Signs of Confidence In The Local Construction Sector

UK-owned RMD Kwikform South Africa is now a fully South African owned company, following a recently concluded management buyout. It will in future operate as KiT. 

RMD Kwikform South Africa (RMD) was a subsidiary of one of the world’s leading formwork and scaffolding suppliers. This buyout could be viewed as affirmation of enduring opportunity in the construction sector, regardless of an ongoing weak trading environment. Having separated from the UK-based Interserve Group, RMD experienced an uptick in earnings over the last quarter while it is about to rebrand its business units across South Africa.

This recent acquisition has dropped the emphasis once again on the underlying value and opportunity still present in the local construction sector, despite a threatening pandemic.

“Once the due diligence report became available, our expectations were confirmed. A strong balance sheet, coupled with a comforting pipeline of secured work and even payment guarantees were particularly satisfying,” a spokesperson for one of the investment corporations, Dirk Streicher, commented during an interview with the new shareholders.  “It was the quality of the executive team and their experience of the local market that really sold us the deal,” he added.  “We were particularly impressed by the early responsiveness of the team on the deteriorating trading conditions early in the cycle, long before Covid-19 arrived on our doorsteps.”

Dirk Streicher, a Civil Engineer by profession, added that the science, creative challenges and complexities of temporary works design had always fascinated him since the early days of his career.  “Over the years I continued to wonder why there were always only a few national players in the market. This acquisition allowed us to expand our investment portfolio into this highly specialised, oligopolistic environment with its high barriers to entry. The fact that we are now proudly South African is the cherry on the cake!” Streicher told the media during a briefing at his home.

Asked what the outlook is for the next year and beyond, Sales Director, Rossouw Fourie, stressed that the new owners maintain a realistic outlook while low levels of construction activity are expected to continue deep into 2022 before a slow recovery could be on the horizon.

The context is further explained by Managing Director, Johan Smit, who emphasises that the prospects for any business operating in the current climate should not be to wait for an economy to recover, but rather to learn to “dance in the rain,” referring to the ability of a company to be profitable despite weak trading conditions. “It is cardinal to rethink and redefine the differentiating factors between essential and non-essential spend,” Smit added. “It is in this regard that the national lockdown has certainly given us all a crash course in what is really essential. As a result, we have created opportunity for ourselves to tender at extreme low rates and still be able to remain profitable while offering added value at low cost to our customers.”

“The current price elasticity of supply in the formwork and scaffolding sector has reached unprecedented levels of sensitivity. Building contractors simply need the best technical solution with a quality product and exceptional service at the lowest available price. We believe that we are now in an ideal position to meet this expectation from customers,” Fourie told the media during an online briefing.

In response to the further question of what lies ahead for the South African business, Director responsible for operations in the Western Cape, Gerhardt Nieuwoudt, elaborated on the next steps: “We will soon start rolling out a whole new corporate identity. It’s a brand that embodies the aspiration that we have as an organisation. It’s about a new culture. It’s about being brave. It’s about being passionate. It’s also about scalability and being ready to serve our customers in a new uncontested way. And yes, we are excited about being “Proudly South African.”

“I think its emotional for all of us as it is ultimately about our people,” Director in charge of KwaZulu Natal, Alwyn van der Watt, added. “Although RMD will be put in a new jacket, it is the same product range and international engineering ingenuity that will be offered. We have therefore recently signed a long-term distribution agreement with RMD Kwikform International, ensuring we can offer the same products and services the South African market will expect from the RMD Kwikform brand.”

“RMD Kwikform is one of the top five suppliers of formwork worldwide and will continue to offer its products and engineering services exclusively through the Distribution Agreement with the new Shareholders.” Divisional Director, David Adams, said in a recent statement from its headquarters situated in the West Midlands of England.

Smit, who brokered the transaction over a period of almost a year, said the time was right for change. “It is a beginning of a new phase for RMD.” He elaborated on the visionary leadership among his colleagues who spent long hours with him, which later became months, around the negotiation table.  He referred to a former South African president who once said: “We have come a long way and now stand at the top of the hill. One can sit and admire the view, but a man of destiny knows that beyond this hill lies another and another – the journey is never complete as he contemplates the next hill.”   (1)

“It is a privilege but at the same time a tremendous responsibility to lead this wonderful team of inspired people through this phase of transition,” Smit commented. “We are now embarking on the next chapter of our journey. While our people have recently witnessed significant changes, we have developed a robustness which created a shield, safeguarding us against the current unfavourable trading environment. What we have in RMD are amazing people with a collective ambition to build a great South African enterprise.

“We are deeply committed to the potential hidden on our continent and, more particularly, in our country,” Smit concluded.

  1. [Statement by FW de Klerk on the Death of Nelson Mandela]