CAPEWELL SPRINGS & METAL PRESSINGS – Demonstrating the Opportunities in Local Manufacturing
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By focusing on the delivery of high-quality, locally produced goods for the automotive, textile and consumer goods industries, Capewell Springs and Metal Pressings has secured its status as a vital cog in South Africa’s manufacturing industry. MD Emile Coetzee talks to Enterprise Africa about how the company will take advantage of new opportunities and avoid negativity.
While many in South Africa’s manufacturing sector continue to be dogged by negative statistics, economic uncertainty, and price wars with importers, those that have focussed on delivering high-quality service to clients have enjoyed loyalty and development.
In early March, Stats SA revealed that GDP contracted by 1.4% in the final quarter of 2019. This contraction came as a result of challenges across a range of industries including manufacturing where there was a decrease of 1.8%. December 2019 showed a 5.9% decline in manufacturing activity when compared to the same month in 2018.
But for Cape Town-based Capewell Springs and Metal Pressings – South Africa’s high-volume manufacturer and supplier of metal pressings, springs, wire forms and strip springs – a continued focus on making the most of the opportunities that do exist, and consistently delivering first-class products and service, has resulted in positivity.
Previously, more than 60% of the company’s products were coated through a plating plant which was ageing and in need of upgrading. Coetzee secured a new facility and contracted an engineer to install the plant. New customers were quickly onboarded and new product lines were launched.
Now, Coetzee speaks to Enterprise Africa once again and details the successes that have been achieved as a result of that installation
ELECTRO-PLATING
“Business is still tough but, with regards to our new plating plant, we have seen an uptick in trade,” he says. “We are seeing more clients specifically looking for plating services or products that require plating so there have been positive improvements there. That plant is driving quite a bit of new business for us so that is great, but overall, it is still challenging.
“It has taken time to finally commission the plant. There’s a lot of fine tuning and capacity checking, and that is an ongoing process to ensure we are optimising the plant. In all, it has been a very positive experience. On the environmental side, it has been helpful. The way we are treating our water now, it’s much better than what we were doing before – it’s very beneficial.”
The company is faced with price pressure from the East as manufacturers in China and other countries flood the market with products at extremely low prices. Manufacturers in South Africa look to importers for cheaper components and this is damaging, but a new wave of localisation incentives as well as general sentiment towards supporting local businesses is helping.
“There’s a big drive for localisation in the automotive sector. The target, by the year 2035, to have 60% of the components used in the manufacture of cars here to come from local suppliers. With that comes a lot of opportunities,” says Coetzee. “The local OEMs are looking to invest another R50 billion into the automotive sector over the next five years so there is a buy-in from the OEMs. We have been approached by a client who is looking for the local manufacture of some products, including wire springs, and that equates to around 35-40% of our current turnover so we can definitely increase our business. It is very doable and it’s now about finding the right investment opportunity. We have the IDC and other organisations that can support us and help to set up this work. Hopefully, in six months’ time we can confirm that all is going ahead.”
INVESTING IN LOCALISATION
Currently, Capewell Springs and Metal Pressings has capacity to produce in its own internal tool room with metal presses and CNC wire forming machines. The company can handle all aspects of manufacturing in-house, including metal forming, heat treatment, and now high-capacity electro-plating. But if it is to take on large scale orders from global auto makers, it will need further capital investment to build capacity.
“We have presented something to our head office in Germany but we are trying to drive it locally. I am busy putting business plans together for local companies that could help finance it as it would require some capex but it would create more sustainability for the business as a whole. Whether it really requires much additional employment remains to be seen.
“The automotive OEM we are in discussions with faced a situation where a shipping company had let them down, and their production would come to a standstill unless they could localise. It’s a great example of how we can assist,” explains Coetzee. “If we had the machinery, we could have had the product moving straight away but we are just waiting to invest. The client can have the product immediately, on demand; they can make changes to their order, and they can gain automotive incentives.”
This is an issue that has been faced by many importers across various industry sectors. While supply is constant and reliable, the low pricing is acceptable but when you need quick communication, problem solving and turnaround strategies, dealing with a reputable local partner brings many benefits.
“That is our ongoing business philosophy,” confirms Coetzee, who explained last year that convincing SA-based companies to buy local was a focus for Capewell Springs and Metal Pressings. “It depends on timing, price and client. Typically, we find that some clients want to import but very often things go wrong and things quickly become costly. There are a lot of risks for importing. We like to sell local manufacturing as one thing that can help to eliminate those risks.”
INTERNATIONAL EXPOSURE
Operating as a South African business, Capewell Springs and Metal Pressings is owned by Schramberg-headquartered Kern-Liebers Group of Companies, a global industry leader in the manufacture of components for the automotive, textile and consumer goods industries.
Despite its global exposure, as a business with a presence across more than 40 countries, Kern-Liebers, like Capewell Springs and Metal Pressings, has been unable to completely sidestep uncertain economics.
“The global economy has influenced everyone and they have had a big drive globally in terms of cost saving,” says Coetzee. “Here, the economy hasn’t changed much as far as we have experienced. In terms of our expansion, head office has assisted greatly, and it has been nice to have technical support. We have the advantage of being part of a bigger group and that allows us access to technical knowledge and then share it with our colleagues and clients.”
But locally, challenges in the economy remain (compounded by the outbreak of the Coronavirus), and even for a thriving global business, a level of unease lingers so long as national growth figures are stunted and local manufacturing continues to decline.
“In the political space, people are realising that so much damage has been done but very few people realised the scope of the damage and how much money had left the country. The further we go, the more we realise about the extent of the trouble. It is not just about one individual solving all of these problems,” says Coetzee. “It is going to take time for the country’s reputation to become attractive for investors who want to move money here. There is so much potential, across all of Africa. We are sitting on major opportunities but we are realistic – there are a lot of hard steps to be taken. There are strategic moves underway which should benefit the economy in the long run.
“For most of our clients, the numbers haven’t picked up over the past 12 months, and we have a broad range of clients across many industries. Others in the industry who only focus on exports are booming. It all depends on who you speak to and the time you get them. A little advertising or marketing can help you pick up clients very quickly – there are definitely success stories from manufacturers who are increasing their volumes. We haven’t turned the corner quite yet – the general economy is still slow but we certainly see the potential.”
For almost 40 years, Capewell Springs and Metal Pressings has been delivering excellence and, by building lasting relationships, the company is ready to take advantage of all opportunities available to ensure it continues in a strong and sustainable manner for the next 40 years. While investments into new technology, such as the electro-plating plant, will help to build capacity and quality, the human touch within the business remains significant.
DEVELOPING OPPORTUNITIES
“We have a strong technical team and everyone contributes. They all understand what needs to be done to make sure these opportunities are realised,” states Coetzee.
Currently home to about 50 dedicated employees, the future of the business will come through localisation of manufacturing, especially in the automotive sector. This is supported by government, business and consumers, and this is where Capewell can offer what others cannot.
“The last 12 months has not been where it should be in terms of our overall business, we have been sitting comfortably with our big clients for many years and some of that business has shrunk, but the last six months have been positive and we are seeing business return.
“There are a number of opportunities that I am working on that are very exciting. We are burning the midnight oil and grinding things out to see how we can get things moving. We are hopeful and cheerful, and excited to see how these opportunities will play out.”
It is this resilience, characterised in so many of South Africa’s robust businesses, that will help Capewell Springs and Metal Pressings to move exciting opportunities into crucial reality.
“There are many projects in the pipeline and many requests for information coming in,” says Coetzee. “We just picked up some work for a German company who wants us to produce parts for Daimler. All of a sudden there is an influx of work and its just a matter of getting in onboard and allowing it to influence our turnover.
“We have a few things happening and we are working on projects that have a lot of potential. In the next six months, we should have some idea about these developments.”
This is a business not interested in the challenges faced by the wider industry, and the negativity present in the economy. Capewell Springs and Metal Pressings is driving forward with a single purpose – to provide clients old and new with high-quality products, and efficient, flexible service that importers cannot guarantee.