Atlas Copco move puts its divisions under one roof

Posted On Wednesday, 08 January 2014 08:00 Published by
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Atlas Copco SA is moving to a new multifaceted facility near OR Tambo International Airport.

Ronnie LetenThe R200m investment puts seven divisions of the company into a "customer centre" that is effectively under one roof.

The move by the domestic unit of the global industrial group will help build synergies between divisions that were previously not part of the old Witfield head office‚ a stone's throw away in Boksburg. The new office administration building‚ warehouse and distribution centre‚ and group workshops will cover about 6‚000m². This excludes acres of yard space in the Jet Park industrial area.

The substantial investment by the Stockholm-based parent company in Sweden shows "a belief" that the South African business "is growing and will continue to grow". The country has long been a "strategic manufacturing base" for mining consumables. Along with offices in Namibia‚ Zimbabwe‚ Botswana and Mozambique‚ it makes up the group's Southern African region. But other regional nations are starting to catch up with Africa's largest economy‚ according to Atlas Copco Group president and CEO Ronnie Leten‚ who passed through Johannesburg recently on his way to holiday in Cape Town. He visits South Africa and other parts of Africa "once or twice a year"‚ this time flying in via Zambia. He is the 11th president of the group since its founding in 1873.

Swedish banking and industrial dynasty‚ the Wallenberg family‚ have been shareholders and directors of Atlas Copco since its beginnings‚ when it was a maker of diesel motors. Atlas Copco operates in about 175 countries. It employs nearly 40‚000 people and has annual revenues of about €11bn. Principal product development and manufacturing units are located in Belgium‚ Germany‚ Sweden‚ China and Brazil. Diesel engines are no longer part of its product offering.

The group has been linked with South Africa since 1926‚ and has been in other parts of Africa since the 1950s. It sells compressors‚ construction and mining equipment‚ industrial power tools and assembly systems. The group‚ which is a worldwide competitor to major industrial brands such as Caterpillar‚ Sandvik‚ Volvo‚ Ingersoll Rand and Bosch‚ makes 14% of its annual global revenues from Africa‚ or about €1.3bn.

Mr Leten sees increasing attention being paid to the continent. "That‚ I think‚ is good for us. In the past 10 years we have seen constant double-digit annual growth in Africa‚" he says. A decade ago North America and Europe made up 75% of Atlas Copco's markets — now they make up 49%. Mr Leten says this is not because the group's traditional markets have been shrinking. Rather‚ the rest of the world is growing faster. But he acknowledges the global recession did cause slower growth for the company. "It's been a roller-coaster since 2008‚" he says. "What I am doing now as a strategy is building bases."

In Africa alone in the past five years Atlas Copco has opened offices in Senegal‚ Angola‚ Nigeria and Mozambique. The last three nations are central to the growth of Africa's oil and gas industries. The new customer centre in Senegal opened in early 2012 and‚ covering countries in Western and Central Africa‚ will initially offer products such as road construction equipment and portable compressors and generators.

South Africa will need to up its game to encourage further international investments. Mr Leten says the cost of labour in South Africa is a "no-go" compared with the productivity and cost of well-educated‚ blue-collar labourers in Spain and Eastern Europe. Labour costs in places such as China are even lower. But Mr Leten says this has been mitigated by the dramatic weakening of the rand.

Atlas Copco products are a big factor in global industrial mechanisation‚ including in mining. This is relevant to the industry in South Africa from a safety point of view‚ as well as efficiency and productivity. "Mechanisation is increasing everywhere in the world — it's the big next step in mining‚" he says. "Our equipment is at the point where production is — we do the drilling. These are now robots. There will be more mechanisation — it has to happen." But the loss of low-skill jobs will also lead to skills upgrading. And it seems South Africa will play an important role in the company's African growth prospects‚ "especially when it comes to talent"‚ Mr Leten says.

Last modified on Wednesday, 08 January 2014 08:17

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