VR Group B eing fired from one's first three jobs doesn't look good on any résumé, but after the third time, John Van Reenen had already decided the only person who could employ him successfully was himself. He was a qualified chartered accountant who couldn't settle for sitting in the back office and being told not to meddle with marketing or production. That was 34 years ago. His first venture into supplying high-strength abrasion- resistant steel to South Africa's mining industry imploded, not because the market was wrong but because of partnership issues, so in 1992 he picked himself up and went straight back into the business of servicing the demand for the best grades of steel. Since then the story has been one of steady growth based on South Africa's long engineering tradition. " We were the only company importing high- quality steel from Swedish Steel AB, and we had an agreement with BHP Billiton to develop fabricated steel dragline buckets to supersede the cumbersome cast iron equipment that had been the surface mining industry standard." So in 1995 VR Steel started a dragline division, entering into a manufacturing partnership with Barloworld, the local Caterpillar dealer. This company was sold to Caterpillar in 1998, with VR Steel continuing to distribute the product until 2003, when Van Reenen decided to launch his own brand. A 12,500- square- metre facility in Alberton near Johannesburg manufactures new equipment, and a smaller site 200 kilometres to the east at Middelburg repairs the dragline buckets as well as the truck bodies, rope shovel buckets and hydraulic shovel buckets and other steel equipment that VR Steel started to manufacture under its own brand in 2008. The VR Group's steel division is still the largest part of the business. VR Laser Services, based at Boksburg, imports steel from Sweden and Finland and is the biggest supplier of armour plate in South Africa. Vehicles for cash in transit and civil security form one niche market, but the division's biggest customer is Land Systems South Africa, a BAE subsidiary that supplies armoured vehicles to defence forces all over the world. If the steel business is larger and more mature, the dragline division is the fastest growing, or it was until the recession started to bite, says Van Reenen ruefully. " The mining equipment business has dropped off to less than half what it was, but we are picking up a lot of repair business as opposed to new business." The mines may not be buying much new equipment in the credit squeeze, but that means that they have to spend more on getting the most out of the equipment they already have, and that's keeping the cash coming in. For mining companies, equipment is a massive capital July 09 www. bus- ex. com 31 ofdetermination The VR in VR Group stands for John Van Reenen, and in many ways the company refl ects the man- resilient, single- minded and, in a word, entrepreneurial. John O'Hanlon talks to him about building a global business
" It guarantees continual improvement on the product, and it means that all buckets that are digging today are 2009 models." Now the service is being extended overseas. A remote mine in Australia, for example, can opt to pay the fee, deduct the cost of its own labour, and VR will supply the steel and expert engineers to ensure that it is repaired to specification, with all upgrades. VR Steel put itself on the international map when it took a stand at MINExpo 2008 in Las Vegas last September. It had already opened subsidiaries in Australia and China and since the show has appointed agents in Chile, Brazil and India. " Although the domestic market has dropped off significantly, at least there have been some very interesting developments overseas," Van Reenen says. " For example, we're about to send our first drag chains to China, which was a market we had never previously considered. China is looking like a very good market for us, but it's a long- term project; to break into the China market you're looking at five to seven years." He's already supplying dragline buckets on trial to India and truck bodies to Brazil and Chile, countries where there's little if any dragline mining. Van Reenen is an enthusiast for social responsibility, less so for BEE ( Black Economic Empowerment), which he thinks has done little for the working man. Accordingly, he has put his company's weight behind sponsorship and training initiatives that make business sense as well as political sense. " There's a huge skills shortage in South Africa and not enough access to education," he observes. VR sponsors students at the burden. A dragline bucket weighs 45 tons, its life is spent scouring across rock, and it wears down quickly. Every four to six months they have to be either repaired on site or sent in for service, and that costs between 600,000 and 1.2 million rand (? 54,000 to ? 108,000) every time. " Our customers like to keep their costs fixed, so ten years ago we came up with a solution they really like," says Van Reenen. " We went to the mining companies and offered to maintain these buckets on a cents- per- cubic- metre basis." The company pays a charge based on the amount of material the bucket has shifted since its last service. Customers loved it because for the first time they could plan a significant element of their overhead. " It helped us to gain a lot of market share," Van Reenen claims. " When you buy a large piece of capital equipment, you take on a lot of responsibility with the ownership of that equipment. Now we take over that responsibility. We make sure it is properly maintained, and we also make sure that all the new upgrades that our research and development team come up with are installed in the older buckets as they come in for repair." It makes them last longer and produce more, he says. " The mine wins and we win." VR Steel's Middelburg workshops have had the interesting effect of turning the company into its own customer. By monitoring the problems that recur, it can use its engineering team to create a solution. The solution is trialled, and if it works it becomes an upgrade. 32 www. bus- ex. com July 09 " Our customers like to keep their costs fixed, so ten years ago we came up with a solution they really like. We went to the mining companies and offered to maintain the buckets on a cents- per-cubic- metre basis"