On lighting, the economy and 48 years of business success

June 2nd, 2017, Published in Articles: EE Publishers, Articles: Vector

 

Vector visited the Johannesburg office of Magnitech Lighting and spoke to managing director Howard Page, chief operating officer Ari Budin and general manager Amar Singh about the company and the times in which it is now operating.

Page explains that Magnitech was founded by his late father-in-law, Holocaust survivor Leon Talerman, and that the baton was handed to him in 1996. When Page joined Magnitech, the company employed approximately twelve people. During the ensuing years, he focused on growing the company, which today employs in excess of 120 people.

Today Magnitech owns its own tools, which it uses to produce its fixtures to service its client base. The range has taken 30 years to develop and even now, Magnitech continues to invest in developing new fixtures to meet the evolving market demands.

He says that as early as the 2000s, the company adopted a policy to employ and upskill young South Africans with little training or experience – long before the advent of Black Economic Empowerment legislation. The objective, he says, is to train these young people in the capacity in which they are employed, and to provide them with the opportunity to empower themselves.

Ari Buden, Howard Page and Amar Singh.

Over 80% of new appointments at Magnitech in recent years were young people from previously disadvantaged backgrounds. No employee holds a “token” position at the company; all employees are given the opportunity to harness their own potential and to grow in their positions. This is an approach that has never let the company down. In the 48 years of its existence, staff turnover has been almost zero. Some employees have worked at Magnitech for over 35 years, and many for 20 years plus.

The company was founded on an import and sell model: lamps were imported from Japan while their fittings came from Italy. Page says initially, and until the early 1980s, the rand could buy $1,35. With the collapse of the rand in the early 1980s to $0,50 to the rand, the fittings from Italy became too expensive to sustain the model.

Magnitech therefore “tooled up” and established a manufacturing and assembly facility in Johannesburg to develop a local range of industrial fittings which holds its own in the international mining and heavy industrial market.

Today, Magnitech is a manufacturer and supplier of bulkheads; floodlights; high mast lights; office lights; security lights, and amenity and streetlights to the industrial, municipal, commercial and mining sectors.

Page, Singh and Budin agree that the success of any lighting company depends entirely on its relationship with its clients and its workforce.

“Never prescribe to your clients,” says Page. Listening to their needs, understanding their requirements and why they experience product failure is paramount. In this regard, Magnitech will assess the requirements and develop prototypes for the client to evaluate. In this way, the client contributes to the company’s research and development and, in the end, benefits from it.

In some coal plants, for instance, the presence of wet coal causes sulfuric acid corrosion. This leads to electrolytic adhesion, where dissimilar materials such as stainless steel and aluminium become bonded. In the case of light fittings, the screws become effectively fused with the housings. Page tackled this problem by developing what he terms the world’s first aluminium-based industrial bulkhead with a clip system, a design which has since been reproduced by a number of other local lighting companies, he says.

“Consultants talk among one-another and remember when your installations are successful. Satisfied customers build your reputation for you by spreading the word that you honour your commitments and don’t over supply nor look for loopholes when a small percentage of inevitable faults occur in the product.”

The majority of lighting installed in South Africa today, says Page, is still of the high-intensity discharge (HID) type. They say the cost-benefit ratio of LEDs often makes them a hard sell but the cost is reducing steadily while lumen-per-watt ratios are increasing in favour of LEDs.

Magnitech stocks a complete range of LED highbays, floodlights, amenity lights, street lights, office and security lighting, and has a stock holding in the tens of millions, components included.

The company developed its own LED bulkhead, the MagLED, as well as many other LED products to suit market requirements. It has also embarked in the street lighting arena and is experiencing significant growth in that sector.

In terms of its distribution model, Page says the sector to which Magnitech caters requires a two-pronged approach, starting simultaneously with consultants as well as end-users. Magnitech’s clients include consulting engineers, mines, plant engineers, end-users and wholesalers. The company has branches in Cape Town and Johannesburg, as well as operations in Bloemfontein and Durban.

When asked about the much-needed upturn in commodity prices, Page points to the apparent up-beat expectations displayed in the mining industry of late. Although new local mining operations are on the decline, this gap is being filled for Magnitech with projects in the rest of Africa and overseas. He points out that mines are not built to meet today’s demands – they are long-term projects with the long-term future of the mining houses in mind. These mining houses employ people to reflect on the long-term viability of the mines they build, so they have their finger on the pulse of the commodity prices and clearly expect a significant upturn.

He says China produces over 80% of all lighting products in the world market, while other, lower-cost producing companies such as Vietnam are on the rise. Chinese manufacture is however, becoming more expensive and Magnitech returned most of its tooling from China and is producing most of its sales range in South Africa, as a result of the falling rand.

On South Africa’s recent ratings agency downgrades, Page acknowledges the rise in interest rates and the looming threat of junk status which now faces the country, but he underscores the danger of a further falling rand.

The price of aluminium, the principal material used in the manufacture of light fixtures, is determined by the London Metals Exchange. Should the rand lose value, he warns, the price of aluminium would rise and affect the lighting industry and its users directly and adversely.

On the longevity of his company, which celebrates its 48th year in 2017, Page says the success of any company depends on its people.

“We respect our people and their contributions. We have a flat management structure and an open-door policy. We encourage strong dialogue and opinions. If two people in business always agree, then one of them might as well stay at home.”

Send our comments to vector@ee.co.za

 

 

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