After profiling the South African metals firm in 2008, Manufacturing Digital revisits Kulungile Metals Group to see how its last year has gone
Written by Ben Lobel & Produced by Tom Lloyd
Kulungile Metals Group is a company well known to Manufacturing Digital – we profiled the firm in August 2008 and discovered a business on the move in the metals industry. Now, over a year on and speaking to Executive Director Tyrone Roothman for the second time, we see what the company has been busying itself with for the past 14 months.
At the time of our first meeting, KMG was the third largest supplier of steel in South Africa, and one of the largest in stainless steel. Its success is built on the operations of Baldwins Steel and Stalcor, which offers a range of metal products and distribution channels that meet the needs of customers, both large and small, cost-effectively. KMG processing plants dovetail seamlessly with KMG Trading’s stainless steel and aluminium distribution network of large, strategically placed warehouses.
“We are people that look at what is required as far as doing business in this country is concerned and we are innovative enough to go out and get it done,” said Roothman in 2008. “We act on things. We are not all talk and empty promises — we deliver. That is why we succeed.”
In 2007, KMG bought Global Roofing Solutions (GRS) for R190 million. GRS, a roofing business, holds the household-name brands Brownbuilt and HH Robertson. The tie-up was done to facilitate a possible listing for the group in the short- to medium-term.
The acquisition gave KMG a new dimension. Roofing is in high demand, so the addition was an exciting one.
FIRM DEVELOPMENTS
But how have things changed at the firm since August 2008? Clearly, our first meeting was at a pivotal time in regards to the world’s economic condition – with warning signs of recession beginning to kick in in many parts of the world. “Well, turnover has been affected in two ways – on the one side it’s affected by volume and, on the other, unit price,” explains Roothman. Indeed, volume has been down in a lot of Kulungile’s industries, as you might well expect, and specifically in carbon steel and stainless steel. However, volume has been less affected in industries like aluminium, so some have been hit harder than others.
From a pricing perspective though, the unit price of all products has been affected. Stainless steel/nickel was coming off $55,000 a ton in 2008, now down to $18,000, but has been as low as $15,000. Aluminium is also down and carbon steel, which took a big hike in 2008, has also taken a steep decline in 2009. “So you have got the effect of the unit price combined with the volume making a substantial decrease in turnover.”
What projects are currently on the table for Kulungile? Well, there is a big airport project in the KwaZulu-Natal province, supplying aluminium to the roof of the new airport. There are also various other projects with regard to flooring solutions, power resources, links with utility giant Eskom and more. “We supply a broad range of industries so we’re always supplying to some sort of project, whether it be roofing, carbon steel, stainless steel or aluminium,” says Roothman. With regard to Eskom, Kulungile has a couple of hundred tons of stainless steel going into Eskom projects, such as power stations.
LOOKING AT THE MARKET
From a product point of view, the firm is continually looking at the market and what the requirements are out there, and keeping sustainability as an important paradigm. One of the other markets targeted is the architectural sector. “It fits in with what we’re doing from a services point of view,” says Roothman. Not to mention being well in line with the aluminium sector. But what Kulungile has done since the last profile is look at how the product can be taken, value added to it downstream and supplying this value added product to the end user market.
Staff levels have unfortunately been affected throughout the economic slowdown and there has been some restructuring in the business. “We have had to refocus on training as a means to get the job done and make sure we have the right skills in the business,” says Roothman. An appropriate measure considering the likely outcome of losing a skill in certain places after a restructuring. “We’ve done a lot of restructuring to suit the market but retained the necessary skills to be productive.”
Flexibility is a key strength for Kulungile. As Roothman explains, when the market changes, the firm has to be fast to respond – and it is. Some of the firm’s competitors have responded a lot slower. “That is an advantage that had carried us through these times,” he says. The economy is not how it was 20 years ago – then, there was a lot of predictability; cycles were a lot longer, six month cycle would be the norm. Now one week cycles are the norm and we’ve had to adapt and we’ve adapted well.”
The challenge of adapting will present itself more so now as Kulungile is poised to enter new markets and aims to supply more into wider Africa. There is no doubt that this firm’s expansion will continue in the same vein of success as it has always demonstrated, and we wish the firm all the best for the future.
FACTS AT A GLANCE
COMPANY NAME: KMG Kulungile
EXECUTIVE DIRECTOR: Tyrone Roothman
OPERATIONS: Supply & import of metals
ESTABLISHED: 2001
EMPLOYEES: 1,000
REVENUE: R3 billion
www.kulungile.co.za
Edited by Ian Armitage