Construction specialists, LBC Lenco Building Contractors, is renowned for building long-term relationships with clients. Director Russell Spedding explains how the company is set to expand, but not at the expense of quality
Written by Ellie Duncan & Produced by Nick Norris
If LBC Lenco Construction is not already a familiar name, then the chances are it soon will be. The family-owned general contractor, based in South Africa, has grand ambitions that are likely to see it grow its presence in Africa significantly over the coming years. For now, the company operates from both Durban and Gauteng, where it has a number of projects currently under construction, and several more in the pipeline.
While Lenco has made a name for itself in the residential construction industry, Director Russell Spedding insists that its expertise is not simply limited to this sector. “We are involved, and we have got experience, in all aspects of construction - commercial, industrial, residential,” he explains.
In fact, it was only by “default”, according to Spedding, that the company found itself predominantly working on residential developments following the construction boom in South Africa which started about seven years ago.
Lenco was founded in 1981 by Len Spedding, Russell’s father. Russell himself only joined in 2000. Director Edward Protheroe, who oversees the Durban division, is Russell’s brother-in-law.
Its family ties have encouraged a strong set of values that form the foundations of the company. As such, the company is renowned for establishing longstanding relationships with its clients and maintaining that rapport over many years.
CURRENT PROJECTS
Certainly, the construction company has plenty of projects underway at the moment, many of which are located in Johannesburg. “We’ve got 146 apartments that we are building in Kempton Park in Johannesburg, and they are eight blocks of two and three storey buildings,” Spedding explains. “Our contract includes the construction of the infrastructure as well. Most of our contracts include infrastructure construction.
“Then we’ve got a boutique hotel which we are building in Rivonia, Johannesburg,” he adds. “It’s an 18-room hotel and it’s a combination of an alteration and an addition to an existing building.
“We’re also building 15 upmarket apartments in Dunkeld which comprises of a basement and three floors and includes the infrastructure.
“Then we have 15 upmarket duplex apartments in Bryanston Johannesburg
including infrastructure.
“In Durban we are going to be building 2000 houses in Pinetown and we are busy with a large upmarket house in Zimbali. We recently finished 301 apartments in Claremont, Durban”
Upmarket apartments are in demand; particularly those developments that are to be used as accommodation for the 2010 World Cup. Projects coming up in February and March include 23 upmarket apartments in Morningside, and another development of 51 upmarket apartments also in Morningside. Lenco is also due to start work on an office building in the city.
All of which suggests that this company has come out the other side of the recession relatively unscathed. However, Spedding acknowledges that there has been a noticeable slowdown in projects. “I think the biggest problem in the industry has been marketing and selling the units,” he admits. “One of the biggest problems with the recession has actually been with the banks, where potential home owners just haven’t qualified to obtain a bond.
“At one stage the banks have moved to an 80 percent bond situation, which means that the owner has to contribute 20 percent equity to the purchase of a property package, and I’m talking specifically in the residential market.”
Although the property market remains intact, it has taken a hit. Spedding adds that this is the reason for its increasing reliance on rental schemes.
“2009 was quite a difficult year for a lot of people, including ourselves,” he summarises. “Turnover has reduced quite drastically.”
DEVELOPING INFRASTRUCTURE
Fortunately, for South Africa, the economic downturn coincided with large investments from the government in the country’s infrastructure in preparation for the World Cup tournament this year. “There is a lot of development taking place in the country at the moment,” he adds. “It is really awesome to see so much money being spent on infrastructure and in the country in general.”
In fact, the work taking place throughout South Africa aligns with Lenco’s own plans. “We’d like to grow the business, to increase our annual turnover and to be able to compete with the bigger construction companies,” explains Spedding. “I’d like to see us nationalise within South Africa.
“So we’d like to get involved in projects in Cape Town and the Eastern Cape, and possibly in the Free State as well. We are already establishing ourselves in Port Elizabeth.
“We are registered with the Construction Industry Development Board (CIDB) and, through them, we’ve been graded as an 8GB (General Building), which means we can handle single projects up to a value of R10 million.” For Spedding, the long-term goal in grading terms is to reach 9GB.
MAINTAINING QUALITY
Despite the prospects for growth, Spedding is determined that Lenco remains a company that values its working relationships above all else. “I think the key to our success has been in our relationships with clients, subcontractors, with suppliers and employees,” he says.
“When we do a project, we don’t see it as a one-off project; we see it as a project that could potentially lead to another one. That, I think, has been a big factor in our success.
“We like to give a level of service and quality to our clients that will keep them coming back. We are not claim orientated and always put the project and the client first”
In talking to Spedding, it is clear that Lenco is a construction company with a unique business proposition. “Moving forwards, although we want to grow the business to a reputable size, we also want to keep improving our quality.
“We want our name to be synonymous with quality and overall performance,” he reiterates.
FACTS AT A GLANCE
COMPANY NAME: LBC Lenco Construction (Pty) Ltd
FOUNDER: Len Spedding
OPERATIONS: General contractors
ESTABLISHED: 1981
EMPLOYEES: 70
REVENUE: R200 million
www.lbclenco.co.za
View Digital Corporate Profile of LBC LENCO in Construction Digital February 2010