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FINANCE: Growing Local Business Withstands Foreign Market Volatility

 



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Durban-based electrode manufacturing company, NMT Electrodes, which has been in existence for over 30 years, is riding a wave of success, after surviving turbulent times as a result of global economic pressure.

Stephen van Loggerenberg, owner and CEO of NMT Electrodes is confident that 2014 will continue to be a good year for his company. NMT Electrodes is set to launch a range of new products, including a prototype for waste water treatment. “We have achieved excellent results so far this year, and anticipate huge customer growth and profitability during the second half of the year.”

NMT Electrodes’ products are used in a variety of electrochemical applications ranging from the production of chlorine gas, to soil remediation, to pipeline protection in the petrochemical industry.

Mr van Loggerenberg says “NMT’s growth has been in identifying and providing less ecologically hazardous solutions to businesses that would like to steer away from lead anodes towards electro-refining.”

NMT Electrodes has an extensive customer base. It supplies to cathodic engineering companies who then supply their clients. While its clientele includes local industry heavyweights such as Mondi, SASOL and SAPPI, up to 95% of its products are exported to South America, the UK, Canada, Germany, France, the BENELUX region and parts of the Middle East, as well as Japan.

“After starting out with four employees in a small office, the family owned business now has a staff complement of 21 – and an annual turnover of R 25 million,” says Mr van Loggerenberg.

“NMT is a unique and innovative business that has grown beyond expectations. We have been with the company since its inception and have stayed the course with them as the business faced turbulent times, largely the result of fluctuation in global precious metal prices,” says Ravi Govender, Head of Small Enterprises at Standard Bank.

“Because we understand our client’s business, the markets they operate in, and their business strategy, we are always willing to go the extra mile by offering them the necessary support they need when times are tough,” says Mr Govender.

Of his business journey, Mr van Loggerenberg says: “I started out on my own in 1984. Standard Bank was my bank back then and still is. We have been through a number of businesses, with each a starting block for the next one, and we faced some difficult times together.”

“I had traditionally been ‘old school’ about the need to borrow money, rather funding all purchases from working capital. I soon realised, however, that in the modern economy growth comes with borrowing. Standard Bank allowed me a small overdraft, and as the business progressed the bank saw the activity in our account, and offered me more, and so on,” explains Mr van Loggerenberg, adding that NMT would not have been the success it is today without support from Standard Bank.

Mr Govender explains that Standard Bank’s overdraft facilities also assisted NMT Electrodes over the years when the company was unable to sell high-value stock, mainly because of the business’ cyclical nature.

The sale of NMT Electrodes’ products revolves largely around the scale and availability of big projects globally. When the world economy faced a slump, infrastructure spend was halted in many of the key markets the company serves. Mr van Loggerenberg regards this period as the lowest point in his business history.

Mr van Loggerenberg also places large stock in the value of building relationships, and in businesses and communities working together and supporting one another. This is why he is involved in mentoring young entrepreneurs through a local business forum, and says that decades of experience in a largely cyclical sector has taught him several lessons. He has the following business tips for budding entrepreneurs:

· Research your idea thoroughly and know what it is going to cost you.
· Expect the highs and lows.
· Know the industry you are going into ‘inside out’.
· Know your competitors. You can learn more from them than you can from your customers.
· Develop a good business plan.
· Understand that it can take 10 years before you start reaping the rewards.
· Don’t pay yourself a fancy salary.
· Make sure you pay your creditors.

“But above all, is the need to find the right financial institution, which is able to understand your business and its needs, and support you during difficult times. In our case, we learned to lean on them and they learned to trust us,” says Mr van Loggerenberg.


 
 
 
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