Pretoria Metal Pressings (PMP) has started its plant renewal process and aims to have this completed by 2020, making the company more efficient and cost competitive.
Phaladi Petje, CEO of Denel Group company PMP, told defenceWeb that studies found that introducing a completely new production capacity would cost in the region of R2 billion. As this was unaffordable, a decision was made to replace very old technology, eliminate heavy manual labour processes and refurbish selective old machines.
Petje said that the plant renewal process has started, with approval received last year, and the process will take about five years to complete. PMP has started the procurement process for new machines and has placed the first tranche of orders for new equipment. Turnaround time on the new machines will be around 16 months. The process will cost around R450-500 million and is completely self-funded.
Some of the new equipment will involve things like ammunition linking and packing machines that will replace tedious manual labour; multisensory machines for quality control; new bullet manufacturing machines etc. PMP is also looking at upgrading its explosive areas.
Petje said that the plant refurbishment will lower the cost of ammunition and provide better value to the company’s primary client, the South African National Defence Force. The plant refurbishment process is one of the ways in which PMP is aiming to double turnover in five years.
Petje said that the market is changing drastically and the biggest opportunities are not just the fact that countries want to buy ammunition but that they are increasingly wanting to establish their own ammunition manufacturing capabilities. For instance, PMP is working with Mzinga Corporation in Tanzania and Luweru Industries in Uganda on domestic ammunition manufacture. He told defenceWeb that some 20 countries have enquired about establishing domestic ammunition production.
Another focus area to drive profitability is research and development, which Petje says is “woefully inadequate” at the moment but is something PMP is starting to get right. For instance, the company has introduced a 3D printing capability, which is assisting with prototyping. Through its relationship with the Council for Scientific and Industrial Research (CSIR) it is exploring a number of other research and development avenues.
Other ways PMP is pursuing profitability is moving into the brokering services sector where the company supplies clients with total solutions. Petje said that he was very hopeful that if the plant renewal process comes right, many opportunities will flow in.
Petje said that in spite of it being a “tough market,” PMP aims to double its turnover in the next five years. He said the biggest issue facing the company is the fluctuating price of copper. Although the price has come down, the rand has depreciated and this represents a big cost to the company.
PMP’s earnings were up substantially between the 2014 and 2015 financial years, with revenue rising from R515 million to R828 million, with the majority (74%) coming from the local market. Export revenue accounted for 26% of the total, and increased by 46% from R150 million to R219 million, according to the latest Denel annual report. Earnings before interest and taxation (EBIT) were up from R7 million in 2014 to R38 million in the 2015 financial year.