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Home » LSE celebrates 3rd anniversary with Gonvarri Materials Handling with exponential growth

LSE celebrates 3rd anniversary with Gonvarri Materials Handling with exponential growth

By Eamonn Ryan | All photos by: Logistics Systems Engineering

This year represents the third anniversary of the Exclusive Distributorship for the Sub-Saharan African region, owned by Logistics Systems Engineering (LSE) on behalf of Norwegian company Gonvarri Material Handling (GMH).

During that time the turnover has grown “exponentially” says Fred Albrecht – chief executive officer of LSE. He quantifies that growth as having been 100% year-on-year over the period since the inception of this agreement. The Gonvarri range includes complete Storage Equipment Solutions in steel pallet racking and shelving systems, as well as storage machines (VLMs), semi-automated and automated storage systems.

LSE quantifies its growth as having been 100% year-on-year over the period since the inception of the agreement.
LSE quantifies its growth as having been 100% year-on-year over the period since the inception of the agreement.

At the moment, the Cape Town and Sub-Saharan cross border African market is larger than Gauteng, as the former is the centre of the Cold Chain Sector, as well as being a harbour city. “Our South African business volume used to be 70% Gauteng, 20% Durban and 10% Cape Town – but that has now reversed. Durban has serious issues with its port, as well as past violence and flooding. The result is that South Africa is split where 60% of our business is now occurring in Cape Town, 30% in Gauteng and 10% Durban. On top of that about 40% of our business volume is in Sub-Saharan Africa and although very risky for those unfamiliar to these conditions, a great frontier for LSE.”

Underlying this trend, says Albrecht, has been a move by Cape Farmers to consolidate their distribution in the metropolitan areas closer to the harbour, rather than small-scale on their own farms. “They look to outsource some of their distribution activities, to those with the expertise and infrastructure – hence we don’t just supply the racking, but the entire solution is from LSE: from Product Flow, Supply Chain Design and complete Warehouse Designs.

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Normally, the architect comes afterwards and designs the building around our engineering drawings of the solution that was conceptualised and then engineered. It is always an inside-out approach, and this does not lend itself to just selling a rack.” If a racking supplier only supplies the rack, it remains a commodity sold on price. As a solution, e.g. a Steri, or Pull-Down Chamber Solution, Complex Semi- or Fully Automated Storage Solution, or even End-Of-Line Automation, we aim to gain the lowest OPEX, with a tangible and measurable ROI, remaining conscious why we partnered with the world’s leading refrigeration and energy engineers; which then becomes a bespoke solution for the cold chain supply customers.

Even during Covid, LSE experienced growth and moved to bigger office space, with a 250% footprint increase in 2021, and a larger than ever before warehouse, of which about a third is set aside to be a showroom of our new products, innovations and local and international R&D. It includes semi- and fully automated mobile racking and shelving among others. It is however great that with this growth, LSE has also increased its ability to ‘showcase’ systems in practice, as its greatest ambassadors are the customers using their systems.

Albrecht explains that Gonvarri consists of around 204 different brands, and although many are unrelated to LSE’s core business of storage systems they nonetheless contribute through having one of the largest specialised tube plants in the world, which LSE and its customers benefit from. Of these, around 20 are racking brands. The company has become a dominant force in its sector through a process of rapid mergers and acquisitions (M&A) of those brands. Under this extended agreement between GMH and LSE, exclusive rights have been secured to supply the various brands into Sub-Saharan Africa for the first time. Albrecht says that GMH’s cutting edge products, passion for innovation (particularly in the area of automation) and drive for sustainability have proven to be a perfect match with LSE’s own values and goals.

“We want to do good work with good people, and so our partnership with GMH is the perfect match. GMH is a powerhouse across the globe, and we are proud to partner with them to supply storage systems in our region.”

He notes that GMH “has a clear plan”, one that eliminates ‘mom and pop’ clients with most of the work now being large clients requiring big orders and repeat business – which explains LSE’s rapid growth. Strategically, LSE only sells to those customers with continuous growth and attempts not to fight for the once-off projects.

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The Gonvarri Group transforms around 5.2 million tonnes of steel into products, such as a vast range of racking and shelving systems each year which, in the context of South Africa, is almost ten times the entire volume of all local annual steel products made. On top of the sheer size of the company comes the R&D, innovation and engineering which volume facilitates. Albrecht says LSE has the largest engineering resource pool in the sector and is “very proud of its ability to be the only company that can provide an engineered solution”. LSE is the only steel storage system in South Africa that is manufactured according to EN (European Norm) 15512 (DIN EN15512:2020), enabling clients to easily install the product with confidence.

Albrecht attributes the rapid growth of LSE and that of GMH to the fact that previously each country would typically have a dominant brand – but no single one had an international footprint. The M&A process for the first time created a global network with local brands such as CKarsten gradually being rebranded where possible. GMH was then formed as a holding company five years ago, to house all these brands. For strategic reasons, some remaining the same brand where they were the most dominant in their individual country, such as Dexion Europe in UK and South Europe, Constructor in North Europe and the Scandinavian countries.

“We were able to form this alliance with Gonvarri Material Handling, as of all the companies in South Africa, LSE’s experience in consulting engineering in the Storage Equipment Sector, we were able to recognise the synergies between us. We didn’t want to simply sell the racking as a product, but to have exclusivity and the facility to advise on the designs with clients and for customers. These are complex products and projects and not suited to clients buying direct – it needs strong local representation. Our agreement entailed setting up local subcontractors around the country. LSE’s strategy is to work with partners and with the best associated engineering companies in Africa and Europe, to ensure the approach it adopted can be delivered on.”

He notes that any other model would be counterproductive for clients and customers. A small local representation by overseas brands would typically entail flying out a technician to manage installation and maintenance – with all the delays, inconvenience and huge costs that entails. Or the clients and customers themselves will then have to find local contractors to install and maintain the equipment.

“Both these scenarios we commonly see when European brands are sold locally and in Africa. In addition, who attends to the sale, design and execution of the project? And on a more current note, who will maintain it for it to last a lifetime? The small saving on buying direct ends up costing a lot more in lost productivity and all the risks associated to the interface and the implementation of the projects. That’s why the bulk of imported equipment and even vehicles in South Africa are sold through local distributors in the main centres, as in South Africa you need an approach and support for South Africans,” explains Albrecht.

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