Black investor acquires majority stake in precision manufacturing firm

8th September 2017

By: David Oliveira

Creamer Media Staff Writer


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The recent acquisition of 51% of Johannesburg-based precision manufacturing company Bay Engineering by Black Industrialists Group (BIG) for R6.5-million is being held up as an example of transformation in the manufacturing sector.

Bay Engineering MD Etienne Labuschagne points out that the deal, which was completed in June, will not affect the company’s operations or leadership structures. However, the strategic partnership with BIG does provide Bay Engineering with access to markets it has otherwise been unable to play in, particularly State-owned enterprises and original-equipment manufacturers that require suppliers and contractors to have a high transformation score.

Bay Engineering FD Charles Smith notes that the vision behind the acquisition is to build a larger and more sustainable company with the strategic imperative to change the manufacturing landscape and be a model for everyone else in the industry. “This is not just a transaction but a partnership aimed at building a greater whole.”

BIG chairperson and renowned business leader Vince Raseroka tells Engineering News that the complementary partnership will ensure Bay Engineering’s competitiveness and, owing to the engineering company’s significant manufacturing capabilities, will hopefully bring back work that is currently being exported.

“The country is being criticised for its high levels of imports and, personally, I am tired of pointing fingers. “We have got to roll up our sleeves and work together as South Africans to come up with a proposal that is internationally competitive,” he asserts.

Smith adds that the merger will help grow the country’s manufacturing capabilities, owing to Bay Engineering’s technical expertise and BIG’s strategic mechanisms, which he expects will “bring business back to South Africa”.

Raseroka notes that the acquisition and the subsequent opening up of markets will help improve Bay Engineering’s balance sheet. “The profitability of the company is unquestionable,” he states.

When asked why Bay Engineering was selected for the acquisition, Raseroka noted that BIG had looked at a number of engineering companies; however, Bay Engineering’s “reputation, commitment and track record, as well as its ability to deliver quality products” set the company apart.

Labuschagne adds that the company’s processes and in-house-developed software allows it to provide good control measures and traceability systems “that often exceed our customers’ demands or even their expectations”.

Bay Engineering’s operations include fabrication and machining capabilities, and it also manufactures its own VMC knife gate valve.

The company’s fabrication capabilities meet the American Society of Mechanical Engineers (ASME) 9 standards. ASME 9 is a comprehensive set of welding qualifications for boiler, pressure vessel and pipe fabrication. Labuschagne tells Engineering News that Bay Engineering fabricates a significant amount of high-pressure piping, particularly for the mining industry.

Bay Engineering’s machine shop boasts a host of computer numerically controlled (CNC) systems, including ten CNC lathes, six CNC milling machines, a CNC horizontal machine with a pallet changer and a CNC vertical machine that can swing up to 1.2 m.

“We have a good blend between fabrication and machining. There are a lot of companies our size that solely focus on either fabrication or machining,” Labuschagne says.

Further, the company also has a portable three-dimensional measuring arm, which has allowed it to operate as a subcontractor to other projects, most notably to measure the turrets of the Badger infantry vehicle, which is currently in production as part of Denel’s Hoefyster project.

“Bay Engineering has significant manufacturing experience over the 31-year history of the company and it has developed partnerships with companies that have the capabilities that we do not, such as gear cutting, gun drilling and heat treatment,” Labuschagne asserts.

The company is ISO 9001-approved and Labuschagne highlights that its quality systems are largely based on Productivity SA’s 20 Keys programme of continuous improvement that it has adapted for its own purposes.

“We predominantly manufacture to customer drawings. Typically, our customers would generate the drawings and the designs, and we would provide input in terms of the manufacturing processes, costs and tolerance tests,” he concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor



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