Ferro South Africa has been named as the Exporter of the Year for 2015 by the Durban Chamber of Commerce and Industry. Group Export Manager, Robin Legg talks to Enterprise Africa to explain more about the company’s plans for further expansion into lucrative African markets.
South Africa has become an important exporter to the global markets since democracy in 1994. As a provider of many mineral resources, agricultural products and engineering parts, the county has positioned itself as a reliable, trustworthy and efficient trading partner for some of the world’s major economies.
Germany, China, Japan, the USA, the UK and the Netherlands are just some of the countries that benefit from relations with South Africa but it’s on the African continent where SA exports have had huge success and where opportunities look set to grow in the coming years.
Almost 90% of South Africa’s exports to the rest of Africa go to the SADC economies. In 2011, SA’s trade with the rest of Africa exceeded R220bn which amounted to 17% of the country’s total trade with the world. This amounted to a R40bn trade surplus for SA compared to a R68bn deficit with Asia. In July 2015, SA’s exports reached an all-time high of R93084.33m; a stark comparison to the all-time low of August 1958 when the figure was just R55.8m.
In Africa, important trade partners include Botswana, Zimbabwe, Namibia, Kenya and Ethiopia, and there is now a growing market in West Africa in markets such as Ghana and Nigeria.
One company that counts exports as one of its primary offerings is Ferro South Africa Pty Ltd, the Gauteng and KwaZulu-Natal-based manufacturer and supplier of specialised performance materials.
Ferro Corporation was formed in the USA in 1919. Ferro Corp invested in a company in Brakpan South Africa in 1946. It was then sold to a private investor in 1994 and current CEO Ian Forbes acquired the company in 2004 along with Investec Private Equity.
In Ferro South Africa itself, there are five different divisions, offering different products: Vedoc Powder Coating, Plastic Masterbatch & Additives, Porcelain and Enamels and Glass Colours. These all have been complimented with the acquisition of Spectrum Ceramics Pty Ltd in 2007, NCS Resins Pty Ltd in 2012 and recently Arkema South Africa Pty Ltd in 2014, now named Ferro Coating Resins Pty Ltd. All carry strong brands and global technology agreements.
EXPORTER OF THE YEAR
Ferro’s main products include thermo-setting powder coatings, plastic masterbatch, ceramic glazes, porcelain enamels, a wide range of inorganic colours, unsaturated polyester resins and accessories and solvent based coating resins.
Just last month, Ferro South Africa was given the KZN Exporter of the Year Award 2015(Large Manufacturing Category) by the Durban Chamber of Commerce and Industry.
‘’Exports are a cornerstone of the country’s economic strategy as it improves South Africa’s balance of trade through earning foreign revenue. Exports also serve to boost manufacturing demand domestically, creating jobs and developing skills,” said international trade expert, Richard Cookson.
“We celebrate and attempt to encourage exports out of KZN,” said Dumile Cele, CEO of the DCCI.
Ferro South Africa’s export department is based in New Germany, KZN and Group Export Manager, Robin Legg tells Enterprise Africa that the export market is a vital focus area for the company.
“Our exports are running at around 11-12% and our target is to get to 25% of turnover.
“The target growth in Exports into Africa is definitely more lucrative than our local market. Our local market growth year-on-year is around 2-3%. The export markets offer opportunity of 5 -6%, we are currently operating in 23 countries, 17 of which are in Africa. We have set up a hub in Kenya via Time Chemicals Ltd our agent and have registered a business in Nigeria called Ferro NCS Resins Nigeria ltd.
“The sub-Saharan Africa Region is the main focus of our export efforts, where, despite the impact of the drop in oil and commodity pricing which has resulted in the slowing of some economies, our method of having stock on hand in some select business areas have resulted in us growing our share of these markets substantially.”
Ferro South Africa has positioned itself as a local African partner offering knowhow, technology and cost savings to clients putting us ahead of the importing international players – especially in regions where there is significant investment in manufacturing, mining and construction where Ferro products are widely utilised.
“The weak Rand has helped us. Most of the trading in Africa is in Dollars and we’re up against global players that produce out of Dubai, Saudi, China, India, Taiwan, Turkey and Europe and we find ourselves to be holding ground competitively.
“There is a lot more opportunity in the export market due to the weakening Rand along with providing our knowhow and added value to our clients in Africa,” says Legg.
African development is providing huge opportunities for all SA exporters and Ferro is no exception.
Sub-Saharan Africa’s growth improved, for the second consecutive year, to 4.5% in 2014. Despite challenges, growth is projected to pick up to 5.1% by 2017, lifted by infrastructure investment, increased agriculture production, and buoyant services.
GROWING IN AFRICA
Since the company was bought out by Ian Forbes in 2004, Ferro SA has grown ten-fold thanks to strategic acquisitions, good management and leadership.
“In the last ten years Ferro SA has spent well over R600 Million on capex and acquisitions with the objective of broadening and diversifying the product and market base of the group. The major part of the capex spend has been focused on quality enhancements and total cost savings,” explains Legg.
Importantly, along with all acquisitions, Ferro SA has retained all the licenses to the products of Ferro Corporate and also has a territorial agreement with Ferro Global only allowing operations in Indian Ocean islands, Australia and sub-Saharan Africa. The reach of the global Ferro business (based in Ohio, USA) is vast hence the importance of not allowing cannibalisation in the African market.
When it comes to continuing the magnificent growth the company has seen in the last decade, acquisitions will remain a large part of the strategy and Ferro SA will build on its already significant investments.
“We’re well positioned now and we’re market leaders in most market segments in which we operate. We have signed technology agreements that ensure we are abreast of the latest developments available internationally – these include Ferro corporate, Esmalglass, Reichhold, Tiger Coatings, Arkema, Smaltochemica, Durst, Akzonobel and Owens Corning – all global players. We have access to all of their innovation and development so we’re in a good position to stay at the cutting edge of supply for our clients,” he concludes.