South African electrical and instrumentation contractor, B&W Instrumentation and Electrical has boosted its order book with a R90 million contract from a major Mpumalanga colliery. Brain Harley B&W MD says he is pleased to have been awarded the contract and that the company remains cautiously optimistic about the future.
“We are in a tough economy but we foresaw this,” Harley says. “Also we have been successful in extending our operations across border, significantly increasing our pool of work.”
Harley adds that in fact at times like these there are many positives for B&W. “Firstly, the falling exchange rate can be a positive thing for us. Basically, as most of our costs are rand based, we become much more competitive across our borders against US dollar linked countries like Australia, China and India.
“Secondly, one of our biggest challenges is to find excellent site management and supervision and when times are tough these people become more available than in the boom periods.
“Thirdly, part of the infrastructure spend is power stations, which is good for us. This creates the need for coal and at least 23 new projects that are associated with new or upgraded coal mines have recently been created in the SADC region.”
He adds that owing to the nature of B&W’s work it comes in at the backend of projects that may have begun up to three or more years ago. “These projects cannot simply be stopped mid-stream, since 95% of the capital expenditure for major equipment has already been spent. Therefore, due to cash flow constraints, these projects could quite well be delayed for six to 12 months,” Harley says.
In the meantime, as part of the crossborder diversification plan, B&W has opened two separate wholly owned subsidiaries in Mozambique and Madagascar respectively to deal with the work it has in those countries.
In Mozambique the company has been successful in securing work to the value of R150 million in the northern province of Tete, for the electrical and control infrastructure for a new coal mine.
Harley says, “The 2009 and 2010 order book is filling up nicely, cross-border is very promising and there’s the certainty of a lot more government work in the pipeline. Further B&W is on the lookout for core related acquisitions in its sectors of operation.”