ENGINEERING: Leadership Change At Racec
Recent Western Cape Business News
CAPE TOWN-based railway and electrification services company Racec has changed the reins of leadership at a very delicate juncture.
Charles Harrod, who has served as Racec’s CEO since 2002, handed over the leadership reins to son Gary Lee Harrod at the end of May.
The development ominously coincided with weak trading period for Racec’s shares, which dipped to an all time low of 25c on the JSE. The waning share price might suggest Racec is battling for profitable business, but that can only be verified once the group releases its financial statements for the half-year to end March 2010.
While clearly planned for, Harrod senior’s retirement does mean the loss of one of Racec’s most senior executives.
Harrod senior has been with Racec since the late seventies, and played a major role in setting up Racec’s electrification division in 1987.
Harrod senior was also a key player in the management buy-out that took Racec out of the old Metkor group in the late eighties as well as the recent listing of the company on the JSE’s AltX board.
Harrod junior has been with Racec since 1998 and served as the MD of the vibrant Racec Electrification section in 2002.
He was also appointed Chief Operating Officer of Racec in 2009. This entailed Harrod jnr taking responsibility for the management of Racec’s operations – a move that probably acknowledged the pending retirement of Harrod snr.
In an official statement the Racec board expressed their confidence that Gary Harrod would make a positive contribution to the future growth of the group.
Charles Harrod, though, will continue to serve as non-executive director, offering consulting services on strategic and operational matters.
While it’s not common to see leadership roles passing between family members (save for family owned businesses) the Harrod management dynasty does recognise that family jointly holds around 28% of the company’s issued shares.
Harrod junior certainly has his work cut out for him. Racec plunged R13 million into the red in the year to end September 2009 as rail projects stalled and competition intensified on the electrification front.
This was the first time since the management buy-out in 1988 that Racec had traded in the red.
Harrod jnr’s immediate challenge is to make sure Racec – which surely must be well positioned to score from much needed rail infrastructure spend – does not languish in the red long enough to start straining the balance sheet.
Thankfully, last time CBN looked, Racec’s ‘secured’ work in both the Rail and the Electrification divisions exceeded 70% of 2009 revenue (which was a not insubstantial R345 million).
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