April 29, 2017

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Localisation drive will help power up Africa for the next generation

Supplying everything from spider nuts to jaw studs, cap screws and washers is all in a day’s work for Ver-Bolt, which is now one of the largest providers of industrial fasteners in Africa. The company’ focus on quality and building long-term, sustainable relationships gave rise to a growth spurt many companies that have suffered through the global recession would be envious of.

It is now well placed to reap further rewards as a key supplier of fasteners for power and construction projects across Africa over the next decade.

Owner of Ver-Bolt, Trevor Nienaber, says one of the biggest lessons he has learned since helping establish the company in 1980, is that maintaining and nurturing relationships with customers and suppliers is the best way to create a sustainable business model.

The company is now ready to use its strong base in South Africa as a springboard into the rest of the continent, especially as many major power projects begin to take off.

The company sees its 28-year-old partnership with Standard Bank as crucial to this success. It recently worked with the bank to obtain the funding to secure a contract to supply the fasteners to a major wind turbine project in the Northern Cape.

Mr Nienaber says due to the tough economic climate, a lack of funding can scupper many a good project in Africa.

“If a company grows two or threefold, you need a bank to support expansion and Standard Bank has been instrumental over the last few years in backing us with some major power projects. Funding is not easy to come by and needs to be motivated correctly. I would say about 50% of that motivation would be based on how well the bank knows the individuals and company it would be working with to have faith in them,” says Mr Nienaber.

On a big contract like a wind turbine project, which forms part of the Department of Energy’s renewable energy bid four window, a lack of funding would have seen the project stagnating and the opportunity being lost.

This project and projects like it are becoming increasingly important drivers of a localisation strategy across the economy – where key components on a project are developed locally rather than being imported. Ver-Bolt is encouraging, together with partners like Standard Bank, more localisation across the supply chain.

This is because the local manufacturing sector has largely been excluded from many renewable projects, where bigger companies preferred tied and tested overseas suppliers. But now, with projects like this latest one from Ver-Bolt, this situation is changing fast and bringing about more opportunities for job and real economy growth.

“The first rounds of bidding had a lot of solar energy projects and the majority of goods in the industry were imported. But we are now seeing the process develop further and a lot of wind power projects are on the table, with more goods being supplied locally by companies like ourselves,” says Mr Nienaber.

“We pushed hard to localise, but the swing happened when saw the bill for localisation, when certain components were focused on and we have seen that portion increase,” says Mr Nienaber.

The Preferential Procurement Policy Framework Act entitles the government to direct which products and services have to be procured locally and it has been ramping up this in 2015, with the latest designations including many power and construction components.

“It needs to be a pretty efficient system to gain the confidence of international companies in the supply chain. The capacity of the local market was just not sufficient. But we have streamlined our system over the past ten years to handle localisation in a big way – this is why these companies trust us to deliver for their projects,” says Mr Nienaber.

While the localisation policy is already creating jobs, it will likewise provide opportunities for Ver-Bolt and its partners to benefit from the growth.  While four rounds of renewable projects in SA have been a roaring success, Mr Nienaber says the whole of West Africa and countries like Botswana, among others, are opening up for these projects now.

“As this happens what you see is a transfer of money and skills. If you start a project in a sustainable way over a number of years there is true empowering in the form of education and skills transfer – we are already seeing this with the wind projects in the Northern Cape,” says Mr Nienaber.

Major multinational players are already seeing the potential – and are not shying away from setting up operations in outlying areas like the Northern Cape, which is one of the best natural geographies for wind power in the world.

Ver-Bolt’s key focus after being established was oil, gas and petrochemicals and the company soon became more diversified when it began supplying parts to coal power stations.

“Our growth has been based on consistency over many years and the significant relationships we built up. But we live in a global market and if you want to compete you need to compete at the international level. If you’re not there you have to bring yourself up to that level. We made that decision and received an opportunity to raise the bar with the distribution of cellphone networks – we have already supplied materials to 40% of the cell towers across Africa,” says Mr Nienaber.

Ver-Bolt has spotted a new trend – and that is the energy sector’s development into Africa.  It is strategically aligning itself to be able to cater for this demand – to feed the supply chain as it moves across the continent.

“We need to be able to meet demands across a diverse mix of products very quickly – from oil rigs to skyscrapers. Logistics is absolutely critical to this and as we expand further and develop our base,” says Mr Nienaber.

The company has streamlined its operations so that it can deliver 2,500 tonnes of product a month and has the ability to ship stock within 24 hours.

“The growth in our company has exceeded expectations and with the relationships and reputation we have, I believe we are very well placed to be able to piggy-back on the expansion of local and international companies into Africa by being the preferred supplier of materials to them. We have, in fact, developed our supply chain to such a degree so that we can meet that demand,” says Mr Nienaber.

 

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