WHEN Brian Naidoo, the new owner of a Durban business which manufactures automotive components bought the company out of liquidation, he could see its potential.
And the new team at Microfinish were determined to slash the huge gap that existed between the cost of their components and that of their competitors in India and China.
“Our products were 135 % more expensive at that time,” recalled Deshan Naidoo, the former operators and strategy director, who has recently taken over as managing director.
Now, as a result of Microfinish’s long-standing relationship with the Technology Localisation Implementation Unit (TLIU) and the TLIU’s interventions, that cost gap has been dramatically cut to 30%-and it is predicted to be reduced even further.
The company has now reached a point where it is a force to be reckoned with in the global market, signing up special contracts with international customers in the UK, Europe and America. It is currently in negotiations to increase its supplies to the United States even further.
Thirty-five new jobs have been created, boosting the workforce at Microfinish’s manufacturing plant in Wareing Road, Pinetown to 147, in addition to other workers at the Microcast foundry at the Westmead industrial site 4km away, where the raw material is produced.
“It was a significant risk when we concluded the deal and decided to resurrect the business, but we knew we had to make the business work again,” recalled Naidoo.
The problem that had faced the company was that it had failed to invest in technology, the result being that it had lost the race against its competitors.
When the new management team took over in 2011, it rehired the majority of the former staff.
The company is a niche manufacturer of automotive components, predominantly supplying two products housed in the cylinder head (valve guides and valve seat inserts).
Its aim is to diversify the product range into other automotive and non-automotive precision parts in line with market demand. The re-energised team is determined to “become a diversified, world-class, lean manufacturing outfit that thrives on change and technological innovation while delivering meticulous, superior products, timeously.”
And 99% of its products are already being exported to developed countries with Microfinish manufacturing the smallest to the biggest components that are used in everything from small passenger to heavy duty vehicles, locomotives, big tractors, logging equipment and shipping.
“We have complete reverse engineering capability and we can create tailor-made solutions for our customers,” the managing director said.
Microfinish has invested heavily in research and development, looking at new technology and newer materials to provide better performance. A massive R100-million was invested between 2012-2017 to take the business to its current world-class level.
The Pinetown plant boasts 50 high-quality precision CNC machines and also has the benefit of design software-among the best in the world-that was funded by Technology Localisation Implementation Unit (TLIU) programme. While physical prototyping had to be done in the past, the work is now electronically simulated with this design software.
“This optimises the design and gives the best results. Lead time is drastically reduced and our clients have their solutions so much sooner,” explained Suveer Singh, the head of engineering and chief technical officer.
TLIU has also been involved in improving the plant lay-out and the process flow, thus decreasing the amount of handling from the raw material stage to the finished product and cutting the time components spend as work-in-progress. This too further reduces the lead time, positively affecting the bottom line.
“In this industry, everything is time based, so saving time has a huge impact on competitiveness and profitability,” Naidoo added.
Microfinish forged its relationship with CSIR in 2014 and CSIR has been involved in various projects with the company, both in the Technology Assistance Package and the TLIU.
“Through the TLIU we lean on CSIR for intensive research and development,” Naidoo said.
TLIU commissioned a project team to work with Microfinish in a bid to substantially reduce a solid mass of raw material that was being used in the manufacture of valve seats. It was an intervention that has had a huge impact.
Microfinish had previously been producing 80-90% of raw material to get to the slim-line finished product.
“It was extremely uncompetitive as the cost of raw material was very high, implying longer cycle times,” Naidoo said.
The project team included representatives of the National Foundry Technical Network (which is funded by the Department of Trade and Industry), the Metal Technology Casting Station housed at the University of Johannesburg, the Casting Simulation Network (which is supported by the Department of Science and Technology and the TLIU, which is hosted by CSIR) and the Microfinish team.
The eight month collaboration came up with a solution that reduced the cost by an average of 37%, making the product considerably more price competitive globally.
Microfinish, which owns the design mould for the product, went into full volume production in 2016, and also went from a single shift to a 24-hour operation.
With the global market assured, Microfinish is now planning to expand into the local South African market, where is sees plenty of gaps and opportunities it can fill, particularly under the localisation and empowerment initiative mandated by the government. This is especially so as there are a very few black-owned automotive component manufacturers.
“This will eventually mean more jobs being created,” Naidoo said.
While there is still much to do to achieve this vision, Naidoo says the company is definitely on the right path.
“Exciting times are ahead,” he predicted.
The company-now in a diversification and growth phase-has been recognised for what it has already achieved.
It has been placed in the prestigious Exporter of the Year competition, organised by the Durban Chamber of Commerce and Industry.
It was initially honoured in the emerging category and then, in 2017, Microfinish went on to win the coveted medium-sized manufacturing export award.
Manager at the TLIU, Ashley Bhugwandin, who has provided mentorship to the company commended Microfinish on embracing new knowledge.
“When I first met with the Microfinish team I identified that there was great potential at the company due to the commitment of management and the manner in which projects were handled. VAMCOSA also identified the company as a candidate that could manufacture valves within the designated sector.
“Thus through the support of subject matter experts and the implementation of strategic systems and processes we were able to migrate Microfinish from an automotive valve manufacturer to an industrial valve manufacturer.
Bhugwandin added that through the entire process there was an hunger and appetite from the management and staff of Microfinish to swallow up all the assistance that they could get and this is resultant in the growth of the company and also the resultant savings.
“This bears testimony that team work is the key to success,” he said.