MCWADE PRODUCTIONS: Sparking a Local Manufacturing Revolution

Last year, in the wake of the pandemic, as all industries struggled against the backdrop of a weak South African economy, insight from Pan-African Investment and Research Services suggested that just a 10% increase in manufacturing investment in South Africa could help to achieve a GDP contribution increase of 13%. A 9% increase in fiscal revenue and an 8% increase in employment creation could also be achieved. 

Currently, manufacturing accounts for between 10-15% of GDP in South Africa. This critical sector is globally accepted as a driver and supporter of economic growth, and onshoring capability in SA has long been a government target. 

But it’s not easy. Manufacturers in the East are cheap, fast, and quality. Setting up a manufacturing operation in SA is capital intensive, and a well-documented skills shortage is growing. 

Thankfully, there are some that realise the potential in Africa’s most advanced and industrialised economy. In an industry plagued with inefficiency and challenge, McWade Productions – leading manufacturer of electrical transmission components – remains optimistic. Approaching it’s sixth decade of operation, the privately-held Gauteng headquartered business has been manufacturing locally since the 60s and knows about the benefits. 

“We pride ourselves on local manufacture and design. We are 100% locally owned company and made up of 100% IP,” says Director, Marc Hindle. 

“We have our own aluminium foundry and we cast all of our own aluminium components. At the Nigel factory, we have a steel forging plant where we can forge anywhere up to 25kgs. We also have machine shops where we can do all of our own machining – milling, turning, CNC machines, thread roller, welding bays, welding robots, and the assembly side as well. 

“We take raw material, usually an aluminium ingot or steel bar, and we take it right through the process. The only thing we outsource is galvanising and heat treatment. We can manufacture a product right from raw basic steel through forging, to drilling, to machining, to getting it galvanised and getting it assembled and utilised as a finished product, all our own design, our own IP, and our own testing.” 

BUY LOCAL! 

33% unemployment in South Africa is universally cited as unacceptable. Hindle believes buying local is the key to solving this problem. This means general public choosing local products and services, businesses partnering with other local companies to localise value chains, and government supporting local procurement policies. 

“For me, the only way for this country to grow is if we employ people,” he says. “The best way to employ people is buying locally. That means we must have products that are competitive, at the right price, right quality, and made to world-class standards. That is why we have chosen the path we have. It has certainly been our focus – we don’t want to be briefcase salesmen, picking up agencies around the world. We try and make as much as we can and we are always searching for local suppliers wherever possible.” 

This methodology goes back through the company’s history to it’s initial founding, when it started out as a small maker of electrical substation on claims, sold to Eskom. As the state power company grew, McWade grew. It’s reliability and quality were in-demand from the utility as it increased coverage across South Africa. Acquisition and diversification helped to fuel expansion, and the company now offers almost every product required to move electrical capacity from generating asset to regional substation.

“We work up to 765kV, right at the top end on substations and transmission lines, down to 11kV – but we don’t do household connections,” says Hindle, an industry veteran, with McWade for more than 30 years. 

“We tick a lot of boxes for the country. We make everything. We are a Level 1 BEE company. we are ISO 9001 accredited and we believe we represent a lot of what this country needs,” he adds. 

And buying local is now more attractive from a cost perspective. The global logistics crisis that came as a result of China’s close-down around the pandemic wreaked havoc across the business environment, and many that were reliant on the East for imports were choked. 

“A lot of those have come back to the local market and we are starting to manufacture goods that use to be imported. We struggled to meet imported prices but our customers don’t have to carry as much stock. They can order smaller batches from us, and our quality is just as good or better,” says Hindle. 

Shipping containers from China is no longer a straightforward exercise – especially when transporting critical infrastructure components like those produced in Gauteng by McWade. The costs and schedules have increased by more than 100%, and sometimes are triple that of 2019. Alongside the Rand being decimated in foreign currency markets, importing is less appealing. 

“Customers are starting to send more and more products our way, outside of electrical, and that is exciting,” says Hindle. 

DIVERSIFICATION  

Currently, the McWade Productions range includes high-voltage substation interconnecting clamps (up to 765kV), insulators, disconnectors/isolators, compression tooling, transmission and distribution line hardware, and more. This equipment allows for the reliable and, most importantly, safe transmission of electrical current from generating assets to locations around the country. As the country ramps up its plans for energy overhaul and improvement, this is an area that will produce significant opportunity in the future. McWade is just one of a small group that can provide these products locally. 

Alongside its strong range comes a service portfolio including in-house design, documentation and technical back-up, local and international sourcing of specialised equipment to suit customer requirements, source and supply of full packages for substations and line projects, design and consulting services to plan and recommend the most suitable equipment, and connections and installation procedures. 

A team of 230 local people deliver this comprehensive offering from dual sites in Olifantsfontein, and a third factory in Nigel. Associated companies Idube Electrical, Trugrid, and Zodiac Engineering provide related services leaving no stone unturned in the transmission and distribution space. Products are in action in South Africa, southern Africa, and various international markets. 

The company’s vast facilities and local expertise have allowed for diversification, and this is where Hindle sees further growth opportunities. 

“One of the spins offs of the Eskom market dropping is that we have started picking up a lot of other work in sectors that are not electrical because we have a foundry and machining shop,” he explains. “Some railway work, some food processing companies, and general engineering jobs, which will allow the foundry to not be totally reliant on electrical products. That makes the company more robust against downturns. Four years ago, that side of our business accounted for less than 2% of our turnover. Today, it accounts for close to 20%.” 

McWade has hired a sales team to seek out opportunities for the foundry and forge away from the electrical industry, with the goal of flattening peaks and troughs in demand and keeping the plant busy at all times. “There are only two forging shops in the country that can forge up to 25kgs. It’s small runs, niche products, and no importing from overseas,” highlights Hindle. 

This additional workflow will also bring costs down internally in the company’s core sector. Here, Hindle is looking to localise a few small components that remain unmade in Africa – at the request of clients who also believe in the vision of a truly South African value chain. 

“As we become the best forging and foundry business, we get cheaper costs out of it.

There are some products that are monopolised by certain companies, and we have had clients ask us to bring something else to the market. Obviously funding is an issue, being privately-owned without a big brother backer. There are two product ranges that we would like to bring to the market in the next two years, which would mean new plant and equipment and they are electrical products to help us increase our basket size. We also want to try and extend our footprint in products like disconnect switches which we sell throughout Africa and into the Middle East. We import a small component for those, and we believe we can make that locally to help us be more competitive. We can then take disconnect switches around the world.” 

Dual expansion through these obvious strategies will help McWade Productions to achieve another goal hampered by Covid – consolidation of its bases. “The next phase in our business is to integrate all of our plants into one factory if possible, or into at most two. We are currently over three properties and too spread out. We want to increase efficiency and streamline processes,” confirms Hindle. 

INDUSTRY FOR GROWTH  

Well-documented challenges in South Africa’s power industry are not major hurdles for McWade, according to Hindle. After 2019, when President Ramaphosa began the splitting of Eskom into three separate divisions – in generation, transmission, distribution – national-level problems have been confirmed, and these are not in the space where McWade plays. 

“Generation is the problem in this country,” states Hindle, Chairperson of the manufacturing arm of The Power Operations & Leadership Association of Southern Africa (POLASA). 

“We understand coal generation, but the coal fleet is aging and Medupi and Kusile never got finished. Then there is the reluctance of the government to roll out renewable projects. We simply don’t have enough generating activity. Transmission capacity is where we play – getting what is generated to where it needs to go.” 

He adds that coal will remain, that’s guaranteed. But as new generating capacity comes online – and it will come online – those power plants will need to be connected to the grid. And the suggestion right now is that they will not be close to existing generating capacity in the north of the country (more likely in the Western Cape). 

“We are quite optimistic,” says Hindle. “We believe we will come right as a country in terms of our generation – it’s just how and when. When it is up and running, there will need to be transition lines and substations. We are in a good place.” 

The country’s total generating capacity sits close to 60,000 MW but actual availability was around 55% in 2022, mainly because of regular unplanned breakdowns and maintenance requirements. Finding the opportunity within the challenge is what separates McWade Productions and Hindle and partner Dessen Naidoo. 

“If we had excess capacity and excess lines, we would be out of a job as there would be no growth. At one point, Eskom said it would need 10,000km of line to be built in the coming three years – we have never built that in this country in that period of time. If that does start, we are nicely positioned. We see it is a major inconvenience rather than a total negative. Even if everyone puts solar on their roof, you will still need big power generation to prop up industry and everything else.” 

Whatever generation capacity looks like in South Africa’s future – privatised or hybridised between private and government, solar, wind, nuclear – the need for transmission will only increase, and the subsequent requirement for robust distribution will also surge. 

STRONG GROWTH PLATFORM 

To prepare for the growth that Hindle is expecting, new equipment is on the agenda. This will, of course, support employment creation rather than replacement. 

“We will be changing old mills for new CNC equipment. We installed welding robots recently and that changed the game significantly. It helped us to make the product cheaper, which encouraged more work, which meant hiring more people,” he says. 

Membership of POLASA will help to shape the conversation around local content within wider infrastructure projects, and McWade will push for any further investment into the local ecosystem which could provide big associated benefits. 

“We come together under one industry body to lobby the Department of Trade, Industry and Competition (DTIC) to try and get a lot of our products designated. It’s about encouraging Eskom to purchase 100% locally manufactured goods. We try really want locally manufactured products into the system. That goes all the way down the chain – materials have to be purchased locally, and everything in between raw material and finished product must be local.” 

However, just being local is not enough to create long-term sustainable growth. There must be an underlying element of quality, and McWade Productions has been serving this up for decades. 

“Our reputation for quality service is what has made us as a company,” admits Hindle. “A customer can arrive and ask for product in a hurry. If we don’t have them, we will cast and machine them from scratch while they sit and have a coffee. That doesn’t happen elsewhere. We are hands on and very close to our customers.” 

Relationships like this are nurtured over years, and simply cannot be created in the same way with distant suppliers. Working with McWade Productions is a true partnership arrangement and one in which you can be sure of an unbending dedication to South Africa’s manufacturing sector.

“A lot of our opposition don’t manufacture everything – they outsource a lot. We have that capability to design a product from nothing and deliver it finished – we are a one-stop, homegrown shop,” concludes Hindle.