REINFORCING & MESH SOLUTIONS: Strong RMS Builds Solid Growth Strategy

Economies in sub-Saharan Africa continue to show reasonable recoveries following the Covid-19 pandemic. The region itself is expected to grow 3.6% in 2022, down from 4% in 2021 according to the World Bank. But South Africa’s struggles with economic growth continue with expectations of a 2.8% slowdown while the regions other big nations – Nigeria and Angola – thrive as a result of increasing oil prices. With the conflict in Ukraine dragging on, the global impact is felt in sub-Saharan Africa where growth is desperately needed.

For companies operating here, the environment must be carefully managed. With sluggish economic growth comes uncertainty and hesitancy around long-term planning. In the construction industry – a game very much reliant on longer-term certainty – infrastructure projects provide so much opportunity and must be given the correct conditions to thrive. Government and private sector organisations need no further reason for timidity.

Fortunately for those that are well-managed, properly scheduled, clearly organised, and centred on quality, large opportunities remain. Construction continues in South Africa, and recent government announcements look set to allow successful firms to plan effectively.

The Minister of Home Affairs announced a R6 billion plan to overhaul several border posts; there is a new organisation set to implement a range of major bulk water resource infrastructure projects; Transnet has declared plans to spend R44 billion on port infrastructure; pension funds are soon to be allowed to invest 45% of capital into infrastructure projects; and the government’s renewable energy plan is fast-tracking projects to assist in the country’s need for power generation.

STEEL-STRONG

Reinforcing Mesh Solutions (RMS), a leading supplier in the steel mesh and rebar industry, has bounced back successfully after the pandemic, feeling minimal impact. On the hunt for new opportunities, and tendering aggressively, this is a company with a strong outlook that refuses to be weakened by structural challenges in the country.

“We have a good footprint nationally and we are able to assist customers throughout the country with the services that we provide,” says Commercial Manager, Jason Bewick, describing a team of 100 contracted employees working from 11 branches with HQ located in Johannesburg.

“We are primarily a steel reinforcing company and we sell into the construction industry across all sorts of projects from large civil infrastructure to smaller individual jobs. We partner well with concrete and you will always see steel and concrete together. We are strong with precast and hollow floor suppliers and we are leaders in the In-situ fixed concrete works. We have a sister company that handles post tensioning where we use cables so that engineers have different options on slab spans and thicknesses,” he adds.

In the past two decades, RMS has completed more than 100,000 projects around southern Africa and has developed a brand that is strong and trusted in the industry.

“Reinforcing is a strange, un-talked about, unglorified product,” smiles Bewick. “When you’re talking about facades or glazing of buildings, these features are quite impressive. Our product is unassuming but it is needed – it is integral to the building standing up.”

It is easy to drive around South Africa and pass projects where RMS work has been critical. The company has completed bridges, wastewater treatment works and reservoirs, wind and solar farms, tunnels, high-rise buildings, suburb developments, housing projects, staircases, and smaller home improvement projects.

“For want of a better phrase, we handle the skeleton that gets buried in concrete,” says Bewick.

Like many in construction, the firm was forced to temporarily close in April 2020 but this was short-lived as RMS – highlighted as a key contributor to major projects – was given special license to continue its work. Steel wire mesh and rebar are used to support structural works, providing tensile strength and protecting against high pressure forces. Often required in buildings, bridges, roads and other high-traffic projects, the steel work that knits concrete together is essential. For this reason, getting the company back on site was crucial in reigniting projects in the first half of 2020.

‘WE WERE FORTUNATE’

“We were able to get back to work in the first week of May as we fell into the critical services category with our projects critical to infrastructure,” remembers Bewick.

“We were fortunate as we had a number of projects prior to the pandemic and they needed to continue,” he adds.

By early 2021, there was a slowdown as the impact of slack decision making and sluggish contract awarding began to bite. RMS realised indecision from clients, and investments became much more onerous than before. “Many people were migrating away from commercial buildings. There was an oversupply of stock and it took some time for industry to understand what was happening with the reduction in demand for office space, but an increase in demand for distribution and warehousing facilities,” says Bewick.

Thankfully, the company again relied on a strong pipeline, built up over a long period, and backed by a robust reputation. RMS’ industry standing is also helping it to build a future pipeline as important projects are, slowly, given the go ahead.

“Data centres are coming online and, more recently with the power issues we face, we are seeing power generation projects come through, although we will only see the work in the next 12-18 months. 2021 was a tough year with the volume of work down, demand down, but competition still there so margins were under pressure,” details Bewick.

“Things started to change in the third quarter of 2021, with more positive news coming through. The cost of material has escalated tremendously with infrastructure being a buzz word, but we see light at the end of the tunnel. The struggle is around power. Not so much on our level with the manufacturing but on an industrial scale with steel mills needing massive amounts of power that cannot be provided by Eskom. Then there are transport costs which are rising and that will impact the customer. We do have challenges ahead both as a steel industry and a construction industry, but we remain confident in our capabilities.”

LANDMARK PORTFOLIO

Able to cite some of South Africa’s landmark buildings as case studies, RMS can prove its product and knowledge. Ford, Capitec, Radisson Hotels and more major international brands are all end users of projects completed by RMS.

“We have recently been awarded a contract for an extension at the South Africa Reserve Bank in Pretoria which is a big project. There are a lot of tenders on road projects that we are still waiting to secure – this has been slightly delayed by the weather, especially in KZN along the N2 and N3 corridor.

“There are some projects in Cape Town that we are busy with including Harbour Arch in the Foreshore, phase one of six across a R3.7 billion project.

“There is a big buzz around wind and solar farms at the moment with bids being awarded to contractors and suppliers. There are a number of good tenders that we are busy with right now that we are confident in securing but are not over the line just yet,” explains Bewick.

The Harbour Arch project is particularly exciting, headed by Amdec and following the model rolled out at the Melrose Arch precinct, this site in Cape Town will eventually be home to six new high-rise buildings, creating 200,000m² of usable space. For RMS, this presents a significant opportunity to take part in the modernising and updating of public space in Cape Town, strengthening through steel, ensuring that future generations will enjoy this brilliant new space.

Further from home, RMS believes there is significant opportunity for it to add value as projects on the continent continue to be rolled out. Across mining, infrastructure, transport, retail, technology, and much more, development is being pushed hard in countries with a good economic outlook. ArcelorMittal has a strong presence up the eastern flank of southern Africa, and European companies thrive along the western side of the continent, especially in francophone nations where many deals are done in Euros. But across southern nations – Namibia, Botswana, Zimbabwe, Zambia, Mozambique, Lesotho, eSwatini, and South Africa – there are openings for strong local players. Already active in some markets, RMS has the credentials to work further in the continental market and is happy to explore opportunities as they arise.

“We do export into Lesotho via Bloemfontein, we export into eSwatini via Nelspruit, and we export in Mozambique via Nelspruit. We sell into Namibia via merchants. We are not in Botswana or Zimbabwe but we are looking at selling upwards north through the Musina corridor into Zimbabwe and onto Zambia,” says Bewick

Opening new horizons and exploring opportunities across borders will help RMS to further bolster its offering as it looks to restore full capacity after the Covid slowdown.

“We are going through a transition where we are trying to grow and get capacity back into the company after two years of depression as a result of Covid. We are trying to pass on knowledge by employing from within and bring people up through the ranks,” says Bewick.

FUTURE PROOFED

ISO 9001, 14001, 45001 certified and a Level 1 BBBEE contributor, RMS has all the ingredients for further success. Strong partnerships with the country’s main steel businesses have been developed and so – even in a tough trading environment with steel imports often more attractive than local supply – the company has ben able to consistently supply quality to clients despite challenges.

“Generally in South Africa, we are serviced by five steel mills that service the steel industry in total,” details Bewick. “Steel reinforcing is only a small percentage of the total product. The mills use volume and low margin to sell into the reinforcing market and likewise that is our model into the contractors. We are well-supplied currently by local companies who source successfully but we have tracked import prices for years. Right now, our ability to buy has diminished somewhat because of currency price against the Euro or Dollar. There are also import tariffs to consider. The war in Ukraine has also tremendously impacted countries in that region to sell rebar into the world markets.”  

As more projects are rolled out nationally, RMS will lean on its longstanding relationships to provide its recognised level of delivery and quality. The company is perfectly positioned and, unlike others who were not able to withstand the Covid slowdown, RMS is embracing its position as the market leader in reinforcing steel and welded mesh in southern Africa.

“Not much has changed in evolution of building materials. Cement, stone, sand, and steel, with brickwork – that is our game,” smiles Bewick.

“We are owned by WBHO, we enjoy Billion Rand turnover per annum, and we work with some of the biggest construction companies in the region.

“We have shown growth and we do see potential growth in the future. We are in a tough spot as a country and as a construction industry but I think we are in a position to gain great benefit from the work that is to come. I see a lot of positive things coming through and we have to be patient and put ourselves in the position to realise opportunity,” he concludes.

Right now – when it is sorely needed – RMS can promise strength, certainty, and quality. As South Africa’s infrastructure continues to develop, this is a business that will be central in the biggest projects.