Concor / Enterprise Africa August 2021

CONCOR

CONCOR

Concor Builds Back

and Builds Better PRODUCTION: Karl Pietersen

As one of the leading tier-one construction contractors in Southern Africa, Concor has had the adjust and adapt to bounce back following the lockdowns that came as a result of the Covid-19 pandemic. Now, the company is busy with several major infrastructure projects that will change the face of South Africa, and will enhance the life for individuals and communities that surround them.

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INDUSTRY FOCUS: CONSTRUCTION

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Complex, technical, intricate, multifaceted construction and engineering projects are today heavily sought after in Southern Africa. The few remaining tier-one construction industry players have had to reinvent themselves to remain relevant and feasible. Following the 2010 FIFA World Cup, when South African construction firms boomed, the industry has been decimated by lacking demand, corruption, liquidation and general market sloth.

But when the big projects go to tender, there remains a group of reliable and sustainable companies standing ready to serve the market, and the country.

At the top of this list is Concor.

With a long history in SA, Concor serves the construction industry and the mining services space through two separate business platforms. Offices across South Africa, Botswana and Namibia, the company’s presence is almost unrivalled and CEO Lucas Tseki is brimming with confidence as a strong project pipeline is continuously growing with exciting mega projects.

“The industry in South Africa has been in a state of decline since the 2010 World Cup programme,” he begins. “We saw huge activity around improvements of our highway infrastructure, we saw the construction of the famous Gautrain infrastructure, and this was all in preparation for

// WITH THE DECLINE IN EXPENDITURE AND SHRINKING GDP IN SOUTH AFRICA, WE HAVE HAD TO MAKE TOUGH DECISION IN THE LAST FEW YEARS TO ENSURE THAT CONCOR IS VIABLE AND SUSTAINABLE // 4 / www.enterprise-africa.net

the 2010 World Cup – not only spend from the public sector, but also a significant drive from the private sector. Unfortunately, since 2010 and the 2018 credit crisis, the Southern African economies have been in a state of decline. The construction sector has shrunk dramatically and some of the household names, large key competitors of Concor, no longer exist.

The changes have been significant because of the loss of these large construction companies in South Africa. With that, we’ve started seeing in the emergence of second-tier and third-tier players in the market who are looking to redefine and compete with the large, established first-tier players.”

Companies from the various international markets have also targeted Southern Africa as part of a growth strategy. Multinational construction firms from Turkey, China, India and more have set up in SA, looking for market share.

“With the decline in expenditure and shrinking GDP in South Africa, we have had to make tough decision in the last few years to ensure that Concor is viable and sustainable. These tough decisions have been taken to defend our balance sheet and protect the infrastructure in the business. We have taken out a lot of overheads and a lot of work has been done, making the business look materially different to what it looked like seven years ago,” details Tseki.

The Concor brand has been refreshed and a new energy is being injected to the business as it looks to modernise and grow. “We are looking at digitisation and technology, and we are looking to promote and spend time with younger engineers to deploy modern methods of doing things. Whether that is using modern methods or modern building materials, or focussing on sustainability, we are now very different to what we looked like years ago. The industry is more competitive and margins are under pressure,” admits Tseki.

// OF THE 23 WIND FARMS THAT HAVE BEEN CONSTRUCTED IN SOUTH AFRICA TO DATE, WE HAVE COMPLETED THE CIVILS AND BALANCE OF PLANT WORK FOR TEN OF THOSE, DEMONSTRATING OUR MARKET SHARE IN THAT SPACE // MEGA PROJECTS Currently, Concor is active across multiple sites, undertaking construction work which sits alongside some of the world’s most impressive projects in roads, buildings, infrastructure, and power and energy. In Gauteng, work continues of the impressive Oxford Corner complex, home to office, retail, hospitality and other buildings. In KZN and the Eastern Cape, Concor is busy with two flagship bridge construction mega projects. In the Western Cape, the Paarl Rock build of 266 apartments at the 22-hectare Conradie Park development is underway. In the Northern Cape, Concor continues with important, detailed civil work on the site of the MeerKAT telescope. Across all other provinces, teams continue with vital infrastructure work that is improving South Africa.

Tseki is extremely excited about the work on the N2 highway which will drive new life around the eastern and southern coast.

“We are well-known in South Africa for delivering large complex bridge projects,” he smiles. “The Msikaba Bridge project will be the longest cable-stayed bridge ever built on the African continent. It’s a beautiful bridge

CONCOR

and is a very important project for SANRAL. In the execution of complex infrastructure projects, we believe we are very competent and very capable in southern Africa, and our abilities are comparable to none – our credentials speak for themselves around these large complex projects.”

Built by a Concor-MECSA (Mota Engil Construction) JV, the bridge will form part of SANRAL’s Wild Coast project. Currently, work on the approach roads and the significant pylon foundations and anchor blocks for the bridge are under construction.

The bridge deck will sit at 194m above the valley below and will use 43,000m3 and 2700 tons of structural steel. On completion, Msikaba will come in as the third highest bridge in Africa.

“This is a crucial component in the new N2 highway that will connect KZN with the Eastern Cape, bringing together the major trading hubs within our Eastern Coastal line, reducing drive time between important economic hubs by three hours. The opportunities that will arise off the back of this project will be very large,” says Tseki.

However, not one to rest on laurels, Concor was quick to reach out for a new tender within the Wild Coast project, pricing for the Mtentu Bridge project which will eclipse Msikaba and will, when complete, become the tallest bridge on the continent at 223m high and 1.3km long.

“This project was initially awarded to the Aveng and Strabag JV but immediately after site establishment, they were unable to manage the extremely challenging community dynamics and declared force majeure, abandoning site. SANRAL put the tender out again following functional and technical evaluation and Concor’s price was opened, demonstrating our prowess for packaging large complex projects. It is a R3.5 billion project and is classed as a mega project in South Africa. This will probably be the largest mega bridge project starting this year in the Southern Hemisphere.

“We experienced the same community challenges with people in that part of our country, but our differentiator was our ability to enter into a viable and mutually respectful relationship with local communities where we look to integrate the community as not only spectators but as contributors who play the biggest role possible in the delivery of our projects. We go out of our way to ensure that our host communities find a way of being empowered through our projects.

Whether it’s education or enterprise programmes, we make it our business to focus on community dynamics and positive involvement,” details Tseki.

BUILDING THE BEST In Rosebank, Concor’s ongoing work at the Oxford Corner precinct has been lauded as industry leading following

the successful build of the BP Southern Africa HQ and a new Radisson RED Hotel.

“Right now, we are working with a longstanding customer called IntaProp on an office building,” says Tseki.

“This project demonstrates our core commitment as Concor around project delivery excellence and delivering value to our clients. We partner with our clients as a solutions provider and not just another contractor out there in the market. We have completed a number of buildings in the same precinct for this client. We completed the BP building, we completed the head office for Life Healthcare, offices for Arup and Sony Music, and we did a number of ancillary buildings as well.”

The Ikusasa office block at Oxford Parks will be completed by January 2022. The four-storey building will be constructed on three basement levels of

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INDUSTRY FOCUS: CONSTRUCTION

approximately 10,326m2 and will have four office levels totalling approximately 7555m2 GLA. It is anticipated that some 814 ton of rebar and some 8707m3 of concrete will be used in the construction of Ikusasa.

“The new building will be owned

by IntaProp and the tenant will be Anglo American. It is really important for us to partake in, and be associated with such world class projects where we are not only working for a world class developer but we are putting up facilities that will be used by world leading companies.”

World leading scientific projects are also within the Concor remit and, proving it’s adaptability, the company is altering its approach to work in challenging conditions to assist in the build programme of the international MeerKAT and SKA telescope project.

“The unique aspect about that project is that it’s a design and construction opportunity and this is the initial phase of the greater development that is being done around the MeerKAT programme,” explains Tseki. “We are in a partnership with Zutari (formerly Aurecon) as the design partner, and we are in partnership with OptiPower as the electrical contractor. It’s a very exciting opportunity which we secured through an open and competitive bid process. We competed against other South African construction firms as well as international firms who quoted on the opportunity.”

In the future, the larger SKA project will be under construction until 2050 with major activity across the Northern Cape.

“We believe that participating in this initial phase will position us well for meaningful participation when future

phases are being rolled out, when hundreds of millions of dollars will be spent on this project. It’s exciting and it is the largest telescope project globally.

For us as Concor to be participating in a project, that is being driven by global scientists and subject matter experts, as an infrastructure partner is really exciting and talks about our core competencies and capabilities.

“We are putting up access roads into the facility and 24 foundations structures for the satellites that will be installed. This is a project that will last just over one year but we believe future projects will allow us to remain on this site for many years,” says Tseki.

The challenge here comes in the form of technology usage available on site. The radio telescope technology is highly sensitive to noise and electrical signals. The equipment has already been used to detect new galaxies in the far reaches of space. So, construction tools on site have to be quiet and simple. Even cell phone signals can disrupt the environment.

// AS AN INFRASTRUCTURE ENGINEERING CONSTRUCTION COMPANY, IF YOU ARE NOT PLACING ONE BRICK ON TOP OF ANOTHER, OR YOU ARE NOT POURING CONCRETE, YOU ARE NOT EARNING – IT IS A SIMPLE BUSINESS MODEL // 6 / www.enterprise-africa.net

“Typically, we would use vehicles packed with electronics but on this site, it would interfere with the space observation activity, so we are having to use older equipment – vehicles that would have been used in the 1920s. We are not allowed cell phones, modern vehicles or modern equipment that would interfere with the electronic signals on the site – there are certainly unique aspects about this project that really excite us.

“It does impact productivity as you have to use specific methods to successfully and safely do the construction work and still make a profit,” enthuses Tseki.

POWERHOUSE In the energy industry, Concor is also busy growing the generating capacity of South Africa, by assisting in the construction of new wind farms, amongst other projects.

Jeffreys Bay, Noupoort, De Aar, Loeriesfontein, Perdekraal East, Excelsior, Golden Valley, Kangnas, Roggeveld and Khobab are large developments that have, combined, added more than 1000MW to South Africa’s grid. Smaller contractors simply do not have the expertise and scale to rollout projects requiring this level of detail alongside other major jobs.

“Looking at the projects we are working on in the energy space,

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particularly renewable energy, of the 23 wind farms that have been constructed in South Africa to date, we have completed the civils and balance of plant work for ten of those, demonstrating our market share in that space.

“We completed a lot of projects during round three and four of the government’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and we expect to be involved in Round five later this year. This is a very important space for Concor,” says Tseki.

Involvement in this sort of work forms a key part of the longer-term vision of Concor, something which Tseki has been pushing hard over his four-year tenure at the helm of the business. this is not a business with interim ambitions, Concor will add to its history of more than 100 years in South Africa.

“When we speak to our colleagues and the market, we say that we believe our core purpose is to positively impact mankind through the delivery of world class infrastructure solutions for the real purpose of enhancing the living and working environment. We are all about leaving a responsible footprint on this earth. We see ourselves as an

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important contributor to society around the delivery of world class infrastructure.

This could be education infrastructure such as schools or colleges, or health infrastructure like hospitals and clinics, or large complex solution such as road infrastructure, or even water projects such as dams and pump stations,” the CEO clarifies.

BRICK ON BRICK Unfortunately, Concor has not had the luxury of plain sailing over the past two years, with the Covid-19 pandemic obviously slowing project roll out and decision making. The initial lockdowns also hampered onsite delivery with staff forced to down tools.

“2020 was a watershed year in history and the impact of the Covid-19 will likely continue to interrupt society for years to come. Last year left no one untouched. The level of disruption, loss of health, and loss of loved ones was profound,” says Tseki, looking back.

“Within Concor, I continue to pay tribute to many of our people, partners, clients, and boards of directors who continue to provide support to us through these uncertain times. Throughout the last year we kept our projects operating because

of the sacrifices that were made by many of our people through additional time and effort, and by being physically present to deliver work that could not be managed remotely.”

The level of delay, cancellation, slowdown, and indecision by project owners cost Concor dearly, but important changes had already been implemented to ensure the business was agile enough to survive.

“As an infrastructure engineering construction company, if you are not placing one brick on top of another, or you are not pouring concrete, you are not earning – it is a simple business model,” insists Tseki. “In South Africa, we had hard lockdowns where we were not allowed to execute any construction works as we were not classified as an essential service.

For two months, we couldn’t earn any revenue and there was a direct hit on our revenue as an organisation, but we had to carry our overheads. That was a significant financial hit on our business.

The difficult thing is that there was a number of projects where Concor was already a preferred bidder. These were important projects that underpinned our business plan. Materially, all those projects have been indefinitely delayed

CONCOR

or cancelled entirely. That shows the huge negative impact of the pandemic in Southern Africa last year.”

He describes nightmare scenarios where calls and mails began rolling in from large clients with notices of cancellation. For example, the important expansion and modernisation work scheduled for South Africa’s major international airports OR Tambo and Cape Town. This R17 billon project was cancelled by Airports Company South Africa (ACSA) and the promised review is only set to occur in 2024/25. “This impact was certainly devastating,” says Tseki.

But with the vaccine rollout finally gathering pace across Southern Africa, there is some light at the end of the tunnel and, fortunately, construction is viewed as a remedy for ill economies.

“As much as the financial consequences of the pandemic have been so negative, the upside of it is that virus policy makers across southern Africa are pushing a concerted effort to utilise infrastructure SMEs as a mechanism to restimulate their economies.

“Towards the back end of last year and the beginning of this year, we have seen unprecedented tender activity from

government backed projects being put to the market. Right now, our estimating teams are totally inundated with enquiries and opportunities that we are responding to, to an extent that we had to bring in consultants and utilise other business partners in the market so that we could respond to this level of activity.

“It has been crazy to see this positive side coming out of the negative pandemic situation,” enthuses Tseki.

He remains concerned about the speed at which new projects, especially in the public sector, will be rolled out as the industry looks to repair damaged balance sheets as quickly as possible following an idle period. To maintain core competences and capabilities during times of inactivity is an expensive exercise. “The situation definitely seems to be turning around,” he says.

In the future, Concor is a name that will continue to be woven into the history of the country. Part of the Southern Palace Group of Companies, Concor has exposure and abilities that span the entire economic landscape of Southern Africa, and Tseki believes partnership building is the final, important element that sets the business apart from its competition.

“You could argue that what we are providing is a commodity in modern times. From a Concor perspective, we don’t believe that,” he says. “We believe there are specific differentiators.

Certainly, we are able to provide certainty around quality, on time delivery, and consistency – including large complex engineering projects which are very hard to deliver consistently on a global basis.

Our ability to partner hand-in-hand with our clients when delivering construction solutions is not something offered by all.”

With the tough post-2010 years behind it, the battle against Covid-19 seemingly swinging to the right side, and economic activity in the region picking up again (albeit slowly), Concor will continue building brick on brick and pouring concrete. For Tseki, the future is bright because the picture is clear.

“Large, complex, technically demanding projects is where Concor continues to dominate and where we continue to deliver better margins,” he concludes.

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