Under the guidance of CEO Sandro Scherf, Pilot Crushtec International rose from humble South African beginnings to become not only southern Africa’s leading supplier of mining and quarrying equipment, but also a force to be reckoned with on the international crushing and screening stage. Speaking to Munesu Shoko, Scherf highlights the company’s winning blueprint and some key achievements over the years, the latest of which is the Metso ‘Best New Services Distributor’ award.
We have often heard the phrase “Africa is not for sissies”, and it applies to many aspects of the continent. For example, the geology of African deposits makes mining in Africa challenging. Whether in quarrying or mining, the continent’s rock is notorious for its hard-to-break nature. This is compounded by the tough nature of the business environment. Doing business in Africa is different to anywhere else in the world, and can prove to be stressful for the uninitiated.
However, that the continent offers great growth potential is no hyperbole. As one of the few remaining untapped markets in the world, Africa has come on to the radar of many international companies looking for a competitive advantage. But, it should be noted that doing business here is a long and taxing exercise. You have to have lots of patience, especially since everything works on African time and terms.
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Throughout its 27-year existence, the company has achieved continuous long-term growth and sustainability, even in the face of some challenging business cycles. To date, it has an annual turnover in excess of US$36 million and employs more than 100 people at its head office and assembly factory in Jet Park, South Africa.
To get a grasp of the company’s achievements over the years, it is worthwhile exploring its humble South African beginnings. “We started Pilot Crushtec in 1990 as a small family business focused on vertical shaft impactors (VSIs),” says Scherf. “We succeeded quite quickly in the VSI business and immediately started exporting.”
During the early days, South Korea was Pilot Crushtec’s biggest export destination, and some of the top export markets also included Mauritius, Canary Islands, as well as some European countries such as the UK, Germany, Italy, Croatia, Slovenia and Serbia, among others. These early achievements didn’t go unnoticed as Pilot Crushtec went on to win Merit Awards for Export Achievements at both the 1993 and 1994 South African State President’s Awards.
The fact that the company started exporting from day one also speaks volumes about its engineering prowess in VSI technology. Its TwisterTrac offering went on to win the SA Pro/Awards’ Competition by Product Award in 2006, before clinching the Design Excellence Award from the Design Institute of South Africa in 2008.
The company has truly made its mark in the crushing and screening industry. “There are a few products we pioneered along the way. We introduced the first tracked VSI crusher, the TwisterTrac, and the first Double Roll crusher in the world, the DoppiaTrac 400,” says Scherf. “We went on to popularise the modular solutions. The Pilot Modular product focus – offering instant off-the-shelf modular solutions – changed market dynamics both in South Africa and globally. We have been very successful with that and in the past six years we have seen many international competitors placing greater focus on modular solutions.”
In 1993, Pilot Crushtec expanded its business by taking on the Terex Finlay agency in southern Africa. This went on to be one of the biggest success stories in the company’s history. During the 17-year spell as Terex Finlay’s distributor in the region, Pilot Crushtec pushed as many as 2,000 units into the market. “We were always either the biggest or the second-biggest Terex Finlay distributor in the world. During our tenure, South Africa was one of the few countries where the brand maintained a very strong market share,” says Scherf.
After parting ways with Terex Finlay in 2013, Pilot Crushtec went on to take the Sandvik Mobile Crushers and Screens business into its stable. Due to several reasons, the decision was taken to terminate the agreement on a mutual basis. “We carried on supporting Sandvik machines under warranty and continued with our standard obligations on the support side. We also supported these machines as we do with everything we have ever sold,” explains Scherf.
The major highlight of the last few years has, however, been the agreement with Metso – which came into effect on 2 April 2016 – to distribute Metso’s aggregates products and services, including static, tracked and wheeled, crushers, scalpers and screens in southern Africa. Scherf says the developing relationship with the Finnish global quarrying, mining and construction equipment giant has been a key feature of the past 12 months, adding that Metso has impressively accounted for a high proportion of the supplier’s wear and spare parts business and new sales.
“Last year – ended February 2017 – we managed to grow the business by about 17%. Metso contributed significantly to that growth. This year (ending February 2018), we expect significant growth of 30% compared to last year. Despite a static market with no growth for the past three years, we have grown our market share significantly,” says Scherf.
Several key initiatives have been at the centre of this growth. The extra emphasis on the spare parts and components business has necessitated the setting up of a dedicated aftermarket business. “We have initiated an aftermarket team designed specifically to address customers at ground level, offering advice in production optimisation, wear and spare parts benefits, ultimately providing solutions that ensure the lowest cost per tonne. We have increased our production, parts and sales teams, which in the current economic climate, indicates that we are delivering on our customers’ expectations and creating an environment of trust and dependability,” says Scherf.
Pilot Crushtec has also significantly increased stock levels for Metso parts, partly due to the fact that the company also inherited a large installed base of Metso machines in southern Africa. “We have – together with Metso – worked hard to keep wear parts’ pricing as low as possible to close the gap between OEM parts and pirated components. We have done this without compromising our processes and quality,” he explains.
Another key initiative has been the recent massive investment in training, both for its people and customers. This has been done through engaging the services of a specialist training company.
All these efforts haven’t gone unnoticed. In September last year, Pilot Crushtec International was awarded the ‘Best New Services Distributor’ at Metso’s global conference held in Tampere, Finland. The award was in recognition of exceptional levels of customer service and support. At the time, vice president of Distribution AGG Business Line at Metso, Adrian Wood, described the award as an achievement of note.
“We currently have a global network of more than 100 distributors, of which between 20 and 25 have been appointed over the last three years. Having gained this award after barely 16 months as a Metso distributor speaks volumes about Pilot Crushtec International’s commitment to customer satisfaction,” said Wood.
Speaking of market conditions, Scherf says business has been challenging in the past three years, especially from a new machine sales point of view. He notes a big trend towards sweating of existing assets as customers continue postponing replacement cycles due to difficult market conditions. This is exacerbated by the lack of funding as finance institutions seem to have very low appetite for risk at this stage. Consequently, the market for second-hand machines has been thriving as well, although Pilot Crushtec hasn’t sold that many due to very limited trade-ins.
The upside to this trend is the growth of the aftermarket side of the business. For example, by October 2017, Pilot Crushtec’s spare and wear parts business had grown to about 50% of the company’s turnover, up from the standard 35-40%.
Scherf is of the view that rebounding commodity prices have offered some reprieve, but policy and regulatory uncertainty have frozen new investment into the South African mining sector, putting the local mining industry under immense pressure. This has had a trickle-down effect into the infrastructure development sector, where there has been no significant investment into new projects.
However, Scherf notes some improving business conditions in Africa. “Towards the end of last year we have seen some new machine orders from Zimbabwe and Congo. Of particular note has been the run of some big orders from Zimbabwe,” he says. Between October and November 2017, the company sold more machines into Zimbabwe than anywhere else into the world. “We have had more business into Zimbabwe in six weeks than we have had in five years in that country,” adds Scherf.
In recent years we have seen African politics firmly trumping economics. There is a strong relationship between economics and politics because the performance of the economy is one of the key political battlegrounds. However, Scherf is of the view that recent political developments in both South Africa and Zimbabwe are encouraging.
A great deal is expected from Cyril Ramaphosa who was elected as the president of South Africa’s governing party, the African National Congress. His election has brought some confidence, as we have seen the country’s currency strengthen and the stock market showing above average activity, especially during this time of the year. Even credit rating agencies are getting a little excited, which is positive for the country’s economy.
Across the border, Zimbabwe could also be on a much stronger growth path following the ousting of Robert Mugabe late last year. The country has suffered decades of economic decline and it is encouraging to see that the new leadership is seeking re-engagement with the international community, though significant risks remain.
“The commodity price cycle is also experiencing good growth globally and it is starting to translate into machine sales. We have also seen some of our export markets coming back slightly. For instance, we sold four machines last year into Australia, from zero the year before and one in 2015. We are starting to get some serious enquiries from the global market, which is very positive for us and the global market at large,” concludes Scherf.
