African Brick Centre Limited: Mixing the Right Ingredient

Having a much –sought, unique product in a market is often a sure fire way to success. At African Brick Centre Limited, a specially-made brick, the backing of a large black empowerment business a long history of tradition and highly regarded brand have all combined to create a forward-thinking business very much focussed on growth.

The company manufactures a range of unique-coloured semi face bricks, semi face gem bricks and stock bricks and has become renowned for its blue bricks, made out of pot clay, which is mined at the company’s headquarters in Krugersdorp, in the West Rand of Gauteng Province.

Bricks348The African Brick group has a rich history dating back to 1945, when the late Ben van Graan moved his clay brick-making facilities from the south of Johannesburg to the current Krugersdorp manufacturing premises.

Today the company is one of only a few larger independent brick makers still left in South Africa. The business has sold close to 1 billion face bricks which have been built into more than 20,000 homes and other buildings. Given the unique colours of the bricks, the company enjoys exclusive repeat business when properties are building extensions or need improvements.

According to Musa Shangase, Managing Director, the company’s success has been very much enhanced by its ownership changes:

In 2007 African Brick Centre was listed on the Altex in 2007. Yakani acquired a 51 per cent controlling stake in the business in January 2009 and increased its stake to 70.8 per cent following a rights issue to all stakeholders a year later.

In January 2012, Yakani make an offer to minorities to acquire the remaining shares and with the 100 per cent shareholding delisted the company from the Altex. We are consequently a black-owned business, which has undoubtedly helped us; we have seen changes that fall in line with the South African Government’s strategy of developing black and disadvantaged people through Black Economic Empowerment.

We now have a diversified market in the sense that as an older company, there was an established market but we are now able to operate in a new market that establishes us as a true South African company.”

African Brick’s transition has had a major impact on not only the markets it can now operate within, but on the culture also: “We have seen changes in leadership and a great improvement in employment equity in terms of equal opportunities for men and women and in regards to demographics,” Shangase affirms. “This is helping us to make inroads into markets we have not previously worked in, such as the townships and also Government projects, where our status is very much in accordance with policy.”

With opportunities very much on the increase, Shangase says that the company hopes to eventually extend its customer base across the whole country; at present African Brick supplies its products to seven of the nine provinces.

The business mines and manufactures bricks in Krugersdorp, home to 60 of its employees, with a further 60 workers based at a second factory in Port Elizabeth.

We source two types of clay; the pot clay is unique to us and is based here in Krugersdorp, while we also use yellow clay which is located 30 kilometres away at a site we own the mining rights for,” says Shangase.

We mine the clay twice a year and stockpile it until we are ready to produce the bricks. At that point we mix the clay with other raw materials and add the mix into extruders before drying the finished product which is then bound. The whole process is highly automated and because the bricks are generally the same size (with the exception of Gem and Maxi bricks which are bigger), we don’t have to change lines during production, we just change the mix,” he continues.

Bricks785At present African Brick is producing four million bricks per month at Krugersdorp, with the capacity to increase this to seven million. A further one million bricks are manufactured in Port Elizabeth which has the capacity to nearly double that volume and Shangase says that the company is comfortably able to meet existing demand:

We sell around 3.5 million bricks a month so there is an element of stock piling, which means we can reduce any problems, such as transport disputes.”

Despite hard times falling on the construction sector, the brick industry remains robust, with competition fierce, and African Brick presently owns roughly 10 per cent of the market. The company’s customers fall broadly into four groups: the large retailers who buy and then sell on the bricks, represent approximately 65 per cent of the business; big construction firms account for 20 per cent of turnover, with DIY sales direct to the public contributing 5 per cent and the remainder of the business coming from Government work.

The split is changing from construction to the big retailers whom we have forged very good relationships with. We also sell through a number of distributors who we call “hubs”,” Shangase asserts.

Business was very good until the economic crash in 2007 and we took a huge knock along with the whole of the clay industry. That began to change in the middle of last year when the graph started to improve and with the changes we implemented we began to look at procurement and our business strategy.

Economically we’ve turned the corner now and see our sales figures increase and there has been a big improvement in the way the whole market perceives our company.”

Tough financial times has prompted African Brick to reassess its costs and has resulted in operational changes aimed at reducing waste and a cautious approach to recruitment and investment in new machinery. Shangase says that the company’s maintenance strategy is paying handsome dividends in extending the lifespan of each piece of equipment to ten years.

Bricks595From 2010 the company embarked on a five year skills development programme which identifies talented individuals – often from previously disadvantaged backgrounds, and inducts them into the succession plan for the business. Training takes place both in-house and at college and covers a variety of skill sets aimed at training administrators, artisans and marketing specialists.

The transition was initially difficult for the company,” acknowledges Shangase, “but we could very quickly see the difference and that it was for the better. We are on track to achieve our goals with personnel by 2015.”

A more immediate challenge is to meet the Government’s environmental expectations and, particularly given the impact of existing clamp kilns. Addressing the issue, Shangase says will be an expensive requirement, but it is one already fully under investigation:

The Government wants us to use greener technology and we have to comply, so we are currently looking at our manufacturing options. There is a Vertical Shaft Brick Kiln (VSBK) technology available which we are looking at right now but overall the process will take two years to complete, at a cost of around R25 million.” With economics on the upgrade, Shangase foresees a bright future for African Brick: “The construction industry is still down and our product is used more in housing and industrial buildings and not so much in infrastructure work, but the building of houses is very slowly gaining momentum.

It remains a good time to be in the brick industry if you are an opportunist and we aim to increase our national market share to 15 per cent by the end of 2013.

Our research and development team play an important part in that projection and have developed a dual purpose brick that can be used as a brick and for paving. We’ve made inroads with this new product and have worked on a couple of successful projects – the market likes it so we need to build up an order book with the construction side of the business. Hopefully such innovations will help us to increase our footprint across the whole of South Africa,” he concludes.