German drive engineering group SEW Eurodrive remains committed to Africa despite political and economic instability in parts of the continent, says local subsidiary SEW Eurodrive South Africa (SA).
SEW Eurodrive SA MD Raymond Obermeyer says, while the political upheaval and economic uncertainty currently being experienced in South Africa are a “concern” for both the parent company and its local subsidiary, SEW Eurodrive, nonetheless, remains confident in SEW Eurodrive SA’s performance and growth outlook.
As such, last year, SEW Eurodrive invested in a 1 500 m2 premises for SEW Eurodrive SA’s Port Elizabeth branch in the Eastern Cape, as, Obermeyer notes, it had outgrown its previous offices. Further, the group has also indicated plans to invest in a 15 000 m2 premises in Nasrec, in Gauteng.
Obermeyer says the property, which is adjacent to the head office, should be registered later this year, and the project should take about three years to complete.
He says that neither the design nor the ultimate purpose of the 15 000 m2 premises has been determined as a result of SEW Eurodrive’s “flexible, wait and see” approach to investment on the continent.
This approach, which is able to adapt to economic circumstances as well as capitalise on growth opportunities, ensures that, “go-ahead on a project is determined by the market”. This means that the group’s resources, including capital investment, are allocated on the basis of how the various African and non-African subsidiaries develop and perform within their specific markets, says Obermeyer.
He cites SEW Eurodrive’s intent to develop its recently established Tanzanian branch into a south-east Africa base. He notes that SEW Eurodrive SA is currently responsible for operations in 22 African countries, but that the Tanzania branch could, in the foreseeable future, run and supply operations in the Democratic Republic of Congo, Burundi, Uganda and South Sudan.
Obermeyer explains that Tanzania’s attractiveness is the result of the new government’s decision to “proactively and systematically root out corruption”, as well as its efforts to drive economic growth by investing in transport infrastructure, including roads and an airport with cargo facilities. He adds that government is also attempting to limit China’s influence on Tanzania’s economic development, ensuring that it attracts and accepts investment from countries such as India, Japan, Germany and others.
He notes that SEW Eurodrive is looking to “springboard” off the country’s slow resurgence into markets such as agriculture, and mining, while leveraging its well-entrenched brand recognition to boost growth and market share.Thus
, Obermeyer suggests that SEW Eurodrive’s decisions pertaining to the structure and ultimate purpose of the Nasrec premises may be influenced by the success and development of the Tanzania branch.
He comments that, “while SEW Eurodrive is 100% committed to South Africa, the lack of economic growth and business confidence has ensured that we look outwards for growth”.
Obermeyer points out that the development of other branches does not detract from SEW Eurodrive SA’s importance to the group, or the continent. He states that, contrary to other South Africa-based companies, SEW Eurodrive SA has experienced an increased order intake over the last three years, as well as having achieved its budget over the same period.
He says the local subsidiary has also been able to increase its stockholding, improve internal capacity planning and expand its premises on the back of its economic successes.
Moreover, he notes that the SEW Eurodrive SA staff – “the best in the market” – have the necessary technical skill and the appropriate knowledge of the African market to ensure the continued success of the subsidiary.
Additionally, SEW Eurodrive SA’s partnership with freight companies and its access to ports for sea-freight purposes stand it in good stead.
Obermeyer suggests that one factor that could further enhance ease of business for the company, as well as the Southern African Development Community, is a unified customs code, which, together with increased road, rail and port infrastructure, will bolster economic activity in the region.
“SEW Eurodrive SA has the full support and backing of SEW Eurodrive, both from a financial and from a technical support aspect,” Obermeyer says. He lauds the group’s international leadership for “doing what is needed, without any bureaucratic barriers”, and notes that, as the German economy recovers and grows, so too does the group’s scale of global investment.