Western Cape Business News

Send  Share  RSS  Twitter  01 Sep 2009

WAREHOUSING: EM Shelving Keeps Shining


Recent Western Cape Business News

EM Shelving & Racking, one of Cape Town’s leading materials handling companies, put in a splendid performance for its financial year that ended in February, increasing turnover by more than 21% to R43 million, compared to the previous year.

Managing director Wolfgang Thomas says the growth was mainly attributable to the Sunshine Storage division, where the quality of the product and keen pricing impacted positively on the market. Also, the product range was expanded to include Gondola Shelving, which is especially suited to retail shelving. A number of major projects of specialised racking were completed in Swaziland, Gauteng and the Western Cape.

However, due to the slowdown of the economy over a wide front that became noticeable in the last quarter of the company’s financial year consolidation was necessary and some restructuring had to take place. Profit margins started to erode, several clients experienced difficulty in paying their accounts and a number of major projects were shelved or awarded at below cost,” Thomas says.

The market has also turned problematic in other ways, according to Thomas. “Under-specking of projects have become more commonplace. It’s frightening to see at what prices projects get awarded. This can only be that less steel gets used in these jobs which will inevitably lead to much poorer safety margins in projects,” he says.

When I started in the industry more than 15 years ago a standard shelf was 1.2 mm thick. Today a standard shelf gets sold in between 0.7 and 0.8 mm. Surely these fragile structures will under-perform and give way sooner rather than later.”

But it’s all about price as clients increasingly, but mistakenly, view racking and shelving as ‘dead’ capital. The less they spend on it, the better, they unfortunately believe. Many companies have little or no understanding of the possible consequences,” Thomas says.

Our team has been trained on an ongoing basis over the years, with one over-riding principle - do not compromise on safety. We have walked away from many projects where we felt this was compromised. A ton of steel cost so much and to mould it and press it has a cost as well as labour.”

So if you go below a certain cost, you have to compromise on the amount of steel you use. No new designs have come on the market in the last 20 years in order to save steel in a project. But prices relative to cost and inflation have come down drastically,” Thomas points out.

He says the company expects lower turnover in the current year.

However, we have seen these types of contractions before and we know that it may take a while before business recovers again.” After all, 450 000 people have to be hosted from May to August next year in South Africa and that will bring increased demand for racking and shelving too,” he says.


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