6 minute read
Local manufacturer gearing up for growth
COVER STORY Local manufacturer gearing up for growth
Becoming South Africa’s leading valve manufacturer, serving both the local and African requirements and meeting the local content policy set by the Department of Trade, Industry and Competition (the dtic) is a top priority for the LVSA Group. Pipes, Pumps and Valves Africa met up with CEO, Sagren Pillay, to talk about how the company is preparing itself for market expansion and growth.
Advertisement
There is much to be said for local manufacturing especially with today’s global market demanding ever-shorter lead times. Customers want quality products delivered yesterday. Manufacturing locally in the current climate is by no means easy and is not an undertaking for the fainthearted. There is no denying, however, that local manufacturing is a fundamental driver of GDP growth and associated with direct employment for the youth. Much has been achieved by the LVSA Group that opted to start manufacturing a range of valves for the local market in 2019. “We have a background in manufacturing having birthed out of Thermal Valve Manufacturers (TVM), at the time one of the country’s top valve manufacturers,” explains Pillay. An opportunity with well-known petrochemical companies, however, led to the development of a purely import and distribution company, the LVSA Group. “At the time it made sense to import products from overseas markets as it delivered quality valves at competitive prices. Our focus was on the petrochemical industry and we built up a range of clients in this sector.” Pillay, however, never lost sight of the potential or importance of manufacturing – a vision he was determined to fulfil. After many years of research and development on the manufacturing of valves for refineries, power, mining and water industries, they are proud to announce that the
LVSA Group will be one of the first to 100% manufacture a range of valves in South Africa.
Delivering quality products
According to Pillay, South Africa needs a burgeoning manufacturing sector. “Government is leading the way with its Local Production and Content initiative, which flows from the government’s policy framework that includes the National Development Plan, the New Growth path, the Industrial Policy and Action Plan and the Preferential Public Procurement Finance Act, among others.” For Pillay, companies such as the LVSA Group must heed this call from the government and manufacture locally. Furthermore, if companies manufacture locally then business, government and state-owned enterprises can all procure these locally manufactured goods with obvious benefits for national competitiveness and economic growth. Pillay says were in the past South African manufacturing had to face serious challenges such as global competition, cheap imports, local costs and low productivity, it is no longer always the case. “To manufacture in South Africa has always carried a high cost due to the pricing of raw materials. For the longest time, it did not make sense for the LVSA Group to position itself as a manufacturer as multinational companies – and even the state-owned enterprises (SOEs) were not going to pay 200% more for a product just because it was made locally.” Pillays says there has been much change internationally in the valve manufacturing sector making it far more feasible for the group to open its manufacturing facility locally. “International foundries have been closing down due to ignition and environmental issues. Especially in China, this has been the case. This has impacted significantly on lead times and it can now take up to 32 weeks before a product is delivered locally from the international manufacturer.” Also, prices have been on the increase and the cheap imports were fast becoming not so cheap anymore. “In China, for example, many of the rebates that manufacturers were getting have been done away with and we are seeing the cost of imports increase by as much as 28%.” Having set themselves the goal of becoming 100% local much progress has been made over the past two and a half years. “For the past eight months we have not imported any products and our foundry is up and running delivering tailor-made solutions to our customers.” With the factory been built in Durban on 24000m2 land and 12000M2 under roof, offices and warehouses in Johannesburg and Cape Town as well as an in Mozambique, the company is well placed to serve the local market. “We have worked hard to get the necessary quality systems and processes in place. Our first step was to engage with the foundry. Getting the quality and costing model for the foundry working was a priority as the price of products remains a critical element to success. This was a process and did take some time.” The next step was to ensure all the necessary approvals were in place including the SABS, ISO and API approvals. “We are in the process of getting our products certified by the South Africa Bureau of Standards (SABS) and the American Petroleum Institute (API). Our application to API has been accepted and we are hoping to have the approval by the end of August.
Benefits to local manufacturing
There are several benefits to local manufacturing, says Pillay. “First and foremost is the lead time as we can manufacture and deliver locally between eight to 12 weeks and the future will even be shorter. From a cost perspective, we are also far more competitive now with our prices. Reduced shipping costs,utlesting our local metals and manufacturing time are directly translating into less cost.” Furthermore, he says, the experts are available on location as opposed to engineers and other experts having to come from international shores to address problems or issues. “This means less downtime and far more fluid operations for our customers.” According to Pillay, there is also a benefit in that there is far more control over the supply chain than when importing valves. we now have control right from the foundry to the machining and assembly “We can expedite orders and deliver critical supplies far quicker than when purchasing internationally.” He says successful manufacturing is dependent on getting the pricing right, having the right mix of people on board and the necessary skills in place. “From a skills perspective, we have brought out a range of design engineers and production heads from India for five years to train our local youth and transfer the necessary skills. We have also developed a course on valve manufacturing and are awaiting Merseta approval on the course. Sectors being focused on are water and sanitation, power generation, refinery and the mining industry. “We also continue to focus on our current industries where we have a strong presence such as the petrochemical industries.” Pillay says there is no doubt that the value of local manufacturing is increasingly being realized. “The outbreak of Covid-19 has only highlighted the importance of having a strong local manufacturing capability. We calling on local industries to support the locally manufactured products manufactured in South Africa. We are very happy so far with the feedback we are getting from the local market who are keen on local products.”
