Capital Equipment News December 2018

For informed decision-making DECEMBER 2018

STEMMING THE TIDE

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CONTENTS Capital Equipment News is published monthly by Crown Publications Editor: Munesu Shoko

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Publisher: Karen Grant

FEATURES

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comment 2 Stemming the tide

mining news 30 Epiroc Drilling Solutions buys autonomous mining solutions business 31 Osborn grizzly feeder for Guinea gold mine 32 Fuel efficiency – do more with less fuel construction news 34 Hiab completes acquisition of Effer Cranes 36 Hyundai CE and Cummins develop electric mini excavator prototype 37 SKF Cooper bearings get a facelift transport & logistics NEWS 38 Sunny conditions for comercial vehicle sector 39 Protec Steel wins the day for Serco

Circulation: Karen Smith

contractor development 4 Blueprint for SMME development used trucks 8 Getting the best value out of your pre-owned truck parts 12 OEM or aftermarket parts? training 18 Bridging the skills gap thought leadership 24 Growing transport SMEs to build SA's economy 26 Top 6 accessories in line striping 40 Big changes ahead for the tyre industry profile 28 Will diesel engines be a thing of the past?

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EDITOR'S COMMENT

STEMMING THE TIDE

A s 2018 draws to a close, one of the key takeaways for me this year has been the industry’s sheer commitment to stemming the tide of skills shortage in South Africa. That there is an overpowering need for skilled workers in the country is no point of contention. However, this year was particularly encouraging, given the private sector’s concerted efforts to help close the skills gap. In-house skills development programmes are increasingly overtaking technical and vocational education and training (TVET). The skills development agenda indicates a shift in emphasis away from supply-led systems which dictate the mode of learning and the pathways to be followed. Instead, it places emphasis on developing skills in demand in the workplace. Previously, companies have depended largely on state provision for skills development, and that model has proven to

be a catastrophic failure; it is rare for the state alone to be able to offer the quality, quantity and range of training needed. In addition, state provision often suffers from several weaknesses. This is not unique to South Africa, many countries share a number of systemic weaknesses in their skills development systems. Notably, in most cases there is a lack of up-to-date, reliable labour market data on which to base decisions on current and future skills needs and strategies for meeting the needs. A fragmentation of responsibility for skills development between Ministries is another typical weakness, leading to a lack of strategic leadership and the inability to implement reforms, rather than responsibility for strategy clearly allocated to a single Ministry with a duty to liaise with all stakeholders. Much has been said about South Africa’s failed Sector Education and Training Authority programme and other initiatives geared at producing the technical skills required by industry that have not produced the desired results. With several success stories this year, I am of convinced the private sector is demonstrating that it has the necessary clout to bridge the skills gap in the country. companies have made hefty investments in developing the skills they need, now and well into the future. As you will see in the Training feature in this edition of Capital Equipment News , many forward-thinking companies are investing in their own initiatives geared at developing the skills they need for their day-to-day endeavours. thyssenkrupp recently launched its R28-million Technical Training Academy. Located in Chloorkop, Johannesburg. It will offer accredited technical and theoretical training to engineering apprentices. In total, the company is looking at training between 30-35 technicians per year. Through its accredited apprentice programme, Bell Equipment enrols an average of 50 apprentices every year. Out of that number, it employs 10 of the graduates and the rest are available to the industry – for other OEMs or its Given that technical skills are the lifeblood of the equipment industry, it is encouraging to see that several

customer network. Babcock’s apprenticeship programmes, ranging from three to four years, train and mentor apprentices through instructor-led and on-the-job training, with the aim of producing graduates capable of operating in complex, highly regulated environments, where competence, compliance and safety are critical. Apprenticeships are offered in various trades including diesel mechanic, boilermaker, earthmoving equipment mechanic, and fitter/welder. Since 2015, Volvo Group Southern Africa has invested more than R86-million on apprenticeship training, automotive industry and disabled persons learnerships and internships. The company planned to plough a further R25-million into the same initiatives during 2018. This year, the Swedish group also established a specialised Driver Training Academy to address the shortage of skilled drivers in the region, at an investment of R1,9- million. We should commend these companies commonly known that many developing countries struggle to maintain robust skills development systems, and despite a large and growing working-age population, skills shortage and high unemployment abound. Economic growth is hindered and employers experience hard-to-fill vacancies for skilled posts. Intervention at this level requires working on policy reform and skills development strategies. Africa is the next big destination for business, but it needs the skills to unlock the treasure trove. Perhaps, these initiatives by the noted companies could serve as a blueprint for developing the necessary know-how needed across the continent. Equipment News would like to extend our special wishes for a happy year end to our readers, advertisers and service providers. Let’s all enjoy the well-deserved break and take the festive opportunity to recharge our batteries in anticipation of a prosperous business year in 2019. I wish you all the happiest of tidings, merriest of Christmases to those who celebrate and warmest of holiday seasons! In conclusion, the festive season is upon us, and all of us at Capital for their commitment to addressing the skills dearth in the country. It is

Munesu Shoko – Editor

capnews@crown.co.za

@CapEquipNews

CAPITAL EQUIPMENT NEWS DECEMBER 2018 2

CONTACTOR DEVELOPMENT

Sicediwe recently took delivery of its first fleet of yellow metal equipment to execute its three-year contract at Glencore Lydenburg Smelter.

Blueprint for SMME development

A collaborative initiative between several role players – a mine, an enterprise supplier development specialist, equipment suppliers and a financier – has afforded a start-up contractor the much-needed access to market, as well as the necessary funding to purchase its first fleet of equipment. The model – which saw the contractor use its three-year contract as collateral to secure financing to purchase capital goods worth R8,5-million – can serve as a blueprint for SMME development across an array of other sectors, writes Munesu Shoko.

I n recent years, lack of access to enterprise supplier development specialist, says the funding drawback can’t be resolved without dealing with the issue of access to markets first. “Unfortunately, many funding has largely been regarded as a major slippery slope for upcoming contractors. However, Otukile Moshori, MD of of Regoapele Capital, a leading

corporates do not create feasible access to markets for emerging SMMEs. This exacerbates the lack of financing because any form of funding is based on the ability to repay,” says Moshori. Regoapele Capital is an experienced company in this area. The firm focuses on opportunity-based development for upcoming businesses. This entails funding, financial

CAPITAL EQUIPMENT NEWS DECEMBER 2018 4

woman-owned small contractor based in rural Mpumalanga. Access to market Sicediwe was established in 2014 by Mary Mkhabela through her involvement in the Mashishing local economic development forum. This is an SMME development initiative led by Regoapele Capital and aimed at taking small businesses through the intricacies of running a business. Through the initiative, Regoapele Capital helped Mkhabela identify an opportunity to provide metal breaking services at Glencore Lydenburg Smelter, a crucial niche application in the mining/smelter industry. Prior to that, the company had previously undertaken various jobs at Glencore Lydenburg Smelter, such as painting, renovations, paving and construction, to build its profile and a trust base with the client. This gave it the required experience in terms of mine health & safety requirements. Glencore went on to award Sicediwe a three-year contract. “We awarded Sicediwe a three-year contract with an option to extend for a further two years. The scope of the contract is to break down run-of-mine ferrochrome material just before it goes into the crusher,” explains Conroy van der Westhuizen, general works manager at Glencore Lydenburg Smelter. Sicediwe has been tasked to break 30 000 t of ferrochrome in a R700 000 per month contract. “This is a true empowerment initiative which will see the black woman-owned company servicing a core mining activity, employing 12 permanent people in the process,” says Van der Westhuizen. Access to funding Regoapele Capital’s role entailed interacting with Glencore Lydenburg management to assess the viability of the opportunity. This was a detailed process where all aspects were looked at, ranging from the right equipment to execute the job and the costing of the machines to comparison between different OEMs’ offerings and interacting with existing owners to get advice on what works best. “After gathering the relevant information, the next step was to look at different finance houses to get the best funding package for purchasing equipment needed to execute the contract. We found the process to be

QUICK TAKE

In recent years, lack of funding has largely been regarded as a major challenge for upcoming contractors. However, the funding drawback can’t be resolved without dealing with the issue of access to markets first.

Regoapele Capital recently played a major role in a collaborative initiative which is deemed as a new blueprint for SMME development – the initiative balances the creation of access to markets with access to funding for SMMEs.

As part of the initiative, Glencore awarded upcoming contractor, Sicediwe a three-year contract to provide ferrochrome breaking services at its Lydenburg Smelter.

Sicediwe purchased two Komatsu PC200 excavators from Komatsu Southern Africa, two new JCB backhoe loaders from Kemach JCB, a Cat-certified second-hand 428F2 backhoe loader and five new Epiroc hammers from Riviera Hire.

3 YEARS

Both the financier and Glencore created an enabling platform for Sicediwe. Using its three-year contract awarded by Glencore as collateral, Sicediwe was financed to the tune of R8,5-million by Masisizane Fund.

From left: Otukile Moshori, MD of of Regoapele Capital; Conroy van der Westhuizen, general works manager at Glencore Lydenburg Smelter; Mary Mkhabela, owner of Sicediwe; and Maphala Mosomane, provincial manager for Limpopo and Mpumalanga at Masisizane Fund, at a ceremony to hand over the R8,5-million worth of equipment to Sicediwe.

planning, financial management and effective market access strategies for SMMEs. “We have a footprint across three provinces. We strongly believe in presence and proximity to markets and clients for effective and sustainable delivery,” says Moshori. Regoapele Capital recently played a major role in a collaborative initiative

which Moshori deems as a blueprint for SMME development – the initiative balances the creation of access to markets with access to funding for SMMEs. As an enterprise and supplier development partner to Glencore Lydenburg Smelter, Regoapele Capital led the negotiations in securing a three- year contract for Sicediwe, a 100% black

CAPITAL EQUIPMENT NEWS DECEMBER 2018 5

CONTACTOR DEVELOPMENT

“With Glencore we structured finance terms that mitigated the risk for financiers. This helped overcome the barrier of historic challenges Sicediwe had. The partnership is based on both the financier and the corporate creating an enabling platform.”

Otukile Moshori, MD of of Regoapele Capital

“If finance houses are serious about helping entrepreneurs finding their feet in the business world, it will take more than just relying on balance sheets to qualify them. We are open to financing small businesses despite their limited operating history, as long as they can prove that they have solid contracts in place.” Maphala Mosomane, provincial manager for Limpopo and Mpumalanga at Masisizane Fund

Riviera Hire supplied a total of five Epiroc hammers to Sicediwe.

educational for most financiers too as they don’t necessarily have the skills sets to asses mining operations,” adds Moshori. “We are working with three financiers to date. We also see a big change in the industry’s approach to funding SMMEs. We have recently seen that some of the larger financiers that wouldn’t normally look at SMME transactions are opening up to funding small companies,” says Moshori. In Sicediwe’s instance, Masisizane Fund, part of Old Mutual Life Assurance Company, was the financier of choice. Masisizane financed Sicediwe to the tune of R8,5-million for the purchase of a fleet of yellow metal equipment and related attachments. Sicediwe purchased two Komatsu PC200 excavators from Komatsu South Africa, two new JCB backhoe loaders from Kemach JCB, a Cat-certified second-hand 428F2 backhoe loader and five new Epiroc hammers from Riviera Hire. The two new Komatsu PC200 excavators are equipped with two Epiroc EC120TCL hammers, while three backhoe loaders are equipped with the three Epiroc SP302 hammers.

“I commend the various parties for the roles they played in this initiative. Capacitating small businesses will not only boost their growth prospects, but also the economy at large.”

Mary Mkhabela, owner of Sicediwe

“We awarded Sicediwe a three-year contract with an option to extend for a further two years. Sicediwe has been tasked with breaking 30 000 t of ferrochrome in a R700 000 per month contract. This is a true empowerment initiative which will see the black woman-owned company servicing a core mining activity, employing 12 permanent people in the process.”

Conroy van der Westhuizen, general works manager at Glencore Lydenburg Smelter

CAPITAL EQUIPMENT NEWS DECEMBER 2018 6

previously disadvantaged economies through economic emancipation,” adds Van der Westhuizen. “We are aggressive in our approach and the Sicediwe deal is a true indicator of how committed we are to building local capacity.” Van der Westhuizen reasons that Glencore’s success depends on how fast it capacitates emerging businesses in the local community. “It took us about five years to identify local businesses and today we have numerous service providers from the area,” he says. “We acknowledge Regoapele Capital for its commitment to opportunity- based development for SMMEs. Its service is purely out of passion to build local capacity and empowering local businesses.” Maphala Mosomane, provincial manager for Limpopo and Mpumalanga at Masisizane Fund, says if finance houses are serious about helping entrepreneurs finding their feet in the business world, it will take more than just relying on balance sheets to qualify them. “We are open to financing small businesses despite their limited operating history, as long as they can prove that they have solid contracts in place,” says Mosomane. Mkhabela, who previously worked for a large retailer in the Lydenburg area, is grateful to the various players who have each played a big role in helping her business with access to a life-changing contract and the financing she needed to purchase the necessary equipment to execute the job. “I commend the various parties for the roles they played in this initiative. Capacitating small businesses will not only boost their growth prospects, but also the economy at large,” says Mkhabela. In conclusion, Moshori says without greater focus on small businesses and specifically emerging black business, the country's tax base will continue to shrink, and that will have a negative impact on the entire economy. b

Karen van der Walt, sales representative at Komatsu South Africa (left), and Filippo Bevilacqua, MD of Riviera Hire (right), with Mary Mkabela (centre) during the handover ceremony.

Blueprint for SMME development Commenting on the lack of financing for SMMEs, Moshori concurs that in most cases small businesses are denied access to funding due to their limited operating history and low gross margins. However, he is of the view that limited history can be overcome if corporates are willing to share the risk. “With Glencore we structured finance terms that mitigated the risk for financiers. This helped overcome the barrier of historic challenges Sicediwe had. The partnership is based on both the financier and the corporate creating an enabling platform,” says Moshori. Van der Westhuizen says this model can act as a blueprint for small contractor development. The same view is shared by Moshori, who says the same model can be applied in various other sectors, such as manufacturing, banking

and retail, among others. “We have also previously assisted entrepreneurs purchase businesses like fuel stations and other businesses outside the scope of supply chain based funding,” says Moshori. Van der Westhuizen commends the concerted efforts of all the various parties that came together to make the Sicediwe venture a success. He says the initiative is a winning formula for levelling the playing field for SMMEs in order to allow real economic capacitation. “As part of our CSI responsibility, Glencore is committed to capacitating young, vibrant business leaders that can take the economy forward,” says Van der Westhuizen. In 2011, Glencore took a decision to make real change in communities it operates in line with its corporate strategy. “It is our desire to uplift

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USED TRUCKS

Buying a commercial vehicle can be a big investment, especially when times are tough. One way to soften the blow is to look at purchasing used vehicles. However, before you buy a used truck, Scania South Africa advises that there are various issues to consider, and chief among them is taking a good hard look at both your potential purchase and its source, writes Munesu Shoko . GETTING THE BEST VALUE OUT OF YOUR PRE-OWNED TRUCK

T he decision to buy a used primary benefit of buying a pre-owned commercial vehicle is mostly the cost savings. It is for this reason that the used truck market is showing strong growth signs in South Africa this year. One of the noticeable trends in the commercial vehicle sector is the enormous demand for good quality used trucks. Harold Donachie, GM – Used Vehicles at Scania South Africa, says normally the used market enjoys a good run at the expense of the new vehicle sector. It is a different scenario this year, with both new and used heavy duty truck markets enjoying a bull run despite the current economic conditions, especially given the technical recession in South Africa. Scania South Africa has already sold in excess of a thousand used units this year. “From a stock levels point of view, this year we have been running at a third of our stock levels of last year. This means that we have been turning around our stock a lot quicker than last year. The quality of enquiries is also lot better than last year,” says Donachie. Key demand drivers There is actually a shortage of quality used commercial vehicles in the market. So, what’s driving demand? According to Donachie, because of the tough economic truck is sometimes referred to as “smart buying decision” because of the advantages and value for money it offers. The

conditions, customers ought to run their existing fleets a bit longer than in the past. Chief among the factors why fleet owners are holding onto their existing assets is the cost of buying new ones in a tough business climate. This is compounded by the fact that the average monthly kilometres have decreased due to the nature of contracts. Therefore, trucks may be a bit older but they are being replaced with lower mileages. “We also see that, due to the tough economic conditions, rates being quoted by transporters have gone down significantly. It’s becoming extremely aggressive to secure business out there. That I believe is actually one of the biggest contributors to fleet owners looking for used trucks. Whether you are running a new or used truck, the rate is the same. If you can lower the cost of ownership of the truck, you may have an opportunity to earn a bit more money,” says Donachie. What is also creating demand or a lack of supply for used vehicles in South Africa is the preferential currency for export. Donachie reasons that the rand has lost its value at a rate that is very attractive for customers in the rest of Africa. “The rand/US$ exchange rate is very favourable for them. I believe some of the industry players also find it attractive for them to export their used vehicles into Africa with the opportunity to earn hard currency too good to turn down,” he says.

Buying considerations As enticing buying a used vehicle may be, to get maximum return on investment, there is need to take into account the benefits and cautions of going the used route. One can easily limit the downside of purchasing a pre-owned truck by buying from a reputable supplier, for example, an OEM like Scania. One of the biggest issues is that commercial trucks are work trucks, which means it isn’t always easy to find one in excellent condition. When debating the benefits and cautions of buying pre- owned commercial vehicles, the best weapon at your disposal is information. purchasing a used truck, customers need to gather every piece of information they can. One of the most important factors to consider is the service history of the truck because reliability matters. “Ask for a detailed history, including accidents, maintenance and repairs. If you are The OEM will always have all the necessary information one needs. According to Donachie, before

CAPITAL EQUIPMENT NEWS DECEMBER 2018 8

QUICK TAKE

One of the noticeable trends in the commercial vehicle sector is the enormous demand for good quality used trucks this year.

The primary benefit of buying a pre-owned commercial vehicle is the cost savings.

“The most important thing when buying a commercial vehicle is to understand that it is a mission critical asset and uptime is of critical importance. Buyers need to consider the reputation of the entity they are buying their used truck from, as well as the future backup of the vehicle.”

Scania South Africa has sold in excess of a thousand used units this year.

97-98% of used vehicles sold by Scania would have undergone some form of refurbishment.

Harold Donachie, GM – Used Vehicles at Scania South Africa

TALKING POINT

CAPITAL EQUIPMENT NEWS DECEMBER 2018 9

USED TRUCKS

buying from a manufacturer like Scania, it is something they should be able to provide,” says Donachie. “The most important thing when buying a commercial vehicle is to understand that it is a mission critical asset and uptime is of critical importance. One needs to consider the reputation of the entity they are buying their used truck from, as well as the future backup of the vehicle,” he adds. The shortage of quality used vehicles economic conditions. However, Donachie believes that a large number of customers still prefer buying a used premium offering. They look at various other factors such as additional benefits of buying from the OEM directly. For example, Scania South Africa can offer service plans and warranties with its used trucks, which provides customers with the much needed peace of mind. “One of Scania’s competitive edges when it comes to used trucks is that we also offer in-house financing and insurance. The customer is afforded a one-stop shopping solution. We also offer our R&M Light Used, a service plan plus warranty. It is a standard engine driveline warranty which can also be expanded to cover certain bolt-on components,” says Donachie. A unique feature of Scania’s used warranty is that it can be extended to beyond a million kilometres. Bear in mind that most of the external warranties offered on used vehicles are up to 800 000 km. The benefit to the customer is that Scania’s warranty is a factory- backed programme. This is complemented by the fact that the majority of dealerships across the country are Scania-owned. The attraction to the customer is that with their R&M Light Used contract, they can walk into any dealership throughout the country. There are also a few service outlets, but these still operate under the Scania banner, so the customer has a wide support footprint at their disposal. More considerations One of the most common considerations when buying a used truck is that one should know the mileage and how it was accumulated; freeway miles are less damaging than constant stop-and-go and arduous applications such as construction. One of the current trends is that trucks are being traded in at an older age than before, but notably with low mileages due to reasons Donachie has already explained. In his experience, generally the replacement cycles used to be 4-5 presents an opportunity for value suppliers to take advantage of the

One can easily limit the downside of purchasing a pre-owned truck by buying from a reputable supplier like Scania.

Scania offers its R&M Light Used, a service plan plus warranty.

years. However, today it’s more to do with the best potential replacement cycle for an individual customer. “When we sell a new truck, our sales executives factor in each customer’s business and type of application to determine the optimum time to replace the vehicle,” he says. In most instances, disposal cycles differ with industries. “If you are driving a refuse collection truck, for example, it will accumulate between 2 000 and 3 000 km a month because, by its very nature, it’s a low mileage application. That truck will not be exchanged prior to five years. However, if one is running a flatdeck or tautliner between Cape Town and Johannesburg, the truck will probably clock between 15 000 and 16 000 km a

month and would need to be exchanged after every three years,” explains Donachie. When it comes to selling of used trucks, Donachie cautions that there are a number of factors to be considered when looking to trade in a vehicle, and chief among them is that the mileage shouldn’t get too high because it affects the resale value. Likewise, the age of the truck shouldn’t get too high because it won’t be financeable. “Financeable age of a used truck is normally five years with most of the reputable lenders. It becomes pretty difficult to obtain funding through banks for a truck that is more than five years,” concludes Donachie. b

CAPITAL EQUIPMENT NEWS DECEMBER 2018 10

PARTS

A long lifetime of wear parts directly reduces the cost per ton of operation.

OEM or aftermarket parts?

Every piece of capital equipment is a mission critical asset. When it breaks down or needs its periodic service, owners want the very best repair or maintenance job for their valuable asset. One of the key decisions to make is whether to insist on OEM parts or to opt for generic aftermarket spares instead, writes Munesu Shoko .

T here is seemingly a growing aftermarket parts market, especially on the back of current difficult economic conditions. In this feature, a panel of experts helps us look at the differences between the two and investigate the benefits and downsides of each option. To start with, what is the difference between original equipment manufacturer (OEM) and aftermarket parts? According to Sandro Scherf, CEO of Pilot Crushtec International, OEM parts are in most cases, specifically manufactured to complement the design of the machine/equipment. They are engineered to deliver certain desired outputs and depending on what the part is, for example, a hydraulic pump – could be designed to supply a specific pressure to achieve optimal performance.

QUICK TAKE

There is seemingly a growing aftermarket parts market, especially on the back of current difficult economic conditions.

CAPITAL EQUIPMENT NEWS DECEMBER 2018 12

engineered to deliver the reliability that customers expect when buying them. They undergo extensive testing and quality checks to achieve the highest level of performance. On the other hand, non- genuine Iveco parts cannot guarantee the same high standards required by Iveco,” he says. Clinton Schultz, national parts manager at Goscor Earth Moving, says OEM or Genuine parts are made by and for the manufacturer of a machine for optimal performance of the machine, and aftermarket parts are similar, but not made by the manufacturer of a machine. “To put it into simple terms, aftermarket parts are not sourced from the manufacturer of the machine. However, they are designed similarly, but in most cases not meeting the required specs,” says Schultz. Price vs quality The growth of the aftermarket parts sector is said to be largely driven by the price factor. Should price determine what parts equipment owners buy for their mission critical assets? Schultz says in most instances aftermarket parts are cheaper. However, short-term price savings will result in long-term losses. He is of the view that OEM parts come at a premium price, but this translates into machine longevity, increased productivity and a healthy balance sheet in the long run. “Yes, price should determine what we buy, but it’s always advisable to remember that you get what you pay for,” says Schultz. Sieja says to reach the desired quality, the OEM invests in research and development (R&D) for materials used in its genuine parts. This ensures that the truck or bus is reliable and safe. “The price may be higher than the aftermarket components because Iveco Genuine parts have been specifically designed to fit our vehicles and therefore offer a higher degree of performance, quality and reliability,” says Sieja. “In addition, Iveco parts benefit from

“To reach our desired quality, the OEM invests in research and development for materials used in its genuine parts. This ensures that the truck or bus is reliable and safe. The price may be higher than the aftermarket components because genuine OEM parts are specifically designed to fit the vehicle and therefore offer a higher degree of performance, quality and reliability.”

Daniel Sieja, marketing manager South Africa at Iveco

“A breakdown is a highly costly situation where the fleet owner can lose hundreds of thousands of rands in lost production. In extreme cases, equipment fitted with generic/pirate parts can be damaged to such an extent that the piece of equipment will require major repair work, obviously translating into even bigger costs.”

Sandro Scherf, CEO of Pilot Crushtec International

“OEM parts will help to improve or maintain efficiency because they were specifically manufactured for the particular machine. Longevity is another key advantage of OEM product – and not just for the part itself, but the piece of equipment as well.”

Clinton Schultz, national parts manager at Goscor Earth Moving

TALKING POINTS

“The method of mounting might also be different for each piece of equipment. A generic part or pirate aftermarket part could be very similar in design, but could have hugely negative effects as it may not only damage the equipment, which not only results in loss in performance, but also voids the warranty of the

equipment,” explains Scherf. Daniel Sieja, marketing manager at Iveco South Africa, says Iveco Genuine Parts are those that have been designed specifically for Iveco buses and trucks. They undergo tests in order to guarantee the highest level of safety, durability and performance. “Genuine Iveco parts are

The general reasoning by fleet owners who opt for aftermarket parts is that OEM parts are generally expensive – in some instances they are said to be almost 60% more than their aftermarket counterparts when it comes to price.

While they represent a major cost upfront, there are an array of benefits associated with buying OEM parts in the long run. Primarily, with OEM parts you get the perfect match for your machine.

The consistency of materials and high quality of raw materials used in the manufacture of OEM parts justify their pricing.

CAPITAL EQUIPMENT NEWS DECEMBER 2018 13

PARTS

Metso spends millions of Euros annually on R&D, and ultimately end users benefit from the results through unparalleled parts quality.

the investment, but also with a potential breakdown which occurs as a result of an aftermarket generic part. “A breakdown is a highly costly situation where the fleet owner can lose hundreds of thousands of rands in lost production. In extreme cases, equipment fitted with generic/pirate parts can be damaged to such an extent that the piece of equipment will require major repair work after that, obviously translating into even bigger costs,” adds Scherf. He advises that fleet owners should be aware that generic/pirate parts may lead to catastrophic machine failures, which results in not being able to deliver on contracts and furthermore, losing money, time and possible reputational damage from untimely and constant failures. Major benefits While they represent a major cost upfront, there are an array of benefits associated with buying OEM parts in the long run. Primarily, with OEM parts you get the perfect match for your machine. “OEM parts will help to improve or maintain efficiency because they were specifically manufactured for the particular machine. Longevity is another key advantage of OEM product – and not just for the part itself, but the piece of equipment as well,” says Schultz. Scherf says keeping equipment to OEM specification is always a benefit for various reasons, including retaining the value of the equipment; retaining all standard and additional factory warranties; all equipment is serial number related, meaning ease of getting spares that will fit accurately and deliver expected performance; as well as peace of mind that one has purchased

correct parts which won’t cause any additional damage to the equipment. “There are several other benefits associated with OEM parts. A longer lifetime of wear parts directly reduces the cost per ton. To maximise production, fleet owners need to ensure that their crushers’ uptime is maximised. Meanwhile, support and information is easier to access through OEM goods, whereas generic/pirate parts may be once-off, and impossible to source reliable information on,” says Scherf. He adds that consistency of quality from OEM parts is almost guaranteed, whereas generic/pirate parts are usually sourced from a variety of locations, based on cheaper pricing. Sieja says reliability and uptime are the major benefits of OEM parts. “We only sell parts when we are sure that they meet all the safety and performance requirements. CNH Industrial, of which Iveco is a part of, invested $957-million in R&D last year. Due to the extensive R&D, we are confident about the quality of our parts and can assure our customers that they are the best option to ensure the highest returns in terms of performance and durability of their Iveco fleet.” Justified costs? The general reasoning by fleet owners who opt for aftermarket parts is that OEM parts are generally expensive – in some instances they are said to be almost 60% more than their aftermarket counterparts when it comes to price. Is the premium price for OEM parts justified? According to Scherf, OEM parts pricing has always been perceived to be more expensive than generic/pirate parts and in most cases the pricing is

Iveco Genuine Parts are designed specifically for Iveco buses and trucks.

the OEM’s expertise and warranty. Iveco Genuine parts last longer, perform better and allow you to reduce your fuel consumption and hydraulic liquids. The downtime due to maintenance of the vehicle is lowered as well. Taking all these factors into account, OEM parts cost much less than aftermarket parts in the long run,” adds Sieja. According to Scherf, operating costs are critical and a focal point for any operation. “We are obviously sensitive to the costs incurred by clients when taking on OEM vs. generic/pirate aftermarket parts, however, the long-term and daily operating returns are usually in favour of selecting OEM goods,” says Scherf. He adds that when customers invest millions of rands into capital equipment and use generic aftermarket parts, they take on a high level of risk, not only in

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PARTS

new equipment to keep up with the demand and customer expectation. For example, Metso spends millions of Euros annually on R&D, and ultimately end users are the ones that benefit from the results,” he says. “This is the main reason we tend to spend time with our customers who use generic/pirate parts and commit to analysis of the cost of OEM parts and their resulting performance, and compare these against the cost of downtime, machine failure and mediocre product performance, to showcase how beneficial OEM parts are in the overall operational costs against looking at the once-off cost for a part purchase,” adds Scherf. “There are some really great aftermarket products in the market, but I will pay a premium for OEM parts due to the fact that the supplier will honour the warranty should I use the OEM part. OEM parts are manufactured specifically for the asset and designed for optimum performance of the equipment. You might save a bit when buying a cheaper aftermarket option now but over time your machine will not perform at optimal levels and might lead to critical failures which outweigh the original savings,” says Schultz. Sieja says apart from the R&D that goes into the manufacture of OEM parts, the high quality of materials used as well as the warranty offered to ensure maximum uptime and longevity better explain why a premium price is charged compared with products of a lower quality. “However, we understand the needs of our customer, hence if they have older vehicles and are not willing to pay the premium price for the Genuine Iveco part, we can offer and also recommend that they use parts from the NEXPRO range, the only Iveco approved and official second line of parts for older Iveco vehicles,” says Sieja. In addition to NEXPRO, Iveco has a very comprehensive range of Reman parts which, for engines and gearboxes, carries a 2-year warranty. The remanufactured parts remain a better option than reconditioned parts. “In our remanufacturing process, used parts are examined, remade (reassembled) and tested to original performance specifications through the use of state- of-the art techniques, strict salvage guidelines, advanced manufacturing systems and unequalled quality control. With quality assurances built into every process and same-as-new or better-than- new warranties, IVECO Reman products provide customers true peace of mind,” concludes Sieja. b

SANY OEM parts come at a premium price, but this translates into machine longevity, increased productivity and a healthy balance sheet in the long run.

OEM parts are manufactured specifically for the asset and designed for optimum performance of equipment.

either competitive or slightly higher than generic/pirate parts. “This is due to several reasons, such as the R&D which goes into the production of the parts themselves, the amount of information associated with the parts, such as parts maintenance, as well as the level of support provided to the parts, such as warranties and guarantees. The consistency of materials and high

quality of raw materials used in the parts manufacture also contribute to their pricing,” says Scherf. Scherf adds that the most important aspect is the level of new technology

being developed year after year, and the amount of improvements to the performance of OEM parts.

“Manufacturers are continuously under pressure to design, test, fix and redesign

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TRAINING

The skill of an earthmoving mechanic has evolved over the past 10 years from being more mechanical to a semi-electronic specialist with advanced hydraulic knowledge.

Bridging the skills gap

Finding skills the industry needs has become one of the biggest challenges for the capital equipment supply chain and end users alike. The situation will only get more acute as technology evolves and competition for talent tightens. Given the dynamics, it is vital for every forward-thinking company to have a system in place to develop the skills it needs, now and into the future, writes Munesu Shoko .

T he dearth of technical skills is a huge challenge for business, not only in Africa, but across the world. This is especially the case in the capital equipment space, where the industry is already scrambling to find people who can work with evolving machine technology. Given that technical skills are the lifeblood of the equipment industry, it is encouraging to see that several companies are making hefty investments in developing the skills they need, now and well into the future. Just how dire is the shortage of skills? Speaking at a recent event where she officially opened thyssenkrupp’s newly-launched

R28-million Technical Training Academy, Naledi Pandor, Minister of Higher Education and Training, noted that there is an acute shortage of automotive and diesel mechanics, along with other nine trades identified as priority trades. These include electricians, boilermakers, plumbers, bricklayers, carpenters and joiners, welders, fitters and turners, as well as riggers. To bridge the gap, Pandor called on the industry to work together with colleges to help develop skills the industry needs, which also significantly impacts the economy at large. Meltus Badenhorst, Bell Equipment GM: Group Technical Services, finds that skills shortage is not a big problem in South Africa

CAPITAL EQUIPMENT NEWS DECEMBER 2018 18

for the OEM. This is not as a result of them being readily available, but because Bell Equipment is “able to grow its own timber” through its accredited apprentice programme. “Annually we enrol an average of 50 apprentices. Out of that number, we employ 10 of the graduates and the rest are available to the industry – for other OEMs or our customer network,” says Badenhorst. However, Badenhorst concurs that skills shortage is a massive reality elsewhere in Africa and the rest of the world. “We have first-hand experience in Australia and New Zealand where workshops are unable to keep up with demand because they don’t have enough skills,” he says. He says customers in those countries are head-hunting those skills faster than what the OEMs can retain them. Bell Equipment has also picked up the same problem in Germany with one of its dealers. To help bridge the gap, it now has apprentices it rotates out of South Africa in the final year to the UK, Germany and the United States. “The benefit is two-fold: it’s a reward scheme for our apprentices whereby the best of the best have the opportunity to gain work experience overseas, while helping our dealers in Germany and the United States, as well as our own entity in the UK with the much-needed skills,” says Badenhorst. “A mechanic needs a minimum of five years of experience to be a successful artisan in Africa because of the nature of the environment. Access to information and secondary assistance from the OEM is often scarce and out of reach, so mechanics are really on their own and have to be self-sufficient.” WearCheck’s reliability solutions technician, Dennis Swanepoel, who is also a certified Mobius instructor and was among the first people in South Africa to achieve Vibration ISO CAT IV certification, says as the complexity of machinery increases, so does the need for more technical skills to operate it. He reasons that technological advancement is an ongoing process, and skills training is constantly required in order to keep up with technology. Swanepoel reasons that one of the challenges hindering the development of skills is the fact that training is not cheap – it takes time and money. “However, investing in skills training can save a lot of money in the long term. These words, which are so true, are often quoted, and have been attributed to several different people: if you think training is expensive, try ignorance,” says Swanepoel.

thyssenkrupp recently launched its R28-million Technical Training Academy. Located in Chloorkop, Johannesburg, it will offer accredited technical and theoretical training to engineering apprentices. In total, the company is looking at training between 30-35 technicians per year.

QUICK TAKE

thyssenkrupp has invested R28-million in its Technical Training Academy. It will offer accredited training to between 30-35 engineering apprentices per year.

Given that technical skills are the lifeblood of the equipment industry, it is encouraging to see that several companies are making hefty investments in developing the skills they need.

Bell Equipment enrols an average of 50 apprentices every year. Out of that number, it employs 10 of the graduates and the rest are available to the industry.

Since its inception 42 years ago, WearCheck has compiled a database of sample diagnoses and wear trends, adding 750 000 new sample results annually to the data.

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TRAINING

Investments abound To close the skills gap, both government and the industry are making substantial investments in training. Speaking at the thyssenkrupp event, Minister Pandor revealed that three years ago, the government declared 2014-2024 as the Decade of the Artisan with the aim of creating a pipeline of qualified artisans to fix the scarce skills shortage. “The status and profile of artisans is being elevated through this campaign. The Department will continue learning from academies like thyssenkrupp Technical Training Academy and encouraging employers to open up their workplaces as training spaces,” she says. Recently, the Department of Higher Education and Training launched an initiative that focuses on the teaching of 13 trade occupations at 26 TVET colleges. The initiative, known as the Centres of Specialisation Programme, is designed to address the growing demand for the skills needed in the country’s current state infrastructure build. Several companies have also invested in their own skills development initiatives to deal with the skills shortage debacle. Driving job creation and skills development is fundamental to Babcock’s apprentice training programme. This is achieved by creating a stimulating environment for young trainees to learn and enhance their skills through both theoretical knowledge and practical training. The apprenticeship programmes, ranging from three to four years, train and mentor apprentices through instructor-led and on-the-job training, with the aim of producing graduates capable of operating in complex, highly regulated environments, where competence, compliance and safety are critical. Apprenticeships are offered in various trades including diesel mechanic, boilermaker, earthmoving equipment mechanic, and fitter/welder. Calvin Muthelo, training manager at Babcock, says the apprentice training programmes combine educational material with hands-on workshop experience. Each apprentice is also assigned a qualified tradesperson who works with them for the duration of the programme. Babcock’s various apprenticeship programmes include one year of technical theoretical training, which is phase orientated, and up to three years’ relevant workplace experiential learning during which time apprentices are given the opportunity to work on the leading brands that Babcock distributes, including Volvo

“Our colleges must have the necessary infrastructure and skilled trainers to produce 21 st century workers and entrepreneurs. Again, industry can play a role. I am hoping every industrial and equipment company in South Africa will create partnerships with our colleges.”

Naledi Pandor, Minister of Higher Education and Training

“A mechanic needs a minimum of five years of experience to be a successful artisan in Africa because of the nature of the environment. Access to information and secondary assistance from the OEM is often scarce and out of reach, so mechanics are really on their own and have to be self-sufficient.”

Meltus Badenhorst, Bell Equipment GM: Group Technical Services

“One of the challenges hindering the development of skills is the fact that training is not cheap – it takes time and money. However, investing in skills training can save a lot of money in the long term. These words, which are so true, are often quoted, and have been attributed to several different people: if you think training is expensive, try ignorance.”

Dennis Swanepoel, WearCheck’s Reliability Solutions Technician

“Babcock has various MERSETA-accredited workshops where practical tutorials are carried out while the trainers and tutors themselves are continually sent on technical training courses to keep up to date with the latest technology and equipment.”

Calvin Muthelo, training manager at Babcock

TALKING POINTS

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