TAKING THE LEAD - JSE MAGAZINE

TAKING THE LEAD

Hulamin helps empower small business by creating opportunities for them as part of its enterprise development initiatives

Hulamin is a leading mid-stream aluminium semi fabricator and fabricator of aluminium products and an enterprise-development leader.

The company is committed to responsible business leadership and good governance, as well as making a positive impact on the economy, environment and communities in which it operates.

Real empowerment of small and medium enterprise (SME) suppliers is critical. Of the 11 million jobs envisaged by the National Development Plan by 2030, 90% are expected to be created by SMEs.

Speaking at a Consumer Goods Council of SA summit recently, Small Business Minister Lindiwe Zulu expressed government frustration at the high failure rate of small businesses. ‘Researchers tell us that the failure rate for new businesses is almost 80% in the first year, and only about half of those that survive remain in business for the next five years.’

She listed interventions that would enable SMEs to evolve into sustainable businesses, which include preferential private- and public-sector procurement as well as incubation support programmes.

Many enterprise development (ED) programmes achieve this. When recently releasing Hulamin’s enterprise development and sustainability report for 2014, Reginald Nyandeni, Hulamin enterprise development leader, said the Broad-Based Black Economic Empowerment (BBBEE) Codes of Good Practice relating to enterprise development provide that companies make monetary or non-monetary contributions, either recoverable or non-recoverable, for development, sustainability, as well as financial and operational independence of beneficiaries.

To achieve the maximum points, the dti has set out a target of 3% of the net profit after tax.

Hulamin

‘In line with these codes, Hulamin’s ED objective is to facilitate the development of sustainable businesses that will create jobs and add stimulus to the economy. Hulamin is committed to this process by providing business opportunities to new enterprises and support for SMMEs, by providing professional, financial and logistical support and various start-up support services. ‘An important element of ED is the emphasis on the value chain, where Hulamin has influence to create opportunities for new businesses as customers or suppliers,’ says Nyandeni.

ED development strategies and activities are mandated by a BBBEE review committee, where feedback is provided on ED performance against required targets. Resources are allocated and fresh mandates are provided. ‘Wholly African-owned enterprises lag behind those of other races in terms of Hulamin’s procurement spend in relation to their population proportion in the country. Hulamin decided to earmark various business opportunities, specifically for African entrepreneurs, within its supply chain to grow its spend within the ED framework.

‘Targeted opportunities include forklifts and equipment, logistics, skid covers, air conditioning, pallets and battens, pest control services, hazardous cleaning and engineering services,’ he says.

In 2014, Hulamin provided business advice and counsel to its African-owned enterprises whose business spend with Hulamin reached a record R82 million from R1.3 million in 1996. These enterprises employ 350 permanent workers, which corresponds to 18% of Hulamin’s total complement of 2 000.

‘For the past two years, Hulamin has obtained maximum points on ED. Certain strategic interventions that have resulted in Hulamin scoring maximum points in enterprise development on the scorecard include the sale of some of Hulamin’s non-core assets to black businesses; favourable payments terms; monetary and non-monetary support for black enterprises including the business support centre in Pietermaritzburg; and management time devoted to conceptualising, guiding and rolling out various elements of the enterprise development,’ says Nyandeni.

As a result, he says, Hulamin’s ED scorecard has risen (out of 15) as follows: 0.04 (2009), 2.8 (2010), 12.54 (2011), 15 (2012), 15 (2013)and forecast for 15 (2014).

‘Hulamin has played a key role in establishing the BSC in Pietermaritzburg, which has contributed enormously to the development of entrepreneurs as well as job creation in the region. Since its inception in 1997, the BSC has provided business training to about 13 500 SMMEs of the total of 92 000 aspirant entrepreneurs that have visited the BSC.

‘Currently, the BSC registers approximately 75 new businesses a year as well as mentoring these new enterprises and integrating them into Hulamin’s supplier chain programme. In 2014, the BSC co-ordinated in excess of 50 BEE verification certificates for SMMEs in support of Hulamin’s preferential procurement requirement. Since 2005 the BSC, together with the SMMEs, has been instrumental in creating more than 2 500 jobs.

‘Of approximately 150 employees who opted to take early retirement packages in 2013, Hulamin has arranged – with the support of the BSC – to assist them with a wide range of business support programmes if they opt to start a business. ‘The support includes seminars and one-on-one business counselling, primarily to assist them to navigate through the early start-up business challenges. These entrepreneurs were considered, like any other companies, for business opportunities within Hulamin’s supply chain opportunities if they met Hulamin’s commercial criteria.

‘Hulamin’s expenditure with these entrepreneurs has grown from zero in 2012 to more than R5 million in 2014 and they collectively employed 50 people on a permanent basis,’ says Nyandeni.

Hulamin2

Aluminium beneficiation initiative overview
In 2014, Hulamin and BHP Billiton collaborated to form the Aluminium Beneficiation Initiative, an economic development initiative focused on developing and supporting high-level entrepreneurs in aluminium fabrication or beneficiation. The project plans to identify, support and train 100 to 150 entrepreneurs and guide them into sustainable businesses within three years, which will result in these companies consuming at least 100 tons of aluminium each.

A key objective of the ABI is to grow local market usage of aluminium, which will have a positive impact on the country’s economy by creating jobs and providing an opportunity for skills transfer. The value-add downstream aluminium projects envisaged will ideally result in products that are exportable and that look at import replacement.

The project will commence in the first quarter of 2015. A foundational element needed to ensure the success of participating entrepreneurs – and ultimately the project – includes putting into place mentors and coaches who will guide, advise and provide general direction to selected candidates.This will especially be required in the manufacturing, fabrication and technical/technology aspects of the businesses.

The aluminium industry in SA exports large volumes of un-beneficiated material, and imports finished products. Through this initiative, Hulamin and BHP Billiton want to promote a business model for the industry that will encourage local sales through great beneficiation or value added.

Small Enterprise Financial Agency has partnered with the initiative by establishing an Aluminium Fund to the value of R80 million. While in SA the consumption of aluminium is in the region of 1 million tons, globally it is currently at some 40 million tons.

It is projected to increase to more than 70 million tons in the next five years, driven largely by growth from the Asian countries. The growth and size of the global aluminium industry underpin major market opportunities for visionary entrepreneurs of this calibre that ABI seeks to support.

Hulamin-logo

www.hulamin.com