CG Holdings’ numerous subsidiary companies have helped to spread risk and enhance solutions in a fluctuating and challenging African oil & gas market
Writer: Matthew Staff
Project Manager: Josh Hyland
As one of CG International Holdings’ and CG Africa Holdings’ first and primary investment objectives, Prommac is looking to leverage its parent companies’ global stature to innovate in an African oil & gas domain crying out for solutions.
The specialist shutdown management, maintenance and project services entity, based in South Africa was the first in a long line of ventures at the hands of the two Holding businesses which were established in 2014. Specialist electrical and instrumentation services company, Kumunyack soon followed, while Prommac acquired a 50 percent stake in Middle Eastern maintenance and shutdown services operator, Projeco a year later.
“CG also invested in IRIS Group (a leading remotely piloted aircraft and robotics business based out of London); while CG continued its investment strategy in 2016 with the acquisition of Al Laith (an event overlay and industrial access equipment supply specialist), and in 2017 with New Age Engineering Services,” picks up Prommac’s Chief Executive Officer, Jason English. “All our businesses [across CG Africa and CG International] are managed and run by owners we believe in, with management having a vested interest in their respective businesses.”
In Africa specifically, the core focus remains on the provision of mechanical, electrical, instrumentation and piping services to the oil & gas, power, energy, petrochemical and mining industries; optimising the turnkey offering that emanates from all aforementioned strands and subsidiaries under the CG umbrella. And this key market advantage is compounded further when taking into account the international influence that is there to pull upon as well.
“We have offices in London, Norway, Dubai, Abu Dhabi, Saudi Arabia and South Africa (Secunda, Johannesburg, Rustenburg, Cape Town, Vaal Triangle, Durban) with an additional established presence in Southeast Asia, Democratic Republic of Congo, Namibia and Madagascar,” English continues. “Our footprint is quite broad at the moment and that was not always the plan, however we have evaluated each opportunity at the given time relative to our availability of resources and ability to deliver in each region and our expansion has been based on a combination of these areas.”
Job selection may seem simple given the scope of the Group, but careful consideration in each case is still of paramount importance, and the emphasis at present is subsequently on blue chip clients who offer shared risk in the execution phase.
English adds: “In our industry, we are only as good as our last job, so our selective focus on jobs we can do well is vital to our continued success. I am proud to say that we have declined numerous jobs which were either beyond our capacity, beyond our skill-sets or just not part of our strategic vision.”
Strategic selection of both projects and acquisition opportunities become all the more significant when considering the ever-changing climate around it, with an onslaught of technological advancements, industry fluctuations and customer demand changes making ad-hoc or mindless expansion a damaging proposition.
“Change happens so quickly that many people don’t have the necessary skills or experience to respond to modern day issues,” English explains. “As a result our philosophy is to simplify everything we do while adopting sufficient technology. We develop road maps which are simple and easy to understand by looking at the big picture of our ultimate goals. We support this with expert advice and knowledge and ultimately tackle the problems one bite at a time.”
Essentially, such simplicity also suits clients as well, with its typical base only seeking zero injuries, high quality service, on-time delivery, and cost effectiveness.
To respond to these wants, the Group is highly focused on safety within its continuous improvement ethos and has driven several unique in-house products to ensure the safety of teams across all Group companies.
“CG Group companies have also heavily invested in the digitisation of all systems and processes which has allowed the Group’s companies to train remotely more than 2,000 employees while delivering a quality solution to clients,” English continues. “The Company has continued to push innovation boundaries in terms of artificial intelligent solutions, virtual reality solutions and virtual production of training and project planning materials which have allowed for better planning management; ultimately translating into on-time delivery of projects and reduced costs.”
Blue chip brands to have benefited from CG’s offering over the years in South Africa have included Sasol, Eskom, Glencore, Puma Energy, Chevron, Sherritt, Thyssenkrupp, Shell, and BP; all of whom have been attracted to the Group’s ability to provide both mechanical and piping solutions.
The CEO notes: “Our model is simple: we are big enough to deliver, and small enough to care. Being an owner-managed business allows us to put our priorities of ‘customer first’ at the forefront of our strategy. Not chasing shareholder value, but rather building a sustainable long-term relationship with clients has led to more and more work being awarded through an organically-driven process.
“And it seems to be working for us so far as Prommac recently received service provider of the year for both the Secunda chemical complex and Sasolburg complex from an allotted 5,000 service providers.”
People make a business
Awards are certainly not a new concept to Prommac or CG Holdings, both the Company and wider Group having won numerous accolades for various works over the past decade. And, in turn, such a positive reputation continues to manifest to this day in the form of new contracts and projects such as those being seen at several mining houses and petrochemical plants in South Africa later this year.
To facilitate its own growth, however, the Group has had to invest significant funds into its own internal processes and structure. Online training systems, concerted aforementioned digitisation, advanced technologies and new facilities are all contributing to CG’s ongoing evolution.
“Significant investments include the building of a technology centre in Secunda, which has become the corporate home in South Africa as well as acquiring new welding workshop facilities in Cape Town in South Africa. In the Middle East, the Group has built a new state-of-the-art 60,000 square metre office complex with major workshops and under-roof facilities to accommodate the expansion of services from Al Laith and Projeco.”
From an employment perspective, and using South Africa as an example, employment is 100 percent localised across each subsidiary; Prommac, Kumunyack and New Age all enjoying fantastic track records of optimising the local talent pools. And where there are capacity or skills gaps, the Group has responded by implementing in-house training programmes geared towards plugging these shortfalls.
“In regards to hiring, the approach is quite simple: ‘attitude first, skills second’,” English emphasises. “The approach to hiring is built on their ability to execute work safely, productively and to a good quality standard.
“And when it comes to retention, the South African companies have a great track record. Our turnover rate of employees is less than three percent a year, and we have a great incentive model for core staff within the companies. Our belief is that people make a business and therefore we work hard at trying to provide an incentive scheme which ultimately makes everyone an owner in some form or another.”
Sustainable profit base
CG Holdings’ supply chain management strategy is equally local-driven, understanding the importance of sustainability and building a local infrastructure in order to achieve long-term success in the region.
And in getting these fundamentals right, the Group is better equipped to negotiate fluctuating industry challenges such as those seen in the world of oil & gas of late.
“With a large portion of our work taking place in the oil & gas space, the oil price and sector as a whole is constantly on our watch. With a depressed oil price, many clients have put a hold on capex expenditure which has seen the projects segment drying up to a large extent,” English describes. “We are fortunate in that the majority of our work is on maintenance and shutdown works which attract a lower but more sustainable profit base, however. We now forecast that the oil sector will start to increase capex over the next 18 months to play catch up.
“Meanwhile, the mining sector has also been under significant pressure and we constantly monitor changes in legislation and look at what’s happening in the surrounding mining communities to determine our next move. Our response to the mining challenge has been to remain engaged and relevant. Mining forms less than five percent of our business so we see far more upside opportunity than downside as a Group.”
Thankfully, a tangible upside can also be found in the power and energy sector in South Africa at present, with the critical need for increased infrastructure in this area playing right into the hands of a Company like CG; who plans to work extensively alongside Eskom in the years to come.
English continues: “Our response plan to the current climates in general, regardless of sector, is quite simple really: optimise processes, operate efficiently, respond quickly to clients and provide value-adding innovative solutions to our clients. So far it’s worked in most cases and we have been seeing the results.
“And this CG model of investing in similar yet different businesses and keeping them as their own separate entities differentiates the Group from our competitors.”
The CEO concludes, looking forward: “I have a passion for seeing my employees succeed, and in the future I would also like to report back that my employees have all become successful through our journey together.
“I would hope to report that the Group has continued to grow in a sustainable manner, has a world-class team with a diverse client base across many geographies, has led the way in disrupting the market, and continues to deliver a safe, high quality, innovative service to our clients.”