Ambitious expansion yields big results

Sabelco Group has been serving its industry sector for over 20 years. This Cape Town-based electrical switchboard manufacturer has experienced exponential growth in the last five years. The Sabelco management team created a new business model and embarked upon a new strategy for success. Since the inception of its innovative growth plan, the company has experienced between 30 per cent and 70 per cent growth annually—no small feat considering the recent economic downturn. During a time when most companies in the industry reported lacklustre returns, Sabelco managed to dramatically increase its market share and is now South Africa’s largest supplier of electrical low-voltage assemblies. President Marc Moreau spoke with The African Business Journal about the new business model and its recent successes, as well as plans for the future.

Sabelco business basics

Sabelco Group manufactures electrical switchboards, with the main market being electrical low-voltage assemblies. The primary product consists of voltages up to 1,000 volts and in that particular market the company supplies a wide range of products, from the very basic wall-like metal enclosures, to fully-fixed segregated panels, to virtually any option that is available in the marketplace. The production is done right in South Africa at the company’s factories in Cape Town and Johannesburg. The standards are maintained at a very high level, something previously only ever complied with by major multinational corporations. Says Moreau, “The tools we provide for the industry are of a very high quality.”

Growth strategy

The crux of Sabelco’s growth strategy was in essence a very simple one: exceptional customer support. What caused the strategy to skyrocket the company to success was management’s ability to pinpoint and fix two major problems: difficulty by its suppliers in providing quality products, and secondly, receiving products on time. By establishing subsidiary companies that support Sabelco’s needs without total reliance, the company was able to effectively eliminate these problems.

CNC Solutions was started in 2000 to meet the demands of the high-volume, high-precision steel fabrication market. The company is recognized as a specialist, precision-focused sheet metal fabricator and utilizes only the most advanced machinery available. TAM Powder Coaters followed in 2004, serving as a specialized supplier of epoxy powder coatings. The subsidiary companies also adhere to Sabelco’s high industry standards, guaranteeing clients consistent, quality end-products. Although the three companies supply each other, the respective operations are managed independently and each has its own healthy base of external clients.

This symbiotic relationship between the companies has led Sabelco to eliminate previous problems and experience the explosive growth of the last few years.

“There is a tendency to tell the customers what they should have, rather than sitting back and listening.” comments Moreau. The key, he explains, is to truly garner an understanding of a customer’s needs, and to optimize those needs. With an initially modest client base that grew into hundreds, Sabelco seems to be doing something right.  Adds Moreau, “We gain even more clients as the quality of our product and our knowledge improves.”

Sabelco’s corporate policy is to optimize a growth strategy from the get-go, so when that growth explosion occurs the infrastructure to support it is already in place. Rather than backtracking and using resources to catch up with demand, Sabelco intuitively planned for projections by increasing investments into human resources and production, ensuring the quality of its products and adherence to its production schedules. As the transition went so smoothly, no further opportunity for growth was missed.

The comparative advantage

Sabelco employs a comprehensive program that thus far has yielded excellent results, but there is always room for improvement. Moreau has hired a PR and communications agency and has another medium to long-term project driving his actions. “What could propel us much further in the market is that we want to change the market mindset,” Moreau explains, “When a consulting engineer end-user thinks of an electrical switchboard, he thinks of Sabelco as the leader.”

Moreau insists that it is the company’s consistency towards quality and its attitude toward service that separates it from the competition. Although conceptually a simple idea, his belief in the company is evident. “We show interest in the client. We meet delivery terms. Our knowledge of the industry is huge. If you combine all that, and the fact that I am a spokesperson of the industry, it gives a lot of confidence to companies.”

African growth potential

With the latest technologies firmly in place, and a stable and reliable production plant ensuring the company can meet its capacity, Sabelco seems prepared for the future. So what about goals for the future? First and foremost the company intends to maintain its dominant market share, and secondly to increase growth in South Africa and Africa in general. Moreau believes in being proactive, and provides continuous technical training so that “the level of competence within the South African part of the industry becomes a known factor throughout the world.” Given Sabelco’s impressive track record, that ambition seems entirely possible.