Solid steel ambitions
Like any business sector, the steel industry has not found itself immune to the effects of the recession. Andre Nienaber tells Andrew Pelis about expansion in a turbulent marketplace and finding a way to capitalise on the right opportunities.
The steel industry has been through a turbulent few years. Internationally, there has been a shortage in supply and sky-high prices. The last nine months, however, have seen prices fall and strategies change, as companies seek to reduce inventories. These changes have been felt in every corner of the globe, including Johannesburg, South Africa, the location of the headquarters for Steeledale Reinforcing and Steeledale Mesh.
The organisation, now part of the Aveng Group, will shortly celebrate its sixtieth anniversary. Steeledale Reinforcing today accounts for approximately 75 per cent of business generated by the two companies, which together employ a factory workforce of roughly nine hundred people.
Andre Nienaber, managing director for the two entities, has been with Steeledale for thirty-four years. ÔÇ£Steeledale Reinforcing is essentially a subcontractor for the construction industry,ÔÇØ he says. ÔÇ£We cut and bend steel and install it. The steel mesh side of the business manufactures mesh fabric for concrete use and fencing mesh.ÔÇØ
A variety of products are on offer, which are almost entirely tailor-made, including pre-assembled reinforcing cages for use in columns, beams and strip footings. The CageWELD pre-assembled welded cages provide rigid reinforcing in piles and circular columns; and the SteeleMAT pre-assembled reinforcing mats provide a unique method of supplying the slab reinforcing to site that makes laying it as ÔÇ£easy as laying a carpetÔÇØ, reducing fixing time by up to 80 per cent. Meanwhile WeldedMESH fabric, used in concrete reinforcement, is available in a number of standard wire diameters and spacing sizes.
Steeledale was formed in the 1950s when Lewis Construction set it up as what Nienaber describes as ÔÇ£a tool in the tool boxÔÇØ. Following tremendous growth and acquisitions in the 1960s and 1970s, it extended its footprint across the whole of South Africa.
Today, Steeledale Reinforcing operates in fifteen locations which sell the reinforcing products, with an additional four outlets producing the mesh. ÔÇ£We have totally focused on construction,ÔÇØ says Nienaber, ÔÇ£and we have worked on landmark projects including the Nelson Mandela Bridge and several of the football stadiums being built to host the 2010 FIFA World Cup, all of which are on target for completion on time.ÔÇØ
Nine months ago, Steeledale faced a different, more challenging environment. ÔÇ£Back then it was a difficult job to obtain steel, but then steel prices went down by nearly 50 per cent which had a large impact on the construction and motor industries,ÔÇØ explains Nienaber. ÔÇ£A lot of de-stocking took place as we found a way to manage the situation and keep our stocks to a necessary minimum. We are now in a strong position to take advantage of economic improvement and the opportunities that present themselves.ÔÇØ
Those opportunities may already be manifest, as the South African government commits itself to developing infrastructure. Nienaber says that the new emphasis on Black Economic Empowerment (BEE) is also good for Steeledale, which has very much taken the lead in training young black people to join its ranks.
ÔÇ£Since 1994 we have seen constant economic growth and the new initiative brought in by the Government has changed our approach; we want to bring in young black people through our extensive in-house training programme. We fully support that obligation. Our parent Aveng Group led the way in the construction and steel industries, becoming the first significant construction group to conclude a high-level BEE transaction, resulting in 25 per cent of its South African subsidiaries being owned by the Tiso-led broad-based empowerment consortium.ÔÇØ
Steeledale supports the concept of the balanced scorecard as outlined by the South African government's Department of Trade and Industry (DTI). The Group participates in various forums and industry bodies in order to achieve a quantifiable and consistent definition covering all aspects of the balanced scorecard.
The role of IT is another essential part of the companyÔÇÖs success, Nienaber explains. ÔÇ£For the past ten years we have used a software package called ARMA+ which was produced in France. The software provides us with excellent opportunities to electronically interface with clients through the process of ordering and delivering steel reinforcing products. We use the system to transfer information from our consultants to the sites and on to the planning department at our factories; this can then be downloaded onto the shop floor using a unique barcode system that enables us to load the product information onto the cut and bending equipment (including sizes and other specifications). This has helped us to manage our supply chain and to minimise scrap metal. It has proved to be highly cost-effective. It has also given us traceability throughout the factory.ÔÇØ
As part of its quality drive, Steeledale benchmarks itself against the most successful European operations and has been accredited by the South African Bureau of Standards (SABS) as an approved supplier in accordance with ISO 9001. Of course, quality and tailor-made production processes can impair efficiency; however, Nienaber suggests the company has not been compromised. ÔÇ£With all the tools we have we are able to run a cost-effective, tight ship,ÔÇØ he asserts. ÔÇ£We train our staff in efficiencies and set very specific targets within our factories and weÔÇÖve achieved just about all our goals. The challenge is always to improve productivity on-site with the installation.ÔÇØ
Alongside improving efficiency, Nienaber cites supply chain management as crucial to the companyÔÇÖs success. ÔÇ£We have very long-standing relationships with our steel providers,ÔÇØ he confirms. ÔÇ£Every second year we attend a major exhibition in Germany to investigate the latest technologies and determine whether we need to upgrade our capital equipment.ÔÇØ
SteeledaleÔÇÖs companies have enjoyed remarkable growth across South Africa and are now in a period of consolidation, although Nienaber does not rule out the possibility of future acquisitions. ÔÇ£We may consider future purchases outside of South Africa and are giving serious consideration to the Asian and Australian markets. We already supply into southern Angola, Zambia and Mozambique and run operations in Lesotho, Namibia and Botswana. We will need to first look at and understand the markets and rules in each country; there are language barriers and the laws can be quite different. One of the important issues is that you can bring your money back.
ÔÇ£Our main aim is to be a full-service subcontractor that adds value. We want to be involved in the job planning and execute the installation of steel, so all the contractor has to do is pour the concrete,ÔÇØ he concludes.
