June / July 2014

June / July 2014

Astrapak turnaround provides relevant lesson for all businesses

REMEMBER the days when Astrapak was the flavour of the month, garnering glowing revues from the financial press? Well, those days are gone … but in its place we now have a fascinating revival story, with the Astrapak management involved in a 2-year turnaround programme that is beginning to show results.

Few of you out there (very few, surely) would have volunteered for the job of Astrapak CEO when it came around in 2012, but Robin Moore put his hand up. Given the complexity of the problem, with close to 20 operating businesses spread around the country plus limited synergy and even duplication between these units, Moore and chief financial officer, Manley Diedloff, have had to make tough decisions. Besides that, they have been subject to the close scrutiny of shareholders and, if it’s possible to appease this group, next in line are the financial journalists … and the risk of getting damning headlines is high.

“An important challenge has been to retain the focus on growth, business improvement and earning customer confidence whilst simultaneously executing on the strategy,” said Moore.

Realistically, they can’t afford to fail; the stakes are just too high.

The rationale being applied is of interest to all involved in company management: like it or not, even shutting a business down incurs significant costs, and you certainly want to avoid that.

Small Business Development initiative is welcome, very welcome

ONE of the positives that’s come out of the recent cabinet restructuring has got to be the formation of the Small Business Development Department. Not surprisingly, the initiative also attracted quite a bit of negative reaction, but in our book it’s good news. And we say that simply because we believe there is a massive need for small business at grassroots level. Rather than BEE style ‘transformation’ economics, what’s arguably most important is the need to create a culture and a mindset that it’s possible for ordinary people to start businesses of their own … and build their lives around them.

The simple fact is that industry in South Africa remains highly polarized, with depressingly few black-run businesses. Don’t confuse this with coloured and Indian entrepreneurs, who are among the most successful businessmen in the industry. For those black businessmen out there who are progressing well in converting businesses, our maximum respect is due … it’s just that there are too few of you, far too few.

Hopefully the new Small Business Development entity will realize at the outset that the most important change required is that of mindset: that it is possible for ANYBODY who can read and write to run a business successfully, and then start putting the building blocks in place.

Failure of the small business programme to create sustainable businesses and empower ordinary people around southern Africa will seriously inhibit economic development, so successful progress is extremely necessary.

POLYCO gets down to business

We hear POLYCO received a good response to its request for project funding proposals, the goal being to boost recycling of post-consumer polyolefin materials (see page 24). The interesting point here is: who has responded? Our observation is that many converting businesses are reluctant to become involved in post-consumer activity, or they have been up until now – if the turnout from individuals in the industry at clean-ups is anything to go by.

Our view is that plastics litter is negatively affecting our industry, in the sense that litter perpetuates the view that plastics are throwaway items and hence low cost … which in turn makes it difficult for manufacturers of high quality plastic products to achieve better selling prices.

The standard of plastic packaging containers, films and labels in South Africa is world class, but how can you sustain world class production on a low cost structure? POLYCO is in the processing of developing strategies to address this problem, so perhaps it’s time for you to get involved?