The modern business world has become besieged in regulatory red tape and health and safety concerns. The need for such safeguards has changed the character of industry. For companies with niche expertise, the new environment can help to further distinguish quality from the general market: companies like MegChem.
MegChem is an engineering company operating primarily in the petrochemical, oil, gas, power generation and energy related industries. Over time the company has emerged as a fully fledged multi-disciplinary engineering company, able to provide turn-key solutions from the design and planning phase through to on-site commissioning of finished equipment. It also provides the physical infrastructure to support the classical engineering consultancy services by making use of sub-contractors and suppliers with whom it has forged long-term relationships, to be able to supply a full EPC service
The company was registered in 1995 following a management buyout and has since gone from strength to strength, as August Zerwick, Managing Director, explains:
“We are a local company with a global focus, with our main concentration on serving the petrochemical industry. We also serve other industries around pressurised systems and design.”
“At the time of the MBO, we had 110 employees and we have successfully grown that base to 310 staff today. Amongst these are more than 80 graduated engineers employed in various engineering disciplines, complemented by more than 100 design draftsmen, as well as other professionals in Contract Administration, Procurement, Information Management, Quality Management, Construction Safety Management and other support functions.”
Part of that growth has come through two acquisitions; including SecMet, which added metallurgical and welding engineering expertise to MegChem’s capabilities and PVSS (Pressure Vessel Design Support Services) for resources and a base in the Vaal Triangle.
1998 saw the company sell a 50 per cent share to LTA, which later became Grinaker-LTA. The company bought back those shares in September 2009, which has given MegChem a more liberal set of opportunities on small but highly complex brownfields engineering, procurement and construction projects, as Louis Odendaal – Manager Business Development outlines:
“Acquisitions have certain objectives but as MegChem continued to grow, there was a strategic decision to un-bundle the various interests. We therefore decided to buy back the shares to focus on strategically what we thought was important to help grow the company without being in conflict with the shareholder when bidding for work.”
As the company continued to grow, the emphasis on quality within the entire industry intensified and by 2000 MegChem had put in place the building blocks of its Quality Assurance Group, which plays such an important role today. The following two years saw the company introduce an Engineering Management Group and SHER Group and by 2004 the company had attained ISO 9001: 2000 certification. Compliance to safety requirements and standards is also one of the key business drivers. MegChem’s Health and Safety Management System has an IRCA 5 Star Safety Rating since 2010
Having started out initially with its focus on maintenance and plant support in the petrochemical industry, MegChem’s expertise has spread to encompass new plant, plant modifications, de- bottlenecking, repairs, upgrades, fit-for-service analyses as well as failure investigations and metallurgical and welding solutions.
The company develops engineering solutions from a brief problem description provided by the client, through feasibility study, conceptual, basic and detail engineering, through to construction and commissioning and has acquired niche engineering skills for Process, Mechanical, Piping, Metallurgical and Forensic engineering. MegChem has its headquarters in Secunda, Mpumalanga, where its metallurgical laboratory is also based. Further sites are located in Vanderbijlpark and in Centurion.
Each location has its own specialities and Odendaal is keen to reiterate the importance of offering such a wide range of services:
“We have definitely been through a healthy period of growth and we still have ambitions to diversify the business,” he affirms. “Today our customers are not just from the petrochemical sector but also gas, power generation and energy-related industries.
“Each project is unique – we are not a technology supplier, instead we see ourselves as a technology integrator, giving us the ability to look at all technologies and options in collaboration with our clients, and to optimize the solution accordingly.
“We play a complete EPC role, providing clients with front end engineering design, the procurement services for key components and equipment as well as project and construction management for the installation thereof.
“We do not have in-house fabrication or construction capabilities; instead we write technical specifications and select the contractors that have the required competence for the application. Then we place orders and proceed.”
The projects MegChem undertakes are predominantly complex brownfields projects requiring a focus on interface and integration management. Projects are carried out for a variety of customers including several of the parastatal companies like Eskom, Airports Company of South Africa (ACSA) and PetroSA.
Odendaal says that the company’s expertise and attention to quality are key attributes to the relationships MegChem has developed, which has resulted in a loyal client base:
“When we are providing a procurement service we particularly add value on non-standard pressure vessels, including drums and heat exchangers, columns reactors and tanks. Our focus is on the total value chain for supplying that equipment and over time we have established very a comprehensive service offering.
“This process is very disciplined to ensure that statutory and design requirements are complied with before the item ever reaches the client. When we are delivering supplies to the client, time is usually of the essence and in most case the equipment has to be on site by a certain date. There are three main elements to our approach to supply chain management: quality, cost and schedule, with the last aspect receiving special attention when we have to import parts.
“Our whole business management system is run on ISO certified procedures which are monitored regularly and we expect the same from our suppliers and fabricators – all of which helps to create an environment of the same quality landscape.
“We work closely with our customers and for example, provide information on spare parts lists, to ensure that the client has the knowledge needed to carry out maintenance and to ensure they have sufficient spare parts.
“The basis of our services is built around relationships and whilst we have grown our client base over the past 18 years, lots of our work is derived from repeat business.”
Given the highly competitive nature of this sector (at the last count Odendaal was able to name 14 competitors), having a reliable reputation and a strong customer base are invaluable tools.
“We focus on delivering the basics: how we can deliver quality and value to the customer, so that we can create space to compete – we have to distinguish ourselves,” he insists. “Our technical competence remains the foundation of our business.”
Much of that reliance is down to the experience and skill sets of MegChem’s employees. Odendaal says that finding the right skills remains a challenge – and to alleviate that particular problem, the company established its own drafting academy in Secunda, three years ago.
“The drafting training academy has proved hugely successful. We take learners from a variety of backgrounds and once they have been through our course we employ some, whilst the remainder are able to join the job market with a new set of skills.
“For those we take on, there is the opportunity to get to know our company culture, further their careers and to do practical work, we and the industry at large have definitely seen the benefits of this programme.”
The latest innovation at MegChem has been the investment in the latest technology which helps to create 3D Models of brownfield sites and can quickly and accurately create plant designs and an exact model of what a plant will look like for the client. This limits the amount of drawings required and speeds up the whole process.
“We have procured a number of High Definition Laser Scanners (HDLS) and these, combined with our software knowledge, creates tremendous value for the client,” Odendaal assures.
He insists that one of the key elements to MegChem’s enduring success will be its ability to keep up to date with regulatory changes:
“We have to ensure we fully comply and we proactively look at the next likely changes to keep up to speed with code and regulatory changes. In South Africa the changes to the pressurized equipment regulations have meant a total review of our approach to design and compliance review.
“It is critical for us to retain our experienced staff and it is a continuous process to ensure compliance whilst meeting regulatory as well as client specific requirements.”
Assuming all goes to plan, MegChem will further strengthen its presence in the energy markets and Zerwick says it will also look to grow competence in other areas of engineering. With key alliances already established in Australia, the Middle East and North America, MegChem’s reputation is well-placed for an exciting global future.