Western Cape Business News

Send  Share  RSS  Twitter  31 Oct 2008

VENTURES: Engineering Supplies Revolution


Recent Western Cape Business News

THE well documented success of the Christo Wiese retail empire (think Pep Stores and particularly Shoprite/Checkers, which is running circles around its rivals such as Pick n Pay) is being replicated in the local engineering sector.

Yes, you’ve read it correctly. The masters of fast moving consumer goods now also turn out to be masters of fast moving engineering components, so to speak.

Key to this engineering success is BMG – a new brand name for the old ‘Bearing Man’ company. The link between BMG and the aforementioned retail empire runs as follows: BMG is controlled by JSE listed and Cape Town based Invicta Holdings, which in turn boasts Wiese – via nominee company Titan – as a major shareholder.

The renewed focus on BMG and its formidable presence in the engineering sector came to the fore forcibly last month when the new BMG branding exercise was put into motion.

“BMG has become one of Africa’s largest specialist distributors of bearings, seals, power transmission components, electric and geared motors, as well as belting, fasteners and industrial filtration products”, CEO Charles Walters tells CBN.

“The launch of a new corporate identity is exciting not only for the company, but also for our diverse network of suppliers and customers”, Walters says. “We are now targeting to double the size of our business over the next five years, through organic growth with existing customers and suppliers, as well as the acquisition of new customers, distributorship’s and select value adding companies”.

All of this sounds somewhat flowery – until one considers the following: BMG’s stock in hand is more than R500 million, turnover in the past financial year was more than R1.5 billion and it has a staff complement of more than 1 800 people. This performance makes ‘doubling up’ seem daunting. But, it will be done and the ‘fast moving engineering components’ recipe will play an important role in this.

Let’s start with the following fact: BMG has an extensive retail and wholesale branch distribution network of more than 120 outlets (in the Western Cape alone they number nine branches) to service the southern Africa market (including Namibia, Botswana and so on). Doesn’t this look very similar to, say, a Shoprite footprint to be close to customers? Then of course one needs lots of goodies to supply the wide range of products customers may demand in a hurry. Again, BMG complies.

Walters tells CBN the company is recognised internationally as a world-class distributor and this recognition is reflected in the exclusive supply, service and distribution agreements with some of the world’s most respected manufacturers of leading engineering consumables. Today, BMG has exclusive rights to over 35 brands including NSK, NTN, Timken & IKO bearings; Hallite seals; Fenner power transmission components; Tsubaki chain; Esco couplings; Nord, Varvel & Sumitomo industrial gearboxes; Habasitlink plastic modular belting, Huck fasteners and Pall Corporation industrial filtration and separation systems.

The company also has shared rights to another 20 world-class brands, and owns a number of local subsidiaries.

“This impressive local and international presence supports an intensive international sourcing policy, which ensures that the best products and leading brands from around the world are supplied to local industry through the company’s various product divisions which include: bearings, seals, power transmission (drive belts, chain and ironware), gearboxes and electric motors, conveyor belting and components, fasteners, OST Africa (anti vibration products and materials handling) and industrial filtration and separation systems. The bearings division, the biggest division of BMG, remains the biggest contributor to sales”, Walters says.

And the product range keeps expanding. BMG has recently acquired Goldquest International Hydraulics. This strategic investment in a dynamic sector of the engineering business broadens BMG’s product range and will enable the company to extend its service to the industrial hydraulic component and services market, significantly expanding BMG’s customer base”, says Walters. “The initial R58 million investment in 100% of Goldquest might rise to R65 million, depending on criteria that include Goldquest’s profits in the current financial year”.

“BMG’s strategy is to grow Goldquest through its existing distributor network and support this service through the BMG branches in areas where Goldquest doesn’t have existing distributors”.

Goldquest, formerly known as Vickers Hydraulics, has serviced distributors in South Africa’s major industrial sectors for over 50 years. The company, which offers a solution-based service, rather than simply a parts outlet, has distributor rights for leading hydraulic brands like Eaton/Vickers, Marzocchi, Larzep, Pister, Schroeder, EP Italiana, MEGI and Piland. “Our aim is to continuously expand our basket of products and to get closer to clients. And because of our buying power, we will be able to deliver at keen prices”, Walters says. To CBN this sounds familiar – words earlier often uttered by up-and-coming retail tycoons. Very different however, from these retail giants, is that BMG is not a cash-and-carry operation. It carries a debtors book for most (90%) of its 20 000 client base. This provides obvious leverage.

What’s next to be added to the ‘basket of products’ – pneumatic products perhaps? Walters won’t comment on CBN’s probes, but contends that providing a total solution to the customer requires constant vigilance for upcoming opportunities.

The unfolding BMG scenario inevitably leads to the following question: if selling of engineering products on this principle – and on a grand scale, followed by other me-toos - will it also replicate the retail history results?

We all know how it led to the demise of most all of the independent, small ‘butchers and bakers’ (and grocers too). If you are a smaller engineering supplier, then beware.

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