A consortium led by South Africa’s State-owned Industrial Development Corporation (IDC) and black-economic empowered Commuter Transport Engineering (CTE) has acquired Union Carriage & Wagon (UCW) from Murray & Roberts (M&R) for an undisclosed amount.
CTE founder and CEO Patricia Norris tells Engineering News Online that the company entered a competitive bidding process for UCW in October, when M&R indicated that it planned to sell the company as part of broader restructuring efforts.
The consortium, which besides CTE and the IDC also includes the National Union of Metalworkers, management and an employee trust, was shortlisted along with two other bidders, before advancing to the exclusive-bidder stage late last year.
Norris, who has worked in the rail engineering environment since 1995 when she took up an executive position at the then Transwerk, grew up in Cape Town and completed her post-matric education in the UK. She founded CTE, with IDC support, in 1999 when the then South Africa Rail Commuter Corporation issued a tender for refurbishment of rolling stock.
The CTE Touws River facility initially struggled, but later found its feet and prior to the UCW acquisition the company had expanded to employ 500 people across facilities in the Western Cape and KwaZulu-Natal.
However, the UCW acquisition more than doubles the company’s asset and employee base, with all 900 UCW staff to be retained. Norris says the transaction also extends CTE’s footprint nationally and materially expands its workshop facilities to cover 58 ha in total.
Norris sees no immediate need to recapitalise these facilities, which have recently completed assembly work for Mitsui and for the Gautrain project.
The deal positions CTE and UCW for localisation workflow that is expected to arise from the Passenger Rail Agency of South Africa’s (Prasa’s) recapitalisation plan, as well as Transnet Freight Rail’s investment programme.
This localisation dimension has been underlined by the IDC, with Abel Malinga, who is the development financier’s mining and manufacturing industries head, arguing that South Africa’s multibillion-rand infrastructure roll-out provides a “window of opportunity for rejuvenating the country’s industrial base”.
CTE has already established relations with Faiveley Transport, of France, which is hoping to supply components and systems to Gibela Rail Transportation – the Alstom-Actom consortium that has been awarded a R51-billion contract by Prasa to supply 3 600 passenger trains over a ten-year period, from 2015.
But the new group’s intention is to remain independent from any one original-equipment manufacturer in the hopes of securing contracts from a range of rail companies supplying product into the South African and African markets.
“We are excited about the future prospects of rail infrastructure, manufacturing and engineering in South Africa, as CTE and UCW are ideally positioned to take full advantage of these prospects,” Norris enthuses.
For M&R, the disposal is part of a strategic repositioning, being led by CEO Henry Laas.
The JSE-listed group has already disposed of steel producer Cisco and is expected to announce further sales in the months ahead, with Hall Longmore, Much Asphalt, M&R Building Products and Rocla likely to be affected.
Group communications executive Eduard Jardim says the group, which is pursuing a ‘recovery and growth strategy’, will unveil a comprehensive growth roadmap during March, which will underline its core construction focus.
Jardim says that the group is also optimistic about the future of the railways industry in South Africa, but that its intention is to participate as a contractor rather than as an equipment supplier and assembler.