COMMENT
Biggest losers keep
the wheels turning
T
Leon Louw
[email protected]
Refurbishment
and plant hire
have become
the name of the
game. Buying
brand new,
glittering yellow
metal with all the
bells and whistles
is now the
preserve of only
a few established
and profit-making
multinationals.”
www.equipmentandhire.co.za
he South African economy is the
biggest loser in the never-
ending political battles within
the top echelons of the ANC.
President Cyril Ramaphosa’s ‘New
Dawn’ has lost its lustre as he is forced
to concentrate on entrenching himself as
president rather than implementing his
business-friendly reforms.
As he fends off wave upon wave
of attempts by internal factions and
opposition parties to dislodge him,
more bail-outs for SOEs are hurting the
economy where it matters most, and
the rumblings of further downgrades
by international rating agencies are
hanging like a dark cloud over promised
new beginnings. All these factors have
increased South Africa’s risk profile,
and foreign investors are beyond
cautious when considering geographic
diversification. Moreover, government’s
debt ratio and continued spending on
crisis management of deeply troubled
Eskom, Denel, SAA and the SABC,
have placed enormous pressure on the
economy, and business in the country is
slowly grinding to a halt.
The construction sector has already
been decimated by government’s failure
to invest in new infrastructure projects,
while other sectors of the economy are
barely keeping head above water. The
mining industry seems to be doing the
best of all, assisted by global shortages
of iron ore stockpiles, for example, and a
weak rand. Production, however, is still far
from where we should feel comfortable,
and there is a clear lack of new exploration
and development projects.
The result of all of this is that with
empty pockets, most fleet and equipment
managers are sweating their assets even
more than what they did during the 2008
financial crisis.
Refurbishment and plant hire have become
the name of the game. Buying brand new,
glittering yellow metal with all the bells and
whistles is now the preserve of only a few
established and profit-making multinationals.
Aspiring or new entrants, in especially
the mining and quarrying industries, are
hamstrung by a lack of funding and have
to use innovative means of acquiring
equipment to sustain their operations.
At most of the mining or quarrying
sites that I have visited over the past
year or so, owners have bought their
fleets from platforms other than directly
from Original Equipment Manufacturers.
Refurbished or second-hand equipment
is being maintained on strict maintenance
regimes to ensure the machines clock
record hours. As profit margins drop
directly as a result of the constrained
economy, it is fascinating what measures
are implemented by experienced artisans
to keep the wheels turning. However,
many operators admit that having a
service contract with OEMs is more cost-
effective and beneficial in the long term.
So, as the South African politicians
continue their ideological battles, and
the economy remains the victim, plant
and equipment owners will be forced
to implement radical measures to keep
their operations running cost-effectively.
To achieve this, employing trained,
innovative and experienced artisans –
and operators for that matter – is critical.
After-sales service remains the backbone
of any OEM contract, and even if the
equipment is not purchased directly from
the OEM, it is worth signing some sort of
contract with the manufacturer to reduce
downtime and ensure operations run
smoothly.
Leon Louw
Editor
SEPTEMBER 2019
1