Steel fabricator taking survival steps as pressures mount

6th November 2015

By: Zandile Mavuso

Creamer Media Senior Deputy Editor: Features

  

Font size: - +

Since China reduced its steel consumption owing to overcapacity in February last year, over the past 18 months, the steel units at construction and engineering group Aveng have been pursuing several work streams to reacclimatise to the prevailing pressures.

“In 2014, we were focused on restructuring Aveng Trident Steel as well as rolling out SAP, which has assisted us [in centralising] procurement and sourcing. “This year, we have been focused on reduction of working capital cycle and rightsizing lossmaking businesses,” said Aveng Steel MD Hercu Aucamp last month during the group’s investor conference in Mpumalanga.

The company had also centralised key functions across the business units, such as human resources and information technology, finance and procurement, as well as reduced operating costs through the consolidation of its properties.

“What has also become of importance to the group, owing to the current market situation, is to continue to focus on positive cash flow through the down cycle by optimising inventory and improved debtor collections,” Aucamp pointed out.

Moreover, the group has strengthened and consolidated its management team, which has the necessary skills and experience to steer the business through the difficult market conditions currently being experienced.

Aucamp believes the longer-term prospects are more positive. He noted the emphasis given by the National Development Plan to increasing industrial development, supported by infrastructure. Aveng Steel is also well placed to benefit from an estimated 13-million tons of new steel expected to be consumed in South Africa over the next 15 years.

“In South Africa, we are forecasting opportunities in the power grid build-out – largely renewable power spend, Transnet rolling stock investment, clean fuels development and additional capacity in synthetic fuels, Gautrain expansion, South African National Defence Force spend, the construction of China City, in Modderfontein, and the free trade zone in Saldanha,” he highlighted.

Moreover, in the manufacturing space, Aveng Manufacturing MD Solly Letsoalo described

transport infrastructure as a key growth market. “Additionally, we expect housing and commercial building prod- ucts demand to remain strong,” he said.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION