Company Report: African Hoe (Pty) Ltd
Forging ahead Having created a niche market, African Hoe is now looking for increased international exposure

African Hoe was founded in 1963

African Hoe specialise in the quick turnaround manufacturing

African Hoe is now looking for increased international expos

South Africa has developed an established, diversified manufacturing base that, despite the knock-on effect of the global downturn, continues to show its resilience and potential to compete in a dramatically changed landscape. African Hoe (Pty) Ltd is perhaps the epitome of this.

The company, based in Springs on the East Rand, which provides quality forgings in both raw and complete machined components to the automotive, industrial and mining industries, is proof that ingenuity and hard work can provide opportunity, even in a recession.

“We specialise in the quick turnaround manufacturing of safety critical and high precision steel or alloy forgings of up to 10 kilos,” says supercar enthusiast José de Campos, owner and Managing Director of African Hoe. “We supply all requirements, working in the automotive market, planswith engineering based companies, and mining component and hand-tool suppliers, both locally and abroad. But we specialise in difficult forgings in steel or alloy – that is our core competency.” This diversity is certainly advantageous. However, diversity alone doesn’t make you a success.

“My involvement with African Hoe began around seven years ago, when the company was very different to what it is today,” continues De Campos, addressing the issue and outlining exactly how he has transformed the business into the successful enterprise it is now. “I was originally contacted to help the company, as it was about to enter liquidation. At the time, I ran a consulting company that specialised in turning businesses around. African Hoe was a third-generation family owned business, which had been around since 1963, and they eventually offered me the opportunity to buy the business. I accepted,purchasing 57 percent of the company, which was a controlling share. I gained full control, buying 100 percent of the firm two years ago.”

He says when he came to the company it had “lost focus” and that managers had become “disheartened”, so he immediately set about changing things, addressing issues with the company’s culture and removing some of the emotional ties that were “causing an issue.” He wasted no time turning it into a commercially viable operation.

“One of the first things I did was to remove a lot of the emotional attachments that existed in the company and started to turn the business into a more commercially viable player.”

Perhaps unusually for an OM, he cut all sales staff, and reduced the number of non-engineering workers the company employed, focusing instead on the product and its manufacture.

“My focus was on the product, a product that now sells itself,” says De Campos. “That focus remains, even as we have become more diverse.”

NICHE MARKET
Always the visionary, De Campos noticed the firm’s niche or USP was that, with increased reliability, it could grow to dominate the market. “The forgings industry is renowned for poor reliability,” he says. “So we created a business that is highly reliable and 100 percent focus on meeting targets. African Hoe’s focus is on meeting targets, supplying good forgings on time. In the forgings game, that seems to be an extraordinary thing.

“As part of this, initially, I started restructuring the floor, eventually departmentalising the organisation, creating feasible departments; we ended up with six. I then applied or employed correct managers, appropriate for the specific operations or tasks performed by the department, enabling them to focus and to build up the appropriate knowledge and skill.”

African Hoe has since become ISO 9001:2000 certified and its products, where applicable, are 94/20/EC compliant.

“The focus departmentalising allows us is great,” De Campos continues. “For instance, we have the appropriate certification in each division and are able to do things like send out quotes for products to customers within three days of having received the customer’s drawing or sample.

“We also have an in-house order control system that ensures a 94-98 percent accuracy level of confirmed delivery dates,” he continues. “As such, the highest standards of product quality and service excellence can be expected.”

GROWTH
The result is that African Hoe has grown around 150 percent in the last five years. “In essence I think we have become exactly what customers have been looking for; they need consistency,” says De Campos. “You’ve got to remember, a forged component plays a vital part in the supply chain; if the component arrives late, it will very quickly affect production. This is true in all our verticals. Our products are critical components and having them on time is a necessity. And that’s what makes customers very comfortable dealing with us – we have that consistency.”

Of course, the auto market has slumped in the last 12 months. But even this hasn’t stopped African Hoe. De Campos admits his business has seen a 40 percent reduction in automotive demand, a trend which started as the “artificially high” market began to decline towards the end of 2008. But he has responded in style: “We decided to source new technology and we added 56 new products to our portfolio.

“Year-on-year results are still down, but impact was reduced.” He is now looking for progressive growth as industry returns to “realistic” levels. “We are expanding into new technology markets. It makes good business sense to apply current product range to new markets – so that’s what we are doing.

“Our basic thinking is, ‘what product lines work in other markets?’, and ‘how can we apply it there?’ It’s working. “I believe the wheels of change are in motion within industry and the next 10 years will see the emergence of new technologies in the fields of energy creation and power saving. We are looking to play our part in that so that we can enjoy the growth of a market that will mature naturally.

“We are able to service these new markets with full 3D Design and Tooling facilities enabling fast and accurate tooling for any new products,” he explains.

EXPANSION PLANS
African Hoe has a big focus on expansion, with the U.S. its prime target. It already supplies Europe – although, it is also increasing the complexity of the products it supplies into that market.

But the big focus is the American market, particularly where mining is concerned.

“We are rated as a potential A1 supplier by U.S. government,” says an ecstatic De Campos. “Our plan may involve setting up distribution centres in the U.S., as well as manufacturing. We don’t plan on doing that in Europe because our current level of supply justifies dealing at full container levels with door to door service. It works well, so why change it?”

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