Finding new local and international business opportunities following a technical recession, restructuring the business and creating a single brand is no mean feat. Patrick Jantjies, Managing Director of AVK Southern Africa is open about the company’s journey since his appointment, the challenges faced, advantages gained and plans to develop it into an internationally renowned supplier of high quality valves for the water, power generation and industrial sectors.
Beginning with AVK in 2004 to manage its new export division, Jantjies grew export turnover from a 0 base to close to R20 million annually. In 2009 he began his role as a non-executive member of AVK Southern Africa’s board and, in 2011, was appointed Group MD of AVK Southern Africa.
2013 saw instrumental changes in AVK’s and Jantjies’ growth trajectories. The company began negotiations to purchase Premier Valves and Jantjies purchased a 3% stake in AVK. When the acquisition of Premier was concluded in 2014, it included black economic empowerment company Zenzele Valves. Jantjies bought the majority share in Zenzele, now AVK’s official transformation partner, and has grown it into a functional valve production company within the AVK stable.
It was at this time that AVK Manufacturing was developed and AVK’s brownfield production facilities (Premier Valves and Cementation Engineering) expanded. The three companies under one umbrella made it possible to manufacture high pressure, large diameter valves, previously imported from AVK’s other companies.
The purchase of Premier Valves had brought with it an existing high value Rand Water contract. “We saw this as a fantastic opportunity to establish our specialised engineering position in South Africa,” Jantjies enthuses. Through Zenzele valves, a successful business opportunity from Eskom followed in 2015, which saw AVK servicing a contract with the power provider until June 2018.
These deals, and others, resulted in fruitful years for AVK. In 2016, however, the markets changed. AVK lost market share in Africa, which was exacerbated by the 2018 South African recession. “The impact was tremendous,” says Jantjies. “Water boards were forced to reduce expenditure, as was the mining industry, which significantly reduced our turnover from those sectors.” To meet industry economic demands, AVK restructured and streamlined expenses in order to continue to deliver and remain profitable. At the beginning of the second quarter 2018, the decision to consolidate all companies under the AVK brand was made.
As a part of its continuous skills development drive, in conjunction with business expansion, AVK instituted several BEE solutions. They ensured compliance with the Supply Development and Localisation Policy specified in Public Finance Management Act; implemented a purchasing policy so its production materials are now purchased only from 100% black- and women-owned companies; established an incubator group of local BEE distributors; instituted a pricing strategy that government recognises as contributions to black empowerment; and established The Academy.
The Academy is an AVK head office training facility and part of the company’s contribution to upskilling the sector.
“Our investments into the valve industry and local lost-foam casting facilities are recognised by government as an investment into the SA economy, and into black economic empowerment,” Jantjies explains. He adds that all initiatives are proving fruitful and that the company is on track to reclaim a large proportion of industry turnover.
Establishing distribution channels into Africa positioned the company to focus on the entire SADC region and further north, whereas it previously focused on set markets in East and Central Africa. “We plan to have operating business models in SADC countries, which will allow us to adhere to local manufacturing requirements that are pertinent in some of those countries,” Jantjies says. “This will facilitate us acquiring more business in the region.”
Looking abroad, October this year will see the implementation of plans to enter the Asia Pacific market. The company’s footprint in Australia is growing via a dedicated importer, who will aid with distribution throughout the Asia-Pacific region, complementing distribution via the AVK Network. Moving even further afield, AVK has its sights set on South America and the Middle East. “We feel many of those countries are similar to South Africa with regards to infrastructure, which may provide us with a business edge,” Jantjies explains.
“By minimising our risk in the domestic market and growing our local and international footprints, we have set a growth trajectory beneficial for all involved,” Jantjies concludes.