Company Report: Austro Group Limited
Market leading industrial equipment After several recent acquisitions and a management reshuffle, the Austro Group has established itself as a market leader in South Africa, as Construction Digital discovers

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After several recent acquisitions, Austro Group is finding its feet. Recently appointed Group Financial Director, James Bennie and the rest of the Austro team have already overseen some vital restructuring. He admits that the company acquired “a whole lot of family-owned and family-run businesses within a relatively short period of time”.

“Our first objective was to stabilise the business and implement the requirements of being a listed company, which we believe we have achieved,” Bennie says.

Indeed, it is hard to keep up with the development of the company, which was established in 1980 under the name Austro Engineering. Initially, the business was a supplier of woodworking machinery, tooling and accessories. Early on, its two owners acquired two small businesses in Durban and Cape Town and the company has maintained a presence in both regions ever since.

AQUISITIVE GROWTH
However, it turned out that 2007 was to be a crucial year for the company. Following its listing on the Johannesburg Stock Exchange in February, it made numerous purchases which saw it expand into other markets. Bennie explains that New Way Motor and Diesel Engineering (Pty) Ltd was bought in the same year; the sole distributor for 133Mitsubishi, John Deere and Doosan engines, used for power generators, marine propulsion, pumping equipment and industrial components. Prior to this acquisition, Austro Group’s expertise was solely woodworking, so this was an entirely new industry but one it has embraced, particularly with the current demand for power in South Africa.

“There has been a problem with the power utility Eskom, there’s been a lot of power outages, so individuals and commercial and industrial operations have been buying generators,” explains Bennie.

The company’s next acquisition, Gearing Moss Supplies (Pty) Ltd was in familiar territory — another woodworking business whose speciality was saw-milling equipment. “Their big strength is that the Gearing Moss solution is different to the normal saw-milling process, where the tree gets cut down in the plantation, then cut into logs and transported to the saw mill,” he says. “These saw mills are portable, so they can be towed right into the plantation.

“Shortly thereafter, Neptune Plant Hire was acquired.” It hired out power generators and had a strong presence in the marine industry in Cape Town. With the acquisition of the firm, Austro Group also cornered the market in the short-term hire of generators to stadiums, the tourism industry, offshore oil rigs, retail stores, hospitals, cold storage plants and trains.

Finally, in February 2008, Austro purchased two companies, both in the generator industry: Quinlec and Quad Technical Services, specialising in electrical contracting, generator manufacture and supply, turnkey solutions, including installation and compliance certification; and the manufacture of motor control and distribution boards, as well as electrical cabinets and sound control for generators, respectively.

Similarly, there have been changes at the top, within the company’s management team. Earlier this year, the Group CEO left and the Financial Director followed a few months later.

Today, the company’s structure comprises two divisions that each house the power and energy side of the business, and the woodworking operations respectively. Each of the divisions is run by a Managing Director, rather than a Group CEO, while Bennie’s role is to bring all parts of the business together.

MARKET LEADER
Despite the many additions to the original Austro company, Bennie now believes that it is “well-positioned” for good growth: “On the woodworking side we are definitely the market leader in terms of equipment because we don’t just offer the new equipment, we offer parts, tooling, blades (and the sharpening thereof), as well as after sales services,” he says. “We have some of the most hi-tech equipment in this industry in the country.”

Despite the ongoing global economic meltdown, Austro Group has remained busy. Although the construction industry has been badly impacted, thereby affecting the woodworking side of the business, government spend on infrastructure in preparation for the 2010 World Cup has maintained levels of activity. “The construction activity in South Africa certainly has sustained the woodworking side,” he continues. “However, we haven’t really felt the effects of 2010 yet, as our customers produce the finishes for projects.”

The recession has not stopped Austro Group from investing in its sites, located in Johannesburg, Durban and Cape Town. “We’re building a big operation on the eastern side of Johannesburg, which is going to house the power division in Gauteng. It was four operations but it’s now down to three and those three will move into those premises on completion,” explains Bennie.

He is, however, well aware of what remains to be achieved at the company. “In the short-term, we’ve got to settle and start benefitting from the synergies that can be realised from the companies that have been bought, and then start looking for opportunities,” Bennie reiterates.

His vision, and that of the rest of the management team, should see Austro Group extend its presence in South Africa and Southern Africa in the coming years.

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