Commercial director of Haw & Inglis Civil Engineering Francis Chemaly tells Jane Bordenave how the company has developed over the past 12 months and what the future has in store.
Cape Town-based Haw & Inglis is one of South Africa’s foremost civil engineering firms, with 25 years of experience in the field. The company has particular expertise in road and highway construction and has been instrumental in developing the country’s infrastructure.
As reported the last time that Achieving Business Excellence spoke to the company, Haw & Inglis was involved with three major projects linked to the World Cup: a R220 million project to upgrade the Hospital Bend Interchange, one of the main arteries into Cape Town; a R550 million project on the R300 freeway, which links two sections of the city; and a R150 million contract widening the N2 alongside the Lagoon leading into Knysna, close to where the French World Cup soccer team were staying.
While there were more contracts on offer, the company took the decision to limit their exposure to the World Cup to these three. “We did have the capacity to take on more work, but we decided that it would be better for business if we did not tender for any more,” explains Francis Chemaly, the firm’s commercial director. “Our rationale was that if we had gone all-out for the tournament we would have been at risk of everything stopping at once, leaving us high and dry. Consequently, we decided to look at other infrastructure projects to maintain continuity of work beyond summer 2010.” This managed level of risk, with only 30 to 40 per cent of turnover being dependent on the World Cup, meant that the firm did not experience a massive drop-off in turnover levels or work once the associated construction was completed.
One unforeseen consequence of the World Cup was that much of the South African economy was insulated from the effects of the recession, which the rest of the world had already been feeling for over a year. However, the crisis has now caught up with the country, and businesses are feeling the pinch. “While we did manage our risk carefully in the run-up to the World Cup, no one can escape the effects of the recession completely,” says Chemaly. “The market has started to feel the pain over the past six months and we have seen margins decline significantly. I think it will take in the order of a year to 18 months for things to stabilise and business to return to some level of normality; however, we remain optimistic.”
One of the company’s areas of focus for investment is building South Africa’s talent pool in terms of engineering and technical expertise. “What we are experiencing with the government’s continued focus on infrastructural spend is high skills shortages in the engineering and built environment fields of knowledge. This situation poses a real risk to industry in the mid to long term as, if the government lacks these skills, there is the danger that it will have difficulty managing the budgets in the respective domains. This could lead to non-investment or poor spending decisions when using money designated for these areas.”
To combat this problem, Haw & Inglis has formed a joint venture with a number of similar-sized construction companies, consulting firms and the provincial government, which put in place a R9 million to R12 million higher education bursary programme. Between 200 and 250 bursaries are awarded each year to people who would not otherwise have been able to access university or technical college, roughly 40 of which are co-financed by Haw & Inglis. The consortium also mentors the bursary students and offers counsellors to help them through the process, as most come from financially disadvantaged backgrounds. Once they have finished their studies, the companies involved in the programme take the students on as employees. This helps stop the skills seepage that South Africa has experienced over the years, with many newly trained engineers and other skilled technical workers leaving to work in Europe or the Middle and Far East.
Specific focus has been placed on employees indentified to work in government. They spend some time working and receiving on-the-job training in the private sector in a structured developmental programme, following which they are placed back in government, enabling it to rebuild its technological and professional capacity. “It is a long term project and a real challenge, but we are confident we will succeed,” says Chemaly.
The firm’s mentoring and rotating promotion schemes remain in place and form the keystone of its ethos. “We believe in a culture of succession and promoting within. We have a system whereby an employee is expected to find his or her replacement if they wish to move up the career ladder themselves. Those of our staff who are already in top-level management are expected to mentor people who are lower down the chain of command. Additionally, once specific top management reach the age of around 50 to 55, they are encouraged to move aside and allow fresh blood to take on their roles, while still remaining with the company as a mentor and guide. This keeps our management fairly young and makes us a more dynamic company, as well as rewarding our employees for their hard work and committed service.”
Looking to the future, Chemaly sees Haw & Inglis as a more diversified company, but not necessarily a bigger one. “When we look forward, it is hard to make predictions on things like turnover, as it depends on what the South African market does. We are not a company that pursues growth for the sake of growth—as long as we are able to deliver for our clients, ensure that our staff are happy and maintain a competitive position in the market at the size we are now, then there is no need to take on an aggressive growth strategy,” he explains. “In terms of diversification, we are considering the possibility of moving into Africa and, of course, our acquisition of Peak Projects has enabled us to take on more contracts outside of the roads and highways arena.”
With the company having celebrated its 25th anniversary last year, it is not hard to imagine that with its continued strategic approach to management, dedication to its employees and measured approach to all areas of its business, it will still be in good health for another quarter-century—and longer—to come. www.haw-inglis.co.za