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168 www. bus- ex. com November 09 Catalyst change

Formex Industries November 09 www. bus- ex. com 169 While recessions are inevitably painful, they can also provide the opportunity for a much needed re- evaluation of company strategy, as Alan Swaby learns Catalyst change for W hen you can claim to be as competitive as any manufacturer anywhere in the world, then you know you must be doing something right. And when the quality of output is sufficient to keep the best names in the automotive business happy, then you know you must be doing everything right. That's the position South African manufacturer Formex Industries finds itself in. With two plants in Port Elizabeth and a third in Pretoria, Formex Pressings and Formex Tubing make component parts for vehicles built locally and many that are built overseas. " Around 80 per cent of the work we do," explains managing director Werner van Rensburg, " is for exhaust systems and catalytic converters. That makes us the country's largest automotive consumer of stainless steel, with the three plants using about 1,000 tons a month. The exhaust parts we make go into a wide range of local and overseas plants covering the full range from Audi to VW." The business we know today has its roots way back in the past, in the grandly named British United Engineering, established in 1915 in Port Elizabeth to support the thriving shoe industry. Initially output centred around far less grandiose tacks and nails but throughout its history, the business has changed and adapted according to circumstance. In 2003, ownership settled in the hands of HCI- a black empowerment investment organisation, 46 per cent owned by two unions and with a bewildering spread of interests from clothing to casinos. It's a very hands- off relationship, leaving Formex to run the business as it best knows how. Although the automotive industry in South Africa has been hit by the recession, it has perhaps done a little better than many other countries. " Last year," says van Rensburg, " volumes were around 70 per cent of historical highs. It was necessary to very quickly get costs in line with sales but it also provided us with the opportunity of reshaping the business." Five years ago, just after the HCI acquisition, Formex had sales of R100 million. Last year they were R900 million