A Pinetown company has become a force to be reckoned with as the largest manufacturer of safety footwear on the African continent – and as at least one of the top five players in the sector globally.
BBF Safety Group, a subsidiary of the Beier Group, which is 49% owned by Beier Family Holdings and 51% owned by black economic empowerment firm Isibaya Strategic Investments, is one of four divisions of the group.
BBF is an entrant in the Durban Chamber of Commerce and Industry Exporter of the Year 2017 awards. The awards, held in partnership with the Transnet Port terminals, will be held on Thursday this week.
Wolfgang Beier, chief executive of Beier Group and executive chairman of BBF Safety Group, is a third generation Beier at the helm.
His grandfather, Oscar, came to South Africa from Germany and started the business in Maydon Wharf in 1929 with about 150 staff. Today it has four factories in Durban, Port Elizabeth and Johannesburg, employing more than 2 000 people.
“My grandfather was a wool merchant who worked in a wool and hat factory when he arrived.
“He built up capital and bought that factory after about five or six years.
“He then turned it into a wool washery, which takes raw wool and converts it to the stage just before spinning,” he said.
“In 1939, it was expropriated by the Industrial Development Corporation because wool was a strategic commodity for the war, but they had no one to run it so they asked him to run it and they gave it back after the war,” he said.
The company moved to its existing Pinetown factory in 1953.
When Beier’s father Herman joined the business in the 1960s, it diversified into industrial products, including footwear, environmental-engineered textiles for filtration, coated PVC and poly urethane textiles, and it expanded to medical textiles in 2004.
Beier qualified as a mechanical engineer and worked in the US, Canada and the Netherlands before joining the business as a general manager in 1990, and climbing the ranks to managing director before being appointed as CEO in 2006.
The company sold a 26% shareholding in a successful BEE deal to Isibaya Strategic Investments (then known as Elderberry) in 2008, and a further 25% last year.
The company merged with its biggest competitor, Bagshaw, in 2014 and went on to buy out four more companies from Steinhoff, part of the listed Bolton Group.
Beier said the local market – about 250 million pairs of all types of shoes are used in South Africa per annum – has potential for growth because only 50 million pairs are made locally.
He estimated that about 80% of fashion footwear was imported.
“The bulk of that 20 years ago was manufactured in SA, so jobs have flown out of the country – that’s why our deal was allowed by the Competition Commission. We said ‘we are successful and Bagshaw is successful but if you don’t allow us to merge, those others will die and we will lose jobs, and safety footwear in SA will then drop below 50%’.
“Conventional wisdom is that once a market in a country drops below 50% local manufacture, it dies,” he said.
“We own 50% of the safety footwear market in SA and are the biggest manufacturer in Africa and probably the third in the world. Our growth is coming from replacing imports, not from growth in the economy,” he said.
BBF supplies the local market, which consumes five to six million pairs of safety shoes per annum, with about 2.5 million pairs.
The company’s footwear is produced to SABS and European Norm standards, and are made with local leather and raw materials – except for the soles – and a network of SMMEs in KZN and the Eastern Cape manufacture the uppers.
It exports about 450 000 pairs of safety shoes valued at R125 million each year, equating to 12.5% of turnover to the US, Singapore, Malaysia, Australia, and to most sub-Saharan African countries including Ghana, the Democratic Republic of the Congo, Tanzania, Kenya, Malawi, Ivory Coast, Zambia and Zimbabwe.
“We have local representation everywhere. We follow the big multinationals – if ABI, or Checkers or SAB goes into Africa we will follow them,” Beier said.
“We want to have exports within the group of between 20% to 25% of our turnover, and BBF being the biggest individual company in the group has the biggest number of exports,” he said.
The Department of Trade and Industry’s (dti) Clothing and Textiles Competitiveness Programme introduced in 2010 aims to help companies to be globally competitive and includes a conditional financial grant production incentive of 7.5% to enhance competitiveness based on a company’s annual manufacturing value addition.
“The dti has realised that the lowest spend per job is available in the footwear and textile industry where you can spend the least amount of money to create the biggest number of jobs,” Beier said.
He said this grant system had been a “huge” part of the firm’s success, enabling investment in R120m worth of machinery across the group.
Beier is decidedly upbeat about the future of local manufacturing.
“We are going into a golden age for manufacturers because if you are manufacturing locally you have got BBBEE legislation and PPPFA which forces customers to buy local.
“The legislation has been around for a long time, but within the past eight to 10 months we have seen a decided swing, and it is led by the government and municipalities buying local because they have realised it’s a way to create local jobs,” he said.
“We’re going to live in a very volatile rand environment for the next five or six years and that plays towards local manufacturers because if your are importing it is very difficult to deal with volatilities in terms of pricing, lead time and supply,” Beier said.