Speaking to Engineering News from the com-pany’s offices in Edenvale, on the East Rand, Pougnet says that, in the past, South African manufacturers used to see themselves as being low-cost producers, but the reality of the strengthened rand, together with the greater accessibility to global markets through electronic media has allowed international com- panies to make inroads into the local market.
“These companies are generally geared to produce mass volumes, and do not sell the degree of customis-ation that we do. “This creates a price expectation with customers, and is forcing the company to be more critical in respect of input costs.
“It has become necessary for us to take advantage of being able to shop globally for components and, with the stronger rand, imported components are more competitive than those produced locally,” says Pougnet.
He tells Engineering News that, because some local companies are not actively looking at reducing their input costs, it is forcing others to buy from inter- national suppliers instead of supporting the local economy. He says that the company used to source products locally, but has found that overseas companies can supply the same quality in “a fraction of the time and at a fraction of the cost” even with shipping costs and duties.
He says the company has also embarked on a number of initiatives to make it more efficient as a manufacturer, and this has included looking at its organisational structure with the intention of recruiting and retaining the necessary skills to ensure its competitive edge.
“People and expertise are important and make the company special,” he says.
Further, says Pougnet, the company has focused on areas such as materials of construction and production methods being used and, through this, has been able to reduce costs and overhead structures, making it more competitive.
A challenge that is also topical for the company has been its dependence on custom-made systems for the military and railway industries and, in the last few years, this has changed with the com- pany strengthening its mining-sector business which is less dependent on extensive development work.
“Custom-developed systems are obviously more expensive, and take longer to produce,” says Pougnet. “In the mining sector the development work is generally a once-off and the systems can be used across the board.” He says that the other challenge is that the industry is under threat from foreign suppliers who are supplying goods at lower prices than those produced locally.