LESCO MANUFACTURING: Third-Generation LESCO Powered by Switch to Local, Inclusive Manufacturing

Founded in 1999 by David Shapiro, LESCO possesses the capacity to produce over half a million innovative electrical products and accessories per month, which it delivers to the entire South African domestic market including all major retailers and electrical wholesalers. Included in this range are adapters, switches and sockets, multiplugs and USB products, all designed and assembled in an ingenious way designed specifically to use minimal equipment and little to no electricity, resulting in a safe, efficient and highly cost-efficient process where mechanical equipment is preferred.

The Shapiro family has been involved in the electrical industry for three generations, a heritage stemming from Natie Shapiro, in the first instance, almost 65 years ago, and is currently headed by Jonathan Shapiro, CEO. “Our family values have definitely gone from our hearts into our business,” Shapiro opens. “My grandfather started a business called Switch King, in 1959, which was primarily a local manufacturer of distribution boards. They were known as a pioneering business within the industry at the time, with my grandfather and father designing truly innovative products, that were all, crucially, made locally.

“The word local is hugely important in the overall LESCO story, and we have adhered unwaveringly to it throughout all three generations to date,” Shapiro stresses. Liquidated in 1994, due largely to the labour issues and strikes that prevailed around large businesses of the epoch, David Shapiro then set out on an entirely different tack. “He is an incredible designer, and all self-taught from the factory floor, and he had the idea to design an assembly plant that could provide work for people living with disabilities, as well as the unskilled and disadvantaged,” Shapiro details of the company’s incredible inception.

UNIQUE APPROACH

“If he succeeded in this, with that demographic, he reasoned, then a symbiotic relationship between employer and employee would surely result, whereby each would be equally dependent on the other.” This would represent the complete antithesis of what David Shapiro had just experienced himself, and serve to markedly redefine the almost universal atmosphere of the time of strikes, threats and unrest.

“The result was that he designed one of the very first two-pin adapters,” Shapiro proudly demonstrates. “My father innovated the process in such a way that the only assembly required was to place a single piece of brass inside the casing. No tool or equipment is required to modify the part to make this happen, and he could thus provide safe work for the staff he intended to employ.”

What resulted was an assembly plant with just a single line, and a hand toggle press, Shapiro details. “He then visited a local home for people living with disabilities and offered to install this equipment, and pay the residents to make the product. Of course, they said yes, and in 23 years we have grown from this original product to a catalogue now comprising 48 pages, 95% of whose wares are crafted in our factory using exactly the same process, more than two decades on.”

Since its inception, LESCO has set out to increase job creation for demographics typically side-lined in the past, Shapiro continues. “For us, including people with disabilities is in the DNA of our business. This means that the assembly process was designed for people with disabilities and people who have little or no skill set. As a result, all classes of labour are empowered to assemble a product with great ease. We have successfully taken down all barriers of entry to meaningful employment; we believe that an enabled society is a sustainable society.”

Last year the Gauteng factory surpassed the 250 million figure in units produced, now closer to 300 million, according to Shapiro, with growth of around 20% over the last two years.

LESCO is a SABS-accredited factory, the award of which Shapiro gives as a key milestone for LESCO and which allows the majority of what it crafts to carry this marking. LESCO is also ISO 9001-certified as well as having Supplier Ethical Data Exchange (SEDEX) accreditation, increasingly important in allowing suppliers to maintain data on ethical and responsible practices and share this information with their customers.

LOCAL LEADERS

“In the market we have had a few local competitors over the years,” Shapiro relates, “but most, if not all have moved their operations outside of south Africa, This means that currently within South Africa, we believe we are the last remaining manufacturer of switches and sockets, adapters and multiplugs, versus 80-90 competitors importing from oversees, resulting in a highly competitive industry,” Shapiro reveals.

“Another big pivot for us was in 2013 when we became one of the first in the industry to decide to go directly to retail. We saw that suddenly that some of our customers became our competitors, while our distributors started going to China, copying our products and bringing them in by the container load and only were buying from us when there was an issue with their stock on the way. We realised that it was no longer a sustainable, safe business model for us.

“It was a major shift as until then something like 60% of our business had been through distributors, but the retailers we approached with our story were incredibly excited to deal with a socially conscious company. Since 2014 we have been listed directly with every single retailer in South Africa.”

More recently, Shapiro goes on, LESCO has commenced joint ventures to contract manufacture under other brands. We have a special projects division, in a relatively new factory, and just a few weeks ago we were awarded another significant contract, to start in December.

“In the next six months, we are embarking on something truly transformative,” Shapiro divulges. “We are in the process of finalising the design of a semi-automated production plant where people with disabilities work hand-in-hand with semi-robotics and automation, to triple our capacity in what is still a very safe environment.”

These will be central to sustaining the growth that LESCO has achieved at a time when it has been so difficult to come by for so many, while retaining every ounce of its founding ethos. “Globally, Covid was actually very beneficial for hardware sales, which saw a 32% total rise,” Shapiro adds of LESCO’s success during such challenging time. “Where we may have benefitted even more than others is by being local and having stock in-country, which has led to our having had two very strong years of trading, unexpectedly.”

Ultimately, it all comes back to the power of local for LESCO, which combined with its rare insistence on inclusivity and family focus has helped it achieve the rare feat of surviving and thriving through three full generations. “It is becoming increasingly apparent that manufacturing in-country is a far safer bet,” Shapiro opines. “Local manufacturing also represents one significant answer to unemployment. It is the heartbeat of any country, and the conversation now needs to happen seriously regarding this very real job creation component.

“There is currently around 70% local content in our products, which is far more than anyone else, and we are now looking to complete our vertical integration strategy within the next year,” Shapiro rounds off. “This means that every single part that we use would be manufactured locally, which will additionally alleviate the supply chain constraints that have drastically worsened this year. This will enable us to remain a preferred and trusted supplier, a brand of safe and high-quality electrical products, a lucrative employment opportunity and a driver of sustainable change for many generations to come.”