Jul 13, 2012
Barloworld chief reflects on organisation’s far-reaching restructuringBack
Barloworld|Caterpillar|Concrete|Industrial|Industrial Equipment|Russia|Capital Equipment|Equipment|Equipment Giant|Industrial Conglomerate|Industrial Equipment|Logistics|Clive Thomson|Infrastructure
© Reuse this
Barloworld underwent significant restructuring and unbundling in 2007, changing from a multinational industrial conglomerate to a capital equipment and logistics-focused company.
In 2010, during the height of the global financial crisis, the company set itself the goal of tripling its market value by 2015 through incremental growth and niche or strategic acquisitions.
Thomson notes a critical component of managing change is a focused execution, specifically on incremental and achievable objectives, the involvement of employees and the development, recruitment and retention of core competence skills.
“Do not clutter your targets. Keep them focused and have measurable objectives over shorter timeframes to assess progress. Further, each division’s management must use the overarching concrete objectives to define measurable and aligned aims for that division.
“The execution of a strategy is what is mostly lacking in corporate restructuring. How do I position myself for growth? How do I change what people do from what they have always done to what the strategy demands?” he asks.
Different skills are often required to effect a change in strategy. This requires firm alignment between the corporate strategy and employee training, performance management and incentive rewards.
“Customers want to shift their risk to you. However, if you manage to deliver the services effectively and efficiently, you will also see commensurate returns for the increase in risks.”
In Russia, the company bought the earthmoving equipment giant Caterpillar dealership for R363-million in 2007. It took the company five years to generate returns in the territory, owing to testing conditions such as subzero winter temperatures and muddy summers that bogged down logistics. However, yearly revenue from the territory is currently about equal to the initial purchasing price, explains Thomson.
“You need a can-do attitude in management. You need to go out there and do what others cannot, which is what will set you apart.”
The risks in emerging markets, owing to difficult operating conditions and a lack of supporting infrastructure, are significant, but there are significant growth prospects for companies that can manage those risks and deliver successfully on contracts, highlights Thomson.
Clients will often demand that a contractor or service provider intimately under- stands their industries and the nuances across different territories. This necessitates a high level of technical skills from the contractor or service provider.
However, a company can deploy its tech- nical experts where they are needed and recruit local managers who have a good knowledge of the local conditions, languages and culture.
“Send your best Romans. Expatriates are ambassadors of your corporate culture; however, do not underestimate cultural differences and do not overestimate poten- tial synergies. In fact, there may be dysergies present that you may not have expected, which is why you need your best people and local knowledge,” explains Thomson.
Barloworld grew its share price from R43 a share in 2007 to R83 a share in 2011. Thomson was speaking as a guest at the Gordon Institute of Business Science in June.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Other News This Week News
Updated 13 minutes ago July new vehicle sales declined by 1.5%, to 57 670 units, compared with the same month last year, reported the Department of Trade and Industry on Friday. The South African new passenger car market, at 39 945 units, shrunk by 418 units, or 1%, compared with July last...
Updated 1 hour 12 minutes ago Changes had to be made in South Africa’s water and sanitation sector to ensure challenges were resolved effectively, as well as to fast-track the country’s socioeconomic transformation, Water and Sanitation Minister Nomvula Mokonyane told delegates at the 2014...
Updated 1 hour 29 minutes ago Steel producer ArcelorMittal South Africa (AMSA) has confirmed that the reline project at its Newcastle mill, in KwaZulu-Natal, has hit snags and that the project, which was initially expected to be completed four months after the May 12 shutdown began, will be...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
South African construction company Group Five says work on the rehabilitation of the 800 km stretch of the Plumtree–Mutare highway, in Zimbabwe, should be completed by the end of this year. Giving evidence before the Parliamentary Porfolio Committee on Transport...
The Space Operations division of the South African National Space Agency (Sansa) revealed on July 17 that it had supported the successful launch of the US National Aeronautics and Space Administration’s Orbiting Carbon Observatory-2 (OCO-2) satellite on July 2. The...
Phase 1A of Johannesburg’s Rea Vaya bus rapid transit (BRT) system should carry around 42 000 people a day, while it was been expected that Phase 1B, rolled out last year, would add another 60 000 daily passengers. However, the entire system is currently carrying...
A stormwater project in Bedforview, east of Johannesburg, has stalled for eight months after project managers in the Ekurhuleni municipality resigned and municipal managers were placed on special leave without designating replacements. Construction to reinforce the...
The design of the Beit Bridge border post is the biggest impediment to efficient freight movement between Zimbabwe and South Africa, says Cross-border Road Transport Agency CEO Sipho Khumalo. Beit Bridge is the busiest border post in Africa. A research study on the...