Hangana Seafood (Pty) Ltd

Changing tides

A major and ambitious investment has secured the future of Hangana Seafood and indeed, that of the Namibian hake industry, as Andrew Pelis found out from Hendrik van der Westhuizen.

Dramatic tales have long been told of life at sea, and the story of Hangana Seafood could rank among the best of them with its account of seafaring life, undaunted courage and survival against the odds.

Hangana Seafood was formed in the 1990s as the result of an initial joint venture in 1997 between Consortium Fisheries (the owners of Foodcon) and the partners of Kuiseb Fish Products, namely Naras Investment and Irvin & Johnson. At the time, both Foodcon and Kuiseb were feeling the economic effects of tough hake quota allocations and fluctuating catch rates; then in 2004, the Ohlthaver & List Group of Companies acquired the shareholding of Naras Investments and Irvin & Johnson, resulting in the operations becoming being fully Namibian-owned.

Since that time, Hangana has ridden the stormiest of seas; but thanks to major investment, it is now on the crest of a wave. Having worked his way through the ranks to his present position of managing director, Hendrik “Wessie” van der Westhuizen is perfectly placed to explain how an ambitious project and the trust of Hangana’s loyal shareholders have transformed the company’s fortunes.

Van der Westhuizen had left the company several years previously (he went to work for Irvin and Johnson, which was the co-shareholder, in Cape Town) and while travelling the world on business, he took new ideas for operational success on board, returning to Hangana in 2003 at a time when the company was in dire need of a change in focus.

“By 2006 we had formulated a strategy to look at changing our business model. So we made an investment of N$25 million, creating a brand new, state-of-the-art value-added site, replacing the two existing ones here in Walvis Bay,” he continues. “The main reason for the investment was that we had identified the benefits of becoming a retail value-added producer rather than a commodity exporter.” Today, Hangana cuts out all the calibrated portions and its produce is packed into retailers’ packaging and sent straight to their supermarket shelves.

“The investment was a last-ditch effort to save the industry in Namibia,” says van der Westhuizen. “Our investors showed a lot of character in 2006—they really stuck to their guns to help us change the strategy.”

Today, the business operates not just a wonderful facility but owns a jetty, an ice plant and processing and storage facilities that are due to open in October 2009 at a cost of N$34 million. The factory is equipped with advanced technology that includes Marel software (which records and monitors production processes like input and yield), an intelligent portioning machine (IPM), an auto plate freezer, and a freezing tunnel for individual quick-frozen (IQF) requirements.

Once production and packaging are completed, produce is shipped overseas. Spain remains one of the main destinations for the retail produce and
has been joined by the likes of France, Germany, Holland and Italy. In all, van der Westhuizen says that export accounts for 92 per cent of the company’s business.

With 1,200 staff across the organisation and some 765 in the factory alone, changing the company’s focus to retail has been an ongoing concern for van der Westhuizen. “It certainly has been a major challenge and we have provided extensive training over two years to change the mindset to one of ‘push and pull’,” he says. “Our monitoring equipment can measure all aspects of performance and we are still busy perfecting techniques at shop floor level.”

Around the same time as the initial capital investment, Hangana embarked upon a vessel replacement strategy, replacing two old, less efficient ships from its fleet of eight with its new flagships Resplendent and Avro Warrior, at a combined cost of N$76 million. “This has had a huge positive impact on the volume and cost side for us,” van der Westhuizen enthuses, “and it has significantly brought down our raw material costs and improved efficiency.”

Van der Westhuizen is constantly aware of the risk of fluctuating exchange rates—particularly relevant for a business that relies so heavily on exports. As another cost-cutting measure, Hangana invested a further N$32 million into a fuel project designed to mitigate the effects of volatile prices. The company’s fuel blending station was officially inaugurated in July this year.

“Today, we are making use of cheaper fuel, having created a mixture of fuels known as intermediate fuel oil (IFO). By blending our own fuel we have seen significant savings on fuel costs. We are now looking to help supply the rest of Namibia’s fishing industry as well as mining, ports and anyone that uses diesel fuel.”

Hangana’s efforts are primarily focused on the harvesting and processing of seafood. It had a head start of two to three years on its competitors but van der Westhuizen says they are all now going down the same route—towards retail production.

Despite the huge volumes of investments made, the business should see a return on all of it as soon as June 2011. Van der Westhuizen adds that the future may involve secondary value-adding processes, including tasks like bread-crumbing. “However, before we look at these opportunities we still need to get our house in order by maximising our retail percentage from raw materials first,” he stresses.

Hangana has certainly survived turbulent times and is now looking ahead to a bright future, thanks to its ambitious plans and industry knowledge. But it is the investors that van der Westhuizen feels played the biggest role. “If it hadn’t been for that initial N$25 million investment I don’t think we would be here today. We have always received 100 per cent support when we needed it.”