Rock solid
Investment in technology and marketing initiatives has helped SmartStone to become South AfricaÔÇÖs leading supplier of cast stone products. It is now looking to expand operations internationally, as Ruari McCallion learned from James Metcalf.
The early years of this decade saw a boom in the construction industry in South Africa. During this time SmartStone rode the wave to generate phenomenal growth for itself and its licensees. But itÔÇÖs a bit harder to grow turnover and to sustain performance when things turn down.
At the heart of the companyÔÇÖs growth were people who were up to the challenge. ÔÇ£We bought the SmartStone licencing company in 2002,ÔÇØ says James Metcalf, managing director. ÔÇ£We were a licenseeÔÇöitÔÇÖs similar to a franchiseeÔÇöfrom the mid-1990s and we became the biggest licensee by far in that time.
ÔÇ£When we acquired the business we immediately set about building the brand through classic marketing initiatives and the development of new products. SmartStone and its licensees enjoyed phenomenal growth until 2006/7.ÔÇØ Numerous competitors had also entered the market by then and, of course, the construction market began to turn down. But SmartStone, which is based in Midrand, has weathered the hard times well. Its market emphasis naturally rebalanced between residential and commercial markets.
ÔÇ£A large part of our market has traditionally been residentialÔÇöhomeowners renovating or building new homes. ThatÔÇÖs quieter at the moment but weÔÇÖre still getting some pretty nice projects,ÔÇØ says Metcalf. ÔÇ£About 40 to 50 per cent of our production is for driveways, parking and roadways. The balance comprises larger flagstones, which are used for patios, piazzas and the like, tiles and landscaping products.ÔÇØ
SmartStone ┬ámakes┬á cast stone products, which are manufactured from a mixture of ÔÇÿwetÔÇÖ concrete, high quality oxides (colour pigments) supplied by Cathay Pigments and other raw materials that are cast in moulds to create products with the same appearance as natural stone. The range of products is very wide; products are used as cobble paving, flagstone paving, tiles, wall cladding and landscaping products.
The products are protected by copyright but SmartStone has also invested in process technology and efficiencies in order to stay ahead of the game.
ÔÇ£Even while we were just a licensee, we brought a level of professionalism to the industry,ÔÇØ Metcalf explains. ÔÇ£We set ourselves up to first world standards and we have invested in one of the most advanced automatic wet-cast concrete machines in the world.ÔÇØ SmartStone has a total of nine manufacturing facilities around South Africa; the main company operates two factories in Midrand, one of which is fully automatic.
ÔÇ£The machine was developed jointly by S R Schindler, a German company, and ourselves. It offers the ability to produce a wide range of products, ÔÇÿdosingÔÇÖ various amounts of concrete at the press of a button. We worked as partnersÔÇöwe specified the requirements for the machine and got the concept together; S R Schindler did the design and built it. A number of the concepts incorporated into the machine have been patented. Interest has been shown in it from our local market, Europe and the UK, the Middle East and Australia.ÔÇØ
SmartStone supplied the Melrose Arch mixed-use development in Johannesburg; the V&A Waterfront development in Cape Town; Parliament; the Presidential home; most of the casino developments around South Africa; and many private homes including Nelson MandelaÔÇÖs. It recently supplied a 28,000 square metre project, which is a very large project for cast stone. SmartStone has also supplied cobbles to some of the stadiums being built for the 2010 Soccer World Cup.
ÔÇ£WeÔÇÖre very proud of our association with these prestigious projects. It sets us apart from our competitors,ÔÇØ says Metcalf. He believes that SmartStone is selected for large commercial projects because it has proved that it can be depended on to deliver large volumes on time.
SmartStone has also been awarded the coveted Concrete Manufacturers Association Award for Paving Excellence twiceÔÇöin 2002 for the Melrose Arch project; and in 2008 for cobbles supplied to a residential home. ÔÇ£The awards are held bi-annually and are the Oscars in our industry,ÔÇØ says Metcalf.
Licensing makes complete logistical and commercial sense. While it might be appealing to keep control of every facet of the operation, the reality is that shipping cast stone products over long distances is simply uneconomical. ItÔÇÖs better to have manufacturing close to where the product is being used. The licensees benefit from the technology, technical support and the strength of the brand.
ÔÇØThe licensing approach is a winner for both parties,ÔÇÖ Metcalf continues. ÔÇ£The business owners drive the business with more passion than a manager does. They also have our support. We spend a good few hours every week providing technical advice. They have the advantage of a ÔÇÿbig daddyÔÇÖ holding their hand when needed.
ÔÇ£Every licensee contributes to the marketing fund as part of their royalty. We produce marketing collateral such as brochures; we undertake print and TV advertising, which builds brand awareness; we push the uniqueness of the product and the association with quality. We, in turn, earn royalty incomeÔÇöand only do well if our licensees flourish.ÔÇØ
Customers and new licensees alike are attracted by the natural look of SmartStone products. This is achieved by sourcing a wide variety of natural stone, used to make the textures for the aluminium ÔÇÿmastersÔÇÖ which are, in turn, used to make the moulds for creating the concrete product.ÔÇØ But variety is about more than just surface texture. Size matters too. There are many different sizes required for the different applications, and for creating various patterns and effects on installation.
ÔÇ£We pride ourselves on making consistently-sized products for ease of installation and an aesthetically pleasing finish,ÔÇØ says Metcalf. ÔÇ£Contractors are able to install our products more quickly and easily than other cast stone, saving them time and money, and giving them a better return.
ÔÇ£Personalisation and customisation are both important, as with carsÔÇöpeople like to have something a bit special, unique to them, and thatÔÇÖs what we supply. Our colours, textures and finishes are industry leaders.ÔÇØ As the company goes forward, itÔÇÖs continually looking for ways to do things better, to maintain and raise customer satisfaction and to stay ahead of the competition.
ÔÇ£A core part of our business has always been residential. We expect there will be a slow upturn but we see the economy picking up and people will invest in their homes again, once they have their debt under control,ÔÇØ says Metcalf. ÔÇ£WeÔÇÖre continuing to get good work in commercial projects, in office complexes, hotels, game farms and so on. We have a licensee going live in the Middle East shortly and we have a number of international enquiries for licences. We can look to the future with confidence.ÔÇØ
