HEUNIS STEEL – Invest in Guaranteed Strength from Heunis

Last year was the 50^th in business for Pretoria-based Heunis Steel. The manufacturer of metal rainwater, roofing and ceiling products has been under the same family ownership since its establishment in 1968.

Today, under the third generation of Heunis family leadership, Heunis Steel leads the way in galvanized rainwater goods, roof sheeting and ceiling products for the plumbing and building industry. Supplying the major national hardware retailers, Heunis Steel is recognised for quality, reliability, prompt delivery, and flexibility.

Often, family-owned businesses that perform strongly in early years are acquired by corporates or sold on for profit and rebranded. But Heunis Steel is different and continues to produce successfully against a challenging economic backdrop and in a manufacturing industry that continues to dwindle. 

Marketing Director at Heunis Steel is Martin Carelse and he explains that, even in a highly competitive industry and with a difficult macro picture, this South African manufacturer continues to grow because of its variety, technology and quality distribution arrangement.

“We cannot participate in negativity. We feel positive and we keep pushing every single month,” he says. “We do not let things get us down. We find new avenues for revenue. We are realistic and we know there are opportunities and that is what we will concentrate on.

“I think we’ve managed to succeed by sourcing new clients, sourcing new products and getting our efficiencies right with our delivery and logistics side – that really counts in our favour.”

GROWING RANGE

Heunis Steel is known for its galvanised steel products including down pipes, guttering, brackets, grease traps, stove pipes, vent flashing waterheads, and stopends. In September 2009, the company acquired Barak Products – a manufacturer of ceiling products – and this made Heunis Steel the only company manufacturing high-quality powder coated ceiling strips and trap doors. 

This range of products will continue to grow as Heunis invests in research and development to ensure it is at the forefront of the market.

“We are busy with two product lines that we are looking at – I don’t want to reveal too much just now but it will be an add-on to the ceiling range that we already have and will be manufactured from galvanised steel,” says Carelse.

As more new products are added to the portfolio, it is key for Heunis to get its distribution right. Owning all of its vehicles and building strong relationships with clients, the company’s logistics department helps to set Heunis apart.

“We introduced galvanised roof sheeting eight years ago and it’s a very competitive product line to manufacture and distribute as it is a volume base product with low margins. If you had to send a 16-ton truck and you have a ±R300,000 load on that truck, your return is very small compared to the expense you make on the vehicle and delivery. We have to add something more valuable onto the truck and not try and deliver only 16 tons of roof sheeting. That is why we sell a full basket of products in one delivery,” says Carelse.

Heunis utilises all data available to it to ensure its logistics department is as efficient as possible. “We measure everything,” admits Carelse. “We measure kilogram per litre, strike rate of the driver, how effectively things are delivered, we track vehicles; we try and turn the vehicles as many times in a week as we possibly can.”

This information is invaluable as the company adapts to constantly changing market conditions and customer demands.

“There are more and more trucks on the road and customer buying patterns have changed. In the past, customers would give you bulk orders and you would only deliver once a month. Today, those customers do not have the spend and will order four times per month, meaning we must deliver four times per month. The customer is expecting us to carry the stock and then deliver it, and that costs money.”

ECONOMIC SHOCK

Manufacturing in South Africa has been hailed as a sunrise sector for the economy – one where the government believes job creation could come in a big way. But those active in the sector are less optimistic. Stats SA announced in November that manufacturing production had decreased by 2.4% year-on-year in September, following a 1.5% decline in August. Load shedding, global uncertainty and flat local demand have all hit manufacturers hard. Even President Ramaphosa has admitted issues. “The decline of the mining industry and manufacturing has cost the country millions of jobs and much economic capacity,” he said while opening of the Presidential Jobs Summit at the Gallagher Convention Centre last year.

Carelse, who has been with Heunis Steel for 15 years, says that economic pressure is certainly something that the company has to navigate.

“The economy has caught up to us,” he says. “Our government does not protect the downstream manufacturer – that’s the smaller companies profiling steel products but who need help to be able to afford quality raw material. The Chinese can manufacture steel, and manufacture an end product, and bring it into South Africa at a cheaper price for the end user so that is damaging for the downstream profilers that are creating jobs. We are working hard to create jobs but we do struggle to compete against Chinese pricing, and we receive no protection – it’s a tough sector.”

Currently, the manufacturing sector is responsible for 1.7 million jobs in South Africa and contributes 14% of GDP. With unemployment at 29%, the country cannot afford to lose anymore jobs.

“People will end up looking to China and importing finished products, and that will result in retrenchments here in South Africa,” warns Carelse. “That is the last thing we want but that is the way it will go if we are not careful – it’s a difficult situation. Consumer spending in South Africa is not growing. Normally, in November and December, factory workers get bonuses and they take that money for home repairs and improvements. That spend has diminished drastically. On top of that, there is government corruption, Eskom and its major issues, the SAA problems, and global economic trends, and it results in a difficult time for South African manufacturers.”

The decline of the country’s construction sector has also contributed to the slowdown in manufacturing. As fewer projects are given the go ahead, fewer are making it to the later stages, when Heunis Steel gets involved. Share prices of the major listed construction firms have plummeted since the exposure of a price fixing scandal.

“Construction companies go onto a site and put their infrastructure in – we have nothing to do with that; then they do the building and we are not involved there; once they get to ceiling height, that is when we begin our work. But, some of these projects are not even getting to the infrastructure stage before they are canned. Then you are relying on the consumer to start with renovation and DIY but their spend is also low as they have less disposable income. We are going through a tough time and we have seen it coming for a few years.”

50 YEARS EXPERIENCE

Through its five decades in business, Heunis Steel has seen ups and downs in the economy and complete social and economic change in South Africa. The company knows how to deal with changing conditions across its marketplace.

“We are doing something right but it takes a lot of time, hard work and dedication,” says Carelse.

By introducing new products, streamlining delivery and logistics, and always offering solutions to problems rather than trying to sell a ‘one size fits all solution’, Heunis Steel has always moved through difficult times without too much trouble.

“We want to get to a certain turnover in five years’ time and we have built the infrastructure to accommodate that growth, but the economic downturn has caused a hiccup in our plan – it might now take longer than we originally planned,” admits Carelse.

Retaining and nurturing an extremely strong company culture has also been essential to the growth of the business over the years. Expanding to become a significant player while maintaining a family feel within the business has been vital. This has allowed Heunis Steel to make quick decisions and adapt to the needs of customers as well as bring in ambitious people with the right personality.

“We still have the family background but it has evolved,” explains Carelse. “Technologically, the business has grown significantly but we do still have the family feel and we remain proud, consistent and passionate. We still have an entrepreneurial flair in the business which allows us to make things happen quickly and effectively.

“The third generation of the Heunis family, Anton, is in charge of the business now and he remains hands on in the business alongside his wife, Tammy, who is the HR Director. His brother and sister are also involved in the business in the logistics and buying department.”

The wider Heunis Steel family is made up of 160 people and the company invests significantly to discover talent from a number of different sources in a very competitive environment.

“To find quality, qualified sheet metal workers is very, very difficult. It’s hard worldwide but even worse in South Africa. It’s a major issue for us – what we can get out of people and what we have to pay is a big query for us. We go to the schools and the unions and look for trained technical people that are looking for apprenticeships. This is also helpful for us as it gives us accreditation.”

Unfortunately, even with all the effort that goes into finding good people, because of the state of the South African manufacturing space, keeping those people is not easy. Especially challenging is discovering youth who are willing to put in that hard yards before working their way up through the company.

“Technology is increasing and technical skills are diminishing. Young people don’t have the dream of becoming a sheet metal worker. Everyone wants to be a manager straight away, but in this industry you need to start at the bottom,” says Carelse.

He warns that if the industry is not careful, job creation will slow even further as technology, and the efficiencies that come with it, become too attractive.

“We are already investing in robotics and machines,” he says. “We have robotic welding machines in the factory and they are definitely improving our efficiency. We are at a crossroads in the manufacturing industry in South Africa and we need to decide which way we are going to go.”

STEELED FOR GROWTH

With a desire to grow revenue in the future, Heunis Steel has everything that it can control in place and ready for expansion. Importantly, the company has very robust and longstanding partnerships in place with clients.

“We supply to the likes of Cashbuild, Chamberlains, Mica, Builder’s Warehouse – we have relationships with all of the big groups in South Africa,” says Carelse. “There are also the larger independent stores in the outlaying rural areas which are very good businesses. We pride ourselves on the relationships we have with our customers. Our salesforce has been in the market for a long time and they know the product and the customers. We try to stay away from the end user – we do advertise so they know our product, but we don’t want to steal our customer’s customer. We deliver to the hardware merchants and we combine our product groups in one delivery. Selling a basket of products is what differentiates us from the others in the same industry.”

If manufacturing is to deliver the jobs and wealth that South Africa so desperately needs, the public sector must assist in protecting SA-based profilers, the government must continue to push education and training of skilled artisans, and the private sector must choose to buy local and buy quality rather than opting for cheaper imports. Stability must also return to the markets and talk of recession downturn and downgrade must become a thing of the past.

“At Heunis Steel we have a saying when people ask us about the recession. We simply say, ‘we cannot partake in this recession’. We have no interest and have to make plans to move around it. Whether it’s invest in new machines, work over time, or whatever – we have to make it work. We’ve been around for 50 years and we want to be here in 150 years,” Carelse concludes.