating a balance between company growth and business sustainability. “We believe that while we are taking measures to grow our assets, it’s important that sustainability is not left behind,” said Teke.

With water becoming a scarce commodity in many areas of South Africa, the company invested R550 million in the construction of a water treatment plant close to the Pullenshope mine. Now fully operational, the plant has the capacity to treat 15 million litres of water a day from Optimum Collieries, and the company plans to supply the water to the local community. “We don’t want to make a profit out of this,” said Teke, “but we are now in advanced negotiations with

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Optimum Coal

the local municipality, and the aim is to sell the water at a price that will help cover our operational expenses.” Initially, the plant will recycle water only from the company’s collieries, but its remit could become wider as enquiries have been received from other businesses in the region keen to recycle their water.

The company’s growth since its launch in 2008 has been strategically driven. The first acquisition was quickly followed by a second in 2009, another BHP Billiton operation, Koornfontein Mines, also located in the Witbank coalfields just 25 km from Optimum Collieries.

Today, Optimum Coal employs around 2,200

full time employees and some 1,000 contractors across all its operational and development sites, and predicts an output of around 18-19 million tons of run-of-mine coal this year. Some 7.6 million tons of this will go for export through the port of Richards Bay where Optimum is a shareholder and the fourth largest exporter, and 6.7 million tons will be supplied to Eskom, with 5.5 million tons to Eskom’s Hendrina Power Station.

From the beginning, the company’s strategy was to increase the footprint of its existing operations and acquire further assets. “We also made the decision to remain a pure play coal mining company and not to diversify,” Teke said. “We had

“We began producing coal from the mine while we were still building the infrastructure”

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Optimum Coal

Fraser Alexander Mineral Processing Fraser Alexander Mineral Processing is a division of the Fraser Alexander Group, which is wholly owned by Royal Bafokeng Holdings (Pty) Ltd. A recognition of the growing market trend in the mining sector to outsource operation and maintenance of mineral processing plants led to the strategic decision in 2007 to establish a fully-fledged Mineral Processing division. FA Mineral Processing offers mineral processing services on either a build, own, operate and maintain (BOOM) or operate and maintain (O&M) basis to the coal and metals industries. It currently has seven operations in the coal and platinum industries.

two platinum projects, for example, and we made the decision to sell those, thereby entrenching our position in the coal industry.”

The next stage in company development came on 29 March this year when Optimum Coal was successfully floated on the Johannesburg Stock Exchange, raising a total of R1.6 billion. This is now being ploughed back into the development of company assets and to pay off the debt from the acquisition of Koornfontein Mines.

Optimum Coal gained a strong pipeline of projects through its two acquisitions, and these are at various stages of development. Currently Optimum Collieries is set to run until 2033 and Koornfontein Mines until 2027, but the new developments should extend that lifespan considerably. The most advanced project is an extension of the Kwagga mine called Kwagga North. In August this year the board approved a capital spend of R600 million on the project, which is expected to cost R722 million in total.

Work has progressed quickly and 15 per cent has already been spent on infrastructure and mine construction by the end of June 2010.

The company also has two greenfield interests in the Ermelo coalfield, Mpumalanga. The first is the Vlakfontein Project and the second is the Overvaal Project. Development is on-going and these projects could potentially deliver another 10 years of coal production. Further North in Limpopo, the Mpefu Project is under development, while Koornfontein Mines is being extended in both

the 2 and 4-seam Projects, and the Schoonoord Project, part of Optimum Collieries, looks set to be developed soon, leveraging the existing infrastructure.

“Today, our company is over 60 per cent black owned,” Teke said, “and amongst our black shareholders we have two significant groups.

Our employees own 25 million of the 251 million shares in issue, and the communities within which we operate own the same number of shares.”

This distribution of shares gives Optimum a solid base of broad based black empowerment and a solid financial foundation, as neither of these two groups is encumbered by debt.

“With the development of black economic empowerment, many companies have found themselves in huge debt through encumbered shareholders,” he explained. “And being unable to service that debt they are often unable to do business or acquire more assets. Our case is the opposite. Our black shareholders are predominantly unencumbered and have no debt.”

This puts Optimum Coal in a great position to continuously evaluate acquisition opportunities. “We see ourselves playing a key role in the consolidation of the coal mining industry in South Africa,” Teke concluded. www.optimumcoal.com

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drivs

In the

South Africa’s automotive sector has undergone fluctuating fortunes over the past four years, reaching its peak in 2007 before the financial meltdown of 2008. Gert Harmse, plant manager for Feltex Fehrer’s Port Elizabeth facility, explains the impact of these challenging times

T

he South African automotive market has gone through a real boom and bust period of late and is only now starting to emerge from the other end. One company that has been through a range of emotions, having enjoyed success and then felt the crunch, is Feltex Fehrer.

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Feltex Fehrer

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Feltex Fehrer

Feltex Fehrer manufactures moulded polyurethane products for the global automotive market; its product range includes seat pads, armrests, headrests, wire frames, listing wires and suspension aid buffers, as well as in situ headrests, panels and armrests.

The business, headquartered in Durban, has very much evolved over time, as Gert Harmse, plant manager at the Port Elizabeth facility, explains.

“The company started in Durban back in 1931 as a textile business, manufacturing ladies’ slippers; that’s where the ‘felt’ part of our name comes from.

Toyota came to South Africa in the 1950s and the company started to supply textile products for them—items like carpet and matting—and it was in 1997 that the company switched its focus entirely to the automotive sector.”

Feltex was subsequently bought in 1999 by

German Claus Daun, who invested in the business to help preserve its status as a Tier 1 and 2 supplier to the automotive industry. His investment came at a time when the South African Export Programme was finding its feet; and it was the same year that the BMW 3 Series commenced operations in the country. “Today Claus Daun still owns around 70 per cent of the business but we listed on the Johannesburg Stock Exchange in 2004, which made quite a difference,” states Harmse. “The listing has certainly changed our management approach which is now much more aligned to financial principles, but this is good for the company.”

The company today operates four plants across South Africa and holds the distinction of being the main foam supplier to the automotive industry in the country. However, that title came as the reality

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Feltex Fehrer

of the global economic downturn took its toll.

“There was another foam supplier in South Africa until 1997. Due to increasing pricing pressures from the OEMs and the low car production volumes of about 200,000 per year in the 1990s, the second company was taken over by Feltex.

With the export programme kicking in during early 2000 with the BMW 3 series, A4 Golf and Mercedes C-class, the industry grew to production volumes of over 450,000 in 2007. However, 2008 into 2009 saw things dramatically decline. That production figure dropped to around 370,000. We are now gradually getting our production figures back towards where they previously were.”

The downturn in business also had an impact on the size of Feltex’s South African workforce, with the Port Elizabeth site employing 280 people at its peak, a number that fell to 140 at the lowest ebb. Harmse says that the numbers are now back to 170 and a reconfiguration of work processes has improved efficiency enough for that figure to achieve the same output previously reached during the boom period.

One area that has helped the company to

improve performance has been the introduction of lean manufacturing processes. “We started around 2004 and the drive came at all levels, from the senior management team down to the shop floor,” Harmse comments. “Production output has increased by about 15 per cent but the most important change I feel has been how much easier the Port Elizabeth plant has been to manage.

We’ve empowered our workforce and tried to make them feel responsible for their own area; they are responsible for output, quality and cost and all of this has enabled our shop floor workers to see what is required within the business.”

Harmse says that each of the plants has implemented its own methodology, with the head plant in Durban adopting the Toyota Lean Manufacturing system. The initiative was very much kick-started by the South African government, which provided funding and resources for the project as it looked to ramp up South Africa’s competitive manufacturing standards on the international stage.

The benefits lean has brought are perhaps best illustrated by employee comments, with operators

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Feltex Fehrer

endorsing the company’s efforts with statements such as: “Makes work simple”, “Tool to develop us” and “The high spirit and competitiveness in the teams are evident throughout the plant”.

Areas such as the Cold Cure Team, for example, have seen productivity increase from 820 parts per day to over 1,000; and scrap reduced from 2.5 per cent to 1.1 per cent.

Training also plays an integral part in Feltex’s Black Economic Empowerment efforts, which have so far reached Level 6—and Harmse indicates that the company is very much looking to promote through the ranks via identifying training needs.

One of the more challenging aspects for Feltex of late has been the twin escalation of energy and staff costs. “Here in South Africa we have endured enormous hikes in energy prices, by as much as 25 per cent year-on-year, while labour costs have increased above the rate of inflation,” explains Harmse. “It is a challenge to offset these costs and remain competitive—we may be the only foam supplier in the country, but we have to

accept the customer prices as they can always import from elsewhere in the world.”

With an impressive list of clients including Johnson Controls and the Lear Corporation, Feltex can look forward to exciting times as business picks up; however, Harmse sounds a note of caution: “We had to scale down our operations while turnover fell by as much as 50 per cent. We are recovering now and the new Export Programme means we are manufacturing components for the Volkswagen Polo which will be exported to the UK, and for the C-class Mercedes and BMW 3 Series, which is exported to the United States.

“As the only main foam supplier in South Africa, an increase in volume will create its own set of challenges and we have to be mindful to continue to meet customer expectations. There is certainly the opportunity once again for a second supplier and the OEMs much prefer competition in each country, so that if there are any problems they have more choice,” he concludes. www.feltex.co.za

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ighty enterprises often spring from small beginnings. Such is the case with the CMC group of companies, which is now one of East Africa’s leading players in the motor industry. Founded in 1948 by two entrepreneurs with an eye for an opportunity selling Land Rovers and authorised share capital of just £10,000, CMC today operates five divisions and eight branches across Kenya with a staff complement of 1,300 employees.

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“We are a centralised organisation but all our companies trade within the umbrella of the holding company, CMC Holdings Limited,” explains Martin Forster, group chief executive. “Each division has its own board and makes strategic recommendations based on their operations, but we maintain the final say.”

CMC Motors Kenya is the largest company within the group and accounts for 84 per cent of turnover. Over the years, it has developed exclusive franchise agreements with many of the world’s best known models, including Land Rover, Ford, Mazda, Volkswagen, Suzuki, Maruti and the Nissan Diesel range of trucks and buses.

MAN commercial vehicles, Bobcat, New Holland and Case tractors are marketed alongside an extensive range of farming implements, from

ploughs through to irrigation equipment.

Kenya Motor Industry statistics show that CMC Motors’ share of the market has risen steadily over the past three years from 14.8 per cent in 2005 to 19.6 per cent in 2009/10. Although the global slowdown has inevitably impacted on profits, sales revenue has been on a similar upward spiral for the last three years, recording Sh9 billion, Sh11.5 billion and Sh11.7 billion in 2007, 2008 and 2009.

“We aim to bring a one-stop-shop approach to the marketplace. Whether it is a small Suzuki car that is sought, or a 50-tonne truck, we can supply it,” states Forster. Earlier this year, the Ford Kuga was officially launched, which Forster expects to appeal to Ford’s loyal customer base as well as attracting new customers to the brand.

However, while CMC is locked in battle with

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Toyota to dominate the passenger car market, the battle has already been won at the heavier end of the transportation spectrum. “Our best selling vehicles are heavy commercial vehicles such as UD trucks from Japan and the MAN range of trucks from Europe which are a recent addition.

We know that we dominate the market for large 65 seater buses where we have a 60 per cent market share and also agricultural tractors where we have a 75 per cent market share,” Forster points out.

The Land Rover, he explains, is still an eternal favourite; and CMC handles all the requirements of Kenya’s public institutions such as the government, police and army who show an unswerving loyalty to the Land Rover Defender.

Providing an excellent after-sales service has always been fundamental to CMC’s success. The core retail offering is complemented by a separate engineering division which provides a range of custom designed and built truck bodies, trailers and water tanks. Should accidents occur, another division is dedicated to accident repair, featuring the latest equipment in body repair and re-spray booths. “We know we have by far the largest distribution network in East Africa not just for sales, but also for parts and service,” says Forster.

However, with success has come the inevitable problem of market saturation. As the local Kenyan economy has little more to offer, CMC has set its sights predominantly on new opportunities in Tanzania. The country has a stable and growing economy and now ranks first in Sub-Saharan Africa when it comes to contracts enforcement, and ranks tenth in accessing credit facilities as well as trading across borders, according to the latest report of the World Bank.

“We are investing more than $8.5 million in the commercial capital of Tanzania,” reveals Forster.

“So far, we have spent $2.5 million on land and we

land has been expensive and difficult, but we plan to start building in December and expect the site to be ready in November 2011. Once that site is up and running, we will look at establishing branches in important towns like Mwanza and Mbya.”

There is already a CMC branch in Kampala; and Forster believes there is scope for further expansion within Uganda, especially for trucks following the discovery of oil and gas deposits.

“We have been active in Uganda since 1956, although we were forced out of business for many years during the regime of Idi Amin when an attack on a neighbouring building by opposition forces accidentally destroyed ours instead. Now, though, the situation is totally different and business is brisk again,” he comments.

Depending on the outcome of the January 2011 referendum which will take place to decide if the country should divide into two states, Forster also sees potential for expansion into Juba in South Sudan. “We must wait and see. If the outcome of the referendum creates a more politically stable country, then there will be new economic potential,” he says.

Last year, the global slowdown, coupled with an appreciation of the Japanese yen against the Kenyan shilling, caused a decline in profits.

Imports of Japanese UD trucks—the name refers to the Nissan Diesel heavy commercial vehicle whose name was changed after Volvo Trucks of Sweden bought Nissan Diesel—created a temporary financial headache.

Forster is optimistic that a sound strategy is now in place to counter the erratic yen. “We have acquired the franchise this year to import and distribute MAN trucks. They are selling very well and because it is a European model, we pay in euros and that currency is much more stable.

“We are already in a much more stable position and the overall outlook for sales is steadily

Africa not just for sales, but also for parts and service” expect to incur an additional $6 million in building costs. We want a presence in Dar es Salam where we plan to have a showroom, parts and service facilities and a large bonded warehouse. Acquiring

improving. There is plenty of room for CMC to grow in the rest of East Africa; and next year, we expect to see important new sources of revenue coming on stream,” he concludes. www.cmcmotors.com

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lthough the global economy is still struggling to recover, Crown Berger Kenya can point to the healthiest of balance sheets. Firmly established as East Africa’s leading paint maker for over 50 years, profits after tax rose by a heady 180 per cent during the last financial year, while overall revenue rose by 34 per cent to $31.5 million.

“Not only have our sales and profits grown, but we are also trading from the position of a very positive cash flow with almost zero reliance on bank finance,” states CEO Rakesh Rao. The company manufactures and distributes an extremely broad range of decorative paints, industrial paints, marine paints, powder coatings, automotive paints, resins, adhesives and wood finishes. This balanced portfolio means that there are numerous applications; so a downturn in one sector, such as ongoing weakness within the automotive industry, does not seriously impact on overall sales.

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Ramco Group Ramco Group is a consortium of over 20 companies and is predominantly based in Kenya with a growing presence in East Africa. The Group is diverse in its operations and is recognised as a leader in hardware, stationery, printing and packaging. Since its earlier days, Ramco Group has had strong business relations with Crown Berger as both clients and suppliers.

been a very important facet of our success,” Rao continues. “Over the last five years a programme of continuous improvement and kaizen has seen us improve our productivity by 100 per cent. This has been done without any investment in new plant, simply by making better use of what we already have.”

All of Crown Berger’s facilities now have ISO 9001:2000 accreditation; and the company has invested in a world-class effluent plant capable of

“People buy from us because we are the most respected brand in the marketplace. Our name inspires trust and confidence” The Kenyan economy has slowed, but continuous investment in infrastructure improvements last year still saw an increase in activity of more than eight per cent within the building and construction sector. Almost two-thirds of the total cost of commercial and residential buildings is accounted for by fittings and finishes, where paint has an integral role.

To date, the company has focused on the premium end of the paint market, where it has a market share of over 60 per cent, but the recent launch of a new economy range is expected to quickly boost sales at the lower end of the market.

“People buy from us because we are the most respected brand in the marketplace,” explains Rao. “Our name inspires trust and confidence. We are the only paint manufacturer in the whole of East Africa to be publicly listed—we are listed on the Nairobi Stock Exchange—and this gives us a great deal of professional status.

“Here in East Africa, most manufacturing enterprises still tend to be local family-run businesses,” he continues. “At Crown Berger on the other hand, we manage our business to the highest international standards and seek to adopt world-class quality standards and practices. This difference in management focus is very important in shaping the way that the marketplace views us,” he explains.

Production is based at a plant in Nairobi, where 400 people produce over a million litres of paint every month. Output is marketed principally under the Crown brand. “Enhancing our productivity has

processing 15,000 litres per day. The company has also become the largest SAP Business One user in Africa, which has greatly improved inventory control, production planning and communications.

Decorative finishes are largely a matter of taste and style, and fashions change quickly. To maintain market interest, the company has pioneered a steady stream of technically advanced product innovations. The latest new product launch has a wood protection system as its centrepiece.

The Woodcare 365 range greatly extends the life of wood fittings and Crown Berger believes this aspect of the product offers important environmental advantages, as well as long-term cost savings to architects and planners.

Another innovation was the launching of an exterior product which carried the tagline ‘To Last the Lifetime of the building’. The new product, branded as Crown Variations, offered a new concept of lifelong decoration—with no maintenance. This product follows the leading products of the world which embrace smart maintenance.

Meanwhile, the Crown brand itself has been reinforced by a cutting-edge, award-winning advertising campaign; and over the past decade, Crown Berger Kenya has attracted a host of similar accolades. In 2006, it was awarded the Marketing Society of Kenya’s Most Improved Brand award, followed by second place in 2007 with the Best New Product Launch award.

Crown Berger has also opened a third paint gallery in Nairobi’s Parklands estate. This is aimed at providing the construction industry with

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a training and education facility while offering a showcase for Crown products. The first gallery of its kind at Westlands has seen turnover increase eightfold since it opened two years ago. All training is provided free and so far thousands of local painters have benefited. Meanwhile, correct use of Crown products means they deliver all the intended benefits.

Although Rao still believes there is scope to grow further in Kenya, he is now casting a keen eye towards opportunities further afield. The creation of the Common Market for East and Southern Africa (COMESA) has also created a raft of new opportunities. The trade liberalisation programme which began in October 2000 has gradually seen the elimination of tariff and non-tariff barriers to intra-regional trade.

“The opening of a large regional market through COMESA is a major opportunity and gives us a big incentive to expand our business in East Africa, particularly as now there is no export or import duty to pay,” Rao affirms. “We have had a presence in Uganda for the last three years, but we are already selling products into a number of other East African states, and expanding our distribution network throughout the region is a big priority.”

However, Rao is clear that the company does not intend to create a network of manufacturing subsidiaries. “We still have capacity at our plant here and we are very proud of the safe, wastefree environment we have created. Also, there is a real problem in other East African countries with attracting the skills and expertise needed to run a successful enterprise. We are very fortunate in Kenya that we can easily find the calibre of people that we need,” he explains.

“The opportunity that COMESA offers is to generate more sales and I believe we can expect to double our turnover again over the next five years,” he concludes. www.crownberger.co.ke

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Water

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Lusaka, the capital city of Zambia, has familiar water su problems. Managing director George Ndongwe tells Jo Lusaka Water & Sewerage Company aspires to become a w

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lready over three million, Lusaka’s population is increasing at something like three per cent per annum, and the city is changing. Its people are getting more prosperous and their expectations are expanding. As the country becomes more wealthy on the back of its natural resources, business and industry is being drawn into the city and it is attracting international investment again after some lean years.

Zambia, being a hilly country with access to major rivers, is not exactly short of water, but water quality is a real problem in some rural areas. Water can also be a problem in the cities, because of under-investment in infrastructure causing a failure to deliver safe drinking water, not to mention sanitation, to significant parts of the population.

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When George Ndongwe was appointed four years ago to lead Lusaka Water & Sewerage Company, he was faced with a run-down water and sewerage system which was ill maintained, unreliable, and without a functioning revenue collection system. The job of turning this situation round within Lusaka itself was daunting enough, and it became considerably more challenging in 2008 when responsibility for the adjacent regions of Kafue Chongwe and Luangwa were added to Lusaka Water’s remit.

have major impacts on infectious disease burden and quality of life.

The problem is an urgent one. “There is a lot of need to rehabilitate and also expand to cover additional demand,” says Ndongwe. “The problem is that the treatment plants are overloaded. They are having to treat more effluent than they were designed for.” The whole system, dating back to the 1960s, requires attention, he adds. “We are still working out precisely what needs to be done but it will be a lot. Once the master plan is ready,

“We are planning to drill 10 additional boreholes this year; and next year we have factored in another 10” Though Lusaka Water & Sewerage is wholly owned by the City Council, it operates like a private company. All its revenue comes from the charges it levies for its services, and it receives no grant or subsidy. Capital projects are another matter; while routine maintenance comes from and is limited by the utility’s resources, it has managed to secure international development funding for much of the major infrastructure work that is being carried out.

A master plan for the entire province of Lusaka is being developed with assistance from the Millennium Science Initiative (MSI), a project of the World Bank and the Science Initiative Group, based in the United States— an international initiative to build capacity in science and technology in the developing world. “We are hoping the master plan will be ready towards the end of 2011, but until then it is difficult to be very specific about the priorities it will identify and the level of investment that will be needed,” says Ndongwe.

Within the city itself the situation is not too bad, he continues. Around 70 per cent of the population has access to potable water, and one of the key outcomes will be to increase that to 100 per cent.

However, a big proportion of Lusaka’s population falls into what are called the peri-urban areas and the sanitation situation in these areas still leaves a lot to be desired. Many people do not have access to a hygienic toilet; large amounts of waste are discharged to the environment without adequate treatment, and this has been estimated as likely to

the situation will be much clearer.”

Because of its height above sea level, Lusaka’s water supply all has to be pumped up. Around 42 per cent of the water is abstracted from the Kafue River about 65 kilometres away and all of 200 metres below the capital’s elevation. The remainder comes from boreholes strategically placed around the city and its suburbs. “Our long term strategy is to double the amount of the surface water we take from the river, and just use the groundwater as a backup supply. In the medium term, however, we do propose to increase the number of boreholes. We are planning to drill 10 additional boreholes this year; and next year we have factored in another 10 under our budget to try to deal with water-stressed areas.”

When it was handed over to Lusaka Water, it was found that many of the existing boreholes in Chongwe were not functioning at all and there was no water treatment plant there. The completion in September this year of a $1.6 million facility finder by the Danish government development agency Danida will have a major impact on the quality of life in Chongwe, says Ndongwe, though there are still major challenges in the extensive rural areas that now fall under his control. “Since taking over Kafue and Luangwa, we have realised that there is an urgent need to rehabilitate the existing water treatment facilities there too.”

Using World Bank finance, the sedimentation plants and intake pumps at the Kafue River plant have been rehabilitated and the plant’s efficiency

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improved. Perhaps the most significant initiative has been the metering programme.

“By the end of this year we will have installed 30,000 meters for domestic customers.

This benefits them because they gain control over their water usage and costs, and it benefits us by cutting the cost of debt collection, improving our cash flow and freeing us to focus on services to existing customers and extending the service to new customers.” New IT servers have been installed to support a SCADA (supervisory control and data acquisition) system that monitors the performance and status of every reservoir, pumping station and treatment plant from a central location.

Lusaka Water & Sewerage has achieved something almost unthinkable four years ago; it has moved from loss into profit, recording a small surplus in 2009 and expecting a larger one in the current year. Remarkable things have been achieved.

“About 19 areas had poor supply and we have covered almost half of them. We have also seen a growth in our business over the last four years and financially the company is getting better. If we are robust in terms of financial performance it

“Our long term strategy is to double the amount of the surface water w will be easier for us to access financing in the future. My vision is to transform this company into a vibrant business that can operate on a sustainable basis and also become a world-class water utility, despite all the challenges we are facing,” says a confident Ndongwe.

Going forward he would like to develop a range of commercial opportunities, including turning waste into organic fertiliser, supplying bottled water, and microgeneration at the treatment plants.

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we take from the river, and just use the groundwater as a backup supply�

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In the oil well drilling business, having the latest equipment helps; but it’s the human element that still makes the difference, as Alan Swaby learns

W

hatever else the Norwegian equivalent of Father Christmas brings Frank Tollefsen this year, his largest—and most anticipated—present by far will be a brand new drilling ship costing the best part of half a billion dollars.

As senior vice president of Operations at Ocean Rig UDW— offshore oil and gas well drilling contractors—Tollefsen currently has at his disposal two deep water semi-submersible platforms that have been hired by all the major oil companies to work in all deepwater exploration zones except the Far East. The very first to go into action was the ‘Leiv Eiriksson’ off the coast of West Africa in 2001. A year later, sister ship ‘Eirik Raude’ was finished off in Canada and put to work in the Atlantic waters off Newfoundland.

Semi-submersible platforms provide an inherently more stable drilling platform than a drilling ship, making them better suited for the harshest conditions. “They sit deeper in the water,” Tollefsen explains, “so they are less susceptible to wind and waves.”

Using a sophisticated GPS system and transponders placed on the sea bed, the platform’s computers can instruct a series of propellers around the rig to make continuous minor adjustments that keep the drill derrick within one degree of where it should be.

What the semi-submersible can’t handle is too much heave in the sea, where the waves rise and fall. There is some slack designed into the rigs—which means drilling can continue even when the platform is moving vertically—but when the waves get to 25 metres in height, operations have to be shut down. All of which is a bit ironical as the ‘Leiv Eiriksson’ is currently on duty in the Black Sea, which is more like a mill pond compared with the North Atlantic.

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To get from location to location, semisubmersible platforms move under their own steam. The pontoons that normally lie deep under water are inflated and the rig sits on the surface.

Propellers that normally control position become means of propulsion. But it’s a slow process and complicated even further in the case of the Black Sea, as the platform had to pass under two bridges, necessitating the derrick to be dismantled.

Drilling ships, on the other hand, sit on the surface and feel every movement of the sea but much of that can be compensated for by the latest dynamic positioning systems. Compared with platforms, drilling ships have a number of operational advantages. They move from location to location twice as quickly as their counterparts and as oil companies hire a rig by the day— whether drilling or moving—speed is of the essence. At prices that start at $400,000 a day and have peaked at over $600,000, any savings to be made soon mount significantly. Drilling ships also have more deck payload so they can hold greater quantities of consumables with a resulting lowering of logistical costs.

“There’s been a shortage of offshore drilling capacity,” says Tollefsen, “to the point where ship yards were able to charge a premium for new vessels and rig operators were able to increase their daily rate. It’s a market driven very much by supply and demand. We are not the only company increasing its fleet, so the extra supply means that daily rates have come off the peak they were at.”

Setting up as an unknown and untested drilling contractor, investing millions of dollars in equipment, involved considerable risks; and in the beginning, mistakes were made. The semisubmersibles were built in yards that had no prior experience. Extra development work and prototypes were involved and the decision to build and then equip in different locations also added time and expense. But by manning the company with the most experienced managers and operators it could find, Ocean Rig fought its way into the market and made a name for itself as a reliable contractor.

“In some industries,” says Tollefsen, “there is a technological and performance gulf between market leader and smaller suppliers. In this industry it’s not the same. Unless you can deliver exactly what customers want, you won’t get any business. The rules tighten more and more, calling

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for ever stricter managerial control.”

As such, the difference between the performance of Ocean Rig and the market leader, for example, is a question of fleet size. Where Ocean Rig currently has two deep water rigs, the opposition has over 20. But with its latest purchases, Ocean Rig is moving up the rankings. The transition came about when the company was bought in 2008 by Greek shipping owner George Economou, through his holding company Dry Ships. It’s enabled the purchase of four state-of-the-art drilling ships which will be delivered between December this year and the end of 2011.

“These drilling ships are built to a proven design,” says Tollefsen. “When we take position they will be equipped with everything needed to go straight to work—including the enhancements we have specified to improve efficiency and reduce maintenance. Already we have signed contracts for the first ship.”

Working offshore will never be an easy life but operations on board the latest generation drilling ship have changed enormously. So much of the handling, joining and screwing of drill pipes and casing is done remotely. Higher derricks mean that three 10-metre lengths of piping can now be preassembled into a single stand and handled as a unit. More efficient drills make shorter work of holes of up to 36 inches in diameter.

Having technically advanced equipment helps; but these days, when working at extreme depths and pressures, having systems in place which minimise the possibility of anything going wrong is what oil companies are looking for. There could be half a dozen or more contractors involved with well drilling providing mud and cement services but the overall responsibility lies with the oil company paying the bills—so despite the expensive toys, it’s the personnel behind them that really count. www.ocean-rig.com

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Pen

Even the largest names in pharmace need some help from their friend time to time, as Alan Swaby lea discussion with Penn P

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career in pharmaceutical R&D is not for those with a short attention span. Perhaps growing bonsai needs more patience; but the painstaking search for new drugs can’t be far behind.

Even when an exciting breakthrough is made in the form of a promising new molecule, the hard grind has barely begun.

But this all bodes well for Penn Pharma. Its raison d’être is to take over the D in R&D. In the business for over 30 years, it’s now one of the longest established pharmaceutical services companies around.

From its UK facilities in Tredegar, South Wales, it works with members of the international healthcare industry, providing pharmaceutical companies of all sizes with drug development, clinical trial supply and manufacturing services.

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“It’s a hackneyed cliché, I know,” says finance director Lee Mainwaring, “but we actually do provide the proverbial one-stop service. Not only that, but we have something to offer everyone, from the entrepreneurial sole scientist who has discovered a promising molecule to multinational household names.”

In case you’re wondering, Penn is not named after the founder of the business but the village in Buckinghamshire where it started in 1979.

In 1986 it was attracted to Wales by the Welsh Development Agency and has flourished there ever since. South East Wales has a good pool of skilled workers and the universities of Cardiff, Swansea and Bristol are in close proximity when it comes to recruiting highly qualified staff, especially forensic and analytical science graduates.

“The sheer variety of work we do,” says Mainwaring, “gives young scientists accelerated experience. The average length of service with Penn is six years and then staff are ready to move on and up the career ladder which may be into our internal project management group or move externally. This we don’t mind because it is good for all organisations to be refreshed with new blood.”

Interestingly, at board level, Penn Pharmaceuticals has done just that. Over the years it has transferred ownership via management buyouts on three occasions—the most recent was a £67 million purchase three years ago. With backing from LDC Private Equity, the new management team has the funds and the strategic intent to finance a £12 million development programme which will be assisted by the Wesh Assembly Government. The plan is to create new facilities which are expected to more than double the current turnover of £30 million within the next few years.

“One part of the service which has attracted considerable attention,” says Mainwaring, “is our ability to work with small, highly potent compounds which need much more careful handling. This is a growth area we have identified and we are planning additional containment suites to accommodate this type of work.” Furthermore the recent investment in Xcelodose equipment will enable the efficient processing of the small amounts of active pharmaceutical ingredient that is required to be dispensed. This is very important for potent drugs.

Take a tour around Penn’s facilities and in addition to two low humidity clean rooms, for the more routine work there are 16 class 100,000 cGMP

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(good manufacturing practice) manufacturing rooms and eight GMP secondary packing rooms.

Then, for the more potent drugs, there are two level 3 containment rooms plus a level 4 high containment suite, where work is carried out with the molecules safely in a closed process train utilising split butterfly valves, glove boxes and, for additional safety, operators in protective suits.

On the other side of the building Penn has all

“We have something to offer everyone, molecule to multinational household nam the requirements needed to turn molecules into medicines: mixers, driers and tablet presses that can supply the full gamut of bottling, sealing and packaging equipment to make compounds ready for the market.

Penn has over 150 clients on its books made up from SMEs which have precious little in the way of facilities and which rely on Penn for virtually all their development work, through to the multinational majors. With the former, the recession and availability of development funds from financial institutions has held work back but after a relatively flat period, activity is once again picking up and the last six months have shown a 30 per cent increase in Penn’s core business.

For the latter, it’s not so much the facilities that are attractive as the speed at which the work is progressed. “Our Fast Track service, for example,” says Mainwaring, “is proving beneficial for pharma companies involved with clinical trials.

It’s a logistical service getting product in the specified manner to clinical researchers who are conducting the clinical trials. We prepare, package and distribute the drug under investigation along with placebo which can include complex double blinded trials much quicker than would normally be the case. Dedicated teams can prepare, pack and despatch product through in days, rather than the weeks it would normally take.”

Penn also finds that it is a popular portal for drug companies from outside the EU wishing to enter the European market. Legislation determines that someone designated a Qualified Person and usually trained to PhD level must supervise any such approach. US and Japanese pharmaceutical companies often call on Penn,

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which currently has five QPs on staff.

At the other end of the spectrum is the work Penn does for the NHS on what are known as ‘specials’— unlicensed medicines. Ironically, manufacturers need to hold a licence to manufacture unlicensed products in MHRA approved facilities. These medicines are made from active ingredients bought from GMP sources and subjected to full analytical testing before use in just the same way

hospitals to satisfy named patient prescriptions.

On the production side, Penn has borrowed from the wider manufacturing world and has an online portal through which clients can see the status of inventories being held, or the progress of a new batch of medicines being prepared. “But rather than producing Just in Time,” says Mainwaring, “we try to ensure adequate stocks are always on hand Just in Case.” After all, the one area

from the entrepreneurial sole scientist who has discovered a promising mes” licensed drugs are made. They might involve a different formulation—a liquid, for example, where tablets can’t be swallowed—but they can only be supplied against bona fide orders from registered wholesalers, pharmacies, dispensing doctors and

where patients would be in short supply is when a sick person can’t get access to the medicines needed. Penn is ultimately here to serve its clients and improve the quality of life for all who require medicinal products. www.pennpharm.co.uk

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Pure dif

Benefiting from a uniquely pure source of spring water, first company to identify a need and desire for flavoured wa African market, a product that now contributes towards its

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ottled water producer aQuellé is based in Kranskop, 150 kilometres north of Durban in KwaZulu-Natal, South Africa. The water bottled at its plant was originally sought after to serve the needs of the local community; however it was found to be of such extraordinary quality and purity that the decision was taken to bottle it and sell it commercially. The product was launched in 1998 and is one of the leading brands in the South African bottled spring water market.

The source of the water used by aQuellé is found along a fault line close to Kranskop and is accessed via 70 metre deep boreholes. At pH6.4, the water is virtually pH neutral and contains only 52mg/L dissolved solids, which is testament to its exceptional purity. Maintaining this purity is absolutely key for the company, as it is this quality that makes the product. For this reason, the boreholes are very deep, so that the water is not contaminated by surface water.

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aQuellé

FONTANA MANUFACTURERS (PTY) LTD FONTANA MANUFACTURERS (PTY) LTD is a leading supplier of quality plastic & metal components to the packaging industry. Its reputation as a market leader is built on innovation, high quality product delivery

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closures range from 28mm – 45mm diameter onepiece and two-piece caps, including the new fliptop sports cap. Fontana realises the need to keep ahead of its competitors by developing and growing its product range whilst building a reputation for quality and value. The new 1881 closures will be launched in 2011. Please visit us at www.fontana. co.za. Enquiries welcomed at sales@fontana.co.za. +27 (0)39 9732690/1/2

Once the water arrives at the bottling plant, having been pumped direct from the source, it is filtered to ensure the highest level of purity using a system that is unique to aQuellé. The entire bottling process takes place in a sterile environment using unscramblers, airveyors, and sterilised equipment and packaging, with bottles and caps being rinsed with filtered, ozonated water. All filling stations are located in laminarflow units using flow-meter technology to avoid cross contamination of product.

As well as making plain still and carbonated products, aQuellé was the first producer of bottled water to see the potential for flavoured water in the South African market. It has used its knowledge of local tastes to select typical South African fruit flavours such as litchi, honey melon, naartjie and youngberry, which are firm favourites among South African consumers. In addition to being targeted

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towards local consumption, aQuellé flavoured waters are also suitable for diabetics and endorsed by the GIFSA (GI Foundation of South Africa).

Investment in increasing production levels and modernising production techniques are very important for the business. Since it was established, the company’s bottling plant has grown to over 27 times its original size, from 360

impact. Waste reduction and recycling are also areas that are important considerations— to deal with these issues, an on-site PET grinding facility has been installed to break down waste product from bottle production for recycling. Additionally, aQuellé makes a cash contribution to plastics recycler PETCO for every bottle produced, in line with its support of

“aQuellé was the f ir st producer of bot tled water to see the potential for flavoured water in the South Afr ican market” square metres in 1997 to 10,000 square metres today. The latest extension of 5,000 square metres was completed in 2007, with a further 30 per cent extension to the facility in the planning phases.

Among the advanced machines that aQuellé has introduced are a new filler, mixer and palletizer.

Effective staff training is vital when ensuring that the quality and purity of the products is maintained. As well as receiving initial orientation upon recruitment, employees are provided with training in machine operations, quality control and manufacturing best practice on an ongoing basis.

In addition, if any personnel wish to further their knowledge and skills, the company will provide them with the opportunity to attend an externally taught advanced course.

Operating an environmentally friendly and sustainable business model is a major focus for aQuellé. The most efficient, state-of-the-art equipment is used during manufacturing, bottling and packaging, which reduces the amount of electricity and water used in the process.

Additionally, it has its own blow moulder on site, which shapes the customised bottles for its carbonated 500 ml range. By blowing these bottles in house, the firm has eliminated the need to transport them from another location, thus dramatically reducing the carbon footprint of the range as a whole.

For distribution, aQuellé has a fleet of modern trucks that are maintained regularly to achieve optimum fuel efficiency, with backhaul loads also being optimised to reduce environmental

the South African Bottled Water Association’s environmental guidelines. aQuellé also sees educating consumers in the importance of recycling as not only its own responsibility, but as a responsibility of the industry as a whole.

When managing the delivery of products to its customers, the company has a two-tier distribution system. Products for all customers are transported in bulk to depots, from where distribution is outsourced.

The first set of distributors deliver to ‘top-tier’ customers, made up of chain stores, wholesalers, large retailers and supermarkets. The second set delivers to independent outlets, forecourts and smaller retailers, known as ‘bottom-tier’ customers.

However, this pattern is changing—the South African retail industry is moving towards a model that is used in much of the rest of the world, with each chain having a dedicated distribution centre. While this is a change that it will need to adapt to, aQuellé already has a two-tier system in operation, so it will be easier for it to make this switch.

The South African flavoured spring water market is a growing one, and by being the first to identify the potential in this sector and approaching it with a South African mindset, aQuellé has established itself as a market leader. It is using continuous innovation and expansion to cement its position at the top, without ever compromising purity and quality, the key attributes of its water products. When looking at all these elements, it is clear to see that aQuellé is working to fully serve the South African market and succeeding in securing its success long into the future. www.aquelle.co.za

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Plastop Bronkhorst Astrapak Group of comp lead in innovation within S packaging market. J 192 www.bus-ex.com December 10

Plastop Bronkhorstspruit

aking e mould

tspruit, part of the panies, is taking a South Africa’s rigid Julia Smith reports

S

ince the plastics industry first made its debut sixty years ago, glass, metal and paper have been steadily forced to the sidelines as packaging materials. Plastic can be moulded into a myriad of forms; it is lightweight, tough and can be made impermeable to air and moisture, as well as withstanding extremes of temperature. It is also extremely economical to produce and can be recycled a number of times.

Astrapak is now South Africa’s largest manufacturer of premium plastic film and rigid plastic packaging materials. The group’s aim is to deliver high growth in earnings and value through a combination of state-of-the-art manufacturing processes and technological innovation.

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Plastop Bronkhorstspruit

This strategy has inevitably led to a focus on premium applications. The group has particularly focused its attention on the special requirements of the pharmaceutical and personal care markets.

There is a strong and growing demand for these products in emerging and industrialised countries, which is driven by rising affluence.

It is also a high value market as the products place particularly high demands on packaging for sterility, protection, appearance and security.

growing its share of the market—not easy in the South African deodorant market which is highly competitive and price conscious with limited brand loyalty.

Sadie and Blue Ice Deodorants were already market leaders in the small-bore deodorant sector and had achieved widespread popularity. Sadie was aimed at the female market while Blue Ice kept the men fresh. However, rapid economic growth was propelling many traditional customers into a higher socio-economic bracket, where the big-ball roll-on

“Plastop Bronkhorstspruit is the first company within its sector to have made a multi-million rand investment in clean room facilities for the pharmaceutical industry” Based in Guateng, South Africa, Plastop Bronkhorstspruit is a wholly owned subsidiary that has been designing and manufacturing customised plastic packaging solutions for more than two decades. It has a special niche in producing plastic bottles, jars, closures and other components for pharmaceutical, cosmetic, personal care and toiletry products.

Plastop Bronkhorstspruit is the first company within its sector to have made a multi-million rand investment in clean room facilities for the pharmaceutical industry—a facility which the company believes is the finest of its kind on the African continent.

Manufacturing processes feature state-of-the-art Wheaton injection blow moulding and Swingplate technology and are supported by labeling, shrink sleeving and silkscreen printing operations. Plastop benchmarks itself against the best packaging companies in the world and believes it now leads as the lowest cost producer in the sector.

Moreover, the company has shown itself to be without equal when it comes to innovation. Last year, Plastop won the Innovative Rigid Plastics category of the 2009 Gold Pack Awards, sponsored by Sasol. The winning product was the Sadie/Blue Ice Big-Ball RollOn Deodorant, a pack design that raised numerous technical challenges and has positioned Plastop at the cutting edge of South Africa’s design talent.

The final design achieved major cost savings for the client, while successfully upgrading the brand and

deodorants have held sway for a number of years.

The brand owner needed to upgrade Sadie and Blue Ice to a big-ball format, while still retaining the small-bore design. In that way, former customers, who were looking for a premium brand, could still choose the brand they knew and liked.

The brand manager wanted a unique shape that would complement the range and traditionally these shapes were packed on thermoformed trays for stability before stretch wrapping. The challenge for Plastop was to redesign the deodorant to do away with the thermoformed tray and the ball-holder insert, so that the product could compete more effectively at a higher margin through cost savings.

“The new Sadie design does just that,” explained a company spokesperson. “The new big ball design has now been created in two pieces.

The ball-holder insert has now been incorporated into the main design so that the ball sits in the body, eliminating the ball-holder insert. The base has also been redesigned to be wider and flatter so that the deodorant can be packed without the thermoformed tray. This has resulted in major savings for the client because the new pack is lighter, cheaper and logistically more efficient, compared to other three-piece designs.”

An additional layer of complexity was created by both male and female products being available in ten different colours, with different shrinkage coefficients. These differences affect the dimensions of the thread diameter, the height of the ball in the

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Plastop Bronkhorstspruit

ball holder and the ball play.

A close look at the design shows that the ball sits closely in the body below the equator line on the ball. This element reduces leakage and aids smooth application, but each colour requires a different set of moulding parameters to ensure that the seal is perfect. Darker colours have higher shrinkage coefficients. These difficulties were overcome by creating a number of colour-appropriate mould parts that compensated for the shrinkage.

The re-moulding of the foot was also problematical because of initial uneven distribution of the material in that area. Multiple trials were needed and the final solution involved establishing colour-specific settings and core rod designs that suited the material distribution characteristics. The new wide foot facilitates filling on a high-speed line because it provides a very stable body and eliminates the thermoformed packing tray.

The new body has an enhanced shoulder with the same diameter as the foot. This creates an easy grip feature and provides the width in the design to support the ball cage. Flat panels at the front and rear allow for easy labeling.

The final material chosen for the new dispenser was high density polyethylene (HDPE) which is noted for its strength. The new lighter roll-on designed by Plastop uses between 21 and 45 tons less HDPE per annum than competing products. Meanwhile, the elimination of the thermoformed tray led to other cost savings—namely 15 tons of PET per annum.

Plastop believes that the execution of this project represents a great showcase for the talents of its design team. The company now looks forward to many other similar challenges that will enable other clients to improve their products’ aesthetics, functionality, quality and convenience. www.astrapak.com

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Starting T

from

he award of the 2022 FIFA World Cup to Qatar came as a surprise to many, given that the country has virtually none of the infrastructure required to host such an event. Sports stadiums, hotels, etc will all have to be built from scratch, although the New Doha International Airport will be ready to replace the old one next year.

Qatar has had to bui plant to avoid becom

Keppel Seghers

mscratch

ild a state-of-the-art waste management ming a victim of its own success

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Qatar is certainly no stranger to large scale construction projects. Twenty years ago, northern Qatar was a rocky desert and Ras Laffan a remote promontory jutting out into the Arabian Gulf. Then the largest single natural gas deposit in the world was discovered and a new port was constructed to ship it around the world. Ras Laffan Industrial City (RLC) has a permanent population of around 28,000 engineers and administrators, commuting from nearby communities like Al Khor or from the capital Doha, respectively 25 and 75 kilometres to the south. But this number is dwarfed by the labour camps within the city area itself. In 2008, between the city’s own camps and those run by companies

generated in Qatar by a population consisting of around 800,000 inhabitants.

The centre comprises reception facilities at the entrance area, administration, staff quarters and miscellaneous facilities, a mechanical sorting plant, a biological treatment plant for biodegradable materials (both composting and anaerobic digestion), a wasteto-energy plant for domestic waste, a construction and demolition waste recycling facility and landfill for non-hazardous solid waste.

The waste-to-energy plant is equipped with stateof-the-art flue gas cleaning technology that meets the most stringent emission regulations in the world, but there is nothing unique about any individual

“The waste-to-energy plant is equipped with state-of-the-art flue gas cleaning technology that meets the most stringent emission regulations in the world” like Shell, camp population rose to 110,000.

Starting from scratch on virgin land and having Qatar Petroleum running the whole show made it possible to accomplish in four years what would have taken decades in any other part of the world.

Qatar is so rich in resources that it achieved double digit economic growth last year, while the rest of world was in recession. Oil and gas account for more than 50 per cent of GDP, roughly 85 per cent of export earnings, and 70 per cent of government revenues. Some sources quote Qatar as having the highest per-capita income in the world, others put it second to Liechtenstein, but this much is clear—it has a thriving economy.

Managing this kind of economic growth requires careful planning to avoid the country falling victim to its own success. The boom it has experienced in recent years has led to a huge influx of migrant workers and a consequent escalation of waste material.

A new waste management centre was therefore commissioned, which will treat all municipal and commercial waste generated in the country by the end of this year. The National Solid Waste Management Centre of Qatar is set to handle 840,000 tonnes a year of domestic waste as well as 1.8 million tonnes of construction and demolition waste. Essentially, it has been built to handle all municipal, commercial and industrial waste

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aspect of the project’s technology. The novelty is in the way the three recycling streams are integrated.

When it is complete in December this year, the Qatar waste management plant will take organic, general and construction waste and either recycle it or use it as an energy resource. At the heart of any integrated plant such as this is the preprocessing of material. Through the use of various technologies and items of proprietary equipment, materials best suited for subsequent treatment are selected and transferred. In this way, the combined performance outstrips non-integrated streams, reducing landfill by a massive 95 per cent.

It took some time to get to this point, however.

The tendering process took around 18 months and involved serious players from around the world. In October 2006 the contract was awarded to Keppel Seghers and design got underway in earnest. Even after such long deliberation there have been significant changes to the scope of the plant. For one thing, the government couldn’t wait for it to be completed before tackling some of the construction rubble being created by the continual redevelopment of Doha, so Keppel Seghers had to install the construction waste line in a completely different location elsewhere.

Another early change was in the scope of the project. The original contract called for two 500 tonnes per hour incinerator lines with an option for

Keppel Seghers

CFE CFE was incorporated in 1880 in Brussels, as a general contractor Class A. CFE is a group on the move, having clearly announced its strategic new objectives in 2006: CFE is opening up to the world with research for new types of contracts in the fields of: energies, industries, water, new infrastructures, railways, new buildings technologies and sustainability.

CFE Middle East has the technical and financial support of the group to secure its development. Our human resource policy, with solidarity and team spirit, allows us to rely on our primary source of wealth—the men and women making up the company.

The

CFE

Group

is

a

consistent

and

sensible

organization, where each division is supported by the others, allowing us to participate in new challenges.

CFE Middle East is building the future with common sense.

a third. This option was quickly required, involving extra work that put the original completion back a little. In fact the site has been sized and laid out for an eventual tripling of capacity, which may be taken up much sooner than anyone suspects at present.

Logistically it has also been something of a challenge. Major items of equipment have been sourced from at least 26 different countries, with up to 20 ships waiting at times to unload their cargoes in Qatar’s relatively small port. Anything on the large side has to be transhipped from neighbouring Emirates, so those responsible for planning have needed some nifty footwork in order to keep on schedule.

When the plant is handed over to the Qatar authorities in December, it won’t be the end of Keppel Seghers’ involvement, as it also has a 20year operation and maintenance contract to run the plant; and already 100 of the planned 150 personnel are on site familiarising themselves with its workings. www.keppelseghers.com

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