In a video interview earlier this month with Cummins Africa CEO, Thierry Pimi, I asked him why he is so upbeat about Africa’s potential. “Africa,” he responds, “is the latest frontier of the emerging markets and represents the largest untapped business opportunity for Cummins’ portfolio. Whether talking about construction or infrastructure development or power generation, we see Africa as the place to build capacity so that we can pursue growth.”
When asked about currently prevailing low growth, he cites the telecoms industry’s experience where, unlike mature markets, “growth was stratospheric”, leapfrogging the need for traditional telephone lines. By seeking out modern development alternatives in Africa, such as microgrid power solutions, rapid growth potential becomes possible.
Cummins is also a premium brand, an engine choice for numerous OEM equipment brands, all of them world leaders in their own right. To succeed with premium brand capital goods in Africa, one has to have a strong reliability focus. “Machines using our engines have to operate over many years for the maximum possible number of cycles,” Pimi notes, which makes service a priority, no matter where in Africa the machinery is used.
But service comes in many different forms, from routine field service to breakdown repairs in small local workshops or it could be complete engine overhauls in facilities such as Cummins’ Master Rebuild Centre. “Our ability to capture growth in Africa depends first on our ability to build the necessary service capacity on the ground,” Pimi believes.
Cummins’ Master Rebuild Centre (MRC) in Kelvin View, Johannesburg is very like an engine manufacturing plant, because of the complexity of the engines and the comprehensiveness of the rebuilds. Cummins brings in used, high-horsepower, end-of-life engines for rebuilding at the MRC – 19 litres and above after 20 to 25 000 hours. Each engine is stripped down, all of the dynamic components are changed and the engine is rebuilt on the same re-machined block – “and we guarantee the engine as a zero-hour rebuild capable of performing as well and for as long as brand new engine.”
After rebuilding every engine is dyno tested and delivered back to customers, and this service is available all over Southern Africa from the South African Regional Distribution Centre.
Getting engines across borders, however, is a logistics challenge. Pimi notes that it is impractical to have regional hubs in every country and it would really help if free trade zones could be established, which are effectively borderless with respect to the movement of goods.
This would help to reduce lead times, grow markets networks and to create more jobs. Businesses wishing to expand in Africa would all benefit from regional Government cooperation to facilitate easier movement of goods between countries.
In Europe, Pimi says, there are 27 countries with a single border and if one compared the time it would take for a truck to travel from Lusaka to Johannesburg to the same truck travelling between Vienna and Madrid, approximately the same distance, the time and the associated logistics costs are much more favorable in Europe – unnecessarily so.
Cummins also recently broke ground on its new consolidated campus for Southern Africa in Waterfall, which is mooted to become the CBD of Gauteng. The new Cummins Southern Africa Regional Offices (CSARO) will include the Regional Distribution Centre, the Africa Learning Academy; an expanded Master Rebuild Centre and the Cummins Gauteng Operations Centre.
The investment? “Over a ten-year period, we will be investing R300-million,” Pimi responds. “In Africa we take a long-term view and this is a demonstration of commitment, which we are sure will bring loyalty and the certainty of more business.”
I found it heartening to listen to an African with such a positive yet measured perspective. The ongoing damage done by poor leadership has been overwhelming in recent times, and few of us can see past ANC’s December Conference, the risk of ongoing graft and the prospects of further downgrades by the ratings agencies.
“Look beyond recent shocks and the opportunities are huge,” I read in a year-old report entitled Africa’s future? There’s a case for optimism from the Cape Times business. It cited the McKinsey Global Institute (MGI) research findings that consumption by African households is expected to grow from US$1.4-trillion in 2015 to $2.1-trillion in 2025, with business spending rising from $2.6- to $3.5-trillion over the same period. That puts the opportunity value of Africa’s markets at $5.6-trillion by 2025.
In the long term, the wheel will turn, leaders will change and new opportunities will emerge. Thank you, Thierry Pimi, for reminding me of that.
