The general industrials sector made little progress in meeting transformation goals during 2006, with only two of the companies ranked in the sector achieving total BEE scores of more than 50% in the Top Empowerment Companies survey for 2007.
There were few major BEE transactions in the sector last year, and some electronics companies struggled with employment equity and management control targets because of a shortage of technical skills. Many companies in the sector still have little or even no direct black ownership and board-level participation.
Sekunjalo Investments, a diversified investment group based in the Western Cape, remained the most empowered company in the general industrials sector for 2007, but dropped from top spot in the empowerment ranking for all sectors last year to number six this year.
Sekunjalo, founded by former political activists in 1997 as a broad-based BEE investment vehicle, took top honours in general industrials for the fourth year in a row. It achieved a total BEE score of nearly 69%, down from 76% last year.
Second-placed Jasco Electronics was the only other company in the sector to crack the overall top 50 with a total BEE score of about 52%. It was the 34th-most empowered firm in the overall ranking.
Control Instruments, the third most empowered company in the sector, mustered a total score of 34% and came in at 75 in the empowerment ranking for all sectors.
Though Sekunjalo performed well across all of the criteria measured, its high score for enterprise development helped it to edge Jasco out and take top spot.
Black control of Sekunjalo exceeds 80%, its board of directors is made up exclusively of black people and the majority of its economic benefits are enjoyed by black stakeholders.
Sekunjalo holds interests in industries as diverse as ICT, biotechnology, fishing, health care, financial services and pharmaceuticals. Most of its investments are wholly owned or majority stakes, over which Sekunjalo has management control, and the company has driven transformation throughout its subsidiaries and investments. Its weakest point is preferential procurement, where it scored relatively poorly for 2007.
Jasco - which operates in the telecom equipment, high-technology manufacturing and security industries - scored well in most categories, but received zero for skills development. The group's high level of black ownership and management helped secure its place as the second most empowered company in its sector.
A transaction in March 2003 brought Community Investment Holdings (CIH) on board as a major shareholder in Jasco and transformed the group into a fully fledged BEE company. CIH has a 35% stake in Jasco with an option to increase its shareholding to 51% in March 2008.
Jasco is satisfied with its progress in most areas, but still faces several challenges in the areas of employment equity, skills development and preferential procurement, says Jasco CEO Martin Lotz.
Preferential procurement is an ideal vehicle for BEE, but smaller companies such as Jasco don't have the capacity to verify the empowerment credentials of every supplier, says Lotz. A consistent rating system for all companies could help to cut through the red tape.
Control Instruments received no points in the management and ownership categories, both of which carry heavy weightings in the TEC survey. It scored well, however, in the enterprise development and social development categories.
The group - a supplier of vehicle components, electronics, tracking solutions and security systems - says a lack of technical skills is its most pressing BEE challenge. Though Control Instruments is committed to hiring more black people to fill senior positions, its efforts are thwarted by a shortage of specialised skills, says group HR executive Richard Machanick.
The group is identifying talented black people in its operational subsidiaries and fast-tracking them into management, but it will take some time before senior and middle management is transformed, says Machanick.
Several years ago, Control Instruments helped to establish Automated Fleet Solutions, which won a tender for the supply of vehicle tracking and control systems to the Western Cape provincial government in 2005.
Packaging giants Nampak and Astrapak were both ranked in the support services category in the last survey but moved into general industrials in 2007. Nampak was ranked fourth with a score of 24% and Astrapak sixth with a total score of nearly 21%.
