Macsteel Tube & Pipe leads the way for pursuing reinvention

Macsteel Express, a new franchise-partnering concept, is being rolled out.

Last year Macsteel Service Centres SA (Pty) Ltd (MSCSA) embarked on a consolidation and reinvention programme set on becoming a centralised distribution-type business and the focus would be on how the company would move steel to customers as effectively and efficiently as possible.

The new strategy and thinking resulted from Macsteel re-evaluating its business owing to a steady decline in steel consumption over the previous five years, with 2019 being a new low and the start of 2020 faring just as poorly – a situation that was exacerbated by the lockdown because of COVID-19.

In various interviews Macsteel CEO Mike Benfield said: “Our strategy is to continue pushing the accelerator pedal to get to the level where we are distributing our steel from fewer distribution centres nationally and not viewing our branch network as a key component of that network.”

A large area has been allocated to the roofing division

“Macsteel is constantly pursuing reinvention and it is with this ethos in mind that we develop innovative fit-for-purpose solutions by virtue of our approach of looking beyond what the customer thinks they need, to understanding what they actually need, and addressing that challenge.”

“Change is necessary, and this time the change needs to be quite radical. The fourth industrial revolution, with a connected world and a high-speed economy with information – and options – at our fingertips, has changed the expectations of customers, including the people we do business with in the steel industry.”

“Our customers want things faster, more affordable, and easier. New, smaller competitors have come into our market, ready to meet those needs. The need to align to the new expectations of customers, in this changing world, together with a struggling South African economy over the last few years, prompted us to relook our business model,” continued Benfield.

Macsteel has been in business for more than 116 years, operating through prosperous and challenging times by adapting its business model to suit the times and markets in which it operates. Pursuing reinvention is at the core of Macsteel’s DNA and the premise from which the business constantly seeks opportunities to evolve.

Macsteel ExpressMacsteel’s new business transformation model drives consolidation and centralisation of functions within its business. This led Macsteel to consider the option of independent ownership of certain Macsteel branches. The concept of Macsteel Express was conceived and the first Macsteel Express franchise opened in Welkom, Free State in February 2021.

The closure of Robor allowed MTP to acquire some of Robor’s equipment that it used to manufacture longitudinally welded steel tube and pipe. It included a OTO and Kusakabe tube roller forming mill and a steel coil slitter

Whilst Macsteel Express is a new franchise-partnering concept, the transition to an Express store will be seamless, says MSCSA. The store will continue to hold the widest range of steel and value-added products and remain focused on partnering with customers to offer and provide solutions.

What makes Macsteel Express exceptional? It’s continued customer centric and solutions-oriented approach to all customer engagements says the company. It is open six days a week with in-store expertise and promises to deliver steel and steel-related hardware designed to meet the highest standards for all commercial and residential construction needs.

A key feature of the Macsteel Express franchises will be the accessibility to the general public and small businesses. The long process normally associated with pre-order, account credibility, execution of the order through despatch and delivery, all time-consuming components, will be cut to a minimum when dealing with a Macsteel Express, depending on size of order.

The Macsteel Express concept is currently being rolled out countrywide and more have been opened since February.

Macsteel Tube & Pipe moves to ElandsfonteinMacsteel Tube & Pipe (MTP), a business unit that is owned and controlled by MSCSA, has been at the forefront of MSCSA’s consolidation and reinvention strategy and programme. MTP has for many years had its tubes and pipes production facility located in Lilianton, Boksburg, Gauteng, from which distribution also took place. This business unit forms and welds steel strips to produce ERW steel tubes and pipes. MTP also offers value-added services for the tube and pipe products such as cut-to-length. MTP’s production of ERW tube and pipes is limited to small bore products (≤ 219mm). This includes structural steel tubes and conveyance steel pipes. Structural steel tubes are typically used as a construction element and form of support in built structures, mining support systems, fencing, hi-tensile scaffolding and furniture. Conveyance pipes are used for the transmission of liquids, oils and gasses. These conveyance pipes find application in household plumbing and heating solutions, irrigation solutions and conveyance solutions in the mining industry.

Manufacture of longitudinally welded steel tube and pipe

However, in 2020 it was decided to acquire some of the manufacturing assets of Robor (Pty) Ltd, a company that had been liquidated in 2019. Prior to the closing of Robor, the South African Competition Tribunal had approved, with conditions, Robor’s merger with MSCSA’s tube and pipe business.. This Merger never materialised after the due diligence were done. Shortly after Robor Liquidated and Macsteel procured some of the Robor Assets

The closure of Robor allowed MTP to acquire some of Robor’s equipment that it used to manufacture longitudinally welded steel tube and pipe. It included a OTO and Kusakabe tube roller forming mill and a steel coil slitter. This equipment is installed at what used to be Robor’s main manufacturing facility and head office in Elandsfontein, Gauteng.

Consolidation of properties This offered MSCSA the opportunity to further rationalise and consolidate its sales, operational, procurement and distribution centres. The result was that MSCSA decided to lease the large Elandsfontein facility, move MTP’s manufacturing and distribution services to Elandsfontein, as well as move the Macsteel Roofing and Macsteel Pipes, Fittings & Flanges (Harvey stays at Vulcania Brakpan) to the same facility.

“Numerous properties have been closed and all services have been consolidated at Macsteel Trading Germiston South and Macsteel City Elandsfontein,” explained Willie van der Colff, General Manager Operations of MSCSA.

“We have also been able to deploy better economies of scale in that there are many different operations within the various units that are now shared, thus eliminating excess and duplication. Centralising departments such as procurement, inventory and sales have created positive synergies that we were not expecting.”

“At this site we will have the capabilities of manufacturing tube from 21.3mm up to 60.3mm on the one line, 60.3mm up to 168mm diameter and 6mm thickness on the other line and in the near future our third line will give us the capability of running 114mm to 219mm and 6mm gauge.”

“We will have approximately 600 to 700 staff – administrative, operational and warehousing – on site when we are fully operational.”

“Distribution has seen a major shakeup as has our branch office situation. For example, Kimberley has been combined with Bloemfontein, Richards Bay and Port Shepstone have been combined with Durban and George with Cape Town, amongst others.”

“This gives us better control and a more streamlined supply chain with better optimised inventory holdings and also affords entrepreneurs to join our Macsteel Express franchise-partnering concept.”

MTP’s Elandsfontein capabilities“In Elandsfontein we now have 110 000m² under roof as compared to 68 000m² that we had at Lilianton. The total area for the whole site is approximately 250 000m².”

“The existing OTO mill that we purchased has been serviced and commissioned and is now fully functional and we will move one mill from Lilianton to Elandsfontein.”“At this site we will have the capabilities of manufacturing tube from 21.3mm up to 60.3mm on the one line, 60.3mm up to 168mm diameter and 6mm thickness on the other line and in the near future our third line will give us the capability of running 114mm to 219mm and 6mm gauge.”

“In essence we have the capabilities to cover the whole spectrum of the popular sizes required in the industry.”

“We have also acquired the Samco CNC cold form open section mill through the liquidation and the new mill together with our existing ASC CNC cold form open section mill is already fully operational.” Part of the Open Section roofing have also relocated. Five open section mills, five corrugated mills and five IBR mills are already operational at the Elandsfontein facility. ”

“The automatic galvanising plant have also been acquired through the liquidation process and plans are ongoing to commission this plant in 2022.”

“Warehousing will in the future all be robotised and distribution is being streamlined so that we operate at the maximum efficiencies.”

“We do import material from Turkey and China occasionally but the majority is locally supplied. This includes the 2mm and 6mm hot rolled steel we get from the Columbus mill in Middleburg, Mpumalanga in recent times.”

In Elandsfontein MTP now have 110 000m² under roof as compared to 68 000m² that they had at Lilianton. The total area for the whole site is approximately 250 000m²

“Commercial sustainability in tough economic conditions remains one of the driving forces behind Macsteel’s business transformation journey. For example, in June 2020, MSCSA merged Macsteel Trading Pipes, Fitting and Flanges into Macsteel Fluid Control, which has since achieved the forecast growth it set out to achieve. The merger required an extensive change management programme which has yielded great success. We continue the drive towards pursuing reinvention and we are seeing the realisations that we set out to achieve.”

“Every industry goes through reinvention cycles that typically start with unfulfilled needs. Startups and corporates turn to innovation to fill that gap, increasing industry fragmentation. As the industry matures, the need for efficiency and scale increases, pushing the sector through consolidation but also forcing them to reinvent themselves. In each stage in an industry’s life cycle, there are risks and rewards for investors. In the early stages, the stakes are high but recognition through hard work soon outweighs those risks.”

“Macsteel City, the name we fondly refer to the Elandsfontein facility as, is the start of a reinvention cycle for us. Our focus going forward is not only going to be just on efficiencies. As a material supplier of everything steel related it is important for us to drive customer engagement to increase sales. We can only do this by becoming customer centric and offering them service levels way above anybody else – before, during, and after a purchase,” concluded van der Colff.

For further details contact Macsteel Service Centres SA on TEL: 011 871 0000 or visit www.macsteel.co.za