RAP CHIEF WARNS SOUTH AFRICA: THERE’S ONLY ONE CLASS – WORLD CLASS.
Faced with increasingly fierce global competition, South African industry needs to raise its price competitiveness and freed from unrealistic labour legislation, packaging entrepreneur Andrea Protti tells Ben Walker. “If we want to be world players we must act like world players.”
Andrea Protti of Johannesburg is the type of hard working, straight-talking entrepreneur every country needs. South Africa not least.
Already the founder of two hair care packaging businesses, seeing a niche opportunity for a new medium sized enterprise, Andrea and brother Rino founded RAP Products. “We saw our chance and took it.”
That was in 1988. Rapid early growth was sustained through new lines and innovative technology; first pumps then into glass bottles and later perfumery; plastic blow-moulded and injection mouldings. A one-stop shop for quality hair product packaging
“We wanted to be in a niche market rather than a big numbers market, working on smaller quantities with better margins. A pretty simple strategy and one we followed from day one. The ozone headache was in play and for three years from 1988 the pump business grew very exponentially and gave us the possibility to grow the rest of our products.”
Four years ago RAP was bought out by homecare company Beige Holdings for R14.7 million. It was a deal offering scale and synergy – Beige’s Crystal Pack plastic division focussing on food, beverages and industry and complemented by RAP’s acclaimed cosmetic and toiletries speciality.
But while functioning as a separate division, RAP’s once distinctive operational and cultural styles have been axed, a development Andrea Protti regrets.
“We were known as a rapidly moving differential company creating very different products very quickly and coming out with a series of innovations every six months. We are now part of a corporate environment, no longer a family-owned entrepreneurial company. The whole strategy has changed.
“Four years ago if you asked where you could buy an environmentally exciting and valuable product in terms of rigid plastics packaging, they would have said RAP. Four years ago we changed our company to a corporate environment which turned the company 360 degrees. I believe that was a mistake. We should have maintained our strong development programme on an on-going basis.”
A key factor in its success, RAP’s emphasis on R&D had not gone unnoticed among competitors. “Up to 2005-2006 our aggressive development programme was working exceptionally well. We were way ahead of the game. Then many of our competitors, seeing the benefits of this process, climbed on the band wagon and followed our example.”
And with the global recession international companies began importing finished products from China and Europe into South Africa. “Since they were not going to buy from us at the bottom end of the scale, this hit us straight away.” Meantime Government incentives enabling European Union companies to import products into South Africa duty free were scarcely helpful to struggling domestic producers.
“So we had a double whammy: The cake shrunk, the competitors increased, and capacity is far outstripping demand.” In this dramatically changing market, South Africa’s package and labelling industries are taking a hard knock, with 69% of all hair care products for example imported in a finished state.
“It’s a situation created by the big high volume conglomerates, the Unilevers’, the P&Gs’ and so on,” says Protti. “They have centres of excellence around the world, concentrate on a single product – shampoo for example – and send it all around the globe. As a local producer you can’t even begin to compete on those levels.
“In the past three weeks we’ve seen the results of five major packaging companies released, all substantially down on last year. As packaging people we are at the moment taking heavy, heavy strain right across the board.”
Employment is a major casualty. “If we have to reduce our volumes we have to reduce our work force. It’s inevitable. Back in 2002 – 2003 we had 350 employed at our plant, now we are down to 200 and unfortunately but inevitably we will be cutting back even further.”
New cross-border African markets such as Angola or Mozambique must be found, says Protti, markets too small to attract the major international companies. “To maintain our market share and abilities as a company and brand we’ve got five years of hard slog coming our way. I’m not pulling my punches.”
At a macro level Protti says a fundamental shift in national emphasis and attitude is needed if South African industries are to flourish and employment secured and expanded.
“If we want to be a world player we have to act like world players. We can’t have restrictions and protective duties put in place by Government. We have to improve our act and raise our productivity – something we are finding extremely difficult to get to grips with.
“Our labour legislation needs to be looked at very seriously. Wages should not go up if productivity is not going up. We need to find centres of excellence – such as are found in countries within Eastern Europe and the Far East – and produce a single product, not for South Africa but for the world.
“There are hundreds of sectors we should be looking at. Why for example should a car produced in South Africa cost more than a car made in England or Spain? The only explanation is that their productivity is greater than ours.
“The only way we are going to get anywhere is by rolling up our sleeves. In China it’s an honour to have a job or a position; in South Africa it’s classified as a right. And with that work ethic or philosophy we are destined for danger.”
South Africa has the potential to be a world player, says Protti. “We have the technology, the ability and the possibilities. But we need dedication from the man in the street to say we need to make products not at a South African price but a world price.
“It’s all very well making statements about flying the South African flag more often or being proud about producing products in South Africa. But at the risk of losing our profitability we sell that down the river very quickly. We need to produce items that are world standard.”
By Ben Walker
Category: Business Profiles
About the Author (Author Profile)
Daemon Sands is the chief editor for the benchmark publication of Littlegate Publishing, Endeavour Magazine. He has written for best selling magazines and newspapers and is a keynote speaker at business conferences around the globe.Subscribe
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