Bell equipment back to profitability and hiring again
AA – After the very tough 2009, because of the global recession, Bell Equipment has announced a profit for the first six months of 2010. Bell was one of the earliest in the industry to be hit in view of their make for stock requirement, but is now one of the first to recover. The earnings per share are 9c versus a loss for the same period in 2009 of 190c per share. JSE listed Bell is the designer and manufacturer of South Africa’s only locally designed and developed production line vehicle.
This ability to recover so quickly, despite continuing difficult trading circumstances, especially in Europe, and the continuing strong Rand, is a tribute to the strategy developed and adopted when times were tough. Bell did not retrench their people to the extent needed to target a break even and instead chose to retain key skills. Bell also continued to invest in product development when many others would have cut back. Product design, quality and customer service are the cornerstones of Bell Equipment’s success and these have not been compromised.
This customer-focused approach has allowed Bell to return to profitability more quickly. “In view of improved demand, especially for the larger trucks, we have started re-employing people at our Richards Bay plant,” said Bell Equipment Chief Executive, Gary Bell. “What we would now like to see is finance companies easing up on their stringent lending criteria for our viable customers. The demand is there but often a customer is not able to obtain the necessary finance on reasonable terms.” This would also have spin off benefits for many local Bell suppliers as well. Bell and their suppliers create local jobs and add to foreign currency generation, as opposed to their competitors who are mainly importers. Importers only benefit offshore jobs, are a drain on South Africa’s foreign exchange resources and add to the current account deficit.
“We appreciate the support received from government and the IDC loans. We look forward to further engagement on ways in which we can further increase local employment and develop the local supply base,” said Gary Bell. So far this year Bell has been able to re-employ 250 people at their Richards Bay plant and this number will increase as demand improves further. “We look forward to the outcome of the current medium and heavy vehicle and yellow equipment review by the dti and are also engaging with the dti and other government entities on generic industrial issues via the Manufacturing Circle,” added Gary Bell. “We are a lot more labour intensive, especially for entry level jobs, than fixed capital intensive manufacturing.”
Bell has a four year plan to roll out new models and these will provide a base for continuing local market share expansion. Despite fierce competition from overseas suppliers who were previously focused on markets that are now depressed, Bell has remained competitive and improved its position in Africa, which shows higher growth than developed economies.
Economies need to grow by 2-3% for there to be real investment and development of infrastructure.
“We would also like to see government supporting an effective buy South African campaign through their own purchases and projects they fund at national, provincial and local government, as well as parastatal levels.
They must ensure that the contractors and suppliers on those projects also source locally where possible. This will be the key to achieving the Industrial Policyobjectives outlined in IPAP2,” said Gary Bell.
“Given the uncertainties relating to the current global economic recovery and local investment into new mining ventures and civil infrastructure, the company will remain cautious in its forward planning,” said incoming Chairperson, Mike Mun-Gavin. “Whilst the picture is a good deal more optimistic than a year ago, we shall continue to maintain our focus on working capital management and control over expenses.” Further management focus on working capital has seen the trade cycle improve from 332 days to 195 days for the first six months. Consequently gearing has decreased from 62% to 36%. This has impacted positively on interest costs.
Bell is well positioned to take advantage of any weakening in the Rand, increase in mining ventures, infrastructure spend and improved economic outlook. “We have come through a period of unprecedented difficulty and emerged stronger thanks to our loyal customers, committed suppliers, dedicated employees and other supportive stakeholders,” said Gary Bell.
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