Local steel tube and pipe manufacturer Robor’s acquisition of Kulungile Metals Group’s (KMG’s) carbon steel division from investment company Blackstar Group will increase its annual turnover by at least one-third, says Robor CEO Gordon Gilmer.

He tells Engineering News that the agreement, which is effective from June 1, follows Blackstar’s decision to sell the KMG Steel Service Centres in return for 5% of Robor’s issued share capital. The transaction is worth in excess of R50-million.

The acquisiton encompasses the former Vanderbijlpark, Isando and Welkom operations of KMG.

Previously known as Baldwins Steel, the KMG carbon steel division now forms part of Robor Steel Services and will operate as Robor Baldwins under the leadership of Robor Steel Services MD Andrew Winter.

Gilmer is optimistic about the acquisition and says Baldwins Steel handled more than 100 000 t of steel products, sourced locally and internationally, in 2010. “We are excited about the possibilities that this new venture offers our existing customers.”

At Isando, Robor took over all the assets, including cut-to-length and long products facilities, while, at the Vander- bijlpark plant, the company took control of the slitting and blanking facilities. At the Welkom site, Robor is running the service centre that services surrounding mines. All staff employed at the units were re-employed under Robor Baldwins.

Adding Value
Gilmer says the acquisition is cost effective, as it will enhance Robor’s capabilities and fast-track its strategy of adding value to steel products and increasing its product offering.

He adds that the acquisition allows the company to offer clients a wider range of hot-rolled, cold-rolled, galvanised and prepainted steel sheets, coils and plates and long products.

“The acquired units also present the company with an immediate solution to add value to its product range because the additional sites are already equipped with value-adding equipment, such as cut-to-length lines that include laser- and plasma- cutting facilities,” he notes.

The company was approached by its private-equity partner Rand Merchant Bank Ventures (RMBV) about the acquisition in September last year and signed a nondisclosure agreement in October.

Gilmer says RMB’s approach came at the right time.

He explains that stakeholders of Robor, which include management and staff, consolidated their debt after the Robor management buyout from industrial brand management company Barloworld in 2006.

“The next step was to find ways to grow the company. We were in the process of looking at capital investment in equipment when RMB approached us. This sped up the value-adding process, which would have taken a lot longer otherwise,” he says.

Robor Baldwins will be one of South Africa’s largest steel service centres, servicing distributors and large end- users nationally. “In addition to expanding our product offering to our domestic market, we will be exporting these products to our established export destinations across the globe.”

Robor exports its products to Zimbabwe, Zambia, Botswana, Angola, the Democratic Republic of Congo, Tanzania, Ghana and Namibia. Off African soil, the company also exports its products to Hong Kong, Australia, the UK and Germany.

Robor has over the years exported over a million tons of welded tube, pipe, cold-formed steel profiles and associated value-added products.

Maintenance
Gilmer says Robor will make additional investments in Robor Baldwins that include a R10-million maintenance and improvement project mainly at the Isando plant to increase production efficiency.

The project started last month and will focus on materials handling equipment and equipment interface.

“With Robor’s far-reaching distribution network, strong capital resources, efficient production and robust information systems, we anticipate being one of the top steel vendors in Southern Africa.”

Challenges
Gilmer notes that Robor has put together a management team in its Steel Services divi- sion responsible for running the service centre.

The new team started work at Robor Baldwins on June 1; however, challenges are being experienced in terms of achieving product turn- around time and productivity in line with Robor standards.

“But it is not insurmountable. We have highly skilled people in management that are experienced in this field.”

He believes that the challenges can best be overcome by instilling Robor’s work ethic, which includes engineering expertise and strong production systems, into the new organisation.

“However, our biggest challenge is improving our customer service interface. It is important that Robor prio- ritise tackling this challenge, because I believe that we can make a big difference by offering good service.”

Good Cause
On the socioeconomic development (SED) front, Robor handed over newly built classrooms to Sizwe Secondary School, in Elandsfontein, near Johannesburg, on June 13.

The project, run by Robor as part of its SED initiatives, is aimed at improving educational facilities in the communities surrounding its operations.

The initiative follows a series of improvements Robor has undertaken at underprivileged schools within the Elandsfontein and surrounding areas.

“Since 2009, Robor has invested in upgrades at Klopper Park Primary School and at Sizwe Secondary School, where broken windows, leaking roofs, inadequate gutters, poor ablution facilities and an insufficient number of classrooms persistently affected the quality of education.”

This year, the company’s continuous involvement has seen the construction of a number of additional classrooms and ablution facilities at Sizwe Secondary School.

“Through this, along with improvements made to existing buildings, Robor aims to assist headmaster Mandla Cele in realising his vision of improving the school’s standards and raising the matric pass rate to a level of excellence,” Gilmer concludes.

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