Actom (Pty) Ltd: Manufacturing the renewable energy revolution

South Africa’s ambitious infrastructure programme offers exciting opportunities for equally ambitious South African businesses. Taking up the mantle in the electrical products arena has been Actom (Pty) Ltd, a company with over 100 years of expertise, which has enjoyed vibrant growth over the past decade.

Actom

Actom is the largest manufacturer, solution provider, repairer and distributor of electro-mechanical equipment in Africa. The company employs approximately 8,000 people worldwide and with annual sales turnover in the region of R8 billion. It is a black empowered company with 42 operating units, 43 production, service and repair facilities, and 36 distribution outlets throughout Southern Africa.

Headquartered in Knights, east of Johannesburg, the privately-owned company has a long, proud history, having formed in 1903, when GC opened offices in Cape Town and Johannesburg. Today the business is split into numerous divisions; the Transmission and Distribution Efficiency Group is lead by Jack Rowan, Chairman and Actom employee for over 20 years:

We are a South African-based group and we are very diverse but we regard ourselves as the largest electrical company in the sub-region,” he describes. “We are privately owned and operate at least 30 sites around Southern Africa, including wholly and partially owned businesses.”

The company’s commitment to Black Economic Empowerment has given it a strong base from which to tender for large public contracts. Rowan suggests that at present, Government and local government projects account for up to 60 per cent of the company’s business, with private sector customers making up the additional 40 per cent.

Our largest single customer is Eskom by quite a way and we have been very fortunate to win national contracts which are valid for up to 5 years. We supply a number of different products for each individual project – including two new power stations.

The Eskom projects tend to fall into two categories: major contracts and frame contracts (also known as national contracts) and these can run into hundreds of millions of Rand.

We supply a wide range of products – most of which we manufacture ourselves locally (with the exception of some of the higher voltage equipment which is typically imported), including: transformers, switch gears, protection, control devices and motors. We also supply the cabling for power stations,” Rowan continues. “We regard ourselves as manufacturers first and foremost,” he adds.

Within South Africa, Rowan says that Actom operates 23 factories, with a large concentration just east of Johannesburg and a couple of sites in the Cape Town area. Johannesburg is also the location for a service and repair facility, which has opened up a world of new opportunity for the group, following a major acquisition in 2012:

We recently acquired a South African company called Savcio, which was roughly a third the size of Actom, so this has really helped us to grow,” states Rowan. “Savcio was involved in repairing transformers, rotating machinery and draglines and this acquisition was very complimentary to what we do – really it is an add-on to our existing products and services.”

With the nature of each individual project varied, the manufacturing sites generally produce customised products. This in turn affects the effectiveness of some forms of automation, but Rowan is proud of Actom’s willingness to employ South Africans:

There is a need within the country to create jobs and we are very committed to helping. We are firmly committed to Black Economic Empowerment and sit as a Level 3 company at present.

We procure whatever we can locally, looking to encourage and support local black supplier – and we set targets for each of our operations to meet black supplier targets. We also look to improve our employment equity – so that management demographics reflect those of the local population.

“However perhaps one of our biggest focuses is on skills development and training is one of the key targets we have to meet. There is a general shortage of skills and it is an ongoing problem to replace older, retiring people.

We have set up training schools on 3 sites at artisan level and we have also forged close links with local technicoms and universities.

Whilst many of the products are bespoke, all are manufactured to comply with the European Union IEC quality standard – and Rowan adds that all facilities have achieved ISO accreditation for production processes.

The big challenge, he says, is mitigating escalating costs:

There are many challenges but cost escalation is a problem – particularly given that we are competing with importers from low-cost countries. There is a continual effort on our part to keep costs down and we have looked extensively at efficiency and productivity, introducing production lines and improving our process flows. This has included training aspects and at times redesigning products to make them more cost-effective.”

Of course manufacturing customised products can put a strain on stock control and supply chain management. Rowan says that Actom tends to operate in a very decentralised environment, with each unit responsible for its own finance, procurement, sales and production.

Similarly the products vary from factory to factory, meaning that some will hold larger volumes of stock like sheet metal, than other sites.

Rowan indicates that one area of key importance to Actom is research and development:

This is all done in-house and mostly the products are manufactured to our own designs- this is a continual programme and as the specifications change within the industry, we have to upgrade our products,” he explains.

At present, the Government is pushing forwards with a number of policies aimed at improving infrastructure, transport and renewable energies – all of which offer a raft of possibilities for Actom.

With our BBBEE rating, we are able to bid for public contracts which currently make up roughly 60 per cent of our transmission and distribution business, with 40 per cent concentrated on private sector projects to heavy industry and mining – of which approximately 10 per cent is exported,” states Rowan.

We have been very fortunate to pick up various contracts in renewable, across our various divisions, including the project to supply the Balanced Electrical Plant. Renewables are relatively new in South Africa and we have had to develop new products to meet requirements.

For the wind farm contract we supply generators and blades as well as all the cabling and step up and step down transformers and switchgears.

We have also invested extensively in factory power transformers and our Wadeville facility has just completed a R50 million expansion in order to accommodate larger size and voltage transformers.

Growth has been slow in South Africa in line with the rest of the world but we are hopeful that as a local manufacturer, the public enterprises will continue to recognise our support of South Africa’s economy and population.

We believe that GDP and demand will increase in 2014 and there are still many mining opportunities in South Africa.

We have also seen a major contract placed with Transnet and Allstom and as a joint venture partner of Allstom we are hoping to help supply the electrics for passenger rail coaches on a 7 year contract.

Further afield, we have always been involved in neighbouring countries and we will focus more on exporting to these regions over the coming year. We have grown very substantially over the past 10 years and we will look at any further opportunities to grow,” he concludes.