Lift truck company Goscor Lift Truck Company (GLTC) – which is part of the Imperial Group – and aluminium supplier Hulamin have jointly devised a scheme based on the revised Broad-based Black Economic-Empowerment (BBBEE) Codes of Good Practice to extend Hulamin’s warehousing and storage capability with new forklifts.
The BBBEE Codes of Good Practice oblige corporates and government entities to support small, medium-sized and microenterprises (SMMEs) through enterprise development.
Enterprise development is defined as a business to black business transaction, which creates structures and provides financial and other contributions that assist SMME entrepreneurs to achieve business sustainability.
The Goscor-Hulamin scheme resulted in the creation of a business model in which the participating SMMEs – Multi Lift, owned by Tutu Jali and Omalume Manufacturing and Projects, owned by Ngcebo Mbambo – supply Hulamin with forklifts in contracts that, together, will be worth about R11-million.
“The basic idea of the scheme,” says Hulamin group communications manager Noma Kanyile, “is that, based on a residual model, these entrepreneurs will own the forklifts at the end of the lease period”.
She adds that Goscor’s selling price includes a 3% discount, with the cash equivalent being invested for 60 months on behalf of the entrepreneurs. This will be used to settle the residual balance at the end of the lease period. “In this way full ownership of the forklifts will pass to Multi Lift and Omalume,” says Kanyile.
“Depending on the condition of the forklifts at that time, Hulamin will then contract the services of the forklifts directly from the entrepreneurs for another two to three years, or the entrepreneurs will be able to lease them out to other end users outside Hulamin. Either way, through this model, the entrepreneurs will have been afforded an economic empowerment opportunity to acquire high-value forklifts at book value as a solid investment platform with which to generate a significant income stream with extremely low risk,” she adds.
Kanyile says that the “cherry on the top” is that Goscor will provide forklift and business management training to the entrepreneurs during the lease period.
Hulamin enterprise development leader Reginald Nyandeni says that a strength of this scheme is Goscor’s and Hulamin’s shared common purpose.
He says that both companies undoubtedly see the long-term economic value in creating and nurturing black enterprises within the equipment hire business.
Nyandeni adds that both Hulamin and Goscor have faced difficulties at various stages of this enterprise development process. “However owing to unwavering commitment, both have managed the risks and have devised remedial actions to overcome challenges. The learning from this process has enabled Hulamin/Goscor to strengthen the development model. This show of commitment stems from the respective chief executive officers embracing BBBEE,” he adds.
BBBEE considerations were one of the criteria for awarding the multimillion-rand forklift contract to Goscor.
Goscor has committed to use this enterprise development model as a basis for other similar schemes at other client sites countrywide.
The final result of this process is that Hulamin, after a long period of being supplied forklifts by another leading company, awarded Goscor the contract in January 2013 to supply Hulamin forklifts. Since then, about 60 forklifts of various sizes (from 2.5 t to 20 t) have been acquired by Hulamin from Goscor.
Between them, Jali and Mbambo have been selected to supply 20% of the total forklift fleet at Hulamin.