A distillation column measuring 40 m in length, and with a diameter of 1,93 m. It was fabricated from 316 stainless
Upon visiting South Africa to inspect the facilities of Stainless Fabricators of Chamdor, Krugersdorp, which at the time was manufacturing three coolers for an expansion project in Richards Bay, the representative of the US client told director Sakkie Nel that, from his vantage in the States, he had envisioned the company occupying “a small lean-to in a jungle clearing”.
Nel tells Stainless Steel that the local fabrication sector is often compared with its international counterpart, which is automatically found to be superior. “Our experience is contrary; we are not moles that do not travel, and our reconnaissance of fabricators in Europe has revealed that we are on a par, if not better, in the area of jobbing,” he argues.
“Where we run out of steam is due to the size of our businesses, which are smaller by virtue of our market size, and it follows that you cannot grow business for a non-existent market.” Nel says a worrisome trend is that some of the major players in the fabrication sector are depleted in skills and facilities, with entire plants being sold off overseas sometimes, impacting seriously on the sector’s ability to carry out heavy fabrication work.
Going overseas is not an option
Some people are of the opinion that, if the local fabrication sector is weak that it cannot do such work, they can simply go overseas for their requirements. If the international sector knows there is no local competition, they will place a premium on their prices, and deliver when it suits them. Furthermore, they would not be interested in the day-to-day single-vessel orders. “Therefore it is in the interests of the big guys to nurture the local industry,” says Nel.
Commenting on the state of the local stainless industry, he says that “engineering is struggling, as the economy has been stagnant for at least five years”. The prevailing scenario is one of Russian roulette, as “you never know when you are employed; you have to negotiate for your contracts every day”.
Nel explains that the stainless fabrication sector usually operates in business cycles of three to six months. However, the “paradox of this business” is that, while Stainless Fabricators “is full up with work, others are scratching”. Nel goes so far as to say that the past three years have been the best in the company’s 20-year history.
Above 100% cap
acity
“We have been running at above 100% capacity for 20 years, less perhaps two to three eight- to ten-week spells where we had a work shortage.” But Nel is quick to point out that, if the economy cools even further, “then we will be in the same boat”. He attributes the company’s continued success to an intimate understanding of the fabrication sector and the market it serves.
Nel likens the sector to a triangle. “The closer you are to the top, the harder it is for you to maintain your position because of the higher technical requirements, but you do have less ‘unqualified’ competitors.” He adds that the fabrication sector deals with an expensive material where any failure is costly, and needs to be avoided. However, many clients opt for fabricators who are not quite up to their requirements, and then think that their own inspection departments inspect quality into the final product. “This is, of course, the best recipe for failure and frustration,” says Nel.
It is essential that a client choose the correct supplier, but it must also be borne in mind that competent fabricators must be left to produce goods with minimal intervention on the part of their clients. Nel comments that the relationship between fabricators and their clients or suppliers is “better than it has been”, with a general awareness on the part of traditional clients, such as the petrochemical sector, as to who can best meet their basic requirements.
The stainless fabrication sector has been trying to embark on a self-regulatory exercise for some time now, but has become bogged down by divided opinions and ideas as how best to proceed. “To be graded as an industry is one thing, but if clients do not accept it by buying into it, it is worthless exercise.”
‘Rightsizing’ fabricators
Nel says a frequent problem is that people who buy for big projects often do not ‘rightsize’ fabricators for the particular type of work required. This means that some fabricators end up with work that taxes their capabilities, resulting in dissatisfied customers who wrongfully blame the fabricators, when it is their own allocation process that is a fault – a scenario that can be avoided easily enough if the sector were graded.
In terms of targeting the export market, Nel says this is possible, but potentially problematic, as when you export into a country where the pressure-vessel regulations are influenced by local requirements. An example is the US, where a fabricator can run foul of legislative, as opposed to qualitative, pressure-vessel standards, meaning you have to pay other people to modify your own vessel once it has been delivered – which is extremely risky.
“We should supply into Africa as we have the higher skills, and we are big fish in this particular technology pond,” says Nel. However, such factors as forex shortages and political instability have hampered the drive into Africa, and where the demand for the sector’s products is not always known, or able to be obtained.
“This industry feeds off projects, and over the past four to five years there have been no sustained projects following each other, but here is a glimmer of hope at the moment,” says Nel. Clients are quick to accuse fabricators of not planning, but they often do not know the fabrication sector, its main players, and their respective capacities and abilities.
“Surely it is economically wiser to pace the work available through the slower periods. There seems to be no communication between clients coming to the market with big projects,” comments Nel, adding that a projects register might solve the problem. “As fabricators we get hounded to produce prices on budget on an incredibly quick turnaround, and then the final decision-making takes anything from six months to a year or more. This is unrealistic, and there is definitely a need for better planning on the part of our clients,” says Nel.
Sector ‘not without guilt’
He adds that the fabrication sector is “not without guilt itself, and always has to bear in mind its available and future capacity, and not over-commit, as is sometimes the case. It has happened that SF, for example, received an enquiry and had to inform the client that it would not be able to deliver on time, but that it would still supply a realistic price to enable the client to judge the market.
Sometime down the line the client is involved in another project, and approaches a different fabricator – excluding Stainless Fabricators from bidding. When approached as to why, the client replies that he had been let down by another company. “Why are we being punished for being truthful?” questions Nel. “Surely the ideal supplier is one who does not lie and supply a fictitious delivery date?”
Another problem is that clients often changed their requirements or specifications after the pressure vessels are at an advanced stage of manufacture. “Then if we say that, as a result, we cannot stick to the original delivery date, the clients brand us as being unreliable. At the end of the day he or she is still the customer, and has to be satisfied, but it is frequently a relationship fraught with difficulty that requires a fine balancing act,” says Nel.
Sometimes component suppliers are unable to meet their promised delivery dates, which gives the client the impression that the fabricator cannot manage his or her own sub-suppliers. However, Nel admits that the industry’s “own Achilles’ heel” is the issue of delivery. “Of every ten orders placed with flange manufacturers, for example, nine – if not ten – are late.
Industry has to find a way
“This is a major problem as a pressure vessel is incomplete without its flanges, and therefore frequently makes the vessel late; we really have to find a way around this as an industry.” Nel is quick to point out that he is not maligning flange manufacturers: “It is conceivable that they are simply doing what any good company should be doing, and that is exporting – but, of course, as a consequence the local fabricators are affected, and we believe that our clients are unaware of the magnitude of the problem.
Commenting on the industry’s relationship with its plate supplier, Columbus Stainless, Nel acknowledges that there had been “performance problems” during its recent major expansion. “I have great admiration while marrying existing and new sections. Columbus Stainless is truly an asset to our industry, and always does come to the party when we are threatened by imports.”
Due to its ‘monopolistic’ position in the stainless industry, the mill was seen initially as being adversarial and arrogant. “This is definitely not the case; they have been very supportive and co-operative,” maintains Nel. His only concern is that Columbus is paying for some of its raw material in dollars.
“It would be fantastic if, in some way, fabricators could have the dollar-related components taken out of the equation, as this would make them invincible in Africa and the world due to the exchange rate. We would be in a more favourable position than people exporting to Africa from the rest of the world, and able to export finished goods worldwide,” says Nel. Stainless Fabricator’s contracts include a 40-m-tall distillation column for Sasol, one of the company’s more technically-demanding fabrications to date, and a 160 heat exchanger for Palabora Mining, which had to be completed on an “excruciatingly tight” schedule.